Frito-Lay has lost a lawsuit in federal court in Texas against a competitor who made bowl-shaped chips similar to the company’s Tostitos Scoops chips.
The Plano, Texas-based snack giant sued Ralcorp Holdings, based in St. Louis, and its subsidiary Medallion Foods over their chips, which like the Frito-Lay product are bowl-shaped for easier scooping. The lawsuit, filed in U.S. District Court in Dallas, sought $4.5 million in damages and a court order prohibiting Ralcorp from making its chips. However, the jury sided with Ralcorp.
Ralcorp is among the largest manufacturers of store-brand foods. The company makes private-label products that carry the names of stores where they are sold. In January, Ralcorp was purchased by ConAgra Foods Inc. for $5 billion.
The chips in question include the Cupz brand sold in Kroger stores and the Bowlz brand sold at Wal-Mart. Frito-Lay, owned by PepsiCo, argued that the Ralcorp chips infringed on its intellectual property, because the design of the chips and packaging were too similar to the Scoops product. Frito-Lay said that Scoops were introduced in 2001 and generate sales in the tens of millions of dollars.
After a two-week trial, the jury of seven women and three men did not find any infringement of patent or trade dress, and awarded no damages to Frito-Lay. The jury deliberated for five-and-a-half hours before returning the verdict for the defendants.
A PepsiCo spokesperson said that the company was reviewing its options for post-trial motions and an appeal.
Frito-Lay had argued that the defendants received trade secrets from a vendor and former employees who worked on the Tostitos Scoops chips. However, the company did not call any witnesses who had seen employees take trade secrets.
The jury’s found that Ralcorp’s manufacturing process is sufficiently different from Frito-Lay’s patented process such that it does not infringe and consumers are not likely to be confused by the similarity between the products.
A Ralcorp spokesperson said that the company made a better chip at a lower cost than Frito-Lay, and that the jury’s verdict would help break a “monopoly.” A Frito-Lay spokesperson countered that the jury’s decision showed that Ralcorp’s product was “not comparable” to Frito-Lay’s superior product.
Frito-Lay North America has been a wholly-owned subsidiary of PepsiCo since 1965, and accounts for 31 percent of PepsiCo’s yearly sales. The company is the world’s largest global snack food firm, with several product lines that generate sales of more than $1 billion per year.
Gregory D. Jordan is an Austin business attorney, Austin employment lawyer, and Austin business litigation lawyer. To learn more, visit Theaustintriallawyer.com.
