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allowing national advertising on a Spanish speaking network and dismissing as impractical methods that could avoid intruding on another user's territory
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Case No. 86 C 8695
February 4, 2003
MEMORANDUM OPINION AND ORDER
The parties are before the court on defendant's motion to modify a permanent injunction entered in 1988 by the late Judge Nicholas J. Bua. Following a trial on the issue of trademark infringement, Judge Bua issued an injunction prohibiting defendant Cacique, Inc. from using the trademark "Ranchero" in Illinois, Indiana, Michigan, and Wisconsin. Cacique claims that changed circumstances render certain aspects of the injunction inequitable and asks the Court to modify the injunction to permit Cacique to conduct national, Spanish-language advertising of its Ranchero-brand products. Cacique requires Court permission to place national ads because they would air in the prohibited states. For the reasons stated below, Cacique's motion is granted.
At the time the injunction was entered, Cacique's name was Cacique Cheese Co., Inc. The second named defendant, V.F. Garza Sons, was Cacique's Chicago-area distributor and is not involved in the present motion.
BACKGROUND
Plaintiff V V Food Products, Inc. and Cacique are both purveyors of Mexican-style cheeses. The present case has its origins in a 1986 dispute about the use of the words "Rancherito" and "Ranchero" as trademarks for a type of Mexican cheese called "queso fresco." In the mid-1960s, V V began using "Rancherito" as a trademark for queso fresco in the Chicago area and obtained an Illinois trademark registration. In the mid-1970s, Cacique began operations in California and adopted the trademark "Ranchero" for its own queso fresco. In 1981, Cacique obtained a federal registration for its Ranchero mark and subsequently began expanding its sales into Latino markets in New York, Florida, and Texas. In 1986, V V applied for federal registration of the Rancherito trademark but was denied based on Cacique's prior registration of Ranchero.
V V then filed suit against Cacique for infringement of its right to use the Rancherito trademark. Cacique counterclaimed for infringement of its allegedly superior rights based on federal registration. The parties stipulated that Ranchero and Rancherito are confusingly similar trademarks. A jury found that Cacique's federal registration was invalid. Cacique moved for a judgment notwithstanding the verdict and asked the court to make additional findings regarding the parties' territorial rights in their trademarks.
The court granted Cacique's motion. V V Food Products, Inc. v. Cacique Cheese Co., Inc., 683 F. Supp. 662 (N.D.Ill. 1988). Judge Bua stated that there were only two possible bases for the jury's finding that Cacique's federal trademark registration was invalid: "Either Cacique procured the trademark through fraud," a theory unsupported by any evidence, or "V V had superior rights to the mark based on prior use." Id. at 665-66. Judge Bua observed that although V V had exercised prior use in certain geographic markets, that use "[did] not warrant complete invalidation of Cacique's federal registration," which the court found Cacique had "acquired in good faith." Id. at 666. Instead, the court enjoined Cacique from using the Ranchero trademark in those states where V V had established common law rights to "exclusive use" based on "prior market penetration" — Illinois, Indiana, Michigan, and Wisconsin. Id. at 667, 669. The court likewise enjoined V V from using its Rancherito mark outside that four-state area because Cacique had "superior rights" there by virtue of its federal registration. Id. at 669.
Cacique conceded that V V had achieved market penetration in the Chicago area but argued that V V's penetration in the four-state area was otherwise de minimis. Judge Bua disagreed. In determining where V V had established prior market penetration, Judge Bua examined gross sales and market share "in light of the size of the market being served and the prospects for growth." Id. at 668. Relying on "the limited size of the relevant market" (Mexican-Americans), the "small number of potential customers," and "the limited growth potential in these markets," Judge Bua found that V V's $6,400 in yearly sales in Indiana, Wisconsin, and Michigan combined was a significant figure. He concluded that V V's 37 distributor-customers in Illinois (excluding Chicago), 45 in Indiana, 21 in Wisconsin, and 39 in Michigan constituted sufficient market penetration to establish trademark rights in those states. Id. at 668, 669.
