The Cookie Department, Inc. v. The Hershey Company

Background

The case concerns The Cookie Department, Inc.’s TOUGH COOKIE trademark and allegations involving the defendants’ use of “TOUGH COOKIES ONLY” on and in connection with ONE Chocolate Chip Cookie Dough Flavored Protein Bars. The tentative ruling addresses the parties’ pretrial motions, proposed jury instructions, verdict forms, evidentiary objections, and trial-administration issues. The opinion does not decide liability after trial.

Jury Trial and Bifurcation

The defendants moved to strike the plaintiff’s jury demand, arguing that the remaining damages theories were equitable. The court was inclined to deny that motion because compensatory damages for corrective advertising are a legal remedy that supports a jury trial. The court distinguished damages for corrective advertising from an injunction requiring corrective advertising. The parties were directed to be prepared to discuss whether the plaintiff adequately disclosed its corrective-advertising damages and how those damages would be calculated.

The court stated that it would deny any motion to bifurcate the trial into separate phases because liability issues would overlap, making bifurcation inefficient.

Expert-Testimony Motions

The court applied Federal Rule of Evidence 702 and the framework requiring a preliminary assessment of whether expert testimony rests on valid methods and whether those methods properly apply to the facts.

The motion concerning Rhonda Harper was granted in part and denied in part. The court generally found that Harper adequately connected her experience to her conclusions about the Sleekcraft likelihood-of-confusion factors. It would exclude her opinions about intellectual-property diligence during Hershey’s acquisition of the ONE brands because she did not show expertise in acquisitions and mergers and her opinions did not connect her experience to that process. It would also exclude her legal conclusion about likelihood of confusion.

The motion concerning Amanda Schlumpf was denied. The court found that her experience in digital marketing adequately supported her opinions and treated the defendants’ methodological challenges as arguments about the weight of her opinions rather than their admissibility.

Summary Judgment

The defendants moved for summary judgment on cancellation of the plaintiff’s TOUGH COOKIE trademark registration, arguing that the registration was invalid because it had been obtained through fraud. The court intended to deny the motion because the plaintiff presented enough evidence to create a genuine dispute of material fact about whether its product list was submitted in good faith or contained a mistake concerning vegan cookies. This ruling allowed that issue to proceed; it did not decide whether fraud occurred.

Motion to Quash

The court was inclined to deny the motion to quash but modify the subpoena so that Ms. Clements could testify virtually. The court found that she appeared to have relevant, nonduplicative testimony and that virtual testimony would remove the burden of travel.

Motions in Limine

A motion in limine is a request to decide before trial whether particular evidence may be presented to the jury. The court ruled as follows:

- Plaintiff’s motion P1 to exclude evidence of a legal right to use the phrase “Tough Cookies Only” was granted in part and denied in part. The defendants could not assert reliance on undisclosed legal advice protected by attorney-client privilege, but they could rely on other disclosed, nonprivileged bases. - Plaintiff’s motion P2 concerning CAVU Ventures was denied because the plaintiff had not shown that CAVU was an employee of the defendants. - Plaintiff’s motion P3 to preclude references to the plaintiff’s motive was denied because motive could bear on alleged fraud in obtaining the trademark registration. - Plaintiff’s motion P4 concerning evidence from the Virtual Diligence Room was denied because the plaintiff had not shown that producing the room itself was necessary if responsive documents had been produced, or that it was destroyed after the defendants knew it was relevant. - Plaintiff’s motion P5 concerning a corrected financial document and related expert opinions was denied because the plaintiff did not identify prejudice. - Plaintiff’s motion P6 concerning testimony inconsistent with interrogatory responses was denied. The plaintiff identified no authority supporting exclusion, and the evidence could be used for impeachment. - Plaintiff’s motion P7 concerning expert testimony as to legal conclusions was granted, subject to the stated qualification. Experts could not give the ultimate legal conclusion about likelihood of confusion or instruct the jury on the law. The court could not rule on the specific challenged statements, except as to Mr. Schoettelkotte, because the plaintiff had not provided the expert reports or a docket citation locating them. - Defendants’ motion D1 to exclude evidence of insurance was granted because due diligence was not relevant where no registered trademark existed when the diligence would have occurred. - Defendants’ motion D2 to exclude evidence of their past enforcement actions was denied. Such evidence could relate to the defendants’ knowledge, although the court did not intend to allow evidence of other cases between the parties and questioned the usefulness of presenting the prior enforcement actions. - Defendants’ motion D3 to exclude evidence of the plaintiff’s efforts to amend its goods description was granted because post-hoc amendment efforts were not relevant to the case and could confuse the jury. - Defendants’ motion D4 to exclude evidence of alleged failures to produce documents was granted. The plaintiff did not oppose exclusion, and its only identified example was the Virtual Diligence Room issue addressed in another motion. - Defendants’ motion D5A to exclude evidence of Hershey’s overall financial condition was granted. Specific financial statements and net worth were not relevant, although the plaintiff could make general references to Hershey as a large company with resources. - Defendants’ motion D5B to exclude the plaintiff’s life stories was denied because that evidence could relate to the plaintiff’s defense against the affirmative defense of fraud in obtaining the trademark application. - Defendants’ motion D6 concerning abandoned damages theories was granted in part and denied in part. The court found it unclear whether the plaintiff sought statutory damages or treble disgorged profits, but stated that corrective advertising could be calculated as a percentage of the advertising amount spent infringing on a plaintiff’s mark. - Defendants’ motion D7 to exclude evidence of due diligence was granted because there was no registered trademark when the diligence would have occurred. - Defendants’ motion D8 to exclude evidence of the plaintiff’s licensing negotiations was denied. The licensing agreements and negotiations could bear on the strength of the mark, and the court found the timing of the disclosures apparently justified. - Defendants’ motion D9 to exclude evidence that they asserted privilege was granted because asserting privilege was not admissible evidence. - Defendants’ motion D10 concerning advice of counsel in Attorney Indrajana’s declaration was granted in part and denied in part. The advocate-witness rule barred Attorney Indrajana from serving as both a witness and an attorney in the case, but did not bar Mr. Resnikoff from testifying about advice he received from Attorney Indrajana.

