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Daily Harvest, Inc. v. Imperial Frozen Foods OP CO LLC

United States District Court, S.D. New York

July 31, 2018

DAILY HARVEST, INC., Plaintiff,
v.
IMPERIAL FROZEN FOODS OP CO LLC, A DELAWARE LIMITED LIABILITY COMPANY; HAPPY AND HEALTHY HOLDCO LLC, A DELAWARE LIMITED LIABILITY COMPANY, TODAY'S HARVEST HOLDCO LLC, A NORTH CAROLINA LIMITED LIABILITY COMPANY; AND DOES 1-10, Defendants.

          OPINION AND ORDER

          ANDREW L. CARTER, JR. UNITED STATES DISTRICT JUDGE

         Plaintiff Daily Harvest, a start-up company that sells healthy frozen cup products, brings this action against Imperial Frozen Foods Op Co LLC ("Imperial"), Happy and Healthy Holdco LLC ("Happy Healthy"), and Today's Harvest Holdco LLC ("Today's Harvest") (collectively, "Defendants") alleging breach of contract, fraud, trade secret misappropriation pursuant to 18 U.S.C. § 1836 and New York Common Law, tortious interference with contract, unfair competition in violation of Lanham Act § 43, 15 U.S.C. § 1125, et seq. and New York Law, and declaratory judgment. Before the Court is a motion for a preliminary injunction to enjoin Defendants from directly or indirectly marketing, selling, distributing, or advertising Defendants' "Happy Healthy" line of frozen cup smoothie or meal products. ECF No. 27. For the reasons set forth below, Plaintiffs motion is DENIED.

         BACKGROUND

         Plaintiff is a New York City based food start-up founded in 2015 that sells healthy "frozen cup" products, including smoothies and overnight oats, directly to consumers via its website. Am. Compl. ¶ 32, ECF No. 21. Due to increasing sales, Daily Harvest engaged a consulting firm in July 2017 to find a "suitable co-packer that could handle the unique needs and explosive growth Plaintiff was experiencing." Id. at ¶ 54. The consulting firm connected Plaintiff with Defendant Imperial, who is "an established supplier of organic frozen fruits and vegetables" and prides "itself as a business that 'integrates] our core competencies with your needs' so as to help 'expand' customers' 'frozen fruit and vegetable program[s]."' Id. at ¶ 55. Prior to engaging Defendant Imperial as a co-packer, Plaintiff required Defendant Imperial to sign a Non-Disclosure Agreement, "which was purposefully drafted to provide broad protections for Daily Harvest's invaluable confidential information and protection against any unauthorized use or disclosure of its intellectual property." Id. at ¶ 56.

         In furtherance of their co-packing partnership, Plaintiff allegedly disclosed trade secrets and confidential information to Defendants through June 2018 in both oral and written form. PL Mem. Supp. Temporary Restraining Order 7-13, ECF No. 27-1. In March 2018, Defendant Imperial's Vice President of Sales Alex Mclntosh provided Plaintiffs Vice President of Product Ricky Silver a courtesy call informing Silver that Defendant Imperial intended to release its own line of frozen smoothie cups in retail stores, but that Imperial had not decided the specifics of the product at that time, i.e., whether it would be sold through one of Imperial's existing brands or through a brand label. Prelim. Inj. Hr'g Tr. 71:23-72:8, July 27, 2018. During the week of June 11, 2018, Plaintiff "was shocked to see a press release advertising Imperial's launch of its own 'Happy Healthy' brand of frozen cup smoothies, overnight oats and bowls, arriving in the market in the Summer of 2018." PL Mem. Supp. Temporary Restraining Order 11-12, ECF No. 27-1.

         Plaintiff asserts that Defendant Imperial's Happy Healthy line of products imitates Plaintiffs products flavor and ingredient profiles. Id. at 13. Plaintiff also alleges that Defendants' trade dress copies "Daily Harvest's trade dress: borrowing its source identifying black lid, white cup with minimal details and directing the consumer's gaze to the central black-and-white initials logo and colorful fruit/ingredient combinations." Id.

