In April, Nespresso filed a lawsuit in the United States District Court for the Southern District of New York against Jones Brothers claiming that its prominent use of the phrase “Nespresso-compatible” to promote its coffee capsules infringed its trademark. In addition, Nespresso claimed the capsules themselves infringed the coffee giant’s trade dress. Overall, Nespresso alleges Jones Brothers “built an entire business by unlawfully trading off Nespresso’s valuable assets and goodwill.”
Jones Brothers was founded in 2013 offering “Nespresso Compatible” capsules for use with Nespresso® machines and other brewers. Starting in the latter-half of 2018, Nespresso issued multiple letters to Jones Brothers, placing Jones Brothers on notice of its allegedly infringing activities. In these letters, Nespresso explained that Jones Brothers was improperly using Nespresso’s trademarks to advertise and sell its infringing capsules. Jones Brothers failed to respond to any of the three letters issued on behalf of Nespresso.
Nespresso is the exclusive licensee of a number of federally registered trademarks and applications covering the “Nespresso” name. Societe des Produits Nestle S.A., which is otherwise known as Nestle, owns Nespresso and all of its intellectual property. As exclusive licensee, Nespresso is authorized to use the Nespresso marks in connection with its products as well as, enforce the marks against infringers, such as Jones Brothers. As such, Nespresso argues Jones Brothers has caused it irreparable harm by improperly using Nespresso’s trademarks to advertise and sell its capsules. Further, in its complaint against Jones Brothers, Nespresso cites another lawsuit in which it was involved where the court held that the defendant’s use of the phrase “Nespresso compatible” prominently to advertise and sell its products constitutes trademark infringement.
Trademark infringement exists where consumers are likely to be mistaken, confused, or deceived as to the source of Jones Brothers’ replica capsules. Thus, for Jones Brothers to be liable for trademark infringement, Nespresso would have to prove that such likelihood of consumer confusion exists between Nespresso’s protected capsules and Jones Brothers’ imitation version. In this way, Nespresso argued Jones Brothers used the slogan “Nespresso Compatible” on its website and packaging so as to “falsely suggest and/or imply endorsement and/or sponsorship, by, and/or affiliation with, Nespresso.”
Nespresso also argues the capsules marketed and sold by Jones Brothers are nearly identical replicas of Nespresso’s trade dress. Specifically, Nespresso claims Jones Brothers’ infringing capsules are identical in size, shape, colors, and appearance. Moreover, Nespresso points to the dimpled cone shape of the capsules, which is identical to the iconic feature of Nespresso’s capsule that consumers readily and exclusively associate with Nespresso.
A subset of trademark rights, trade dress protects the packaging, design, and overall feel and appearance of a product. Infringement of trade dress occurs when one product’s design or packaging mimics that of another product to the extent there exists a likelihood of consumer confusion. If the trade dress is unregistered, it must be either inherently distinctive or have acquired distinctiveness. Inherent distinctiveness means consumers automatically identify the product with its source. Acquired distinctiveness, on the other hand, means the trade dress has become distinctive as applied to the relevant goods or services in commerce.
Recently, the case has settled. Attorneys for Nespresso submitted a letter to the judge stating “the parties have amicably resolved their differences and Nespresso voluntarily dismisses” its claims against Jones Brothers. Accordingly, Nespresso filed a Notice of Voluntary Dismissal concurrently with the letter. While the terms of the settlement are confidential, Jones Brothers’ website now shows adjusted packaging for its coffee capsules and further, the Nespresso® mark has a less prominent role.
This lawsuit demonstrates how adjusting packaging and adding disclaimers can resolve trademark infringement litigation. Indeed, Jones Brothers appears to continue to market and sell “Nespresso-compatible” coffee capsules, but now does so in a manner less likely to confuse consumers. As one example, the Jones Brothers website now features a disclaimer at the bottom of each page stating, “Jones Brothers Coffee is not affiliated with, endorsed or sponsored by Nespresso. Nespresso® is a registered trademark of Societe des Produits Nestle S.A.” It remains to be seen whether the confidential settlement will require Jones Brothers to cease all mention of Nespresso or its registered marks.