United States: Duel by Moonlight: Ex-Licensee Enjoined from Using Knockoff Certification Mark

USA-Halal Chamber of Commerce ("USA-Halal") certifies meat and poultry products that have been slaughtered and prepared in accordance with Islamic law—a process known as "halal." Products that have met USA-Halal's standards may be labeled with the certification mark shown below (the "Halal Crescent Moon"):

USA-Halal owns an incontestable U.S. registration for the Halal Crescent Moon.

In 2015, Best Choice Meats, Inc. ("Best Choice") was certified by USA-Halal and licensed to use the Halal Crescent Moon on its meat and poultry products. Under the license agreement, Best Choice was to provide monthly production reports to USA-Halal in order to maintain the certification. Three years later, Best Choice ceased providing these production reports to USA-Halal which resulted in the termination of the license to use the Halal Crescent Moon in September 2018. After termination of the license, Best Choice represented to USA-Halal that it had destroyed its certificate issued by USA-Halal and was not using the Halal Crescent Moon on its products and promotional materials.

In May 2019, USA-Halal discovered that Best Choice was still displaying the allegedly destroyed certificate bearing the Halal Crescent Moon on its web site. Further, Best Choice was displaying the following mark on packaging for its meat and poultry products (the "Best Choice Moon"):

USA-Halal immediately demanded that Best Choice cease using the certificate with the Halal Crescent Moon on its web site and cease using the nearly identical Best Choice Moon on its packaging. In response, Best Choice removed the cancelled certificate from its web site but failed to remove the Best Choice Moon from its packaging. Two months later USA-Halal sued Best Choice and moved for a preliminary injunction to prevent Best Choice's continued use of the Halal Crescent Moon and the Best Choice Moon.

The Parties' Positions

USA-Halal argued that it was entitled to a preliminary injunction based on the following factors:

• The Halal Crescent Moon and the Best Choice Moon were essentially identical, so consumer confusion is inevitable, and USA-Halal was therefore likely to succeed on the merits at trial.
• USA-Halal was experiencing irreparable harm since it could not monitor whether Best Choice's meats actually met halal Islamic standards, and consequently its use of an identical mark threatened the integrity of the Halal Crescent Moon certification program in the minds of consumers.
• The balance of hardships favored issuing an injunction because USA-Halal risked suffering significant reputational damage while Best Choice merely needed to print and affix new labels.
• The public interest favored issuing the injunction because food labelling should not misrepresent the quality and characteristics of the food by suggesting that it is certified as halal compliant by USA-Halal when it is not so certified.

Best Choice argued that no preliminary injunction should issue based on the following factors:

• The parties' logos were not confusingly similar because Best Choice's letter "H" was in a different typeface that featured squared rather than rounded lines and that Best Choice Moon was tilted at a different angle from the Halal Crescent Moon. As such, USA-Halal was not likely to succeed on the merits.
• Best Choice did not intend to copy USA-Halal's mark and was unaware of USA-Halal's trademark rights until the complaint was filed.
• USA-Halal waited too long to seek a preliminary injunction, and thus was not experiencing irreparable harm.
• The balance of hardships favored Best Choice because it risked spoiling its inventory of meat if it was required to repackage the products or recall meat that was already in the marketplace.
• The public was not misled by the Best Choice labels since its products were being certified as halal compliant by a group other than USA-Halal.

The Court's Holding

The Court ultimately decided to issue the preliminary injunction requiring Best Choice to cease using both the Halal Crescent Moon and the Best Choice Moon based on the following findings:

• USA-Halal was highly likely to succeed on the merits since the parties' marks were nearly indistinguishable, and the slight differences in the marks identified by Best Choice would not be noticeable to the average consumer.
• Best Choice's intent was irrelevant to likelihood of confusion analysis. Further, it was not credible that Best Choice was unaware of USA-Halal's trademark rights since Best Choice had signed the trademark license that included that information.
• USA-Halal would suffer irreparable harm to its reputation whenever a non-certified party use an identical mark. If the Best Choice products did not meet USA-Halal's standards, the integrity of its certification program was in jeopardy.
• USA-Halal's delay of two months in seeking the preliminary injunction was not unreasonable. Most cases finding unreasonable delay have much longer periods of time (often 12 to 18 months). Further, Best Choice's own misrepresentation that it has ceased using the Halal Crescent Moon undercuts its argument of unreasonable delay.
• The balance of hardships favored USA-Halal since it had such a strong chance of prevailing on the merits. Further, the Court decided to tailor the injunction to avoid Best Choice needing to recall meat that had already been sold and allowed Best Choice to sell off any meat that had already been packaged as of the date of the order.
• The public interest would be served by eliminating the potential for consumer confusion as to whether Best Choice's meats were certified by USA-Halal.
• To comply with Fed. R. Civ. P. 65(c), the Court required USA-Halal to post a $95,000 bond in the event that it loses at trial. The amount was based on Best Choice's assertion that it sold "tens of thousands of dollars" of merchandise each week.

The case is USA-Halal Chamber of Commerce Inc. v. Best Choice Meats Inc., Case No. 1:19 C4693 (N.D. Ill. August 14, 2019).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.