The injunction states in relevant part:
Defendant Cacique . . . [is] hereby permanently enjoined from using in commerce in any of the states of Illinois, Indiana, Michigan and Wisconsin, any colorable imitation of the word RANCHERITO or the word RANCHERO in connection with the sale, offering for sale, distribution, or advertising of cheese or any other goods or services on or in connection with [which] such use is likely to cause confusion or to cause mistake or to deceive.
Permanent Injunction Order of June 1, 1988. The parties have lived under the injunction for almost fifteen years. Cacique sells its Ranchero-brand queso fresco in forty-six states; in Illinois, Indiana, Michigan, and Wisconsin, Cacique sells a queso fresco under the label "Cacique Queso Fresco." Cacique now moves for a modification of the injunction to permit Cacique to advertise its Ranchero-brand queso fresco in national media. Under the current terms of the injunction, Cacique cannot advertise Ranchero products nationally because any such advertisements would incidentally air in the four-state area where Cacique is prohibited from using and advertising products bearing its Ranchero trademark. The Court held an evidentiary hearing on Cacique's motion in December, 2002.
DISCUSSION
Cacique moves for modification of the permanent injunction pursuant to Federal Rule of Civil Procedure 60(b), which provides in relevant part:
On motion and upon such terms as are just, the court may relieve a party . . . from a final judgment, order, or proceeding for the following reasons: . . . (5) . . . it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.
Defendant's motion states that Cacique moves for modification pursuant to Rule 60(b)(6). But, because Cacique has not cited a single case relying on this subsection and because it relies on Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367 (1992) — a case articulating the standard for modification under 60(b)(5) — the Court treats Cacique's motion as a Rule 60(b)(5) motion. In Rufo, the Supreme Court announced that Rule 60(b) constitutes a "flexible standard" for modification. Id. at 380. The Seventh Circuit has interpreted this statement as permitting modification of an injunction "whenever the principles of equity require it to do so." Hendrix v. Page, 986 F.2d 195, 198 (7th Cir. 1993); id. ("Rufo assimilates the standard for modification to Fed.R.Civ.P. 60(b)(5). . . .").
As the Court applies this standard to the case at hand, it bears mentioning that the Supreme Court's characterization of Rule 60(b) as a "flexible standard" marked a significant change in the law. Prior to Rufo, courts operated under the presumption that the rule for modification was the "grievous wrong" standard articulated in United States v. Swift Co., 286 U.S. 106 (1932): "[n]othing less than a clear showing of grievous wrong evoked by new and unforeseen conditions" was understood to warrant modification. Id. at 119. Rufo's flexible standard was intended to be less confining and more conducive to modification than Swift's "grievous wrong" standard. Hendrix, 986 F.2d at 198; cf. Rufo, 502 U.S. at 380 ("[T]he `grievous wrong' language of Swift was not intended to take on a talismanic quality, warding off virtually all efforts to modify consent decrees.").
Despite the admonition that courts exercise greater flexibility when entertaining requests for modification, "it does not follow that a modification will be warranted in all circumstances." Id. at 367. The party seeking to modify an injunction must establish that "a significant change in circumstances warrants" modification. Id. at 383. The change in circumstances can be "a significant change either in factual conditions or in law." Id. at 384.
A. Changed Factual Conditions
Factual change may warrant modification of an injunction "when changed factual conditions make compliance . . . substantially more onerous. . . . [or] when a decree proves to be unworkable because of unforeseen obstacles." Id. at 384. Although the changed circumstances need not have been unforeseeable at the time the injunction was issued, the changes cannot have been actually foreseen: "[o]rdinarily, . . . modification should not be granted where a party relies upon events that actually were anticipated at the time. . . ." Id. at 385; see id. (refusing to adopt an "unforeseen and unforeseeable" standard). Also, modification is not permitted merely because "it is no longer convenient to live with the terms" of an injunction. Id. at 383.
