With winter (or Abuelita season) approaching, Chocolate Abuelita (a classic Mexican hot chocolate) is at the top of many Mexican minds. However, this time, the thought comes with a bit of uncertainty. This summer, a trademark infringement lawsuit between Nestlé USA and Ultra Mundiales, a Mexico-based distributor, took over Mexican Instagram and TikTok.
- Chocolate Abuelita (mark used on the greatest hot chocolate)
- Nescafe (mark used on the greatest coffee)
- La Lechera (mark used on the absolute bestcondensed milk)
This trademark dispute could leave Mexican-American pantries without access to many beloved products. Before talking about this telenovela of a lawsuit, let’s talk about trademarks and trademark infringement.
What is a trademark?
A trademark may be any word, name, symbol, or design that identifies a specific product or service from a particular source and distinguishes it from others. Trademarking is critical to businesses as it helps to build their brand and strengthen customer relationships.
Having a valid trademark gives the owner the right to assign the trademark so that others can use it (licenses or assignments), and the right to exclude others from confusing uses of the mark. Part of exercising the right to exclude others is bringing lawsuits for trademark infringement
What is trademark infringement?
Trademark infringement involves the unauthorized use of a trademark on or in connection with goods and/or services in a way that is likely to cause confusion, deception, or mistake about the source of the goods/or services. Additionally, a plaintiff must demonstrate ownership of a valid trademark. In this lawsuit, Nestlé USA must meet all of the trademark infringement elements to succeed.
An authorized use of a trademark may look like distributing, selling, offering to sell products, or using a trademark in advertisements without the authorization of the trademark owner. Not all uses by others outside the trademark owner are unauthorized. A trademark owner may grant others with licenses to use their trademark. Trademark licenses are a merchandise agreement which allow another party to make, sell, or distribute products with the trademark owner’s mark. The trademark owner (licensor) ordinarily receives compensation for the other party’s uses (licensee). A simple example of a trademark license can be seen in Nike’s latest special edition SB Dunk’s featuring a Jarritos trademark. Jarritos is a delicious and famous Mexican soda.
Now, let’s break down this telenovela of a lawsuit!
The Lawsuit
In 2020, Nestlé USA filed a complaint against Ultra Distribuciones Mundiales and Ultra International Distributors in the United States District Court Western District of Texas. Nestlé USA sells Nestlé foods products in the US, including American versions of these Mexican Classics. In contrast, Ultra Mundiales is a Mexico-based global distributor of Mexican products, including Mexican-made versions of the products at issue in this trademark lawsuit.
In this lawsuit, among other claims, Nestlé claims that Ultra infringed on Nestlé USA’s trademarks by distributing and offering products bearing Nestlé marks which were manufactured solely for the Mexican market like Nescafé, Abuelita, Nido, Media Crema, Carnation, and La Lechera. Although the marks in dispute are originally owned by Société des Produits Nestlé S.A. (“SPN”), Nestlé USA is an exclusive licensee of those trademarks and all of their associated rights.
Nestlé USA claims that the distribution and offering to sell products caused and are likely to cause confusion among consumers and might lead purchasers to believe that Nestlé USA authorizes and control Ultra’s products. Nestlé USA requested a jury trial to resolve its claims.
For many, including myself, these Mexican products are a home away from home—and the American versions are just not the same. Now, several Mexicans anxiously await to see if Nestlé USA’s lawsuit will result in taking these Mexican classics off the shelves.
Unauthorized Use of Trademark on or in Connection with Goods and/or Services
In the complaint, Nestlé USA explicitly mentions SPN granted them an exclusive license with all the trademarks and their associated rights. This exclusive license means that any potential sales, use in advertising, offers to sale by Ultra, will constitute an unauthorized use. Ultra sells and distributes products with the exact same marks as the Nestlé USA’s trademarks like Nido, Nescafe, Abuelita, La Lechera, and Carnation. The marks are everywhere! From the logos and names of products to the grandma drawing in front of chocolate abuelita, Ultra’s products are full of Nestlé USA’s trademarks.
Additionally, all of Nestlé USA’s trademarks involved in the dispute are registered with the United States Patent and Trademark Office (“USPTO”). Registering a trademark with the USPTO gives the trademark owner a legal presumption of validity such that there is no need for Nestle to establish validity for its marks.
