Stark et al v. Diageo Chateau & Estate Wines Company

Filing 78

ORDER by Judge Yvonne Gonzalez Rogers granting in part and denying in part 26 Motion for Preliminary Injunction (fs, COURT STAFF) (Filed on 11/1/2012)

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 10 Northern District of California United States District Court 11 12 13 CHRISTIAN STARK et al., 14 15 16 17 Plaintiffs, Case No.: 12-CV-4385 YGR ORDER ON MOTION FOR PRELIMINARY INJUNCTION vs. DIAGEO CHATEAU & ESTATE WINES CO., Defendant. 18 19 Plaintiffs Christian Stark, Stark Wine LLC (“Stark Wine”), and Stay @ Home Sommelier, 20 LLC (“S@HS”) (collectively “Plaintiffs”) bring this trademark infringement action against Defendant 21 Diageo Chateau & Estate Wines Company (“Diageo”), alleging that the mark for Defendant’s “Stark 22 Raving™” wine is confusingly similar to Plaintiffs’ “Stark Wine®” and “Stark Thirst™” marks. 23 Plaintiffs bring seven trademark claims: (1) Federal Trademark Infringement under 15 U.S.C. § 1114; 24 (2) Cancellation of Trademark Registration under 15 U.S.C. § 1119; (3) Federal Unfair Competition 25 under 15 U.S.C. § 1125(a); (4) Trademark Infringement under Cal. Bus. & Prof. Code § 14335; (5) 26 Unfair Competition under Cal. Bus. & Prof. Code §§ 17200 et seq.; (6) False or Misleading 27 Statements under Cal. Bus. & Prof. Code §§ 17500 et seq.; and (7) Common Law Trademark 28 Infringement. 1 Plaintiff have move for a preli fs ed iminary injun unction to sto the advert op tisement, pro omotion, 2 distr ribution and sale of Defe endant’s “Stark Raving™ wine on the grounds that consum will like ™” mers ely 3 and mistakenly associate Di iageo’s “Star Raving™ wine with Plaintiffs’ w rk ™” h wines, which will h 4 irrep parably harm the Plaintif business m ffs’ ses. The par rties submitt briefs, the Court held a two-day ted d 5 hear ring with live testimony, at the end of which cou , o unsel present oral argu ted ument. Having reviewed the parties’ bri r e iefs, the adm missible evidence offered into the rec d cord, including 6 7 duri the hearing, the argum of counsel followin the close of evidence and having compared ing ment e e, g ng 8 the marks thems m selves and th context of their use in the marketp he f n place, the Co hereby GRANTS the ourt e 9 Mot tion for Preli iminary Inju unction only as to Sonom County, o ma otherwise the Motion is DENIED. e 10 I. BACKG GROUND Northern District of California A. 12 United States District Court 11 Plaintiff Christian St f tark is a win nemaker loca ated in Sonom County, California. He started his ma h STARK WINE E 13 busi iness in 2003 and sold his first wine a 2003 vin 3, h es, ntage, in 200 Since th time he h grown the 05. hat has 14 busi iness, and no produces eight variet ow s tals, which h sells in ce he ertain parts o the United States.1 His of d 15 pass sion is the Rh hône varieta Syrah an Viognier. Christian S als, nd Stark testified that he had earned a d d 16 repu utation in the industry fo producing and selling ultra-premiu handcraf wines. H mission e or um fted His 17 was, and still is, quality ove quantity. He sells his w , er H wine with th slogan “d he deliciously do own-to-earth h.” 18 Mr. Star testified ab rk bout his invo olvement in the winemak aking process over which he maintain s h ns 19 e y farmers with proven track records for k r full control. He starts by selecting grapes grown by reputable fa 20 wing excepti ional quality fruit. He is responsible for fruit sou y s e urcing, grow relations and wine wer s grow 21 prod duction. The reputationa evidence in the record for Stark W ® focuse on the win e al i d Wine ed nemaker 22 him mself, Christia Stark,2 an the labels on his wine simply state “STARK” as shown below: an nd e ” 23 24 25 26 27 1 Pla aintiffs’ Motio lists fifteen states: Cali on n ifornia, New Y York, Florida New Jersey Connecticu Montana, a, y, ut, New Mexico, Ma w aine, Rhode Is sland, Oregon Colorado, V n, Virginia, Geo orgia, Ohio, M Minnesota, and Washington d n, D.C. On the advi of counsel Plaintiff wo ice l, ould not confi firm, at deposi ition or at the hearing, whe e ether he is nsed to lawful sell his pro lly oduct in any of these states or the Distri of Columb o s ict bia. licen 2 28 Se Plaintiffs’ Exhibits 1, 8, 17, 18, and 23. Plaintiffs’ corresponde ee E 2 ’ ence to custom connect the winemak mers ker “Sta ark” to the win (Exs. 10, 11, 14, and 15.) ne. 1 2 1 2 3 4 5 6 7 8 9 10 Def. Opp’n, Dkt. No. 37, at 1; Dkt. No. 3, Ex. C at 18. 11 Christian Stark sells Stark Wine® primarily direct-to-consumer in Garagiste, a tasting room Northern District of California United States District Court 12 13 14 15 16 17 co-owned by Stark Wine LLC and located in Healdsburg, Sonoma County, California. He also sells his wine online via,3 through wholesale accounts with California restaurants, wine bars and retail shops, and through the Stark Wine Club. Stark Wine® ranges in price from $28 to $44 per bottle, with an average price point of $36. Output of Stark Wine® has increased from 150 cases in 2003 to 850 cases in 2011. Christian Stark expects to produce 1000 cases of Stark Wine® in 2012. Christian Stark individually owns the “Stark Wine®” trademark, registered in International 18 19 20 21 Category 33 with a description of “Wine” with the United States Patent and Trademark Office (“PTO”) since October 17, 2006, Registration No. 3,160,031. The “Stark Wine®” mark achieved “incontestability” status on or about June 2, 2012. B. 22 In April 2012, Stark Wine LLC and S@HS launched a new sub-brand of wine called “Stark 23 24 25 26 27 STAY @ HOME SOMMELIER4 AND STARK THIRST™ Thirst™.” Based in New York City, Kersten Krall Walz (“Krall Walz”) is the founder, marketing 3 Plaintiffs’ moving papers and the accompanying declaration of Christian Stark stated that Stark Wine® was sold through a number of third party websites. The evidence produced during the hearing contradicted this assertion, as none of the third-parties identified sell Stark Wine®. Subsequent to the filing of his declaration and motion, Plaintiffs arranged for the website to sell Stark Wine®. 4 28 A “sommelier” is a wine steward, the person in charge of the wines in a club or restaurant. See MerriamWebster’s Ninth New Collegiate Dictionary, p. 1124 (1988). 3 1 director, and co-owner of S@HS. (Krall Walz Dec. ¶ 1.) A self-described Madison Avenue refugee, 2 Ms. Krall Walz worked in New York City’s advertising industry for fourteen years, rising from 3 administration to account director. (Id. ¶ 3.) Ms. Krall Walz worked at two of “Madison Avenue’s” 4 flagship agencies: Young & Rubicon and Saatchi & Saatchi. (Id. ¶ 3.) 5 In 2010, Krall Walz left the advertising industry to start a business that would allow her to 6 “stay at home” to raise her son and to pursue her passion for wine. Prior to leaving the advertising 7 industry, she spent five years taking classes to obtain a diploma in Wine Studies from London’s Wine 8 & Spirit Education Trust, one of the world’s most comprehensive and rigorous wine study programs. 9 (Id. ¶ 5.) She met Christian Stark in the fall of 2010. (Id. ¶ 7.) Initially, she did brand consulting for 10 11 Stark Wine, helping to develop its current strategic brand position and update the website. (Id.) In the summer of 2011, Krall Walz formed S@HS to merge her advertising experience with Northern District of California United States District Court 12 her knowledge and passion for wine. At this point she had been working on several brand extensions 13 for Stark Wine, i.e. using other words in combination with the word “stark” for purposes of selling 14 wine. Krall Walz conceived of this idea on her own. Christian Stark never attempted brand 15 extensions and did not assist in her work. In the summer of 2011, Krall Walz and S@HS partnered 16 with Christian Stark to create the Stark Thirst™ brand extension. 17 Ms. Krall Walz conducted market research, including holding focus groups to decide on a 18 brand name and a brand identity using extensions on the word “stark.” Her target audience was 19 Generation Y, defined in the alcohol industry as individuals in the 21-35 year range (“Gen Yers”). 20 Her research revealed that (i) 24% of Gen Yers drink wine as their preferred alcoholic beverage, (ii) 21 Gen Yers are looking for bottles priced under $15 and are socially conscious, and finally, (iii) the 22 name “Stark Thirst” tested better than the other extensions. 23 Plaintiffs launched Stark Thirst™ as a more affordable brand, marketed towards these 24 younger wine drinkers. It retails for approximately $16 per bottle, with 10% of profits donated to 25 WaterAid, an international charitable organization that brings safe drinking water to those in need. 26 The mission for Stark Thirst™ is to give people a charitable way to drink delicious wine. Plaintiffs 27 have produced 216 cases of Stark Thirst™. 28 4 On October 19, 2011, S@HS applied to the PTO to trademark “Stark Thirst™.” In February 1 2 2012, the PTO denied the “Stark Thirst™” on the basis that the dominant feature of both the “Stark 3 Wine®” and “Stark Thirst™” marks is the word “Stark,” which the PTO stated is identical in sight, 4 sound, and meaning. Subsequently, Christian Stark filed a consent agreement with the PTO noting 5 that Stark Wine LLC and S@HS are business partners that sell wines under both the Stark Wine® and 6 Stark Thirst™ marks.5 On June 20, 2012, PTO found that the “Stark Thirst™” appeared to be 7 entitled to registration and approved the mark for publication. The trademark registration for Stark 8 Thirst™ is pending with the PTO. 9 C. DEFENDANT DIAGEO CHATEAU & ESTATE WINES COMPANY Diageo is a subsidiary of an international beverage conglomerate that owns such recognized 10 Northern District of California brands as Smirnoff Vodka, Jose Cuervo Tequila, Guinness Beer, Tanqueray Gin, Johnnie Walker 12 United States District Court 11 Scotch, Captain Morgan Rum, Veuve Cliquot Champagne and Dom Perignon. Diageo Chateau & 13 Estate Wines Company focuses exclusively on wines. Its brands include Acacia Vineyard, Beaulieu 14 Vineyard, Chalone Vineyard, Provenance Vineyards, Sterling Vineyards, and Rosenblum Cellars. 