Cacique disputes this point and states that Rufo "held that the changed circumstance need not be unforeseen for a modification to be warranted." Def.'s Post-Hearing Br. at 3. This is not Rufo's holding. Contrary to Cacique's assertion, Rufo made clear that, as a rule, changed factual circumstances must be unforeseen to predicate modification. In fact, the Rufo court remanded precisely on the issue whether the petitioners had foreseen the changed circumstance that allegedly warranted modification. Rufo, 502 U.S. at 385. The point Rufo did make was that if the changes were foreseen, a movant would face an exacting burden: "If it is clear that a party anticipated changing conditions that would make performance . . . more onerous[,] . . . that party would have to satisfy a heavy burden to convince a court that it . . . should be relieved . . . under Rule 60(b)." Id.
Cacique does not suggest that unforeseen obstacles impede its compliance with the injunction. Rather, Cacique maintains that because of changed factual conditions, compliance entails unforeseen and unintended hardships. Namely, Cacique argues that three factual changes warrant modification: the dispersion of the Latino population into new, unexpected geographical markets; the advent of national, Spanish-language network media; and the targeting of Latino consumers by general-market cheese manufacturers such as Kraft. Cacique argues that national advertising is necessary both to reach the newly dispersed Latino market and to compete with its new competitors who exploit this medium to reach Cacique's core customer base.
1. Dispersion of Latino Population
Cacique submits that since 1988 the Latino population in the United States has not only grown dramatically, but has also unexpectedly spread into diverse geographic markets. Census data indicates that between 1990 and 2000, the Latino population grew by 60%. According to a 2002 study by the Pew Hispanic Center and the Brookings Institution, "by far the fastest rate of growth occurred in new destinations, especially in smaller metropolitain areas with virtually no Latino population 20 years ago." Report of Kathy Gregory, Ex. 10 (Lynette Clemetson, Latino Population Growth is Widespread, Study Says, N.Y. Times, July 30, 2002 (citing Roberto Suro Audrey Singer, Brookings Institution, Latino Growth in Metropolitan America: Changing Patterns, New Locations 2 (2002))). The study identified fifty-one new growth areas, "scattered across 35 states." Id. Eighteen of these new destinations experienced what the study characterized as "hypergrowth" of more than 300% between 1980 and 2000. The study also documents another relevant trend — the flocking of Latinos to the suburbs during the 1990s: "Latinos, [who were] evenly divided between suburbs and cities in metropolitain areas a decade ago, now are more likely to live in suburban neighborhoods." Report of Kathy Gregory, Ex. 11 (D'Vera Cohn, Latino Growth Among Top in U.S., Wash. Post, July 31, 2002 (citing Suro Singer, supra)). Latino growth "is part of a spreading-out of the Latino population that is happening faster than the movement of European immigrants from gateway cities to the heartland a century ago," and that "the rising Latino population will have its biggest impact on areas where few Latinos lived two decades ago." Id.
V V argues that the growth of the Latino market is not a "changed circumstance" from the perspective of Cacique because, V V claims, Cacique foresaw this growth. V V cites the 1987 deposition testimony of Frank Gutierrez, Cacique's then-vice president of sales and marketing, who stated that with the influx of Latinos from Mexico or South America, "the Hispanic market has to grow." Gutierrez 1987 Dep. at 80. V V also offered the deposition testimony of Beatriz Corona, the Cacique's account director at Acento Advertising, a Latino advertising agency. Corona stated that "the Hispanic advertising industry has always believed there will be substantial growth" in the Latino market. Corona Dep. at 40.
V V also contends that it is improper for Cacique to base its motion to modify on Judge Bua's characterization of the Latino market as "limited" and of "limited growth potential": "Cacique argues that the prohibition against it[s] advertising in the four-state area is premised, in part, on the Court's erroneous factual findings" that the Latino community comprised a limited market. Pl.'s Post-Hearing Br. at 13. V V submits that Judge Bua's findings are presumed correct and that Cacique therefore cannot properly challenge the injunction simply because Judge Bua was "mistaken" about the growth potential of this market. This is not Cacique's argument. In fact, Cacique's position is that Judge Bua accurately described the conditions as they existed in 1988.