         (Image Omitted)

         Defendants' product is set to ship on August 2, 2018, and is expected to hit retail store shelves in late August. Plaintiff seeks to enjoin Defendants' product launch. Prelim. Inj. Hr'g Tr. 86:9-87:4, July 27, 2018.

         LEGAL STANDARD

         "The District Court may grant a preliminary injunction if the moving party establishes (a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." KindLLC v. ClifBar & Co., No. 14 CIV. 770 KMW RLE, 2014 WL 2619817, at *1 (S.D.N.Y. June 12, 2014) (citing Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F.3d 206, 215 (2d Cir. 2012) (internal quotation marks omitted). In addition, the "court must consider the balance of hardships between the plaintiff and defendant and issue the injunction only if the balance of hardships tips in the plaintiffs favor" and "the court must ensure that the public interest would not be disserved by the issuance of a preliminary injunction." Id. (citing Salinger v. Coking, 607 F.3d 68, 80 (2d Cir. 2010) (internal quotation marks omitted).

         DISCUSSION

         Plaintiff asserts two bases for a preliminary injunction: (1) violation of the NDA; and (2) trade dress infringement. During the hearing before the Court on July 27, 2018, the Court held after considering witness testimony, exhibits, and argument by counsel that Plaintiff did not sufficiently prove a likelihood of success on the merits on their claim that the NDA was violated or that the balance of hardships tipped in favor of Plaintiffs and thus, the NDA did not provide a basis for an injunction. Prelim. Inj. Hr'g Tr. 117:9-12, July 27, 2018. The Court now considers whether Plaintiffs trade dress infringement claim establishes irreparable harm and either a likelihood of success or that the balance of hardships tip in Plaintiffs favor.

         A product's trade dress is its "total image and overall appearance ... as defined by its overall composition and design, including size, shape, color, texture, and graphics." Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc., 58 F.3d 27, 31 (2d Cir. 1995) (internal citations and quotation marks omitted). "The Lanham Act protects trade dress that (1) is either inherently distinctive or has acquired distinctiveness through a secondary meaning and (2) is not functional. Nora Beverages, Inc. v. Perrier Grp. of Am., Inc., 164 F.3d 736, 743 (2d Cir. 1998) (citing Milstein, Inc., 58 F.3d at 31). The plaintiff must prove that its trade dress is distinctive, whereas the defendant can raise the functionality of its trade dress as a defense. Id. Moreover, the plaintiff must show "that there is a likelihood of confusion between its trade dress and the allegedly infringing trade dress." Id. (citing Fun-Damental Too, Ltd. v. Gemmy Indus. Corp., Ill F.3d 993, 999 (2d Cir. 1997)).

         In sum, "to succeed on a trade dress infringement claim, the plaintiff must show that (1) its trade dress is protectable due to the dress's (a) inherent distinctiveness or (b) acquisition of secondary meaning, and (2) likelihood of consumer confusion." KindLLC, 2014 WL 2619817, at *2 (citing Nora Beverages, Inc., 164 F.3d at 743). Here, the Court finds that Plaintiff has not established a likelihood of success on the merits. The Court also holds that the balance of the hardships tip in favor of Defendants. In light of this, the Court will forgo analysis on whether there is irreparable harm as the existence of irreparable harm by itself is not sufficient for an injunction.

         I. Likelihood of Success on the Merits

         a. Distinctiveness

         The distinctiveness of a trade dress turns on whether it is "(1) generic, (2) descriptive, (3) suggestive, [or] (4) arbitrary or fanciful." Abercrombie & Fitch Co. v. Hunting World, Inc.,537 F.2d 4, 9-10 (2d Cir. 1976). Generic trade dresses are entitled to no protection whereas suggestive or arbitrary or fanciful trade dresses are always inherently distinctive. Id. A descriptive trade dress, on the other hand, can be distinctive and protectable if the producer establishes that it has acquired a secondary meaning, i.e., the trade dress has become associated with the producer rather than the product itself. Id.; Coach Leatherware Co., Inc. v. AnnTaylor, Inc.,933 F.2d 162, 168 (2d Cir. 1991) ("The trade dress of a ...


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