15 Stark Raving™ is a sub-brand of Rosenblum Cellars. In November 2011, Diageo began plans for sub-brands of wine to target the millennial 16 17 consumer segment of the population, defined as ages 28-38. This resulted in the “Stark Raving™,” 18 “Rose-N-Blum™” and “Butterfly Kisses™” sub-brands. Diageo wanted to create a wine that goes 19 against the grain and celebrates the idea of doing things differently and with great passion. The 20 concept for “Stark Raving™” was to bring to life the personality of Rosenblum Cellars’ founder, 21 Kent Rosenblum, who left a successful career as a veterinarian to pursue his passion for winemaking. 22 (See Declaration of Mary Frances Light Dusenbury (“Light Dec.”), ¶ 11 (“Our founder quit his day 23 job to make wine in his garage. They said he was stark raving mad. Mad? We call it inspired!”).) 24 The Stark Raving™ sub-brand revolves around a mad scientist persona and uses the tag line “Crazy 25 Good Wine” as illustrated below: 26 27 5 28 Separately another applicant, not a party to this lawsuit, applied for the mark “Stark Naked” and was denied for the same reasons that “Stark Thirst™” initially was denied. 5 1 2 3 4 5 6 7 8 9 Ex. 202 2 Ex. 42 10 The wine attemp to appeal to male mil pts l llennials by being fruitie and juicier than other wines, and it er i 11 is pa ackaged in a screw-top bottle with a label design modeled on craft beers b n n s. Northern District of California United States District Court 12 On Febru uary 13, 201 Diageo applied to the PTO for th trademark “Stark Rav 12, a e he k ving™” in 13 International Ca ategory 33 with a descrip w ption of “Alc coholic beve erages other than beer.” Plaintiffs 14 alleg that Diageo not only knew of the “Stark Wine ®” tradema in the sam Internatio Categor ge e ark me onal ry 15 33, but with a de b escription of “Wine,” bu in fact, kn that the “ f ut new “Stark Thirs st™” mark h been had 16 rejec days ea cted arlier for bein too simila to the “Sta Wine®” mark. Plain ng ar ark ntiffs allege t Diageo that 17 inten nded to misl lead the PTO by using th descriptio “Alcoholi beverages other than b O he on ic s beer” instead d 18 of “Wine,” know wing that its application likely would be rejected if Stark Ra d d aving™ was described as s 19 ine.” The ac ctual evidenc produced at the hearin demonstr ce ng rated that Diageo had file over 80% ed % “Wi 20 of all of relevan application in Internat nt ns tional Categ gory 33 with the broader description “Alcoholic 21 beve erages other than beer.” The PTO ap pproved Dia ageo’s applic cation on Jun 26, 2012. ne . 22 In the su ummer of 2012, Diageo introduced S i Stark Raving wine. Its suggested retail price is g™ s i 23 betw ween $12.99 and $13.99, although ap , pproximately 75% of the wine is exp y e pected to be sold at the 24 sale price of $10 primarily through mass market retailers suc as Target. Diageo has produced 0.99 m ch . s 25 appr roximately 80,000 cases of Stark Ra 8 s aving™ wine Stark Rav e. ving™ wine began shipp ping in June 26 2012 and by the end of Aug 2012, Diageo had d 2, e gust D delivered 17,000 cases to distributors of which o s, 27 7,00 had been delivered to retailers. As of August 15, 2012, S 00 A t Stark Raving wine was on the g™ s 28 shel lves at over 1,500 stores across the United States In Octobe Diageo st 1 U s. er, tarted rolling out a Stark g k 6 1 Rav ving™ food truck progra which of t am, ffers wine ta stings of the Stark Ravin e ng™ sub-bra in and 2 coor rdination wit food truck rallies acro the nation. (Light Dec. ¶ 16.) th k oss Plaintiff requested Diageo to ce fs D ease and des ist from prod selling wine under the ducing and s 3 4 “Sta Raving™ brand. Diageo refuse and Stark brought this action to en ark ™” ed s njoin Diageo from o 5 prod ducing, prom moting, distri ibuting and selling the “ Stark Ravin s ng™” wines to prevent lo of oss 6 good dwill and seek compensation for any damage alr y ready inflict 6 ted. 7 II. A prelim minary injunc ction is an ex xtraordinary remedy, wh should b granted o y hich be only in limite ed 8 9 10 L RD LEGAL STANDAR circu umstances and where the merits of the case clea favor on party over the other. W a t arly ne r Winter v. Natu Resourc Defense Council, 555 U.S. 7, 24 (2008). ural ces 4 The Cou considers four factors when decid urt s ding whether to issue a p r preliminary i injunction: (1) ( 11 Northern District of California United States District Court 12 whe ether the mov ving party ha demonstrated that it i s likely to su as ucceed on th merits; (2) whether the he ) 13 mov ving party will suffer irre eparable inju if the rel ief is denied (3) whethe the balanc of the ury d; er ce 14 hard dships favor the moving party; and (4 whether t public in 4) the nterest favors granting re s elief. See 15 Mill v. Califor ler rnia Pacific Medical Ctr 19 F.3d 44 456 (9th Cir. 1994) (en banc). I a trademark r., 49, h In 16 case a plaintiff is entitled to a prelimina injunctio if it can de e, o ary on emonstrate e either: (1) a combination n 17 of “p probable suc ccess on the merits” and “the possib ility of irrep d parable injury or (2) the existence of y”; e o 18 “ser rious questio going to the merits” and that “the balance of hardships ti sharply in his favor.” ons a e f ips n ” 19 Sard Restaura Corp. v. Sardie, 755 F.2d 719, 7 (9th Cir. 1985) (quot in Brookf di’s ant 723 ted kfield 20 Com mmunication Inc. v. We Coast Entertainment Corp., 174 F ns, est F.3d 1036, 1 1046 (9th Ci 1999)). ir. 21 This represents two points on the sliding scale in wh s o g hich the requ uired degree of irreparab harm e ble 22 incr reases as the probability of success decreases. Se Oakland Tribune, Inc v. Chronic Publishin d ee c. cle ng 23 Co., 762 F.2d 13 1376 (9 Cir. 1985 The burd of showi a likeliho of succe on the , 374, 9th 5). den ing ood ess 24 mer is “placed on the part seeking to demonstrat entitlemen to the extr rits d ty o te nt raordinary re emedy of a 25 preliminary inju unction at an early stage of the litigat n tion, before the defendan has had th opportuni nt he ity 26 27 6 28 Pla aintiffs initiall moved for a nationwide injunction, b have since limited the r ly e but e requested inju unction to five state California Florida, Illinois, New Yo and Texas es: a, ork s. 7 1 to un ndertake ext tensive disco overy or dev velop its defe enses.” Perf 10, Inc. v. Amazon.c fect com, Inc., 48 87 2 F.3d 701, 714 op d pinion amen nded on reh’ 508 F.3d 1146 (9th C 2007). ’g, Cir. 3 III. DISCUS SSION 4 A. 5 The Lan nham Act def fines a trademark as “an word, nam symbol, o device, or any ny me, or r OVERVIEW OF TRADEMA PROTE CTION O ARK 6 com mbination the ereof used by a person … to identify and distingu his or h goods, in y y uish her ncluding a 7 uniq product, from those manufacture or sold by others and to indicate t source of the goods, que ed y the f 8 even if that sour is unknow n rce wn.” 15 U.S § 1127. Thus, a tra S.C. ademark is an nything that serves to 9 indicate the sour of one co rce ompany’s go oods and to d distinguish t them from th goods of o he others. It “is s disti inguishing mark or symb m bol—a comm mercial signa ature—upon the mercha n andise or the package in e 12 Northern District of California mer a conven rely nient means for facilitati the prote ing ection of one good-will in trade by placing a e’s l 11 United States District Court 10 whic it is sold.” United Dr Co. v. Theodore Rec ch rug Th ctanus Co., 2 U.S. 90, 98 (1918). 248 , 13 The own of a trade ner emark has a limited prop perty right to exclude oth from us o hers sing that mar rk. 14 New Kids on the Block v. Ne America Pub., Inc., 9 F.2d 302 306 (9th C 1992). A person w e ew 971 2, Cir. 15 acqu uires the righ by being the first to us it in the m ht t se marketplace, or by using it before the alleged e 16 infri inger. Unlik a copyrigh or a paten for an inve ke ht nt ention, a trad demark is a p property righ only in ht 17 conn nection with its use by an existing bu h a usiness. See United Dru supra, 24 U.S. 90; R e ug, 48 Roger E. 18 Mei iners, Patent Copyrights, and Trad ts, demarks: Pro operty or Mo onopoly?, 13 HARV. J.L. & PUB. POL’Y 3 . L 19 911, 930 (1990) (“It is property only in the sense tha trade repu ) at utation or go oodwill is a p property 20 righ ht.”). 21 Courts focus on prot fo tecting consu umers in cas involving infringeme of a trade ses g ent emark which is h 22 the reason for cl r lassifying it as a form of unfair comp f petition. See 15 U.S.C. § 1125(a)(1); Mars Inc. v. e 23 Kab bushiki-Kaish Nippon Conlux, 24 F.3d 1368, 13 (Fed. Ci 1994) (“T law of un ha C 373 ir. The nfair 24 com mpetition gen nerally protec consume and comp cts ers petitors from deceptive o unethical conduct in m or 25 com mmerce …. Patent law, on the other hand, protec a patent o P o cts owner from t unauthor the rized use by 26 othe of the pat ers tented inven ntion, irrespective of whe ether decepti or unfair ion rness exists.” “The law ”). w 27 of unfair compe u etition has its roots in the common-la tort of de s e aw eceit: its gen neral concern is with n 28 prot tecting consu umers from confusion as to source. While that c c s concern may result in the creation of y e f 8 1 ‘quasi-property rights’ in communicative symbols, the focus is on the protection of consumers, not 2 the protection of producers as an incentive to product innovation.” Bonito Boats, Inc. v. Thunder 3 Craft Boats, Inc., 489 U.S. 141, 158 (1989). interest in a trademark; and (2) defendant’s use of a mark similar to plaintiff’s trademark in a manner 6 that is likely to cause consumer confusion. See 15 U.S.C. § 1114(1).7 Likelihood of confusion is the 7 central inquiry in the trademark infringement analysis: whether a “reasonably prudent customer in 8 the marketplace is likely to be confused as to the origin of the good or service bearing one of the 9 marks” because of the similarities between the two marks. Dreamwerks Prod. Group, Inc. v. SKG 10 Studio, 142 F.3d 1127, 1129 (9th Cir. 1998). “[B]ecause we are at the preliminary injunction stage, 11 [Plaintiffs] must establish that it is likely to be able to show such a likelihood of confusion.” See 12 Northern District of California The elements of a trademark infringement claim are: (1) a valid, protectable ownership 5 United States District Court 4 Brookfield, supra, 174 F.3d at 1052 n.15 (citing Sardi’s Restaurant, supra, 755 F.2d at 723). At this 13 time the Court is not making ultimate findings of fact after a full trial on the merits. The discussion 14 of infringement, and factual findings in that regard, is directed only towards Plaintiffs’ likelihood of 15 success on the merits.8 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Section 43(a)(1) of the Lanham Act itself provides that: Any person who, on or in connection with any goods or services, … uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, … shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. 