Turning up the heat: Crumbl and Dirty Dough both confident in latest court decision
Aug 15, 2023, 2:42 PM
FILE: A Dirty Dough sign outside of one of their stores. (KSLTV)
(KSLTV)
SALT LAKE CITY — A federal judge has denied a preliminary injunction in Crumbl’s ongoing lawsuit against Dirty Dough, but both companies see it as a victory.
In the latest action in the “Utah cookie wars,” U.S. District Judge Howard Nielson on Friday denied Crumbl’s request for a preliminary injunction and ordered Dirty Dough to return Crumbl’s trade secret information.
Crumbl filed a preliminary injunction motion Sept. 16 asking for Dirty Dough to return its trade secrets, issue a public statement admitting they’d stolen secret Crumbl information and delay opening more franchises until they could determine that Dirty Dough would not continue to use Crumbl’s information.
The first of those requests was ordered by Nielson Friday, but Nielson said in the memorandum that Crumbl failed to prove that the other two requests would not negatively affect public interests, including protecting a free marketplace of ideas and free competition in the economic marketplace.
Crumbl will continue to pursue a preliminary injunction for the other two requests, according to the judge’s memorandum.
Dirty Dough founder Bennett Maxwell said in a statement Tuesday he was “very happy” the preliminary injunction was denied.
“This lawsuit has always been about a greedy billion-dollar company suing multiple startups for making cookies in (an) attempt to stifle competition,” Maxwell said. “I am looking forward to winning this lawsuit to hopefully stop Crumbl from suing even more cookie companies due to the shape of their box or use of sprinkles on cookies.”
Yet, Crumbl said in a statement Tuesday that it was “thrilled” with the decision, even though it didn’t achieve all its aims.
“Crumbl is pleased and strengthened by the recent court order reinforcing our effort to safeguard our intellectual property,” the statement said. “We have achieved a significant legal victory and secured a stipulated order in which Dirty Dough has agreed to return Crumbl’s trade secret information.”
The “Utah cookie wars” started May 10, 2022, when Crumbl filed lawsuits against rival Utah cookie companies Crave and Dirty Dough on the basis of using “confusingly similar” logos, websites and other marketing materials. The lawsuit also accuses Dirty Dough of copying recipes, as Maxwell’s brother Bradley Maxwell is a former Crumbl employee.
Bradley Maxwell downloaded 66 Crumbl recipes and other Crumbl information onto a personal cloud drive during the last week of his employment, according to the memorandum. Nielson also said the Maxwell brothers invested in Dirty Dough while Bradley Maxwell was still employed at Crumbl, and that at least some of the Crumbl information in question could be defined as a trade secret.
“The court also has very little doubt that Bradley Maxwell acted unlawfully — and no doubt that he acted unethically — when he kept the Crumbl information after his employment was terminated and when he disclosed that information to Dirty Dough,” the memorandum states. It also called some of Bennett Maxwell’s social media statements regarding the case “deceptive and deliberately misleading, if not outright falsehood.”
“Crumbl has probably established a substantial likelihood of success on the merits,” Nielson added in the memorandum.
On the other hand, Nielson said Crumbl has not proven that Dirty Dough’s growth should solely be attributed to Maxwell’s use of Crumbl’s information, and said, “Regardless of Crumbl’s motivations for bringing this action against a rapidly emerging direct competitor, its request that the court bar Dirty Dough from expanding in the market while this suit is resolved would be profoundly anti-competitive in effect.”
Crumbl dismissed its lawsuit against Crave on July 20 with ambiguous details, saying in a statement to KSL.com that the two companies “have reached an amicable settlement.”
“Crumbl and Crave are pleased that they have been able to work together to resolve this dispute and each remains dedicated to serving its customers with excellence,” they said in the statement. “Crumbl and Crave wish each other success in their future endeavors. The parties have agreed that the terms of the settlement are confidential.”
