(CN) - An injunction is not necessary to settle a dispute over toy-filled chocolate eggs allegedly set off by a tip from chocolatier Ferrero, a federal judge ruled.
Though the Food and Drug Administration banned confectionary products with edible shells housing inedible items more than 75 years ago to prevent choking hazards, Henry Whetstone Jr. obtained two patents in 1999 and 2000 for a product that met the ban's exception.
Whetstone's patents describe an inedible capsule containing a toy that is partly visible to children under the confectionary layer.
Italian chocolate giant Ferrero allegedly told Whetstone in the summer of 2011 that Candy Treasure, a Lebanon, N.J.-based chocolatier, was selling a similar product called Choco Treasures.
Despite four phone calls and two emails to Candy Treasure CEO Kevin Gass, Whetstone allegedly could not make contact with the company to see its product.
Whetstone said he then had his attorney send Gass a letter stating that Choco Treasures may infringe one or both of Whetstone's patents.
An attorney for Gass replied that Candy Treasure's product had little in common with the product described in those patents, leading Whetstone on a fruitless search of stores, trade shows and the Internet for Choco Treasures, according to the lawsuit.
Whetstone said he did not catch a glimpse of the product until he traveled to Italy in September 2011 where Ferrero showed him a sample.
The patent holder then granted Yowie North America, a "surprise chocolate company" based in Perth, Australia, an exclusive license in mid-2012.
In March 2013, Whetstone found a Choco Treasure at a Target store in Florida.
Yowie's attorney sent a cease-and-desist letter in June 2013. It filed the complaint
with in Southern California two months later, and then moved to enjoin Candy Treasure from marketing or selling Choco Treasures.
U.S. District Judge Renee Marie Bumb heard oral arguments in Camden, N.J., this past March after the case was transferred to her court. She dismissed
the claims against Gass but held off on deciding summary judgment.
In their bid for a preliminary injunction, Whetstone claimed that Candy Treasure lost him a contract with Ferrero. Yowie meanwhile said its contract with a vendor is in limbo.
Bumb nevertheless refused
on May 8 to grant Whetstone and Yowie a preliminary injunction.
"Although Yowie contends that it will suffer an irreversible loss of market share, the evidence has not supported such argument," Bumb wrote. "Yowie's efforts at launching its product have been, and still are, in progress."
The judge further held that the marketing of the two products are materially different.
"Yowie intends to market to children ages 7 to 14, and to promote its collectibles with an environmental and educational message," the redacted, unpublished ruling states. "The chocolates and underlying capsules are shaped like one of six Yowie characters that act as guardians of the natural world with responsibility for a particular domain, such as the deserts and plains. Candy Treasure's product packaging, on the other hand, is based upon famous licensed characters, such as Spiderman and Hello Kitty, or sports balls, as well as Christmas or Easter themes. The Yowie toy inclusions are of differing quality and type than those included in the Choco Treasure product. The products also sell at significantly different price points."
Bumb did note, however, that Yowie is "likely to succeed on its infringement claim," based on diagrams and images showing similarities between the products at issue.