15 U.S.C. § 1125(a)(1). 8 Plaintiffs’ state law and common law trademark infringement claims and claim under California’s Unfair Competition Law based on infringement are subject to the same legal standards as their Lanham Act trademark claim. See Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1221 (9th Cir. 2012) (citing Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 632 (9th Cir. 2008). Therefore, the same findings that the Court makes with respect to Plaintiffs’ entitlement to a preliminary injunction with respect to the federal trademark claim, also apply to Plaintiffs’ related state trademark infringement and unfair competition claims. 9 B. 1 2 FIRST ELEMENT: VALID, PROTECTABLE OWNERSHIP INTERESTS IN THE TRADEMARKS AT ISSUE Rights in a trademark are obtained only through commercial use of the mark. One way to 3 establish trademark rights is through use of a trademark in commerce and federal registration under 4 the Lanham Act. 5 Registration constitutes prima facie evidence of the validity of the registered mark and of a 6 plaintiff’s exclusive right to use that mark. 15 U.S.C. § 1115(a). To acquire ownership of a 7 trademark under the Lanham Act it is not enough to have invented the mark first or even to have 8 registered it first; the party claiming ownership must have been the first to actually use the mark in 9 the sale of goods or services, and, therefore, a party pursuing a trademark claim must meet a 10 threshold “use in commerce” requirement. Id. § 1051 et seq. Northern District of California Once a registered trademark has been in use for five years and if certain statutory formalities 12 United States District Court 11 are met (e.g., timely filed affidavit of continuous use), the registration is considered “incontestable” 13 evidence of the registrant’s right to use the mark. See id. § 1065. Incontestable status provides that 14 the “validity and legal protectability, as well as [the registrant’s] ownership therein, are all 15 conclusively presumed.” Brookfield, supra, 174 F.3d at 1046-47 n.10; 15 U.S.C. § 1115(b).9 A 16 registrant may rely upon the incontestability of the mark in an infringement action. See Park ‘N Fly, 17 Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 204 (1985). 18 1. 19 Stark Wine® Since the “Stark Wine®” mark is incontestable, it is immune from challenge on certain 20 grounds. 15 U.S.C. § 1065; see Barentzen Dec., Ex. D at 1 (PTO’s notice of acceptance of 21 declaration of incontestable status). Diageo challenges the “Stark Wine®” mark on the grounds that it 22 was never used in commerce, and therefore, has been abandoned. 23 A mark is “used in commerce” when (1) “it is placed in any manner on the goods or their 24 containers or the displays associated therewith,” and (2) “the goods are sold or transported in 25 commerce.” 15 U.S.C. § 1127. 26 27 28 9 “Incontestable trademark” is a legal term of art which provides the owner with certain presumptions. It does not mean that a challenge can never exist. For example, contests are appropriate where the trademark has been abandoned, is being used to misrepresent the source of goods, or was obtained fraudulently. See Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 195 (1985). 10 1 Diageo points out that the wines are labeled “STARK,” not “Stark Wine®,” and that the 2 phrase “Stark Wine®” only appears in fine print to identify the company’s business name (this is both 3 on the front and back labels of the wine bottles). On that basis, Diageo challenges the use of the 4 “Stark Wine®” mark, arguing that Plaintiffs only use the phrase “Stark Wine®” as a trade name and 5 not a trademark.10 At the hearing Plaintiffs introduced evidence of Stark Wine’s use of the trademark 6 “Stark Wine®” on packaging and correspondence. (See Exs. 2-7, 9-10, 12-13, 16, and 18.) For purposes of a preliminary injunction, Stark Wine is “likely” to be able to show that it has 7 8 a protectable ownership interest in the registered trademark “Stark Wine®” based upon the 9 trademark’s incontestable status and evidence that it has used the mark in commerce. 10 2. 11 Diageo challenges the validity of S@HS’s right to use the trademark “Stark Thirst™” Stark Thirst™ Northern District of California United States District Court 12 because the “Stark Thirst™” mark is not registered. Here, S@HS asserts common law trademark 13 rights in “Stark Thirst™” through its use of the mark in New York City, and in interstate commerce, 14 beginning on April 20, 2012. On June 20, 2012, the PTO found that “Stark Thirst™” appeared to be 15 entitled to registration and approved the mark for publication. The time to oppose registration has 16 expired. S@HS contends that its federal trademark registration is imminent. To succeed on an infringement claim, S@HS will have to show use and geographic scope of 17 18 that use. “Stark Thirst™” is available for purchase at only three locations in New York City—a high 19 end wine store in Manhattan, and a wine bar and a restaurant in Brooklyn. S@HS’s use of the Stark 20 Thirst™ mark has priority over Diageo’s “Stark Raving™” in this geographic area. S@HS is likely to be able to show that it has common law trademark rights in “Stark 21 22 Thirst™” in a limited geographic area to satisfy the first element. 23 24 25 26 27 28 10 A “trade name” is defined in the Lanham Act as “any name used by a person to identify his or her business.” 15 U.S.C. § 1127. In contrast to trademarks, which refer to words or symbols used to identify and distinguish particular goods, trade names refer to the words or symbols used to identify and distinguish businesses. See SunEarth, Inc. v. Sun Earth Solar Power Co., Ltd., 846 F. Supp. 2d 1063, 1073 n.6 (N.D. Cal. 2012), appeal dismissed (Apr. 18, 2012) (citing 15 U.S.C. § 1127). 11 1 C. 2 To prevail on a claim for trademark infringement, Christian Stark, Stark Wine LLC, and SECOND ELEMENT: LIKELIHOOD OF CONFUSION 3 S@HS must establish that Diageo is using a mark confusingly similar to their own marks. See AMF 4 Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979) abrogated by Mattel, Inc. v. Walking 5 Mountain Productions, 353 F.3d 792 (9th Cir. 2003). The central issue in a trademark action is 6 whether consumers “‘are likely to assume that a product or service is associated with a source other 7 than its actual source because of similarities between the two sources’ marks or marketing 8 techniques.’” Nutri/System, Inc. v. Con-Stan Indus., Inc., 809 F.2d 601, 604 (9th Cir. 1987) (quoting 9 Shakey’s Inc. v. Covalt, 704 F.2d 426, 431 (9th Cir. 1983)); Official Airline Guides v. Goss, 6 F.3d 10 1385, 1391 (9th Cir. 1993) (issue can be recast as whether “the similarity of the marks is likely to 11 confuse customers about the source of the products.”). Northern District of California United States District Court 12 Courts in the Ninth Circuit use the eight Sleekcraft factors to guide the likelihood of confusion 13 analysis: (1) the similarity of the marks; (2) the relatedness of the companies’ goods; (3) the 14 marketing channels used; (4) the strength of mark(s) of the junior holder or senior holder or both; (5) 15 Diageo’s intent in selecting its mark; (6) evidence of actual confusion; (7) the likelihood of expansion 16 into other markets; and (8) the degree of care likely to be exercised by purchasers. E. & J. Gallo 17 Winery v. Gallo Cattle Co., 967 F.2d 1280, 1290 (9th Cir. 1992). Courts do not mechanically apply 18 these factors and then tally the results; some factors are considered to be more important than others 19 and each factor is not necessarily relevant in every case. Id. Accordingly, this list functions as guide 20 and is “neither exhaustive nor exclusive.” Id. 21 1. 22 The Ninth Circuit has developed “certain detailed axioms to guide this comparison” of First Factor: Similarity of the Marks. 23 marks for similarity: (i) the marks must be considered in their entirety and as they appear in the 24 marketplace; (ii) the marks should be analyzed by their sound, sight, and meaning; and (iii) 25 similarities are weighed more heavily than differences., Inc. v. Walt Disney Co., 202 F.3d 26 1199, 1206 (9th Cir. 2000) (citing Filipino Yellow Pages, Inc. v. Asian Journal Publications, Inc., 27 198 F.3d 1143, 1147-50 (9th Cir. 1999); Dreamwerks, supra, 142 F.3d at 1131; and Goss, supra, 6 28 F.3d at 1392). 