The change Cacique cites, however, is not just the actual growth of the Latino population but, more importantly, the manner of its growth — its dispersion into new pockets of the United States and its movement into the suburbs — such that even well placed local advertisements cannot reach all of its potential customer base. Cacique's expert witness Kathy Gregory, a specialist in Spanish-language media consulting, testified at the hearing that the advertising industry generally assumed that "as with most ethnic groups," Latino growth would occur "in existing pockets where their population already existed." Hearing Tr. at 128 (Gregory direct).
Unless otherwise indicated, all citations to the hearing transcript refer to the evidentiary hearing held on December 12 and 13, 2002.
2. New Advertising Possibilities
The second changed factual condition Cacique cites is the advent of Spanish-language network media. This change, Cacique contends, permits something that was neither viable nor foreseen at the time the injunction was entered — national Spanish-language network advertising. At the hearing, Gregory testified that in the 1980s Spanish-language television networks — defined as having broad coverage over a large area — did not exist. Although Univision and Telemundo had a "handful" of stations, they did not provide coverage to the entire country. Hearing Tr. at 119 (Gregory direct). Rather, these stations were considered "low powered," broadcast during limited hours, and their coverage was limited to major urban markets. Id. at 122. In her expert report, Gregory submits that "[n]ational Spanish-language television was not available in 1988. Univision was the first Spanish-speaking network in the U.S., and remains far and away the largest such network. It was still in its infancy in 1988, and did not even begin to offer national advertising until the mid-1990s." Report of Kathy Gregory at 3.Today, Spanish-language networks like Univision, Telemundo, and Telefutura have followed the Latino population, spreading across the country. Hearing Tr. at 122-24 (Gregory direct). Their emergence as national networks has dramatically increased the potential reach of Spanish-language advertising. For instance, as of August 2002, Univision was broadcast in 207 markets, either through affiliate stations or cable providers, and reached 97% of households identified by Nielsen as Latino. Report of Kathy Gregory, Ex. 8 at 4 (Univision Affiliate Coverage by Designated Market Area, Aug. 2002). Cacique submits that Univision programming "reaches all but approximately 20 [Nielsen] markets in this country" and "is likely seen everywhere" by virtue of satellite broadcasts. Def.'s Post-Hearing Br. at 6 n. 2. Cacique maintains that it needs to conduct the now-possible national advertising in order to reach the newly dispersed Latino population.
The parties offered evidence that two kinds of advertising mechanisms are available on Spanish-language networks. Jim Baral, a sales manager for Univision, testified that "network advertising" involves broadcasting a commercial everywhere that Univision is seen, by virtue of a network feed to all the affiliates. Baral Dep. at 19. By contrast, "spot advertising" is "advertising in a specific city or . . . market." Id. at 21. Spots are purchased directly from local affiliate stations in the target markets. An affiliate is defined as "a station that carries the network feed of a given network entity." Hearing Tr. at 134 (Gregory direct). Whereas national advertising involves negotiating a single contract with Univision, spot advertising requires negotiating separate contracts with each affiliate and cable provider that will carry a commercial. Hearing Tr. at 136, 147 (Gregory direct). Spots are accomplished through "insertion" — a network's local affiliate inserts a different commercial than the network would otherwise carry, and the spot is then seen only in that local market.
To advertise its Ranchero products nationally without violating the injunction, Cacique theoretically could structure an advertising campaign in either of two ways: it could purchase local spots in all markets except the four states, or it could purchase national advertising and block out the Ranchero ads in the four states through spot insertions of a different Cacique commercial. However, the evidence has established that neither of these alternatives is actually viable.
