(CN) - The 5th Circuit revived claims that a chain of Mexican restaurants in Texas called Mission Burritos violates the trademark held by Gruma Corp.
Since 1982, Gruma has registered 29 trademarks related to the word or logo Mission, which it uses to manufacture and sell Mexican food products such as tortillas, tortilla chips, taco shells, guacamole and salsa.
The logo features the word Mission under a Spanish-style bell tower with a rounded top and colored red, orange and white.
Mexican Restaurants Inc. opened several casual restaurants called Mission Burritos around Houston in 1995.
It obtained a state trademark two years later and a federal trademark in 2008. Its logo is the top of a Spanish mission-style church topped by a cross in black and white.
Mexico-based Gruma sued Mexican Restaurants for trademark infringement, unfair competition and dilution in 2009.
A federal judge dismissed the case after finding no likelihood of confusion between the two companies' marks, but a three-judge appellate panel in New Orleans reversed last week.
It found that the lower court improperly focused on the differences between the two marks rather than their similarities.
"When we consider the similarities between Gruma's Mission mark and Mexican Restaurant's Mission Burrito mark, both marks use the word Mission in all caps and both use an image that clearly represents the tower of a mission style Spanish church," Judge W. Eugene Davis wrote for the panel. "We find it inescapable that both are clearly employing the device of a mission-style tower associated with Mexico and South Texas to draw an association with the name MISSION and the Mexican food each party sells."
Though the Mission Burrito mark includes additional words, such as "fresh food fast" and "more choices, more flavor," the appeals court said this factor should not carry much weight.
"When we disregard the extra, descriptive words in Mexican Restaurant's mark and focus on the similarity of the two marks as the case law requires, we conclude that the District Court erred in finding that this element favors Mexican Restaurant," the 13-page opinion states.
The judges also disputed the finding that the products in question are dissimilar because they do not compete against each other.
"The distinction between pre-packaged food products sold in retail stores and finished food products sold in restaurants is not enough to show that products are dissimilar," Davis wrote. "Gruma sells essentially the same type of Mexican pre-packaged foods that appellee sells in its restaurants. Neither the record nor case law support the district court's conclusion that the restaurant business is not a natural area of expansion for Gruma."
Concentrating on actual expansion intent misses the point, the court said, emphasizing that the key is the customer's perception of the possibility of expansion.
Gruma presented evidence from a marketing survey in which customers said they believed that the manufacturer of Mission tortillas could operate restaurants.
"Every digit of confusion weighs in Gruma's favor or is neutral and no factor favors Mexican Restaurants," the panel concluded. "Based on our careful review of the record and case law, we are left with the firm conviction that the District Court's conclusion that there is no likelihood of confusion between the two trademarks in this care was clearly erroneous."
The panel also said that the lower court should not have ruled against Gruma on its Texas Anti-Dilution statute claim.
The evidence establishes that the Mission Burrito mark "dilutes the distinctive quality" of Gruma's mark, as required by the Texas law, and "lessens that mark's capacity to identify the true owner's goods and services," which is the definition of dilution by blurring, according to the ruling.
Founded in 1949, Gruma is one of the largest producers of corn flour, tortillas, wheat flour and staple foods, according to its website. It operates 99 plants in more than 100 countries, and employs more than 20,000. Gruma's U.S. operations are based in Irving, Texas.
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