12 1 a) 2 Plaintiffs argue that the word “stark”—used in Diageo’s “STARK Sound 3 RAVING™,” and Plaintiffs’ “STARK WINE®” and “STARK THIRST™”—is the dominant portion 4 of the trademark and is identical in sound, sight and meaning in all three marks. Plaintiffs base this 5 argument on the PTO’s rejection of the “STARK THIRST™” and “STARK NAKED” marks on the 6 grounds that those marks are similar in sound, sight, and meaning to “STARK WINE®” due to the 7 common use of the dominant word “stark.” Plaintiffs argue that because “STARK RAVING™,” 8 “STARK THIRST™” and “STARK NAKED” all begin with the word “stark” there is no difference 9 between the rejected “STARK THIRST™” and “STARK NAKED” marks, and the “STARK 10 RAVING™” mark. Therefore, Plaintiffs argue that these similarities in sound, sight, and meaning 11 due to the common use of the dominant word “stark” are case dispositive. Plaintiffs rely too heavily on the PTO determinations regarding the STARK THIRST™ and Northern District of California United States District Court 12 13 STARK NAKED applications. The Ninth Circuit has held that a preliminary determination by a PTO 14 administrator is entitled to consideration but should not be accorded much weight where the examiner 15 did not have access to the all the evidence before the District Court. 19 Any such determination made by the Patent Office under the circumstances just noted must be regarded as inconclusive since made at its lowest administrative level … . The determination by the Patent Office is rendered less persuasive still by the fact that the Patent Office did not have before it the great mass of evidence which the parties have since presented to both the District Court and this court in support of their claims. 20 Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 802 (9th Cir. 1970). Thus, even if the 21 PTO rejected Diageo’s trademark application for the “STARK RAVING™” mark, this evidence 22 would be entitled to minimal weight. Here, Plaintiffs did not call the PTO examiner to testify as to 23 the basis for the PTO’s rejection of the “STARK THIRST™” and “STARK NAKED” marks. 24 Nevertheless, in a vacuum while using the “sound” test, the use of the words “STARK 16 17 18 25 RAVING™” as compared next to “STARK THIRST™” and “STARK WINE®” in the context of 26 selling wine is likely to cause confusion. For instance, as seen11 on a menu or wine list, little 27 28 11 One cannot fully separate sound from sight or meaning in this context. 13 1 difference exists to alert the customer that the products are not related. Thus, the sound metric 2 weighs in favor of finding similarity. 3 b) 4 Diageo argues that aside from the commonality of the word “stark,” the marks 5 have nothing in common. Even if the dominant portion of the wines’ names is “stark,” this does not 6 mean that the other words in the name have no significance. Alpha Indus., Inc. v. Alpha Steel Tube & 7 Shapes, Inc., 616 F.2d 440, 444 (9th Cir. 1980) (“These other words are significant words, indicating 8 a different origin, not merely descriptive words.”). 9 Sight The marks must be “[c]onsidered in their entirety and as they appear in the marketplace.” be considered in light of the way the marks are encountered in the marketplace ); First Brands Corp. 12 Northern District of California Goss, supra, 6 F.3d at 1392; Kern v. Mindsource, Inc., 225 F.3d 663 (9th Cir. 2000) (similarity must 11 United States District Court 10 v. Fred Meyer, Inc., 809 F.2d 1378, 1383-84 (9th Cir. 1987) (examining the “total effect of the 13 defendant’s product and package on the eye and mind of an ordinary purchaser.”); adidas Am., Inc. v. 14 Payless Shoesource, Inc., 529 F. Supp. 2d 1215, 1234-35 (D. Or. 2007) (“similarity of design is 15 determined by considering the overall impression created by the mark as a whole rather than simply 16 comparing individual features”). “The proper test for likelihood of confusion is not whether 17 consumers would be confused in a side-by-side comparison of the products, but whether confusion is 18 likely when a consumer, familiar with the one party’s mark, is presented with the other party’s goods 19 alone.” E. & J. Gallo Winery v. Consorzio del Gallo Nero, 782 F. Supp. 457, 466 (N.D. Cal. 1991) 20 (quoting Elizabeth Taylor Cosmetics Co. v. Annick Goutal, S.A.R.L., 673 F. Supp. 1238, 1248 21 (S.D.N.Y. 1987)). Here, the marketplace is not only restaurants, which may list only the name of a 22 wine on a wine list, but other consumer outlets where the consumer would see the labels of the wines 23 themselves. 24 25 26 27 28 14 1 Here Defendant argues that these: e, t 2 3 4 5 6 7 8 9 10 Ex. 20 02 11 Northern District of California United States District Court 12 Ex 42 x. look nothing lik these: k ke 13 14 15 16 17 18 19 20 21 22 23 24 See Def. Opp’n 1 O E 43 Ex. Kersten Krall Walz disagree and testifi that they all appear t come from the same s W ed fied y to m source. 25 26 27 28 15 5 1 Diageo produced examples of other wines also using the word “stark” on the wine label which 2 are not the subject of this action and questioned Ms. Krall Walz about the possibility of confusion of 3 Plaintiffs’ Stark Wine® and Stark Thirst™ marks with these other wines, such as “Stark-Condé,” as 4 shown below: 5 6 7 8 9 10 11 Northern District of California United States District Court 12 Ex. 218A 13 14 Ms. Krall Walz testified that consumers would not confuse Stark-Condé wines with either of the 15 Plaintiffs’ wines because the Stark-Condé label used a hyphen which suggested it was derived from 16 the name of a person. 17 The Court finds that in terms of the “sight” sub-factor as it relates to the Stark Wine® and 18 Stark Raving™ marks, it is not likely that consumers would be confused. The Stark Wine® label is a 19 sophisticated, traditional wine label, with block lettering, set against a linen background, and only 20 uses the word “STARK” suggesting the last name of the winemaker himself. The Stark Raving™ 21 label is not traditional. The image of the mad scientist/inventor, with vibrant colored paint 22 splatters—blue, orange, red, or green, depending on the varietal―suggests the exact opposite of a 23 traditional, personally crafted, boutique wine affiliated with a winemaker. It is more radical in 24 approach and does not even list the wine’s vintage or vineyard, calling out the varietals in a non- 25 traditional way―Red, White, Cab (except for the Malbec). 26 The call is closer with respect to whether consumers would be confused about the source of 27 Stark Thirst™ and Stark Raving™. The similarities between the Stark Thirst™ and Stark Raving™ 28 labels are more pronounced and the differences are more subtle than between the Stark Wine® and 16 1 Stark Raving™ labels. Both Stark Thirst™ and Stark Raving™ have non-traditional wine labels. 2 The Stark Thirst™ label appears to be a hand drawn picture of an old bottle with simple colors— 3 black and white, while the label for Stark Raving™ has a picture of a person, is more colorful―blue, 4 orange, red, green―and does not list vintage or vineyard. 5 6 This sub-factor weighs against a finding of similarity with respect to Stark Wine®, but in favor of finding similarity with respect to Stark Thirst™. 7 c) 8 In this context, one cannot fully separate sight or sound from meaning. As to 9 Meaning Stark Wine®, the most prominent feature of the label is the word “STARK.” On a wine label, the use winemaker. The Court is not persuaded by Plaintiffs’ argument that their use of the word “STARK” 12 Northern District of California of the single word “STARK,” without modifying another word, suggests solely the name of the 11 United States District Court 10 on a wine label conveys a meaning of “to the fullest extent” separate and distinct from wine produced 13 by Christian Stark. (Reply 8.) In this context, the word “STARK” is being used as a proper noun and 14 not as an adverb or adjective, and it evokes the name of the winemaker himself, not the dictionary 15 definition of the word. 16 On the other hand, because both Stark Thirst™ and Stark Raving™ are used as adverbs, 17 confusion is more likely as “stark” in this context means “to an absolute or complete degree.” 18 Merriam-Webster’s Ninth New Collegiate Dictionary, p. 1150 (1988). The image of a mad scientist 19 on the label for Stark Raving™ communicates a message that the consumer is bold, young and 20 rebellious. A picture of an old bottle with information that 10% of profits to WaterAid on the label 21 for Stark Thirst™ suggests complete thirst, and the impetus to buy wine which contributes 10% of 22 profits to WaterAid. While Stark Raving™ (“totally crazy,” or “completely wildly insane”) and 23 Stark Thirst™ (totally and completely thirsty), communicate distinct meanings, both labels 24 communicate more than just the name of a winemaker. 25 An analysis of the components of the similarity of the marks, in their entirety and as they 26 appear in the marketplace, and weighing the similarities more heavily than the differences, strongly 27 suggests a finding of no confusion between “STARK RAVING™” and “STARK WINE®,” but in 28 favor of finding confusion between “STARK RAVING™” and “STARK THIRST™.” 17 1 2. 2 “Related goods are generally more likely than unrelated goods to confuse the public as Second Factor: Relatedness of the goods. 3 to the producers of the goods.” Brookfield, supra, 174 F.3d at 1055.12 Related goods are those 4 “‘which would be reasonably thought by the buying public to come from the same source if sold 5 under the same mark.’” Sleekcraft, supra, 599 F.2d at 348 n. 10 (citations omitted). “[W]ines of all types constitute a single class of goods.” E. & J. Gallo Winery, supra, 782 F. 6 7 Supp. at 464. All of the goods at issue are wine; that is enough to satisfy the relatedness element. 8 adidas, supra, 529 F. Supp. 2d at 1236 (“Here, the parties’ products are essentially identical in use 9 and function. Both parties sell athletic and casual footwear. Aside from arguable differences in 10 quality, the parties’ products are ‘reasonably interchangeable by buyers for the same purposes,’ and 11 thus competitive.”) (citing 4 McCarthy, supra, § 24:23). This factor weighs in favor of confusion. Northern District of California United States District Court 12 3. 13 This factor considers how and to whom the respective parties’ goods are sold. 4 Third Factor: Common marketing channels. 14 McCarthy, supra, § 24:51. “Convergent marketing channels increase the likelihood of confusion.” 