(Fod additional information, please see Principals say Cuties fued won't impact supplies)Behind the smiling public face of Cuties clementines, a multi-million dollar feud has been festering for months.
Consumers bought 75 million boxes of the clementines bearing the Cuties character in the 2011-12 season, but its use on juice products proved to be the final wedge in what had become a strained relationship between its two owners.
The disagreements between Stewart Resnick, owner of Paramount Citrus, Delano, Calif., and Berne Evans, owner of Sun Pacific, Pasadena, Calif., became public March 21 when Paramount filed a trademark infringement case in federal court against Califia Farms, a Pasadena, Calif., juice company.
Use of the Cuties trademarks by Sun Pacific's wholly-owned subsidiary Califia Farms on these juice products thrust a behind-the-scenes rift between Sun Pacific and Paramount Citrus into the public arena when Paramount filed a trademark infringement suit in federal court earlier this year.Califia is a wholly-owned subsidiary of Sun Pacific. According to court documents, Paramount planned to join Sun Pacific in the juice and concentrate operation. Paramount provided $1 million up front to Sun Pacific for the development of the juice business. Sun Pacific gave that money back after Paramount pulled out of the deal, according to court documents.
Sun Pacific proceeded with the Califia Farms juice operation, which uses culled citrus from the Cuties orchards. Paramount contended in the trademark case that Califia did not have rights to the Cuties trademarks or name, even though it is owned by Sun Pacific, which jointly owns the trademarks with Paramount.
Paramount withdrew the complaint in April, after Sun Pacific asked the court to enforce an arbitration agreement it has had with Paramount for several years.
The trademark dispute is now pending before the American Arbitration Association, as is a previously filed dispute regarding which company will pack, market and sell the Cuties for the 2012-14 seasons, according to court documents.
Since Oct. 1, 2008, the Cuties brand of the easy-peel citrus fruit has been grown, packed, shipped and marketed by Paramount Citrus and Sun Pacific under an agreement that runs through Sept. 30, 2014.
The two companies have had equal ownership of the Cuties trademarks since 2001 in an arrangement described as “extremely unusual,” according to R. Polk Wagner, a professor of trademark law at the University of Pennsylvania, who was quoted by the Wall Street Journal in a story about the dispute.
Resnick and Evans began collaborating on clementines in 1999.
According to the Sun Pacific website, Evans started developing a specific clementine variety after a 1990 freeze hit California citrus growers. In 1996, Evans signed a deal with a nursery to multiply clementine trees and sell them exclusively to him.
Evans and Resnick forged a business arrangement that generated great profit for Paramount and Sun Pacific, but the relationship has become increasingly strained, Evans told the Wall Street Journal.
Part of the strain is related to aggressive and expensive advertising campaigns that saw the companies spend $20 million during the latest season, according to the Journal article, published July 14. Evans told The Journal he believes the fruit is so good it doesn’t require extravagant promotion.
After Resnick backed out of the juice deal, he tried to take over all of the packing of Paramount’s clementines and afourers for 2012-14, instead of using Sun Pacific’s packing operation as the 2008 agreement requires, according to court documents.
Resnick also told Evans he wants to market and sell not only Paramount’s clementines and afourers, but also all of Sun Pacific’s clementines and afourers for the 2012-14 seasons, according to court documents.