## Facts

- Société des Produits Nestlé, S.A. owned U.S. and Puerto Rico registrations for PERUGINA-related trademarks used on premium Italian-made chocolates.
- For years, Casa Helvetia was the authorized distributor of PERUGINA chocolates in Puerto Rico, but Nestlé later appointed Nestlé Puerto Rico, Inc. as the exclusive Puerto Rico distributor.
- Nestlé separately licensed a Venezuelan manufacturer to produce and sell PERUGINA-branded chocolates in Venezuela, with contractual limits barring export or U.S. distribution without written authorization.
- The Venezuelan chocolates differed from the Italian chocolates in presentation/packaging, assortment, composition, quality, and price, and were generally lower priced and lower quality.
- Without Nestlé’s consent, Casa Helvetia obtained Venezuelan-made PERUGINA chocolates through an intermediary and imported and sold them in Puerto Rico under the PERUGINA mark.
- Nestlé sued under the Lanham Act and sought injunctive relief, alleging that materially different gray-market goods were likely to confuse consumers and harm goodwill tied to the Puerto Rico market’s association with the Italian product.
- The district court acknowledged differences but denied preliminary injunctive relief, reasoning that plaintiffs had not shown actual consumer dissatisfaction or deception.

## Issues

1. Whether importing and selling gray-market goods bearing an authorized trademark, but materially different from the trademark owner’s authorized domestic goods, constitutes Lanham Act infringement without proof of actual consumer confusion or dissatisfaction.
2. Whether the differences between the Italian and Venezuelan PERUGINA chocolates were “material” enough to establish a likelihood of confusion and support injunctive relief.

## Decision

- The First Circuit reversed the denial of injunctive relief and remanded.
- The court held that the Venezuelan PERUGINA chocolates were materially different from the authorized Italian PERUGINA chocolates sold in Puerto Rico.
- Those material differences were sufficient to establish a likelihood of confusion under the Lanham Act, warranting injunctive relief against the gray-market imports.
- The district court erred by effectively requiring evidence of actual consumer deception or complaints and by discounting the significance of the documented differences.

## Legal Principles

- Trademark law may bar unauthorized importation and sale of gray-market goods where the trademark owner has lawfully arranged territorial exclusivity and the imported goods differ from authorized domestic goods.
- In gray-market cases, the scope of trademark protection depends on whether differences between the authorized domestic goods and the imported goods are material to consumers’ purchasing decisions.
- Material differences can create a likelihood of confusion even if consumers are not confused about the nominal source, because the trademark also signals consistent attributes and quality.
- The Lanham Act generally requires likelihood of confusion, not proof of actual confusion, dissatisfaction, or documented complaints, to justify prospective relief protecting goodwill.

## Conclusion

The First Circuit held that materially different gray-market imports sold under the same trademark are likely to confuse consumers about the product attributes the mark represents, and thus can infringe under the Lanham Act without a showing of actual consumer deception; the denial of injunctive relief was reversed and remanded.


Société des Produits Nestlé, S.A. v. Casa Helvetia, Inc., 982 F.2d 633 (1st Cir. 1992)