15 Nutri/System, supra, 809 F.2d at 606 (quoting Sleekcraft, supra, 599 F.2d at 353). If the “general 16 class” of purchasers of the respective products of the parties is the same, confusion is more likely. 17 Sleekcraft, supra, 599 F.2d at 353. In contrast, significant differences in the price of the products, or 18 the type of stores (i.e., discount or specialty) at which the respective products are sold may decrease 19 the likelihood of confusion. See L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1134 (Fed. 20 Cir. 1993). In determining whether significant overlap exists between the general classes of 21 purchasers exposed to the products, relevant considerations include whether the goods are sold under 22 the same roof; the normal marketing channels are similar or parallel; the same sales methods are 23 employed; and the products are advertised in the same places (internet, newspapers and classified 24 telephone directories). Sleekcraft, supra, 599 F.2d 353. 25 26 27 28 12 To satisfy the relatedness factor Plaintiffs do not need to establish that the parties are direct competitors, although where the goods are directly competitive, “the degree of similarity of the marks needed to cause likely confusion is less than in the case of dissimilar goods.” 4 McCarthy, supra, § 24:22. 18 1 The evidence presented suggests no overlap in the parties’ channels. Mary Frances Light 2 Dusenbury, Defendant’s Senior Director of Marketing and Innovation, explained that wine is 3 distributed through a “three-tier” system whereby producers sell their products to distributors, who in 4 turn sell to retail accounts. (Light Dec. ¶ 18.) Consumers then can purchase wine “on premises” at 5 restaurants and bars or “off premises” from mass merchandisers, grocery stores, liquor stores, and 6 wine shops. (Id.) 7 Stark Wine® is sold in Christian Stark’s tasting room in Healdsburg located in Sonoma 8 County, California. Consumers can also purchase Stark Wine® over the telephone and on Stark 9 Wine’s website. Stark Thirst™ is sold off premises at one high-end wine store in Manhattan and and one wine bar. Diageo estimates that approximately 90% of Stark Raving™ wine will be sold 12 Northern District of California through the internet, and is available on premises at two locations in Brooklyn, one upscale restaurant 11 United States District Court 10 “off premises” through Diageo’s current network of distributors, approximately 80% of whom 13 exclusively distribute only Diageo products. According to Diageo, this means that Stark Raving™ 14 wines are, and will continue to be, on the shelves at large national grocery stores and mass 15 merchandise chains (such as Safeway, Target, and Jewel-Osco) that require a large volume supply of 16 product, which Plaintiffs could not supply. And any on-premises sale would most likely be served at 17 “fast casual” chain restaurants like T.G.I. Friday’s. 18 Plaintiffs testified of future plans to sell their wines through channels similar to the channels 19 through which Diageo sells its Stark Raving™ wines. Plaintiffs’ expansion plans are relevant to the 20 seventh factor, infra, but are not pertinent to the analysis of whether there is any overlap in the 21 respective marketing channels now. Plaintiffs did not submit any evidence that the parties advertise 22 their products in the same places. 23 This factor weighs against finding confusion, as it seems that there is no overlap in the 24 parties’ respective marketing channels, except, perhaps to the extent consumers in Sonoma County 25 shop at the mass merchandise chains and boutique wine shops. 26 4. 27 The more likely a mark is to be remembered and associated in the public mind with 28 Fourth Factor: Strength of the mark. the mark’s owner, the greater the likelihood of confusion. Brookfield, supra, 174 F.3d at 1058 (citing 19 1 Ken nner Parker Toys Inc. v. Rose Art Ind T R dus., Inc., 96 F.2d 350, 353 (Fed. C 1992)). The “strengt 63 Cir. th” 2 of a trademark is evaluated both in term of its conc i b ms ceptual stren ngth and its c commercial s strength. Se ee 3 M pra, 2 McCarthy, sup § 11:83. 4 a) 5 Mark can be con ks nceptually cl lassified alon a spectrum of increas ng m sing inherent t 6 Conceptua Strength al disti inctiveness, the weakest being gener and the st ric trongest bein fanciful: ng 7 c tive estive → arb bitrary → fa anciful generic → descript → sugge 8 See Brookfield, supra, 174 F.3d at 1058. A “weak t F trademark” i a mark tha is a meani is at ingful word in i 9 mmon usage or is merely suggestive or descriptiv of the pro o o ve oduct or service. “A ‘gen neric’ term is com ervice is a sp pecies. It ca annot become a trademar under any circumstan rk y nces.” Surgic centers of or se 12 Northern District of California one that refers, or has come to be unders o stood as refe erring, to the genus of w e which the par rticular produ uct 11 United States District Court 10 Ame erica, Inc. v. Medical De ental Surgeries, Co., 601 F.2d 1011, 1014 (9th C 1979) (c 1 , Cir. citing 13 Abercrombie & Fitch Co. v. Hunting World, Inc., 53 F.2d 4, 9-11 (2d Cir. 1976)). A descriptive . Wo 37 14 mar specificall “describes a characte rk ly s” eristic or ing gredient of an article or s n service to wh it refers or hich 15 its purpose (e.g., “Park ‘N Fly”), while a suggestive mark “sugg p F e gests,” rather than descri r ibes, an 16 ingr redient, quali or charac ity cteristic (e.g. Sleekcraft) and thereby moves alo the spect ., ) y ong trum to the 17 stron nger categor See Selfry. -Realization Fellowship Church v. A Ananda Chur of Self-R rch Realization, 59 5 18 F.3d 902, 910 (9 Cir. 1995 d 9th 5). A “stron trademark is one used only in a f ng k” fictitious, arb bitrary, and f fanciful man nner.13 Mark ks 19 20 that are suggesti arbitrary or fanciful “serve[ ] to identify a particular sou of a pro ive, y urce oduct, [and] are a 21 deem inheren distinctiv med ntly ve.” Two Pe esos, supra, 505 U.S. at 768; Kendal ll-Jackson W Winery. Ltd. v. v 22 E. & J. Gallo Winery, 150 F.3d 1042, 10 (9th Cir 1998). Arb W F 046 r. bitrary mark are words, symbols, ks 23 pictu ures, etc., th may be in common lin hat n nguistic use but which, w when used in combinatio with the n on 24 good or service at issue, have no descr ds es h riptive conn notation with those goods or services 2 McCarth h s s. hy, 25 supr § 11:11. Fanciful ma are “coi ra, arks ined” words or phrases t are eithe invented o selected— that er or — 26 27 28 13 Fo example, Iv or vory soap is not made of iv n vory, and a “c common” wo such as “a ord apple” can be used as an arbit trary and inhe erently strong trademark on a product su as person computers 2 McCarthy supra, § g n uch nal s. y, 11:11. 20 0 1 i.e., words that are unknown or out of common usage at the time—solely for the purpose of 2 functioning as a trademark. Id. § 11:5. 3 Where a particular mark falls along this spectrum is determined by the “imagination test” and 4 the “need test.” See Earthquake Sound Corp. v. Bumper Indus., 352 F.3d 1210, 1221 n.4 (9th Cir. 5 2003) (citing Miss World (UK) Ltd. v. Mrs. Am. Pageants, Inc., 856 F.2d 1445, 1449 (9th Cir. 1988), 6 abrogated in part on other grounds as recognized by Eclipse Assocs. Ltd. v. Data Gen. Corp., 894 7 F.2d 1114, 1116 n.1 (9th Cir. 1990). The “imagination test” considers “how much imagination a 8 consumer must use to associate a given mark with the goods or services it identifies,” with greater 9 effort on the consumer’s part corresponding to a stronger mark. Id. The “need test” considers 10 11 whether “a mark is actually needed by competitors to identify their goods or services.” Id. Typically, in analyzing the strength of a mark, the Court would evaluate the mark which had Northern District of California United States District Court 12 priority; a more well-known senior mark suggests greater likelihood of future or “forward” confusion 13 because a junior user’s mark is more likely to be associated with that established famous mark. In 14 that case, the concern is whether the junior mark-holder is benefiting from the goodwill of the more 15 well-known senior mark-holder. 16 In a reverse confusion case, as alleged here, the concern is that consumers will believe that the 17 senior mark-holder’s goods are produced by the junior mark holder or that consumers will believe 18 that the senior mark-holder is trying to “palm off” its goods as those of the junior mark-holder. For 19 that reason, the focus in a reverse confusion case is on the strength of the junior user’s mark. 20 Dreamwerks, supra, 142 F.3d at 1130 n.5 (issue was whether a consumer attending a Dreamwerks- 21 sponsored science fiction convention might do so believing that it is sponsored by DreamWorks) 22 (citing Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 959 (7th Cir. 1992)). 23 Accordingly, the Court reviews the strengths of all three marks. 24 i. The “Stark Raving™” mark 25 Conceptually, the “Stark Raving™” mark is arbitrary because the mark 26 “uses common words in a fictitious and arbitrary manner to create a distinctive mark which identifies 27 the source of the product.” Dreamwerks, supra, 142 F.3d at 1131. It is neither suggestive of the 28 21 1 goods–people do not ordinarily associate drinking wine with insanity–nor descriptive of the wine’s 2 characteristics–people will not go stark raving mad after they drink the wine. 3 4 Based on the foregoing, the Court finds that the mark “Stark Raving™” is arbitrary and therefore conceptually strong. The “Stark Wine®” mark 5 ii. 6 Diageo argues that Stark Wine®, as a personal name, is a descriptive descriptive and not protectable unless it acquires a secondary meaning. 15 U.S.C. § 1052(e)(4), (f); 2 9 McCarthy, supra, § 13:1 (proof of secondary meaning is required to protect a family name). Where, 10 as here, “stark” has a non-surname meaning, the mark is not primarily a surname, and no secondary 11 meaning is required. See Lane Capital Management, Inc. v. Lane Capital Management, Inc., 192 12 Northern District of California term. Under the trademark laws, a mark that is “primarily merely a surname” is considered 8 United States District Court 7 F.3d 337 (2d Cir. 1999) (mark Lane Capital Management is not a personal name mark requiring 13 secondary meaning because “lane” also has a non-surname meaning, even though “Lane” was the 14 nickname and middle name of the father of the founder of plaintiff and the middle name of the son of 15 the founder). 