Likelihood of Confusion
To prevail on a trademark infringement claim, Nestlé USA must show that there would be a likelihood that consumers would be confused between the products Ultra imports and Nestlé USA products. Likelihood of confusion arises between trademarks when the marks are so similar and the products and/or services they identify are so related that consumers would believe they come from the same source.
Courts decide each case differently based on the facts presented and their own jurisdiction’s likelihood of confusion factors. Although various courts use different labels for a set of factors to determine the likelihood of confusion, they all use a factor-based analysis that includes similar considerations. Courts need not consider all the factors, but they do consider them a balancing test. In determining the existence of likelihood of confusion, the Western District of Texas and 5th Circuit looks at factors including:
- Strength of plaintiff’s mark (in this case, Nestlé USA)
- Similarity of design between marks
- Similarity of the goods and services
- Identity of retail outlets and purchasers
- Similarity of advertising used
- Defendant’s intent (in this case, Ultra)
- The existence of actual confusion
- Degree of care exercised by potential purchasers
Similarity of Design Between Marks and Similarity of Goods and Services
In analyzing the similarity of design between marks, courts examine whether the marks are visually similar, alike when spoken, and the general commercial impression in the customer’s mind.Although I hate to admit it, when comparing American and Mexican products side by side, the trademarks are incredibly similar.
For example, when looking at the differences between Chocolate Abuelita’s logos, you can barely notice a difference between the ribbon folding. Additionally, the grandma's drawing sits on a circle in the Mexican version, but she is on an oval in the American version. Now, if strictly looking at word marks, like the name of the products, some marks like “La Lechera” and “Abuelita” are identical. When comparing, the marks are substantially similar, if not the exact same, between Ultra’s products and Nestlé USA products.
Even if the plaintiff's and defendant’s marks are confusingly similar, for a likelihood of confusion to exist, the customers must be confused as to the source of the goods/and services. For this reason, the similarity of the goods or services is an equally important factor. To determine the similarity of goods, courts look at whether the products in question have the potential to be connected in the minds of the consumer. Even when Mexican products have different ingredients, such as more sugar instead of corn syrup, the types of goods for both American and Mexican products are the same. A hot chocolate made in Mexico or America is still hot chocolate. Because they are the same type of goods, customers are very likely to connect them.
Identity of Retail Outlets and Purchasers
For the identity of retail outlets/purchasers, courts look at the overlap or similarity of where the products or services are offered and who the consumer is. For example, when two products utilize similar retailers and reach similar consumer demographics, confusion can follow if the two trademarks closely resemble each other. In this case, both Ultra and Nestlé’s products exist in the same retail outlets like grocery and convenience stores. In fact, at some stores, these products might sit right next to each other on the shelves.
This factor leads me to my favorite inquiry about this topic. Who is the purchaser? Who would likely be confused? As presented in different tweets, many Mexicans say they will not purchase “expensive and synthetic” versions of Abuelita chocolate. Some even say they would travel to Mexico themselves to purchase the Mexican-made products. So, it begs the question. Would Mexicans be confused? Maybe the identity of purchasers is up for debate. Personally, I know that 10 times out of 10, I will identify the Mexican product. However, if I sent my boyfriend to the store to get some of these products, I am sure his in-progress-Mexican-spidey-senses might not help him pick the “right” (aka Mexican) products.
In the Nestlé dispute, a court will find there is a likelihood of confusion if a consumer is likely to be confused as to who made the product on the shelf, Nestlé USA or Nestlé Mexico. And, although I am sad to say, the factors do not look like they weigh in favor of keeping Mexican-made products on the shelves. Because the marks, goods, and identity of retailers are incredibly similar, a court is likely to find in favor of Nestlé USA.
The Future of Mexican Pantries
As someone loyal to Mexican-made products, I always look for products with the Spanish language on the packaging. The ingredient differences are small but mighty. Purchasing Mexican-made products makes a world of difference when I sit at home and enjoy some chocolate caliente.
Ultimately and unfortunately, my prediction is that Nestlé USA will prevail on this suit. If Nestlé USA prevails, Ultra will have to stop distributing the Mexican Nestlé products and likely pay damages to Nestlé USA for the infringement claim and the rest of the claims in the complaint. For now, I will stock up on these products and enjoy them for as long as possible.
Iris Gomez
Associate Blogger
Loyola University Chicago School of Law, Class of 2025