Jury: Medallion Foods, Ralcorp Didn't Imitate PepsiCo's Frito-Lay Chips

PLANO, TexasA 10-person jury in Texas has found Frito-Lay's bowl-shaped tortilla chips were not unlawfully emulated by rival chips that look similar.

Frito-Lay North America, Inc. had sought $4.5 million in damages and an injunction against Ralcorp Holdings, Inc. and its subsidiary Medallion Foods, Inc. for infringement of intellectual property and infractions under Texas law.

Frito-Lay, which is owned by PepsiCo, sought to protect the distinctive design and packaging of its Tostidos Scoops tortilla chips, which the company said were introduced in 2001 and generate tens of millions of dollars in sales.

The rival chips include the Bowlz brand sold at Wal-Mart and Cupz brand available at Kroger, the retail food chain. Introduction of the products coincided with the 2012 Super Bowl, said Armstrong Teasdale LLP partner Scott Eidson, who tried the case with his colleague David Harlan on behalf of the defendants.

"Defendants' bowl-shaped tortilla chips and accompanying packaging are an intentional effort to imitate Frito-Lay's distinctive Tostidos Scoops tortilla chips and packaging, while using manufacturing processes that infringe Frito-Lay's patent," Frito-Lay of Plano, Texas, alleged in a second amended complaint.

But the jury of three men and seven woman found no infringement of a patent or trade dress, and Frito-Lay was awarded no damages in the case. Following a two-week trial, the jury deliberated for five-and-a-half hours before rendering the verdict, Eidson said.

Chris Kuechenmeister, a PepsiCo spokesman, said the company was "reviewing its options for post-trial motions and appeal."

"If upheld, the jury's finding simply means that Ralcorp/Medallion found a way to make bowl shaped tortilla chips using a process sufficiently different than our patented process that it was deemed to not infringe, and that their process makes chips different enough that consumers will not confuse their chips with Tostidos Scoops," he said in an emailed statement.

Frito-Lay had alleged the defendants obtained trade secrets from its former employees and a vendor who worked on the Tostidos Scoops tortilla chips. But Eidson said Frito-Lay didn't call any witnesses who testified they saw employees steal trade secrets.

The jury's verdict marked a victory for ConAgra Foods, Inc., which recently acquired Ralcorp Holdings for roughly $5 billion.

"We are pleased with the jurys decision in our favor. We believe private brands offer a strong value to consumers, and we are delighted to bring terrific choices to shoppers. We will continue to develop and make distinctive, high-quality food like this chip," Becky Niiya, a ConAgra Foods spokeswoman, said in an emailed statement.

The case was tried in just one year from the time the lawsuit was filed in a district where the federal judges are known for grasping one of the more complex areas of federal law: patents.

"That's a very fast pace for litigation. Very fast," Eidson said.

Magistrate Judge Amos L. Mazzant hasn't entered the final judgment so post-trial motions and an appeal cannot be filed yet.

Defendants were represented by Ward & Smith Law Firm of Longview, Texas and Armstrong Teasdale, one of Missouri's largest law firms with other offices in Kansas, Illinois, Nevada and China. Baker Botts L.L.P., a global law firm, was the lead firm representing Frito-Lay.

Baker Botts partner Timothy Durst, who is based in Dallas, reportedly did the heavy lifting at trial. Asked for a comment on post-trial motions, Durst referred to Frito-Lay's statement and confirmed that a judgment has yet to be entered.