Written by Jordan Johnson
Nespresso USA., Inc. is in a bit of a bind. Last year, the company brought a ten-count lawsuit against Peet’s Coffee, Inc. (“Peet’s”) for unauthorized use of the Nespresso trademark and trade dress (the name of the brand and the design of their product packaging), alleging that Peet’s infringed upon them by selling single-serving coffee capsules that are compatible with Nespresso coffee machines.[1] Five of those counts have now been dismissed as a matter of law by a New York federal court.[2] The problem? Nespresso USA doesn’t actually own the IP that it claims Peet’s infringed upon.
Société des Produits Nestlé S.A (“SPN”) is not a party to the lawsuit. It is, however, the owner of six U.S. trademarks[3] collectively referred to as the “Nespresso Marks” in Nespresso USA’s pleadings. [4] In a tertiary licensing arrangement, SPN has an agreement with Nestlé Nespresso SA, which in turn provides sub-licenses of the Nespresso Marks to Nespresso USA.[5] This licensing arrangement has served Nespresso USA well for the past few decades, but never amounted to any actual “transfers of ownership akin to an assignment.”[6]
In its complaint filed last year, Nespresso USA admonished Peet’s for launching a line of espresso pods in 2018 that prominently displayed the Nespresso mark with its registered trademark symbol, leading consumers to believe that Peet’s products were affiliated with or sponsored by Nespresso. The complaint alleged that Peet’s capsules were sold in stores alongside genuine Nespresso products, unfairly trading off Nespresso’s goodwill.
The complaint further claimed that Peet’s failed to use descriptive language to explain that its pods are compatible with Nespresso machines, and used “Nespresso” as a noun, causing actual confusion in the marketplace.[7] The complaint included screenshots of consumer reviews on various social media websites and online storefronts that referred to Peet’s pods as Nespresso pods, as evidence of consumer confusion.
As such, the Court allowed a leave to amend on the five dismissed counts and recommended a series of steps—including providing copies of the licensing agreements—that would show that Nespresso USA has standing; if not, it cautions, “the Plaintiff would do well to let sleeping dogs lie.”[8]
The Court didn’t mince words as it reasoned through its decisions regarding the ten counts in over forty-six pages. It finished with the following: “If SPN wishes to join this action as a plaintiff, of course, all bets are off.”[9] What’s next is anyone’s guess.
[1] Nespresso USA, Inc. v. Peet’s Coffee, Inc., No. 22-cv-02209 (CM), 2023 U.S. Dist. LEXIS 12228, at *2 (S.D.N.Y. Jan. 24, 2023).
[2] Id.
[3] Id. at *35.
[4] Id.
[5] Id. at *14.
[6] Id.
[7] Isaiah Poritz, Nespresso Sues Peet’s Coffee Over Espresso Pod Trade Dress, Bloomberg Law (Mar. 17, 2022, 4:03 PM), https://news.bloomberglaw.com/ip-law/nespresso-sues-peets-coffee-over-espresso-pod-trade-dress
[8] Nespresso USA, U.S. Dist. LEXIS 12228, at *45.
[9] Id. at *46.
