IP Law Daily, TRADEMARK—3rd Cir.: Denial of default judgment affirmed in chocolate milk powder dispute, (Aug 2, 2024)

By Kevin M. Finson

Default judgment was properly denied to a trademark owner who failed to show trademark counterfeiting or consumer confusion.

A seller of chocolate milk powder was not entitled to a default judgment of infringement and injunctive relief against sellers accused of selling counterfeit or infringing BOURNVITA-branded chocolate powder and related goods, the U.S. Court of Appeals for the Third Circuit has held. There was no showing of consumer confusion arising from the importation of allegedly infringing goods and allegations regarding the sale of “identical” products did not support a trademark counterfeiting claim (Meenaxi Enterprise, Inc. v. Singh Trading Co., Inc., No. 23-2288 (3d Cir. July 31, 2024)).

Meenaxi Enterprises, Inc. (Meenaxi) was the owner of the federally registered trademark BOURNVITA for use with chocolate milk powder and related goods. Meenaxi brought suit for trademark counterfeiting, infringement, false designation of origin, and unfair competition under the Lanham Act and unfair competition under state law against Singh Trading Co, Inc., other entities, and various corporate owners and officers (collectively, Singh), alleging that they engaged in the unauthorized import and sale of identical BOURNVITA-branded chocolate milk which had been manufactured by the Cadbury Company in India, where Cadbury owned the right to use the BOURNVITA mark.

After several defendants failed to respond to the suit, Meenaxi sought entry of default judgment and, among other relief, a permanent injunction. The trial court denied the motions for default judgment. Meenaxi appealed.

Default judgment. The trial court had held that as to the defendants for whom it had denied default judgment the complaint pleaded only conclusory allegations or left key questions unanswered, specifically, whether the goods were not genuine. The district court noted that the complain has been worded in a way that suggested that the case may have involved a gray market situation—a case in which the problem is the unauthorized import of a product that would be genuine if sold in India, but which has been imported to a country where Meenaxi owned the rights to use the BOURNVITA mark in commerce.

However, the complaint pleaded no facts that supported the inference that the allegedly infringing boxes were counterfeits. The appellate court found that Meenaxi had pleaded that the product sold by the defendants and its packaging were the “same” and “identical” to Meenaxi’s own product and packaging, and therefore the goods were genuine, not counterfeit. Additionally, the court found that Meenaxi made only conclusory allegations of consumer confusion, presenting no evidence or allegations of specific facts to support that legal conclusion. Because the goods were genuine and there was no showing of consumer confusion, there could be no finding of infringement.

The court affirmed the denial of default judgment, while noting that it did not hold that a trademark owner was without a remedy against an unauthorized seller of genuine goods, but only that such a remedy was not found in the trademark statute upon which Meenaxi had relied.

The Case is No. 23-2288.

Judge: Shwartz, P.

Attorneys: Meichelle R. MacGregor (Cowan Liebowitz & Latman PC) for Meenaxi Enterprise, Inc.

Companies: Meenaxi Enterprise, Inc.; Singh Trading Co., Inc. d/b/a Roshni Foods

Cases: Trademark DelawareNews NewJerseyNews PennsylvaniaNews