Other Evidentiary Rulings

The court overruled the plaintiff’s objections to trial exhibits without prejudice because the plaintiff did not identify the exhibits. The court agreed that third-party use of “Tough Cookie” or similar marks could be relevant to the strength of the mark, but stated that it did not intend to allow fourteen witnesses to testify about that use without further explanation of why testimony was necessary.

The court sustained the defendants’ objections to proposed witnesses Elannah Resnikoff, Renae Scott, and Bruno Tarabichi because they were not disclosed as witnesses and the proposed impeachment purposes were unclear or unsupported. It overruled the objection to Amanda Schlumpf, who could testify about matters in her expert report. It overruled the objection to the TOUGH COOKIE trademark exhibit because validity was factually disputed, and sustained objections to the plaintiff’s other trademark registrations because they were not produced in discovery and other valid trademarks were irrelevant.

The court also sustained or overruled objections to numerous other exhibits based on nondisclosure, irrelevance, prejudice, hearsay, privilege, or lack of a proper basis. It sustained the defendants’ objections to the plaintiff’s discovery excerpts as unopposed because the plaintiff filed no response.

Jury Instructions and Verdict Form

The court ordered the parties to file one set of jury instructions by November 2, 2022, after meeting and conferring. The court discussed proposed instructions concerning trademark validity, ownership, likelihood of confusion, abandonment, fraud, infringement, false designation of origin, damages, disgorgement of profits, and willfulness. The court stated that experts could not give legal conclusions or instruct jurors on the law, and that the parties should resolve as many disagreements as possible before submitting the instructions.

The court was inclined to use a verdict form asking whether the plaintiff proved that TOUGH COOKIE was a valid and protectable trademark; whether the defendants proved abandonment or fraud; whether the defendants infringed; whether their conduct violated California law; and, if liability were found, the plaintiff’s damages and profits attributable to the allegedly infringing phrase. The court stated that this was not final proposed language and required the parties to jointly prepare a final verdict form by November 3, 2022. It also stated that punitive-damages questions were improper because such damages were unavailable under the Lanham Act and California’s Unfair Competition Law, and the plaintiff had not requested them in its complaint.

Administrative and COVID-19 Matters

The parties were directed to provide estimated examination times for witnesses and total trial time, and to be prepared to discuss public access, courtroom technology, sealed information, and possible hybrid trial procedures. The court noted that many proposed redactions appeared overbroad and unnecessary and that it intended to deny a substantial portion of the pending motions to file under seal. It also described possible masking and other safety procedures related to COVID-19.

Disposition and Effect

This document is labeled a pretrial conference tentative ruling. It states that the court was inclined to deny or intended to deny certain motions and grants, denies, or partially grants numerous evidentiary motions, but it does not provide a final trial verdict or final determination of infringement, fraud, damages, or liability.