As for the first alternative, Gregory testified that it is not possible to get comparable coverage with spot ads as with network advertising. Hearing Tr. at 146-47 (Gregory direct). She stated, for example, that Univision, "the number one network which has about 70 percent of the overall Hispanic viewing," has a limited number of affiliates with insertion capabilities. Id. at 133-34. Of the 207 markets where Univision is broadcast, insertion is only possible in roughly 40. See Report of Kathy Gregory, Ex. 8 (Univision Affiliate Coverage by Designated Market Area, Aug. 2002). For example, insertion is not available in Portland, Oregon, a market with more than 60,000 Latino households. Report of Kathy Gregory at 3. Gregory concludes that "national advertising on Univision would allow Cacique to reach approximately half a million households outside of [the four-state area] that cannot be reached by `spot' advertising on individual Univision stations." Id. at 4.
Gregory also testified that even were Cacique to buy as many spot ads as it could — which would still only accomplish a campaign of limited reach — the cost would be prohibitive because separate deals would have to be struck with each affiliate and cable provider. Hearing Tr. at 147 (Gregory direct). According to Gregory, the greater cost of a spot campaign is owed in part to the fact that a spot advertiser who must strike separate deals with each affiliate does not come to the table with the same clout as does an advertiser negotiating a single, network-wide buy. Id. at 137. Gregory also testified that spot ads might nonetheless violate the injunction, because signals may bleed across state borders. For example, according to Gregory, St. Louis ads could bleed into Illinois, and Minneapolis ads could bleed into Wisconsin.
Some markets are served by more than one cable provider. For example, the Minneapolis market is serviced by fifty-five cable companies, and thus running spot advertisements there could entail negotiating fifty-five separate contracts.
The second advertising alternative described above is not viable because television stations in several of the markets in the prohibited four-state area do not have insertion capabilities. For example, Univision local ad insertions are not possible in Detroit, Michigan, Indianapolis, Indiana, or Green Bay, Wisconsin. Report of Kathy Gregory, Ex. 8 at 2 (Univision Affiliate Coverage by Designated Market Area, Aug. 2002). Hillary Dubin, Vice-President of West Coast Sales for Telemundo, testified that on the Telemundo network, which serves 112 markets, insertions within the four-state area are only possible in Chicago and Milwaukee. Dubin Dep. at 25-26. And none of Telemundo's cable carriers have insertion capability. Id. at 25.
3. New Competition from General-Market Manufacturers
The third changed condition identified by Cacique is the emergence of competition from general-market cheese manufacturers like Kraft and Sargento. Cacique submits that these companies, which once largely ignored Latino consumers, are now directing their products and advertising efforts at them. Gregory states in her report that in the late 1980s "advertisers generally dismissed the Spanish-speaking population as not being worth the trouble of advertising efforts." Report of Kathy Gregory at 1. Gregory testified at the hearing that as late as 1993, marketers had to be "prodded" to address the Latino market but that by 1995 the industry had "turned a corner" in this regard. Hearing Tr. at 117 (Gregory direct).
Cacique contends that today general-market manufacturers produce cheeses that attempt to lure the Latino consumer. At the hearing, Cacique presented product wrappers from several such cheeses. Examples include Sargento Mexican shred, Kroger Nacho and Taco Cheese, Lucerne Mexican Four Cheese Blend, Kraft Mexican Taco Cheese, Def. Ex. 7, and Kraft Manchego Singles, Def. Ex. 4. Cacique recognizes that these companies do not sell a queso fresco. Gilbert de Cardenas, Jr., president of Cacique Distributors, U.S., testified that the manufacturers of these cheeses take a different tactic: they attempt to sway the Latino consumer to perceive these non-traditional products as substitutes for traditional Mexican cheeses. Hearing Tr. at 89-91 (de Cardenas cross). As an example of this marketing strategy, at the hearing Cacique showed a Kraft Spanish-language commercial featuring a Latina woman making quesadillas with Kraft American cheese singles. Cacique maintains that "to the extent Kraft's advertising is successful, Cacique's customer base is extinguished." De Cardenas Aff. at 5.