16 Stark Wine argues that its mark is “arbitrary” because the adjective “stark” has nothing to do 17 with wine. (See Reply 8 (“Stark is not only a surname, but also an adjective that appears in the 18 dictionary …. When it comes to describing wine, ‘Stark’ is arbitrary and, therefore a strong mark.”).) 19 The PTO initially rejected Christian Stark’s trademark application for the “Stark Wine®” mark on the 20 basis that “Stark” “is primarily merely a surname.” (Barentzen Dec., Ex. D at 52 (“in support of the 21 assertion that Stark is a surname, the examining attorney points out that the applicant’s surname is 22 Stark.”)). Christian Stark responded that “[t]he word ‘Stark’ is not primarily a surname. In many 23 instances it is used as an adjective … such as ‘a stark white room’ or a ‘stark contrast.’” (Barentzen 24 Dec., Ex. D at 44.) 25 Christian Stark testified at the preliminary injunction hearing that he was reluctant to use his 26 surname for his wine but felt that the dictionary definition of the word “stark”―complete, bold, to 27 the fullest extent―adequately captured the essence of his wines. While conceptually, stark would be 28 an arbitrary name for a wine—as one does not normally think of wine as being “bare” or “harsh,” or 22 1 “utterly” and “completely” so―Christia Stark and S@HS have closely ass s an d sociated the Stark Wine® 2 and Stark Thirst brands with Christian Stark as th winemake throughou its history of use. His t™ w n he er ut 3 after r-the-fact att tempt to dist tance himsel from this u is belied by his own documents: lf use d 4 “Krall Walz is launc W ching her ow wine bran Stark Thi (of cours made by wn nd, irst se, Christian (Exh. 18) n)” 5 6 7 8 9 “Stark Wine is a refl W lection of ou passion fo family.” ( ur or (Ex. 8.) “The nam Stark Wi derives from the own family n me ine f ners name … Th goal is for he r consume to associa the wine and its qual with the name ‘Stark ers ate lity k.’” (Ex. 23.) “We cho the name Stark Thirs because Ch ose e st hristian Star is the winemaker.” (E rk Ex. 240.) strates that Thu while “sta us, ark” can be used as an ad u djective or a adverb, he the evide an ere, ence demons 10 until Krall Walz partnered with Christia Stark it ha only, and intentionally, been used descriptive z w an ad d ely 11 dentify the wine with the winemaker himself. w e r to id Northern District of California United States District Court 12 13 Based on the foregoi the Cou finds that on this reco the mark “Stark Wine®” is, at bes n ing, urt ord st, desc criptive and therefore rel latively weak k. 14 iii. 15 Plaintiffs argue that th “Stark Th he hirst™” mark is conceptu k ually strong Th “Stark Th ®” mark he hirst 16 for the same rea t asons that the “Stark Win ®” mark is strong. (Se Reply 8 (“ e ne s ee “When it com to mes 17 desc cribing wine ‘Stark’ is arbitrary and therefore a strong mark e, a d, k”).) Conce eptually, the “Stark 18 Thir rst™” mark can be class sified as sugg gestive becau it “suggests” that the product is a beverage ause e 19 that will quench the consum h mer’s “thirst.” Based on the foregoin the Court finds that th mark ” ng, t he 20 ark ” ve efore modera ately strong. “Sta Thirst™” is suggestiv and there 21 22 b) Commerc Strength. cial . None of the mark has acquir commerc strength Plaintiffs c e ks red cial h. contend that t 23 Chri istian Stark has “strength h hened his br rand to acqui commerc strength based upon the favorabl ire cial le 24 reviews of his wine, and its recognition as a charitab organiza w ble ation.” Defendant does n dispute not 25 that Christian St tark is a goo winemake and that h wines hav received n od er, his ve numerous ac ccolades. 26 How wever, neithe Christian Stark’s wine nor the “S er es STARK WIN ®” tradem NE mark has com mmercial 27 stren ngth. At bes the goodw that Christian Stark has built int his brand t st, will to through favo orable review ws 28 and charity work has created recognition in Sonoma County onl k d n a ly. 23 3 1 Plaintiffs’ companies are struggling financially, with little to no advertising budget. Stark 2 Wine LLC will spend approximately $1,000 out-of-pocket marketing Stark Wine® in 2012, while 3 S@HS has not spent any money advertising Stark Thirst™.14 Stark Thirst™ is a relatively new 4 brand, and Stark Wine produced no wines in either 2008 or 2010―Christian Stark testified that 2008 5 was a bad year for grapes and that he devoted 2010 to building his tasting room. Sales outside of 6 Christian Stark’s tasting room totaled $20,000 over the past two years, $500 in 2011. Kern v. 7 Mindsource, Inc., 225 F.3d 663 (9th Cir. 2000) (evidence did not show mark was strengthened by 8 mark holder’s activities: (1) his advertising in magazines aimed at lawyers and the purchase of a spot 9 on a local radio show was discontinued in 1996; (2) he had used his mark less than seven years and produce any financial records of his business but only estimated annual sales to be “a couple 12 Northern District of California there was at least one other federal registration for the same mark that predated his; and (3) he did not 11 United States District Court 10 thousand dollars, maybe”). Additionally, Tony Yarborough, a private investigator with Robert & Jackson Associates, 13 14 discussed the relative unavailability of Stark Thirst™ and Stark Wine®. The investigator attempted 15 to locate the Plaintiffs’ wines on the websites where Plaintiffs Krall Walz and Christian Stark stated 16 by Declaration that Stark Wine® and Stark Thirst™ were available, but neither wine was available to 17 purchase on any of the websites. Also relevant to the analysis is the extent of any advertising or marketing campaign by Diageo 18 19 that may result in “a saturation in the public awareness of the junior user’s mark.” Glow Indus., Inc. 20 v. Lopez, 252 F. Supp. 2d 962, 989 (C.D. Cal. 2002). Advertising, length of time in business, and 21 public recognition are factors taken into account when classifying the commercial strength of marks. 22 Sleekcraft, supra, 599 F.2d at 350; Brookfield, supra, 174 F.3d at 1058 (significant advertising 23 expenditures can transform a suggestive mark into a strong mark where that mark has achieved actual 24 marketplace recognition). Stark Raving™ has been marketed and promoted, only recently, on 25 Diageo’s website and via the website, through YouTube videos, and 26 27 28 14 Ms. Krall Walz has devoted a significant amount of uncompensated time marketing Stark Thirst™. 24 1 thro ough distribu ution of mark keting mater rials—includ ding pallet w wraps, playin cards, iPhone covers, ng 2 bott carriers, bar mats, and menu inser tle b d rts. 3 With res spect to Stark Raving™, whether Dia k ageo will ac chieve comm mercial streng or brand gth 4 awa areness rema speculati ains ive. Ms. Krall Walz test tified that gi iven Diageo’s resources it can 5 prom its Star Raving™ wine brand to create hig brand aw mote rk gh wareness. Ho owever, she w unable to was t 6 quan ntify the cos of creating such brand awareness i a wine lab given the saturation i the market. st g in bel e in 7 Ms. Light testifi that wine generally do not have brand awar ied es e reness, with G Gallo being an exception n. 8 Mor reover, Ms. Light testifie that the co to gain su brand aw L ed ost uch wareness wo ould be extra aordinary, 9 man millions of dollars. Ms. Light exp ny o M plained that she does not expect the Stark Ravin t ng™ brand to o plac any telev ced vision or radi advertisem io ments, and it internet ad ts dvertising ha been to en as ncourage we eb 12 Northern District of California gain brand awar n reness becau it does no have a suf use ot fficiently lar advertisin budget. D rge ng Diageo has not n 11 United States District Court 10 user to visit the Diageo Chateau & Esta Wines C rs e ate Company web bsite, www.diageowines 13 Add ditionally, wh Diageo has spent or committed more than o million d hile r one dollars to ma arket the Star rk 14 Rav ving™ brand this marketing has been directed pr d, rimarily tow wards distribu utors and ret tailers and not 15 cons sumers. 16 c) 17 Finall Diageo argues that th Stark Win ® and Star Thirst™ m ly, a he ne rk marks are we eak 18 beca ause many other wines also using the word “star on their l o a rk” label. “Use of similar m marks by third- 19 part companies in the relev industry weakens th mark at is ty s vant y he ssue.” M2 So oftware, Inc v. Madacy c. 20 Entm 421 F.3d 1073, 1088 (9th Cir. 2005) (citing Miss World supra, 856 F.2d at 144 Quality m’t, d 8 2 d, 6 49); 21 Sem miconductor, Inc. v. QLog Corp., C-93-20971 J 1994 W 409483, a *2 (N.D. C May 13, gic C JW, WL at Cal. 22 1994 (“an arbit 4) trary mark may be classi m ified as weak where ther has been e k re extensive thi party use of ird 23 simi marks on similar goo ilar n ods”) (citing General M g Mills, Inc. v. K Kellogg Co., 824 F.2d 62 627 (8th 22, 24 Cir. 1987). 25 Third par use rty Diageo has provided evidence of the use of t word “st h d the tark” by a nu umber of oth her 26 emakers (an potential infringers). Mr. Yarboro nd i M ough, Diageo private in o’s nvestigator, testified abo out wine 27 the market avail m lability of ot ther wines th use the w hat word “stark” on their labe “Stark-C el: Condé”; “Stark 28 sed Win nes” made by Stark Wine LLC, a Minnesota bas company that has be making i Stark y es M y een its 25 5 1 Wines for over a year; a dessert wine “Stark’s Star”; “Starkweather Alley” Pinot Grigio; and Indian 2 Creek Vineyard’s “Stark County Red.” In response, Plaintiffs contend that Stark-Condé, Stark 3 County and Starkweather Alley relate to a name or place and therefore are not relevant; Stark Wines 4 makes “fruit wine” and is therefore not a competitor; and Stark’s Star describes a grape varietal. 