Friday, March 28, 2008

Sensient Flavors obtains Temporary Restraining Order against SensoryFlavors

On March 10, 2008, Sensient Technologies Corporation along with one of its subsidiaries, Sensient Flavors LLC (together “Sensient”), filed a lawsuit in the U.S. District Court for the Eastern District of Missouri again SensoryFlavors, Inc., Performance Chemicals & Ingredients Co., Diehl Food Ingredients, Inc., and Highlander Partners, L.P. (collectively “SF”) alleging trademark infringement and unfair competition under the Lanham Act, common law, and Missouri law as well as trademark dilution under Missouri law. See Sensient Technologies Corporation et al v. SensoryFlavors, Inc. et al, Case No. 4:08CV00336 ERW (E.D. Mo. March 10, 2008). Along with the complaint, Sensient filed a Motion for a Preliminary Injunction which sought a temporary restraining order (“TRO”) against SF’s use of the SensoryFlavors name, logo, and website.

For more than 125 years, Sensient Technologies has been in the business of developing and distributing flavors, fragrances, and colors used in food, beverage, household care, and personal products. Previously known as Universal Foods Corporation, the company, in 2000, decided to rebrand itself by creating the mark “Sensient” and began to change its entire corporate identity around the mark. The company has received numerous registrations for the mark SENSIENT including, inter alia, “cosmetic fragrances and food emulsifiers” and “food and beverage colorants

On February 13, 2008, Givaudan Flavours North America (“Givaudan”), a manufacturer and supplier of flavors for ice cream and other dairy products, changed its name to SensoryFlavors Inc. after being acquired by Performance Chemicals & Ingredients Co. (link to press release). Givaudan and Sensient Flavors were direct competitors in the area of ice cream and dairy flavors. In addition, the President of SensoryFlavors Inc. is Charles Nicolais, who served as the head of Sensient Colors, Inc., another subsidiary of Sensient Technologies and sister company of Sensient Flavors, from February 2004 through July 2005.

Sensient maintains that the name SensoryFlavors was chosen to cause confusion with its Sensient Flavors name. SF asserts that the name was an outgrowth of the SensoryEffects word mark and design registered in 2004 and that they wanted to build on the goodwill of such make by developing a similar name for the acquired flavor business (replacing the word “Effects” with the generic word “Flavors”).

The court analyzed the usual four factors for determining whether to issue a TRO: (1) the threat of irreparable harm to the moving party; (2) balancing the harm and injury to the non-moving party in granting the injunction; (3) the probability of the success on the merits; and (4) the public interest. See Phelps-Roper v. Nixon, 509 F.3d 480, 484 (8th Cir. 2007).

Probability of the success on the merits
The court first analyzed probability of the success on the merits. The court found, on balance, that Sensient was likely to prevail on its claims, specifically, for purposes of deciding the motion, Sensient’s federal trademark infringement claim.

The six factors analyzed by the court for determining whether SF’s use of its mark was likely to cause confusion as to the source or sponsorship of the goods or services are:

1) the strength of the plaintiff's mark; 2) the similarity between the plaintiff's mark and defendant's marks; 3) the degree to which the allegedly infringing product competes with the plaintiff's goods; 4) the alleged infringer's intent to confuse the public; 5) the degree of care reasonably expected of potential customers, and 6) evidence of actual confusion.

Davis v. Walt Disney Co., 430 F.3d 901, 903 (8th Cir. 2005).

Regarding the strength of the SENSIENT mark, the court found it to be a fanciful mark entitled to the broadest protection (but noting that the Flavors part of the name is generic or at most descriptive and Sensient has not shown any evidence that its use of the word Flavors has acquired a secondary meaning).

As for similarity between the marks, because the goods at issue (food flavors) are virtually identical, the degree of similarity that need be shown by Sensient is less. The court found the marks to have a strong phonetic similarity, which is particularly important given that customers are usually contacted over the phone. The court found this factor to weigh in favor of granting the TRO.

The third factor favored Sensient because SF’s allegedly infringing product competes with Sensient’s products. As for SF’s intent to confuse the public, the court did believe that SF’s rationale for its name overcame the obvious prior relationship of SF’s president to Sensient (which creates a strong inference of an intent to confuse) and the knowledge that SF had of Sensient Flavors' existence in the relevant market. The court found that this factor favored granting the TRO.

The degree of care exercised by potential customers actually favored SF because, in this case, potential customers are sophisticated business entities and a high degree of care can be expected.

Finally, regarding evidence of actual confusion, the court found this factor irrelevant under the circumstances given the short period of time in which SensoryFlavors has been operating under such name and the fact that it is too early for Sensient to provide any evidence of actual confusion.

Irreparable Harm
The court relied upon the showing of a likelihood of confusion as support for a showing of irreparable harm (citing Louis Vuitton Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 537 (2d Cir. 2005). Since the court found a likelihood of confusion, the court found that Sensient did face a threat of irreparable harm.

Harm to Defendants
While the court acknowledged that SF may suffer some harm form the TRO, the little harm that would be inflicted (given the short period of time in which SF has used the new name) was outweighed by the irreparable harm to Sensient’s long-established goodwill in the relevant industry.

Public Interest
Because neither party submitted any strong evidence that the public interest would be impacted either way by the TRO and the fact that there is always the public interest in preventing confusion by enforcing trademark laws, the court found this factor to favor granting the TRO.

The court concluded that, on balance, the factors favored granting the TRO to stop SF from using the SensoryFlavors name, and on March 20, 2008, so ordered and set a hearing on Sensient's preliminary injunction (scheduled for today). Of course, given that the factors for deciding a preliminary injunction are the same as the factors for deciding a TRO, SF’s chances of success are not looking very good.

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