De Cardenas further testified that in 1987, Cacique did not expect competition from general-market companies. At that time, the only companies that competed specifically for the Latino customer were other manufacturers of traditional Mexican cheeses. Corona testified that the kinds of shredded "taco cheese" blends introduced at the hearing did not exist as recently as a couple of years ago. Corona Dep. at 90. Cacique contends that it must now conduct national Spanish-language advertising to compete effectively against companies that exploit this medium to attract Cacique's traditional consumer base. The injunction's prohibition against advertising, Cacique maintains, "forces Cacique to fight much bigger foes `with one hand tied behind its back.'" Def.'s Mot. for Modification of Permanent Inj. at 11.
V V retorts that Cacique has not established that its queso fresco competes with the melting cheeses introduced at the hearing because queso fresco is "market[ed] as a fresh, non-melting cheese." Pl.'s Post-Hearing Br. at 9 (emphasis in original). And, V V submits, Cacique produces other cheeses that more closely resemble these melting cheeses, such as Cacique-brand baby jack, "queso quesadilla," and "asadero" — products that Cacique is not enjoined from advertising nationally. But simply because Kraft does not produce a queso fresco does not mean that Kraft is not vying for the same consumer as those targeted by Ranchero queso fresco. It is reasonable to infer that if Latino consumers can be persuaded to make enchiladas or other traditional dishes with, for example, a Kraft Mexican-style shred rather than Cacique's queso fresco, Cacique's market share is at risk.
V V also contends that Cacique has offered no evidence that the general-market manufacturers advertise nationally "rather than on a spot basis in selected markets." Pl.'s Post-Hearing Br. at 10. At the hearing, Cacique introduced several Spanish advertisements by general-market manufacturers, such as the previously mentioned Kraft American Singles commercial. There is no logical basis to assume that a national company like Kraft would place advertisements on the more costly spot basis. Moreover, the evidence has established that general-market manufacturers market to the Latino consumer and can exploit national media if they so desire.
B. Is Modification Warranted?
The combined effect of the three changed conditions, Cacique claims, makes its compliance with the injunction substantially more onerous and renders the continued prospective operation of the injunction inequitable. The growth of the Latino population has made it an attractive target for general-market cheese purveyors; these companies now attempt to interest the Latino consumer in their non-traditional cheese products as replacements for Cacique's traditional cheeses. Cacique submits that it must compete on the same footing as these companies in order to maintain and grow its market share. With the advent of Spanish-language national media, such companies are able to reach Latino consumers regardless of where they are located. And, as the evidence has established, they are dispersed throughout the country to a degree that was unexpected in 1988. Yet Cacique is enjoined from exploiting this same medium and is therefore at a competitive disadvantage in the forty-six states where the injunction was never intended to hamper its activities and in which it has superior trademark rights. It is not possible for Cacique to accomplish the same advertising coverage by placing local commercials because many affiliate stations and cable providers do not have the capacity to provide local ad insertions. Even if full coverage through spot advertising were possible, the cost likely would be prohibitive.
Cacique is, of course, permitted to advertise its other products nationally, and it has done so in the past. Ranchero queso fresco, however, is Cacique's best selling product, its "flagship" product. Hearing Tr. at 24 (de Cardenas direct). Corona testified that from an advertising perspective, a company's "top seller should be supported as best possible and reach the greatest percentage possible of the target audience." Corona Dep. at 121. Cacique also wishes to advertise Ranchero queso fresco alongside its other products so that those products can benefit from association with this well known product. Gregory states in her report that "[i]f Cacique is prevented from advertising its most important brand in national advertising, it will be placed at a competitive disadvantage as compared to its competitors, which are able to use their most important brands in national advertising to promote the sales of their other brands." Report of Kathy Gregory at 5.