5 After considering the relative conceptual and commercial strengths of the parties’ respective 6 marks, the Court finds that this factor weighs against a finding a likelihood of consumer confusion 7 between Stark Wine® and Stark Raving™ or between Stark Thirst™ and Stark Raving™. 8 5. 9 If intent to deceive consumers is shown, courts will presume that the defendant will be Fifth Factor: Intent of holder of alleged infringing mark in adopting mark. at 1293); Network Automation, supra, 638 F.3d at 1154 (defendant’s intent relevant insofar as it 12 Northern District of California able to accomplish its deceptive purpose. Goss, supra, 6 F.3d at 1394 (citing Gallo, supra, 967 F.2d 11 United States District Court 10 bolsters a finding that the public will be deceived by the junior mark-holder’s use of the mark). Thus, 13 when “an alleged infringer knowingly adopts a mark similar to another’s, courts will presume an 14 intent to deceive the public.” Goss, supra, 6 F.3d at 1394; Interstellar Starship Services, Ltd. v. Epix 15 Inc., 184 F.3d 1107, 1111 (9th Cir. 1999), superseded by statute on other grounds (“Adopting a 16 designation with knowledge of its trademark status permits a presumption of intent to deceive”). 17 Generally, the intent factor will be of minimal importance because intent can be hard to prove and 18 “intent to confuse customers is not required for a finding of trademark infringement.” Brookfield, 19 supra, 174 F.3d at 1059 (citing Dreamwerks, supra, 142 at 1132 (“Absence of malice is no defense to 20 trademark infringement.”)). Further, this factor generally focuses on whether the junior holder of the 21 mark intended to “palm off” its goods as those of the senior mark-holder, thus plays a less critical 22 role in a reverse confusion case. Chattanoga Mfg., Inc. v. Nike, Inc., 140 F. Supp. 2d 917, 930 (N.D. 23 Ill. 2001), aff’d as modified on other grounds, 301 F.3d 789 (7th Cir. 2002) 24 Here, Diageo was aware of both the Stark Wine® trademark and the Stark Thirst™ trademark 25 application at the time it sought to register its Stark Raving™ mark. Diane Plaut, Diageo’s Director 26 and Senior Counsel of Intellectual Property, commissioned a trademark search for the word “stark” 27 which uncovered both the Stark Wine® trademark and the Stark Thirst™ application. Ms. Plaut spent 28 26 1 a few hours reviewing the 298-page trademark search report.15 (See Ex. 29.) Even though Diageo’s 2 legal team was aware of the Plaintiffs’ trademarks, Diageo chose to file an application to register the 3 “Stark Raving™” mark. Plaintiffs contend that Diageo not only was aware of their trademarks, but that Diageo 4 5 intended to mislead the PTO by describing its wine as “Alcoholic beverages other than beer” rather 6 than “Wine.” As proof, Plaintiffs argue that on April 2, 2012, which was within two months of 7 applying for the “Stark Raving™” mark, Ms. Plaut, who filed the “Stark Raving™” application, filed 8 a trademark application for another brand of wine Diageo was launching for Rosenblum Cellars 9 called “Butterfly Kisses™,” but in that application, Diageo disclosed that the trademark was for the 10 goods “Wine.” For purposes of this proceeding, the evidence provided at the hearing supports Ms. Plaut’s 11 Northern District of California United States District Court 12 testimony that her practice on behalf of Diageo was to apply for the broadest possible protection of its 13 trademarks so that if the opportunity arises in the future it can expand its product line. First, she 14 testified that Diageo has expanded wines into spirits. Second, Ms. Plaut testified that to her 15 understanding the description “Alcoholic beverages other than beer” was an acceptable description 16 for a wine because it includes wine. And, third, business records showed that approximately 80% of 17 all of the trademark applications that she had filed for wines while she has worked at Diageo had 18 been more expansively described as “Alcoholic beverages other than beer,” not “wine.” Awareness of a senior mark-holder’s trademark is not dispositive of a junior mark-holder’s 19 20 intent or bad faith in adopting its mark. Thus far, the Court is aware of no evidence to show that 21 Diageo believed that its “Stark Raving™” mark would be confusingly similar to the “Stark Wine®” 22 or “Stark Thirst™” marks when Diageo selected the “Stark Raving™” mark. Likewise, there has 23 been no showing that “despite acting innocently, the junior user ‘was careless in not conducting 24 proper research to avoid infringement prior to development of its trademark.’” 4 McCarthy, supra, § 25 26 27 28 15 The standard practice at Diageo is for the legal team to render its own report after conducting the trademark search. Diageo did not produce that report in discovery or testify about the contents of that report at the hearing, asserting that the information is protected by attorney-client privilege and the work product doctrine. The parties did not brief this issue nor is it ultimately material in this context. 27 1 23:10 (quoting Mars Musical Adventures, Inc. v. Mars, Inc., 159 F. Supp. 2d 1146, 1152 (D. Minn. 2 2001)). 3 Balancing the competing considerations, the preponderance of the evidence does not suggest 4 that Diageo intended to deceive the public, and therefore, this factor weighs against a finding a 5 likelihood of confusion. 6 6. 7 In the end, “consumer confusion” constitutes “the sine qua non of trademark Sixth Factor: Evidence of actual confusion. 8 infringement.” Network Automation, supra, 638 F.3d at 1149. Because of the difficulty in obtaining 9 such evidence, the failure to prove instances of actual confusion is not dispositive. Id. at 1151 (citing heavily only when there is evidence of past confusion or, perhaps, when the particular circumstances 12 Northern District of California Sleekcraft, supra, 599 F.2d at 352). Consequently, like the intent factor, this factor is weighed 11 United States District Court 10 indicate such evidence should have been available but was not provided. Sleekcraft, supra, 599 F.2d 13 at 353. Given that there is no evidence of actual confusion, this factor is neutral. 14 7. 15 “Inasmuch as a trademark owner is afforded greater protection against competing Seventh Factor: The likelihood of expansion into other markets. 16 goods, a ‘strong possibility’ that either party may expand its business to compete directly with the 17 other will weigh in favor of a finding that the present use is infringing.” Sleekcraft, supra, 599 F.2d 18 at 354 (citing Restatement of Torts § 731(b) & cmt. c). When goods are closely related, any 19 expansion is likely to result in direct competition. Id. 20 Stark Wine and S@HS claim that they plan to grow Stark Wine® and Stark Thirst™ into 21 nationwide brands. S@HS “is aggressively seeking a wider distribution for [Stark] wine in various 22 markets throughout the U.S.” (Stark Dec. ¶ 11.) Stark Wine LLC and S@HS also “plan to grow the 23 [Stark Thirst™] brand and sell it nationally by 2015.” Ms. Krall Walz testified about Plaintiffs’ five- 24 year plan to grow Stark Thirst™ to a 20,000 case per year brand and Stark Wine® to a 3,500 case per 25 year brand. Within two years Plaintiffs expect to be selling their wines in all of the major wine 26 markets: New York, California, Texas, Florida and Illinois, and nationally within five years. 27 Starting as early as 2014, Plaintiffs plan to introduce additional “Stark” sub-brand extensions, 28 including Stark Wild, Stark Naked and/or Stark Raving Mad. When cross-examined about the 28 1 likelihood of these plans materializing, Ms. Krall Walz explained that Stark Wine and S@HS have 2 access to capital to implement their plans and thus far, S@HS has met every one of its growth goals. 3 By contrast, Ms. Light’s testimony revealed that penetration of the wine market is incredibly 4 difficult and expensive. Christian Stark himself is a boutique winemaker with no experience in 5 nationwide marketing or business. He lacks any significant third-party distribution chains even for 6 his small enterprise and does not demonstrate a sophisticated knowledge of the challenges of the 7 market at issue. On this record, the possibility remains speculative as to whether Plaintiffs can 8 expand to Diageo’s current market position. However, Diageo is fully capable of accessing Stark 9 Wine’s established market in Sonoma County. Accordingly, this factor weights in favor of no 10 finding of confusion except as to Sonoma County. Northern District of California 8. 12 United States District Court 11 In assessing whether there is a likelihood of confusion, courts look to the reasonably 13 prudent purchaser exercising ordinary caution. Sleekcraft, 599 F.2d at 353 (“The care exercised by 14 the typical purchaser, though it might virtually eliminate mistaken purchases, does not guarantee that 15 confusion as to association or sponsorship is unlikely”). “[T]he standard of care to be exercised by 16 the reasonably prudent purchaser will be equal to that of the least sophisticated consumer.” Ford 17 Motor Co. v. Summit Motor Prods., Inc., 930 F.2d 277, 293 (3d Cir. 1991). Wine is considered a 18 good with which the average consumer does not exercise care when purchasing. E. & J. Gallo 19 Winery, supra, 782 F. Supp. at 465 (with respect to wine drinkers, “lack of consumer sophistication 20 significantly enhances the likelihood of confusion between the two products”); Taylor Wine Co., Inc. 21 v. Bully Hill Vineyards, Inc., 569 F.2d 731, 734 (2d Cir. 1978) (“the average American who drinks 22 wine on occasion can hardly pass for a connoisseur of wines. He remains an easy mark for an 23 infringer.”).16 This factor weighs in favor of finding consumer confusion. Eighth Factor: The degree of care likely to be exercised by purchasers. 