IP Law Daily, TOP STORY—5thCir: Restaurant Chain’s Use of MISSION BURRITO Mark Was Likely to Cause Confusion with Mexican Food Products Sold Under MISSION Mark, (Oct 15, 2012)

By Peter Reap, J.D., LLM

The use of the trademark MISSION BURRITO by Mexican Restaurants, Inc. (Mexican) for its chain of restaurants, was likely to cause confusion under the Lanham Act with Gruma Corporation’s use of the Mission trademark for the Mexican food products it marketed nationally, the U.S. Court of Appeals in New Orleans has decided (Gruma Corporation v. Mexican Restaurants, Inc., October 11, 2012, Davis, W.). Further, Mexican’s use of the MISSION BURRITO mark diluted Gruma’s MISSION mark under the Texas Anti-Dilution statute. Thus, a federal district court’s judgment against Gruma on its Lanham Act and Texas Anti-Dilution claims was reversed.

Background

Since 1982, Gruma has obtained 29 federally-registered trademarks, some with the word MISSION alone and some with the work MISSION in a logo. The MISSION logo includes the word MISSION under a Spanish style bell tower with a rounded top, usually using the colors red, orange and white. Gruma sells its products nationwide in grocery stores or other retail outlets, as well as directly to restaurants, schools and other institutions.

Mexican owns several different Mexican concept restaurants in Texas and elsewhere, including the Houston based Mission Burrito restaurants, started in 1995. The restaurants are considered fast-casual and serve tortilla chips, dips and salsa, and fresh tortilla based Mexican food items such as burritos, tacos, and quesadillas. The MISSION BURRITO logo is the top of a Spanish mission style church topped by a cross in black and white. Throughout its existence, the title of the restaurant, MISSION BURRITO, has generally been followed by a tagline, first “Fresh Food Fast” and later “More choices. More flavor.” Mexican Restaurants obtained a federal trademark for the logo and name in 2008.

Gruma brought suit against Mexican, alleging trademark infringement and unfair competition under the Lanham Act, and dilution under the Texas Anti-Dilution statute.

Likelihood of Confusion

Under the Lanham Act, the central question here was whether Mexican’s use of the MISSION BURRITO mark was likely to cause confusion as to the “source, affiliation, or sponsorship” of Gruma’s products. Case law is well settled that the court should examine eight nonexclusive “digits of confusion” to determine whether a likelihood of confusion is present:

(1) the type of trademark; (2) mark similarity; (3) product similarity; (4) outlet and purchaser identity; (5) advertising media identity; (6) defendant’s intent; (7) actual confusion; and (8) care exercised by potential purchasers.

No digit is dispositive, and the digits may weigh differently from case to case, depending on the particular facts and circumstances involved.

Factors Found in Gruma’s Favor by the District Court

(1) The type of trademark. The district court found that this factor favored Gruma because the MISSION mark is strong and distinctive. The mark is also in substantial exclusive use by Gruma, which weighs in Gruma’s favor. This finding was clearly correct, according to the appellate court.

(4) Outlet and purchaser identity. The district court found that although the parties do not use the same retail outlets to sell their goods and services, the consumers who purchase Gruma’s retail products substantially overlap with the consumers who purchase Mexican Restaurant’s products and services because both purchase Mexican food products. Again, the district court correctly found that this factor favored Gruma.

(5) Advertising media identity. The district court found a significant identity in the advertising media used by the parties. The district court correctly found that this factor favored Gruma.

(8) Care exercised by potential purchasers. The district court correctly found that because the parties’ products are inexpensive they would not be purchased with a high degree of care as to their origin increasing risk of confusion.

Disputed Factors

(2) Mark similarity. The district court found that “[i]n totality, the marks are not comparable in appearance, sound, or meaning” and “prospective purchasers are unlikely to believe that the parties are somehow associated.” However, when the extra, descriptive words in Mexican’s mark were disregarded and the focus was placed on the similarity of the two marks as the case law required, the district court erred in finding that this element favored Mexican Restaurant, the court held.

The descriptive words attached to Mexican Restaurant’s use of the word MISSION—like “Burrito” and “Fresh Food Fast” or “More choices. More flavor”—were relatively unimportant when determining whether the marks were similar. Rather, it is clear from caselaw that the dominant word or words in a mark should be the focus of the analysis.

Both marks used the word MISSION in all caps and both used an image that clearly represented the tower of a mission style Spanish church. It was inescapable that both were clearly employing the device of a mission-style tower associated with Mexico and South Texas to draw an association with the name MISSION and the Mexican food each party sold.

(3) Product similarity. The district court found that although both parties are in the Mexican food industry, their goods do not compete. The district court also found that Mexican Restaurant’s products are not similar to Gruma’s and that consumers would not think they originated from the same source. Finally, the district court concluded that consumers would not believe that the restaurant business is a natural area of expansion for Gruma. Based on these findings the district court concluded that this factor favored Mexican.

The distinction between pre-packaged food products sold in retail stores and finished food products sold in restaurants was not enough to show that products are dissimilar, according to the appellate court. In In re Azteca Restaurant Enterprises, Inc., 50 U.S.P.Q. 2d 1209 (T.T.A.B. 1999), the T.T.A.B. affirmed the examiner’s refusal to register the mark AZTECA MEXICAN RESTAURANT for a Mexican restaurant as it would likely cause confusion with the earlier registered mark for AZTECA prepared Mexican foods, because “consumers would be likely to mistakenly believe that registrant’s Mexican food products sold under the mark AZTECA and applicant’s restaurant services sold under the mark AZTECA MEXICAN RESTAURANT originated with or are somehow associated with or sponsored by the same entity.” The facts in this case were almost identical to Azteca, the court observed.

Neither the record nor case law supported the district court’s conclusion that the restaurant business was not a natural area of expansion for Gruma. The danger of confusion increased when the junior user’s market was one into which the senior mark could naturally expand. Based on these facts and caselaw, the district court erred in marking this factor in favor of Mexican.

Neutral Factors

(6) Defendant’s intent. The district court found that Mexican did not adopt its mark with the intent of copying Gruma’s mark or benefitting from its reputation. This finding was supported by the record.

(7) Actual confusion. There was no error in the district court’s finding that this factor was neutral.

Balance of the Factors

Every digit of confusion weighed in Gruma’s favor or was neutral and no factor favored Mexican. Therefore, the district court’s conclusion that there was no likelihood of confusion between the two trademarks in was clearly erroneous.

Dilution

The relevant factors under the Texas Anti-Dilution statute established that Mexican’s use of the MISSION BURRITO mark diluted the distinctive quality of Gruma’s MISSION mark, as required by the Texas Statute, and lessened that mark’s capacity to identify the true owner’s goods and services which was the definition of dilution by blurring. The district court erred by granting judgment on this issue against Gruma.

The case is No. 11-41105.

John M. Cone (Hitchcock Evert, LLP) for Gruma Corporation. Barry Grattan Flynn, (Gordon & Rees, LLP) for Mexican Restaurants, Inc.

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