Intellectual property and CHOCOLATE. Rarely do two of my favorite topics converge, and yet for the last few days I’ve watched my newsfeed light up with commentary about the recent Hershey’s versus Cadbury debacle. Few, however, provide a detailed look at what started the problem: Hershey’s litigation complaint in the Middle District of Pennsylvania. Not against Cadbury, but against Let’s Buy British Imports (LBB), which was importing Cadbury and other British chocolates, from abroad.
For those who live under a rock (or else just do not like chocolate), under a recent settlement LBB has agreed to cease importing all Cadbury’s chocolate made overseas, among other delicacies. Nor is this the first time chocolate has seen a blow: a few years back, in what Cadbury aficionados labeled “Creme Egg Gate”, the much-loved Dairy Milk chocolate used in the treat was swapped for a cheaper type of chocolate shell. And another ‘conspiracy,’ unmasked by actor B.J. Novak in 2007, which revealed that the size of the Creme Egg has decreased over the years. And yet another: they have dropped one from the traditional six-pack count — while keeping the price the same.
The present lawsuit was brought by Hershey’s in August 2014 to stop LBB from shipping any and all Cadbury products to the United States. Why? First, Hershey’s has a licensing agreement to manufacture Cadbury’s chocolate in the United States with similar packaging as that used overseas, but with a different recipe. Yes, that’s right: Hershey’s owns the right to make and sell any chocolate products with the Cadbury name in the United States. Thus, when “real” Cadbury products are imported by third parties and sold in the United States, this directly cuts into Hershey’s sales and profits. They face competition from the same products as theirs with the same name and a different recipe . . . a recipe which most people who have tasted both versions say is superior. For example, the first ingredient in U.K. Cadbury chocolate tends to be milk, while the first in American-made Cadbury chocolate is sugar, according to the New York Times. British Cadbury products supposedly contain 25% cacao, and the United States versions only 10%, and the U.S. versions contain significantly more preservatives. Whether this is true or not, the end result is that Hershey’s wants to shut that competition down. This makes perfect sense from a business standpoint. If you’ve paid for an exclusive license to make and sell Cadbury products in the United States, it makes bad business sense to allow others to import the British version and erode on your sales.
Second, Hershey’s alleged several counts of trademark infringement. The Complaint states, among other things, that:
(a) the orange package and yellow-lined brown writing of Toffee Crisp looks too much like the packaging for REESE’S PEANUT BUTTER CUPS;
(b) the name of Yorkie chocolate bars is easily confused with Hershey’s YORK peppermint patty, which Hershey’s has the exclusive license to that mark through Kraft;
(c) British-made Kit-Kat bars infringe upon Hershey’s American KIT-KAT mark;
(d) British-made Maltesers infringe Hershey’s MALTESERS mark;
(e) British Cadbury treats infringe Hershey’s exclusive United States rights to the CADBURY marks and trade dress;
(f) British Rolo treats infringe Hershey’s ROLO mark, which Hershey’s has the exclusive license to in the United States through Nestle;
Two pictures comparing the various products (REESES and Toffee Crisp, and the two ROLOs) can be seen below, taken from the Complaint.
As recently reported by the New York Times, Hershey’s representative Jeff Beckman commented on the lawsuit and settlement by stating, “It is important for Hershey to protect its trademark rights and to prevent customers from being confused or misled when they see a product name or product package that is confusingly similar to a Hershey name or trade dress.”
The odd part about this dispute — the elephant in the room — is that Hershey’s still manufactures its Cadbury products under the Cadbury label. Thus, if you look at it one way Hershey’s appears to be causing confusion in the marketplace by making American consumers believe they are buying genuine Cadbury products, when consumers are really purchasing Hershey products and recipe packaged prettily under a Cadbury label. I admit that even I, as an everyday purchaser of the holiday favorite Creme Egg, recently saw the “Cadbury” name and assumed they were genuine Cadbury products . . . and I’m an intellectual property attorney. Perhaps there is a “Made by Hershey’s” lettering in very small print on the label — I have not checked, and it would not surprise me. But I haven’t looked for it, and I’m guessing most average consumers don’t. So, distilled to the basics, Hershey’s position is similar to the following: “We have the sole right to sell Cadbury products in the United States using our own non-Cadbury recipes and ingredients, and package them like Cadbury products to make Americans believe they are buying the real thing. Having the real thing imported and sold in direct competition confuses consumers, and makes them think they are buying the “real” real thing (an unauthorized sale) when they should be buying the “fake” real thing (an authorized sale).” Does Hershey’s have a right to complain? Yes — they paid good money for their license from Cadbury. Not to mention the trademark infringement of all the other, non-Cadbury products at issue. But is there a funny aftertaste to their argument?
The end result: Americans are not happy with Hershey’s. And more people than ever now know that “Cadbury’s” treats in the United States are really Hershey’s chocolate. Will knowing the true source of the products — the reason trademark law exists (to protect that association) — hurt or help Hershey’s? In any case, it will be much harder to obtain genuine Cadbury’s products in the United States, and small stores that make a living off selling these Cadbury imports may not be able to find other suppliers. Just yesterday, it was (tongue-in-cheek) reported that two men were arrested by the U.S. Customs and Border Protection off the East Coast, for attempting to smuggle a $2.5M shipment of Cadbury’s chocolate. The offending boat was a yacht from Ireland called the Fruit and Nut, and allegedly carried three tonnes of pure, uncut Cadbury’s Dairy Milk chocolate. The raid was allegedly set up due to a tip from an unnamed “rival chocolatier” . . . Spoof or a genuine news? Does it matter? This is certainly something that likely can and will occur down the road. I won’t name names, but some of my connections in social media are already posting to cajole friends and family abroad to mail or smuggle back chocolates for them.
On a lighter note, while the outrage in the United States over the Hershey’s/LBB settlement has been almost tangible, Americans are far from the only ones who love chocolate. The New York Post just reported that a French judge has ordered the parents of a baby girl not to name her Nutella. Why? It would be a stretch to argue trademark infringement on the grounds that the use of “Nutella” to represent a little girl, would confuse consumers of a chocolate-hazelnut spread into thinking she was associated with the delectable treat. No: the judge’s ruling was to save her from a lifetime of teasing. “The name ‘Nutella’ given to the child is the trade name of a spread,” the judge declared. Since the parents failed to show up for the court date, the judge unilaterally ordered that the girl’s name be shortened to Ella.
Trademark law and chocolate: do they really mix well?