Addressing the issue of trade dress infringement, the U.S. Court of Appeals for the Third Circuit affirmed in part and reversed in part the district court’s decision denying a preliminary injunction against the sale of artificial sweetener in yellow packets. McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, et. al., 2007 U.S. App. LEXIS 29751 (Padova, J.).

The plaintiff, McNeil Nutritionals, is the maker and producer of an artificial sweetener, SplendaTM. McNeil’s SplendaTM sweeteners are sold in yellow packaging with the word “Splenda” written in italicized blue lettering. The defendant, Heartland Sweeteners, is the maker and producer of store-brand artificial sweeteners for grocery stores such as Heartland’s Ahold, Food Lion and Safeway products. Heartland’s Ahold, Food Lion and Safeway products are each sold in yellow packaging with the respective store names listed in blue writing on the product packaging.

McNeil filed suit alleging that the color schemes, graphics and package sizes infringed those of McNeil’s SplendaTM products, thereby causing consumer confusion. McNeil moved for a preliminary injunction to prevent Heartland from selling or distributing products in packaging resembling that of SplendaTM products. The district court denied the motion, holding that even though McNeil had established a close similarity in appearance between its product and the Heartland product, several remaining Lapp factors weighed against it. McNeil appealed.

The Third Circuit upheld the district court with respect to Heartland’s Safeway and Food Lion products. However, the Court held that the lower court did not correctly weigh the Lapp factors with respect to Heartland’s Ahold products. The Lapp decision held that “[t]he single most important factor in determining likelihood of confusion is [degree of] similarity.”

Specifically, the Third Circuit found that the district court “committed clear error” by not weighing the trade dress similarity factor—which it labeled “the single most important factor”—heavily enough. Based on its balancing of the Lapp factors, the Court determined that even the district court’s findings on the intent factor and evidence of actual confusion were insufficient to overcome the degree of similarity factor. On that basis, the Court reversed, explaining that when the similarity factor favors the plaintiff in a directly competing goods scenario the defendant “has a high hurdle to overcome.”

Practice Note: In holding that “[t]he single most important factor in determining likelihood of confusion is [degree of] similarity,” the McNeil case takes U.S. trade dress infringement precedent one step closer to that currently in place in the European Union.