Settlement of Nature’s Pride litigation may be in sight

by Eric Schroeder
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IRVING, TEXAS — If Flowers Foods, Inc. emerges as the winner of an upcoming auction to acquire certain plants, depots and brands of Hostess Brands, Inc., Thomasville, Ga.-based Flowers foods also may settle a long-standing dispute over trademark infringement.

On July 23, 2008, Flowers Bakeries Brands, Inc. filed suit against Interstate Bakeries Corp. (which later became Hostess Brands) for alleged “trademark infringement, unfair competition, trademark dilution and injury to business reputation and deceptive trade practices.”

The lawsuit, filed in the U.S. District Court for the Northern District of Georgia, stemmed from an Aug. 7, 2007, intent-to-use application submitted by I.B.C. with the U.S. Patent and Trademark Office for a line of packaged bread, bun and roll products under the ‍Nature‍’‍s ‍Pride and ‍Nature‍’‍s Choice names.

Since 1976, Flowers Foods has baked a line of bread and other baked products under the ‍Nature‍’‍s Own trademark, and, according to Flowers, I.B.C.’s use of the ‍Nature‍’‍s ‍Pride and ‍Nature‍’‍s Choice names was “likely to cause confusion and to deceive consumers and the public.”

In its original filing, Flowers said the ‍Na‍‍ture‍’‍s Own mark “has achieved significant fame and public recognition in connection with high-quality bakery goods. Because of its widespread use in the food service and retail grocery industry, the ‍Nature‍’‍s Own mark has tremendous power as a source identifier.

“The ‍Nature‍’‍s Own mark became famous and distinctive long before (I.B.C.’s) activities described herein, and the ‍Nature‍’‍s Own mark continues to serve as an indicator of the source of goods provided by, licensed by, or otherwise affiliated with Flowers.”

At the time of the filing, Flowers said the possible positioning of the goods side by side on grocery store shelves was likely to confuse consumers.

“(I.B.C.’s) use of the ‍Nature‍’‍s ‍Pride and ‍Nature‍’‍s Choice marks in connection with the marketing, manufacture, distribution and sale of its soft bakery goods is likely to deceive, confuse and mislead prospective purchasers and purchasers into believing that (I.B.C.’s) unlicensed and unauthorized goods were produced or authorized by or in some manner associated with Flowers,” Flowers said. “The likelihood of confusion, mistake and deception engendered by (I.B.C.’s) unauthorized and unlicensed use of the ‍Nature‍’‍s ‍Pride and ‍Nature‍’‍s Choice marks is causing and is likely to continue causing   irreparable harm to Flowers.”

As part of the Jan. 11 purchase agreement with Flowers, Hostess is seeking approval of the settlement of the Nature’s Pride litigation. Although Hostess continues to contend that there is no infringement and no damages owed, Flowers has sought the full amount of Hostess’ sales associated with the use of the Nature’s Pride trademark, which Hostess said are close to $80 million in the postpetition period alone, as well as treble damages.

“Though the litigation has been stayed by the commencement of these chapter 11 cases, the litigation places a cloud over the trademark and resolution of this matter would be necessary prior to any attempt to sell the Nature’s Pride brand,” Hostess stated in the Jan. 11 filing. “The debtors estimate that it could cost millions of dollars to try the case. The settlement of the Nature’s Pride litigation pursuant to the purchase agreement provides a direct benefit to the estate in avoiding the costs associated with such litigation and the release of associated claims.”

The litigation over the trademark only will be settled if Flowers emerges as the winner for the Hostess bread brands.
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