Kraft Still the Big Cheese: Seventh Circuit Affirms Injunction in Trademark Dispute over Cracker Barrel

cbocs

Cracker Barrel Old Country Stores are easy to spot off the highway, but you won’t be noticing the company’s products in grocery store aisles any time soon.

The Seventh Circuit Court of Appeals recently upheld a preliminary injunction barring Cracker Barrel Old Country Store, Inc. (“CBOCS”), from selling branded food products, particularly packaged hams, in grocery stores.  The appeals court found that the similarities between the CBOCS mark and that of Kraft Foods Group’s Cracker Barrel cheese products line could easily lead to consumer confusion.

Kraft

Judge Posner explained that allowing CBOCS to sell food products in the same outlets under a confusingly similar trade name posed a “particular danger” to Kraft, especially “if a consumer has a bad experience with a CBOCS product and blames Kraft, thinking it the producer.”  In such situations “a consumer who thinks Kraft makes bad hams may decide it probably makes bad cheese as well.”

The Seventh Circuit’s decision affirms an Illinois district court judge’s injunction against CBOCS that was originally granted in July of this year.

Ham and Cheese

Kraft Foods, based in Northfield, Illinois, has been selling cheese under the Cracker Barrel mark for nearly 60 years.   Although Tennessee-based CBOCS’s restaurants (in operation since 1969 with over 600 locations across the country) are usually accompanied by country-style stores that have been selling Cracker Barrel branded products for years, the two companies managed to exist peacefully for some time.  Things changed, however, when CBOCS decided to sell a variety of food products (not including cheese) in grocery stores under the “Cracker Barrel Old Country Store” logo.  Specifically, when Kraft learned that CBOCS planned to sell packaged ham using the CBOCS logo, it sued the company for trademark infringement.

The relationship between the two products, as well as grocery store sales practices, had a great deal of influence on the Seventh Circuit’s decision.  The  court noted that it is “not the fact that the parties’ trade names are so similar that is so decisive,” but rather their grocery store distribution channels and advertising practices.  In the brief period where CBOCS hams were sold in grocery stores before an injunction was issued, an online ad for Cracker Barrel Sliced Spiral Ham provided a link to a coupon for Kraft’s Cracker Barrel cheeses.  The court concluded that the products were also likely to appear in the same grocery store circulars and near one another in grocery store aisles, increasing the likelihood of consumer confusion.

Consumer Harm

The Seventh Circuit also noted that this confusion would undermine one of the main purposes of trademark law—reducing consumer search costs.  Since both products in this instance are “inexpensive—under $5” it is likely that “only very cost-conscious consumers are apt to scrutinize carefully the labels” in this case and verify the company of origin.  “Even savvy consumers might be fooled,” the appeals court wrote, “because they know that producers often vary the appearance of their trademarks.”  While the Seventh Circuit’s decision is a continued blow to CBOCS’s efforts to license its products for sale in grocery stores, the appeals court did note that CBOCS could continue to sell its branded products without limitation at CBOCS restaurant locations and through its online store.

The case is Kraft Food Group Brands LLC v. Cracker Barrel Old Country Store Inc., 13-2559, U.S. Court of Appeals for the Seventh Circuit (Chicago).

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