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Talk about a lot of bread.
A federal judge has ordered Leland Sycamore, the Utah entrepreneur who created Grandma Sycamore's Home Maid Bread, to pay $4.6 million to a company to whom he sold the trademark name doubling the amount of damages given by a jury in April for infringement and unfair competition claims.
U.S. District Court Judge Dale A. Kimball said the amount awarded by the jury was inadequate given the lost sales and damage to the goodwill of the EarthGrains Baking Companies' trademark.
Kimball also tripled the damages to $26,100 to be paid by the Sycamore Family Bakery for engaging in unfair competition. The judge also said EarthGrains, which acquired the brand and its assets from the Sara Lee Corp. earlier this year, may collect prejudgment interest of 2.18 percent per year since June 8, 2009, when the original complaint was filed.
In 1998, Sycamore sold the Grandma Sycamore's trademark, business goodwill and trade secrets to Metz Baking Company, which was later acquired by the Sara Lee Corporation. As part of the deal, Sycamore was given an exclusive license to use the Grandma Sycamore trademark in a limited number of areas outside Utah, if given written approval from Metz Baking.
Within a decade, Grandma Sycamore's including white, 100 percent Honey Whole Wheat, Honey Grain and Sunflower loaves was the leading bread sold in Utah.
In 2008, Sara Lee sent Leland Sycamore a letter asking him to refrain from using "Sycamore" or any other component of the trademark for any bread or bakery products, but got no response to that or three subsequent demand letters.
He subsequently started the Sycamore Family Bakery and began marketing a variety of breads identical to those marketed under the Grandma Sycamore's brand. On its bread packages, the name "Sycamore Family Bakery, Inc." was repeated 24 times above an image of a teddy bear holding hearts similar to the hearts incorporated in the Grandma Sycamore's packaging.
The new business marketed the bread as the "original granny bread" and "original version" of Grandma Sycamore's. The Sycamore Family Bakery bread was sold in numerous grocery stores in Utah that also carried Grandma Sycamore's bread.
Kimball granted a preliminary injunction in October 2009, rejecting the argument that Leland Sycamore had not given up right to use his surname in business. The judge found that confusion both by consumers and food distributors between the trademarks led to the impression that the "Sycamore family" was making both bread products, and that the defendants deliberately adopted a similar trademark to benefit from its reputation.
He noted there was evidence the defendants had joked about the desist letters, ignored an employee's warnings and theft of Sara Lee's bread racks.