No, No, Nutella! A Trademark Dispute Over a Hazelnut Milkshake

In the Tip O'Neill spirit of all politics being local, here's an interesting trademark story from right down the road from our office:

Anyone who went to college in Boston over the past decade probably knows Boloco, a local wraps-and-smoothies chain with locations at or near most of the colleges in the metro-Boston area, with scattered other locations at other college towns in New England. Among the shakes and smoothies that Boloco sells is a "Nutella Milkshake," made with Nutella, skim milk, and frozen yogurt. The picture included with this post is taken at Boloco's Harvard Square location, and shows how Boloco advertises the shake on their menu board. (And yes, it is as delicious as it sounds.)

Boloco CEO John Pepper sent a Tweet yesterday saying, "After 14 yrs as their faithful advocate, Nutella's lawyers have sent us an immediate cease & desist on the use of their name." According to subsequent reporting by the Boston Herald, the dispute appears to be over the use of the word "Nutella" in the name of the milkshake, because, according to Pepper, "[t]hey don’t endorse the use of Nutella or the Nutella brand in frozen beverages." Nutella says that Boloco can continue using the product, but cannot use the name.

The rights that Nutella is asserting here come from trademark law. As our legal guide notes, trademark law grants certain exclusive rights to a person or business that uses a word, image, or other indicator to identify goods or services. At the heart of trademark law is the claim of trademark infringement, which the owner of a mark can bring against someone using the owner's mark in a way that falsely suggests origin, sponsorship, or endorsement of the other's goods or services.

By allowing companies to do this trademark law fulfills an important consumer-protection function: because unauthorized uses of marks on goods and services are removed through litigation, when you see a particular brand name on a product you can safely assume that the product comes from the company popularly associated with that brand name. (Imagine how hard it would be to live in a world with a dozen different Coca-Cola-brand sodas, each coming from a different company with different ingredients and quality control measures.)

An unfortunate consequence of this monopoly, however, is that we often see trademark law used for purposes other than its consumer-protection origins. This blog has brought you past stories of companies suing websites critical of the company for trademark infringement, companies using trademark law to try to stop websites from linking to the company, and companies using trademark law to stop joking references to their products. Our legal guide has an extensive section about using the trademarks of others in the context of reporting and criticism. As Prof. Bill McGeveran's excellent article on the subject notes, courts generally have been good about rejecting these overreaching claims, but not always, and the ones that get it right usually only do so after a long and costly discovery process, making many of these victories Pyrrhic at best. 

The issue here is a little different. Instead of simply making a nutellasucks.com website or using the brand name Nutella in a blog post about the company (ahem), what Boloco is doing is using the Nutella name to correctly note that the Boston milkshake contains some of the famous Italian hazelnut spread in it.

Courts have long confronted this unauthorized-but-accurate use of another company's name. In a 1924 Supreme Court case the court considered a New York company that took a French company's cosmetic powder, blended it with a binding agent, and sold it as a compact including both the New York company's and French company's names on the packaging. The Supreme Court allowed the defendant to do this, provided that the defendant include a prominent disclaimer that the district court in the case initially imposed, informing the public that the two companies are not affiliated. Writing for the majority, Justice Holmes observed:

[W]hat new rights does the trade-mark confer? It does not confer a right to prohibit the use of the word or words. It is not a copyright. . . . A trade-mark only gives the right to prohibit the use of it so far as to protect the owner's good will against the sale of another's product as his. . . . When the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the trut