Background:

• • Smucker began selling crustless sandwiches in 1998 and launched its Uncrustables brand in 2000. The line has grown to $650M+ in annual sales.
  • Chubby Snacks was founded in 2021 specifically to compete with Uncrustables, launching a similar line of nut spread and fruit sandwiches.
  • Smucker sued Chubby in Sept. 2024, alleging Chubby falsely markets its products as superior while disparaging Uncrustables and infringing Smucker’s IP.
  • The complaint asserts Chubby’s own CEO admitted sitting next to Uncrustables in stores and using Smucker’s brand recognition boosts Chubby’s sales.
  • Smucker claims it welcomes fair competition but alleges Chubby has engaged in false advertising, trademark dilution, defamation and unfair practices.

Stakes & Potential Impacts:

• • As a huge legacy brand, Smucker is fiercely protecting its market share and intellectual property against this new rival encroaching on its sandwich turf.
  • For startup Chubby, the suit poses an existential threat – a finding of willful violations could mean huge damages owed or even an injunction to stop sales.
  • The outcome may impact other upstart food brands in how aggressively they can market against established competitors and use their trademarks.
  • With Uncrustables a beloved lunchbox staple for many families, the PR battle and consumer perception of this food fight could impact both brands too.
  • Expect this case to be closely watched as a test of legacy CPG brands’ power to quash competition through trademark and false ad litigation.

Key Questions:

• • Did Chubby’s health claims and comparisons to Uncrustables cross a legal line? Smucker says absolutely, Chubby will argue its marketing is fair game.
  • Can Chubby be held liable for tarnishing Smucker’s brand through insults? Disparagement can be defamatory if statements are false and damaging.
  • Is Chubby trading on Smucker’s Uncrustables fame and diluting its marks? Using a rival’s brand to boost your own products is risky business.
  • Will a jury see this as a Goliath bullying David or a legitimate IP defense? Both sides will look to sway jurors with their version of unfair practices.
  • Could this suit backfire and bring Chubby more exposure than ever? Even a loss in court could still be a publicity win with the underdog narrative.

Elements of False Advertising:

• • To prove false advertising under the Lanham Act, Smucker must show Chubby used a false or misleading description of fact in ads that:
  • 1) Deceived or had the capacity to deceive a substantial portion of the audience;
  • 2) Was material, in that it was likely to influence purchasing decisions;
  • 3) Affected interstate commerce; and
  • 4) Injured or likely injured Smucker as a result.
  • Claims can be literally false or true yet misleading. Implied claims are viewed from the perspective of a “reasonable consumer.”

Elements of Dilution:

• • Federal and OH dilution law protects famous marks from blurring (impairing distinctiveness) and tarnishment (harm to reputation). Factors include:
  • 1) Plaintiff owns a famous mark that is distinctive;
  • 2) Defendant is using the mark in commerce;
  • 3) Defendant’s use started after the mark became famous; and
  • 4) Defendant’s use is likely to cause dilution by blurring or tarnishment.
  • Smucker must show Chubby used the Uncrustables marks in a way that impaired their distinctiveness or harmed the brand’s reputation in consumers’ minds.

Elements of Defamation/Disparagement:

• • Smucker’s defamation and disparagement claims argue Chubby made false statements harming its brand’s reputation.
  • The OH food disparagement law specifically prohibits false info that a food product isn’t safe for consumption. Elements include:
  • 1) Defendant disseminated info to the public re: safety of a food;
  • 2) The info is materially false; and
  • 3) Defendant knew or should’ve known it was false.
  • Smucker asserts Chubby’s claims Uncrustables contain “junk” and “processed grossness” convey the sandwiches are unsafe to eat.
  • It also alleges Chubby falsely portrayed Smucker as a “bully” trying to stifle fair competition by enforcing its valid trademark rights.