The Court finds that the factual circumstances cited by Cacique are indeed significant changes and finds that, although perhaps foreseeable, these changed conditions were not actually contemplated by the parties at the time Judge Bua entered the injunction. The Court also finds that these changes render Cacique's compliance with the injunction substantially more onerous: because it cannot exploit national Spanish-language advertising, Cacique is limited in its ability to reach its newly dispersed customer base. By contrast, general-market manufacturers can advertise their substitute products nationally to the entire Latino market. As a result of these factors, Cacique stands to lose market share in the forty-six states where its rights are superior to V V's. Because the continued prospective operation of the injunction hampers Cacique's legitimate pursuits outside the four-state area, the injunction has become unfair to Cacique in a way that it was not, and was not intended to be, in 1988. As such, the injunction's continued operation is not merely inconvenient but rather works an inequity on Cacique.
Even so, an additional consideration remains. In Rufo, the Supreme Court suggested that modification must not "violate the [injunction's] basic purpose," Rufo, 502 U.S. at 387. Notwithstanding unintended hardship to Cacique, modification is not appropriate if it is "in derogation of the [injunction's] primary objective." Id. at 381 n. 6 (quoting N.Y. State Ass'n for Retarded Children, Inc. v. Carey, 706 F.2d 956, 969 (2d Cir. 1983)) (internal quotation marks omitted). Although "any modification will perforce alter some aspect" of the injunction, we consider whether Cacique's proposed modification would derogate the injunction's primary objective. Rufo, 502 U.S. at 381 n. 6 (quoting Carey, 706 F.2d at 969) (internal quotation marks omitted).
It is clear from Judge Bua's opinion that the injunction's principal objective was to protect V V's market for Rancherito queso fresco within the four states where it had established rights as a prior user. Judge Bua did discuss advertising, but only in the context of determining where V V had achieved market penetration. There is no indication that the parties or Judge Bua considered advertising as an independent issue in 1988 or that the ban on advertising was anything more than incidental to the ban on sales. Because only local Spanish-language advertising was then available, any advertising seen within the four-state area perforce would have been advertising intended to target consumers in that area. Because Cacique could not sell Ranchero queso fresco in the four states, there was no reason to permit Cacique to advertise the brand within those markets. With the advent of nationwide Spanish-language network media, this is no longer the case.
Because the Court determines that Ranchero sales, not Ranchero advertising, was the primary focus of the injunction, modification will not derogate the injunction's basic purpose. Because Cacique is and will remain enjoined from selling Ranchero products in the four states, V V will not lose queso fresco sales to Cacique's Ranchero. Ranchero products will remain unavailable within the market area where V V's rights are paramount, and V V's Rancherito market thus will remain protected from incursion by Ranchero products.
V V argues that modification to permit national advertising will cause product confusion within the four states to the detriment of V V. V V posits that because Cacique wishes to promote its other Cacique-brand products together with Ranchero queso fresco, consumers may believe that V V's Rancherito is endorsing Cacique's product line. The consumer may then purchase Cacique-brand queso fresco in the mistaken belief that it is made by V V.