Allegedly False “Healthy” Claims:

• • Smucker alleges Chubby’s website, social media and CEO interviews are full of claims that its products are a “healthier” alternative to Uncrustables.
  • But Smucker argues these violate FDA rules for “healthy” food label claims, which require the product to be low in fat and saturated fat.
  • Based on Chubby’s own nutrition facts, its sandwiches allegedly exceed the fat and sat. fat thresholds to bear an unqualified “healthy” claim.
  • Smucker says this makes Chubby’s “healthier than Uncrustables” claims across various media false and misleading to consumers.
  • The suit also asserts Chubby’s “high protein,” “high fiber” and “no sugar added” label claims don’t comply with FDA definitions of those terms.

Alleged Trademark Misuse:

• • Smucker argues Chubby’s constant use of the Uncrustables word mark in hashtags and ad copy dilutes the distinctiveness of the brand.
  • It cites examples of Chubby using “Uncrustables” as a noun (vs. adjective), in the singular form, and without the “®” symbol or attribution to Smucker.
  • This allegedly blurs the mark by making consumers associate “uncrustables” with any crustless sandwich, not just Smucker’s trademarked product line.
  • Smucker also claims Chubby’s use tarnishes its marks by portraying Uncrustables in an “unwholesome” way, calling them “junk-filled” and for “losers.”
  • Visual ads and videos showing Uncrustables being smashed or thrown in the trash alongside Chubby’s insults also allegedly degrade the brand.

Alleged Defamation/Disparagement:

• • Smucker points to numerous Chubby social media posts, site copy and executive remarks implying Uncrustables are unsafe “junk” food:
  • Calling Uncrustables “the scum of the earth,” “junk-filled,” “processed grossness,” “filled with junk,” and depicting them being trashed
  • It argues associating Uncrustables with “junk,” “garbage,” “scum” and “grossness” tells consumers the products are unfit for human consumption.
  • Smucker also cites instances of Chubby implying it engaged in “bullying” tactics by suing to protect its IP, unfairly painting Smucker as anti-competitive.
  • The complaint asserts these claims, made to promote Chubby’s rival products, constitute defamation/disparagement under state law.

Potential Chubby Defenses:

• • Its “healthy” claims are mere puffery, opinions or aspirational marketing speech rather than objective, verifiable facts about the products.
  • Consumers don’t take its comparative claims literally or make purchase decisions based on the challenged statements.
  • No real evidence of actual consumer deception, confusion, or harm to Smucker’s sales, as Uncrustables’ popularity and revenue continue to grow.
  • Use of Uncrustables’ marks is nominative fair use to truthfully refer to and compare Chubby’s products to the market leader it competes with.
  • Insults comparing Uncrustables to “junk” are opinion, hyperbole and humor, not statements of fact that could be defamatory or disparaging.

Possible Settlement Terms:

• • Injunction: Chubby agrees to stop using certain challenged claims, more clearly distinguish its products, and abide by FDA labeling rules.
  • Licensing & Quality Control: Chubby pays Smucker for a license to use Uncrustables marks in limited ways with strict quality and messaging rules.
  • Corrective Marketing: Chubby runs approved clarifying ad campaign retracting problematic claims to remedy consumer misimpressions.
  • Damages & Costs: Chubby makes a confidential payment to Smucker to settle claims without admitting fault or liability.
  • Mutual Releases: Both sides agree to drop all claims and release each other from further liability relating to the challenged practices.

Key Takeaways:

• • Lawsuits like this hinge on whether the challenger can prove the defendant’s claims are materially false or misleading to a reasonable consumer.
  • Marketing claims phrased as opinions or which are too vague or hyperbolic for consumers to take literally are less likely to be deemed deceptive.
  • Compliance with FDA definitions and disclosure rules is critical when making claims like “healthy” or comparing to other food products.
  • Startups looking to challenge established players must use caution not to misuse competitors’ trademarks or violate endorsement/review rules.
  • While comparative advertising is legal, challengers may open themselves up to liability if their insults or attacks go too far into defamation territory.