V V, however, is estopped from arguing that it will be harmed if the injunction is modified. Earlier in these proceedings, V V moved for a protective order to prohibit Cacique from engaging in discovery related to possible harm to V V as a result of modification. In its motion, V V took the position that such inquiries were "irrelevant to the claims raised in Cacique's motion [for modification]." Pl.'s Mot. for Protective Order at 3. V V's rationale was that "Cacique's motion does not raise a single claim that any change in V V's circumstances warrants modifying the 1988 injunction." Id. at 7. In open court, the Court admonished V V that Cacique's discovery requests would be relevant to the issue whether modification would harm V V, stating "it is conceivable that a change in the injunction might harm you now in a way that wasn't anticipated at the time of the original injunction." Hearing Tr. (July 17, 2002) at 11; see id. at 19 ([T]he only way [the issue of harm] is going to come up is if [V V] mention[s] it. If you do, then the discovery [Cacique] is talking about is relevant."). Based on V V's representations that it would not raise the issue of harm, except by reference to matters that were determined in 1988, id. at 19-20, the Court granted V V's motion for a protective order. Id. at 21, 23. Before doing so, the Court clearly advised V V of the consequences of its decision to seek a protective order: "If you make an argument at the hearing that the proposed change to the injunction would have an adverse impact on V V beyond what is implicated in Judge Bua's decision, I am going to say that you are estopped from making that argument because of your motion for protective order that I am about to grant." Id. at 21. Even after being so advised and given an opportunity to "hedge" its earlier statements, id., V V persisted in saying that the issue was not relevant. Id. at 22-23. The consumer confusion that Judge Bua considered in 1988 involved confusion that would arise from the presence within a market of two products bearing confusingly similar trademarks. Judge Bua did not consider what confusion might ensue if a Ranchero product was merely advertised but not sold in the four-state area. V V gave up the opportunity to argue that such a scenario will cause it harm by denying Cacique the opportunity to conduct discovery on that issue.
Even were the Court to permit V V to raise the issue that it would be harmed by a modification of the injunction, however, any such claim is without merit. Its contention that consumers might purchase Cacqiue-brand queso fresco in the mistaken belief that "Cacique and Rancherito-brand queso fresco are `unified,'" Pl.'s Mem. in Opp'n to Mot. for Modification of Permanent Inj. at 15, is entirely speculative, as there is no evidence that such harm might ensue.
C. Timeliness of Cacique's Motion
On a final note, we address V V's argument that Cacique's motion is untimely. V V argues that Cacique's 60(b)(5) motion to modify the injunction was not presented in a "`reasonable time' after having notice of the allegedly changed circumstances that it alleges warrant modifying the injunction." Pl.'s Post-Hearing Br. at 4.
The Court disagrees and notes that it is the combined effect of the three changed conditions, not any one in isolation, that must be considered. Moreover, there is evidence that Cacique did not understand the magnitude of the Latino population's dispersion throughout the United States until after the 2000 census, and it was only then that Cacique began national network advertising of its other products on a regular basis. Hearing Tr. at 50-51 (de Cardenas direct). Also, the evidence has established that before filing this motion Cacique attempted other alternatives to modification. For instance, sometime after the data from the 2000 census had been analyzed, Cacique attempted a national television campaign that featured Cacique-brand queso fresco on the national feed and Ranchero-brand queso fresco insertions in certain markets. Id. 56-58. This proved unsatisfactory for several reasons. Id. Cacique filed the present motion in May, 2002. This lapse does not strike the Court as unreasonable given the circumstances.
V V also maintains that Cacique did not timely move to modify the injunction pursuant to Federal Rules of Civil Procedure 59(e) and 60(b)(1), which permit relief from a judgment when the trial judge has made a manifest error of fact. Bordelon v. Chi. Sch. Reform Bd. of Trs., 233 F.3d 524, 529 (7th Cir. 2000); Fed.R.Civ.P. 60(b)(1). Cacique did not, however, move to modify the injunction pursuant to either of these rules and does not maintain that Judge Bua made a mistake of fact in 1988.
D. V V's Proposed Limitations
V V has proposed that if the Court modifies the injunction, it should require Cacique's ads for its Ranchero products to include a disclaimer indicating that the products are not available in the four-state area and should preclude Cacique from advertising Ranchero and Cacique brands in the same spot. These issues have not been addressed adequately by the parties at this point. The Court directs the parties to address these issues further as discussed below.
CONCLUSION
For the reasons stated above, the Court grants defendant's motion for modification of the permanent injunction [filed 05/17/02]. The injunction will be modified to permit defendant to advertise its Ranchero brand nationally on Spanish-language television networks. Defendant is directed to submit a proposed modification by February 10, 2003, and should address further at that time the limitations proposed by V V. V V's response, due by February 12, 2003, should elaborate on its position in this regard.