24 25 26 27 28 16 Diageo attempts to distinguish purchasers of its wine from consumers of Plaintiffs’ wines to suggest that the two classes of consumers are so different that no confusion can occur. Diageo argues that due to the relative unavailability of Plaintiffs’ wines, consumers will need to seek them out. This niche audience is “far more likely than the average consumer to have achieved the level of connoisseurship that would allow them to distinguish between the parties’ products.” Sutter Home Winery, Inc. v. Madrona Vineyards, L.P., C 05-0587 MHP, 2005 WL 701599, at *11 (N.D. Cal. Mar. 23, 2005). In contrast, Diageo characterizes consumers of Stark Raving wine as less sophisticated wine drinkers, which Diageo believes precludes them from knowing or 29 1 9. 2 “There are at least three types of proof of likelihood of confusion: (1) survey evidence; Overall Analysis of the Sleekcraft Factors 3 (2) evidence of actual confusion; and (3) an argument based on an inference arising from a judicial 4 comparison of the conflicting marks themselves and the context of their use in the marketplace.” Dr. 5 Seuss Enterprises, L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1404 n.14 (9th Cir. 1997). 6 Plaintiffs did not present survey evidence or evidence of actual confusion. This leaves a judicial 7 comparison of the marks. 8 9 As set forth above, the Court has compared the marks using the Sleekcraft factors. As to Plaintiffs’ collective claims, the factors which weigh in favor of confusion focus on sound (i.e. the purchases will not exercise due care. By contrast, the factors weighing against confusion include the 12 Northern District of California use of the word “stark”), the fact that all goods at issue are wine, and the presumption that wine 11 United States District Court 10 visual comparison of the product labels, the meanings and marketplace associations connected with 13 each of the variations (Stark Wine®, Stark Thirst™, and Stark Raving™), the lack of both conceptual 14 and commercial strength in Plaintiffs’ marks, and the lack of any actual intent on Diageo’s part to 15 confuse consumers. 16 17 Based upon that collection of evidence, the Court concludes that Plaintiffs have not shown generally a “likelihood of success on the merits.” 18 D. 19 Under the Lanham Act, a district court has the “power to grant injunctions, according to the THE EQUITIES 20 principles of equity and upon such terms as the court may deem reasonable.” 15 U.S.C. § 1116. 21 Even if “serious questions going to the merits” existed, the balance of the hardships does not tip 22 “sharply in favor” of granting the full scope of the requested injunction. Brookfield, supra, 174 F.3d 23 1046 (where there are “serious questions going to the merits,” to obtain an injunction, plaintiff must 24 show that “the balance of hardships tips sharply in his favor”). On the current record, the balance tips 25 in Diageo’s favor except as to Christian Stark and Stark Wine LLC’s own market in Sonoma County. 26 27 28 caring about Plaintiffs’ wines. It is the care exercised by this less sophisticated consumer that the Court must consider in the likelihood of confusion analysis. 30 1 1. 2 Even where infringement has been proven, a plaintiff cannot be granted injunctive Harm to Plaintiffs Absent an Injunction 3 relief unless it can show irreparable injury absent an injunction. This requires a plaintiff to 4 “demonstrate a likelihood of irreparable injury—not just a possibility—in order to obtain preliminary 5 relief. “ Winter, supra, 555 U.S. at 21. Irreparable injury means an injury that is imminent, and that 6 cannot be remedied by an award of money. Misidentification of goods poses a threat to goodwill and reputation. A trademark holder is 7 goodwill or loss of control over one’s reputation cannot be measured precisely and “may constitute 10 irreparable harm for purposes of preliminary injunctive relief.” SunEarth, supra, 846 F. Supp. 2d at 11 1083 (quoting Mortgage Elec. Registration Sys. v. Brosnan, 2009 WL 3647125, at *8 (N.D. Cal. 12 Northern District of California entitled to control the reputation and goodwill associated with its mark. This potential loss of 9 United States District Court 8 2009)). 13 Both Christian Stark and Ms. Krall Walz testified about a subjective fear that if Diageo floods 14 the wine market with Stark Raving™ wine, it will be impossible to undo the damage to Plaintiffs’ 15 goodwill and reputation. Christian Stark testified that reputation is everything in the wine industry 16 and that people will assume that he produced Diageo’s Stark Raving™, which will damage his 17 reputation. He testified that consumers will come to expect low quality “stark” wine, which will 18 prevent him from selling his Stark Wine® at its current price point of $28 to $44 per bottle. The 19 alleged difference in price and quality between the wines could be damaging to the Stark Wine® 20 brand. Because there is not a likelihood of confusion generally, it is unlikely that there will be such 21 reputational harm or loss of goodwill except in Sonoma County. 22 Ms. Krall Walz testified that the Stark Wine® and Stark Thirst™ brands would be damaged 23 beyond repair. Ms. Krall Walz and Christian Stark testified that if an injunction does not issue, they 24 will lose the opportunity to expand their businesses nationally, which they argue is a harm that cannot 25 be quantified. Ms. Krall Walz testified that absent an injunction, Stark Raving™ wine will be on 26 shelves in the same stores where Plaintiffs plan to sell Stark Wine® and Stark Thirst™. 27 28 31 Plaintiffs did not present credible evidence of the reputation or goodwill associated with the 1 2 Stark Thirst™ mark. S@HS has not advertised the brand, and its wine is available at only three 3 locations in New York City. Plaintiffs testified that they will not be able to do their brand extensions because the Stark 4 5 Raving™ wines will damage the reputation of the word “stark” in connection with wine. However, 6 neither Ms. Krall Walz nor Christian Stark own the trademark rights to these brand extensions—one 7 acquires the exclusive right to use a trademark through its actual use in commerce; expansion plans 8 are not use in commerce. 9 2. Balancing the Relative and Potential Harm to Each Party Diageo has identified concrete and particularized harm that an injunction would cause 10 Northern District of California to its business. First, Diageo claims an injunction will end the Stark Raving™ brand. Ms. Light 12 United States District Court 11 testified that retailers have reserved shelf space for Stark Raving™, which would be lost if Diageo 13 could not ship (or had to recall) cases of Stark Raving™ wine.17 Additionally, an injunction would 14 also harm Diageo’s goodwill with these distributors and retailers who have agreed to distribute and 15 stock the wine. Ms. Light explained that the Stark Raving™ sub-brand is Diageo’s first foray into 16 this wine submarket and its success impacts Diageo ability to establish itself as serious competitor in 17 that submarket. Diageo argues that it would be cost prohibitive to do anything other than destroy the 18 bottles if the wine cannot be sold under the Stark Raving™ label. 19 Plaintiffs argue that any hardship is of Diageo’s own making. See Cadence Design Sys. v. 20 Avant! Corp., 125 F.3d 824, 829 (9th Cir. 1997) (“a defendant who knowingly infringes another’s 21 copyright cannot complain of the harm that will befall it when properly forced to desist from its 22 infringing activities”) (internal quotations omitted). Plaintiffs also discount the potential harm to 23 Diageo. They argue that Diageo could just re-label the bottles if enjoined.18 According to Plaintiffs, 24 the Stark Raving™ sub-brand was introduced to the market recently, with no goodwill in its 25 26 27 28 17 Diageo has produced approximately 80,000 cases of Stark Raving wine, approximately 17,000 cases were delivered to distributors and in turn 7,000 of those cases have been delivered to retailers. As of August 15, 2012, Stark Raving wine is on the shelves at over 1,500 stores across the United States. Neither party proffered evidence of the cost of relabeling or recalling the bottles already shipped. 18 The Court notes that the actual relief sought in this action includes destroying the bottles. 32 1 trad demark, and that Diageo is a large co t ompany with a large port h tfolio of bev verages, of w which the Sta ark 2 Rav ving™ sub-brand is a sm compone mall ent. 3 The harm from an er m rroneously is ssued, wides spread injunc ction far out tweighs any harm should d 4 such relief be er h rroneously denied. By th same toke closing S d he en, Sonoma Cou unty off from Diageo wil m ll 5 have little impac and will protect Plaint e ct p tiffs locally. In that cou unty, evidenc exists that Plaintiffs ce t 6 have built a positive reputat e tion for Stark Wine® and there consu k d umers are mo likely to be confused ore d 7 thus bolstering Plaintiffs’ cl s P laim of hards ship and tipp ping the scal in their fa les avor. 8 3. 3 9 Before issuin an injunct B ng tion a court a must en also nsure that the “public int e terest would Publi Interest. ic conf fusion serves the public interest and there is a str rong policy in favor of p protecting rig to ghts 12 Northern District of California not be disserved eBay v. MercExchan LLC, 54 U.S. 388, 391 (2006). Preventing consumer b d.” M nge, 47 g 11 United States District Court 10 trad demarks. As set forth abo the pote ove, ential for con nfusion is lo to Sonom County. The public ocal ma 13 inter is served by an injun rest d nction in tha county. at 14 IV. CONCL LUSION 15 For the reasons set forth above, the Court wi GRANT a preliminary injunction, limited in r fo t ill y 16 geog graphic scop to Sonoma County, California, in favor of Ch pe hristian Stark and Stark W LLC, k Wine 17 only Stay @ Home Somme y. H elier, LLC’s request for a preliminar injunction is DENIED. s ry n Therefor the Motio for Prelim re, on minary Injun nction is GRA ANTED AS TO SONOMA COUNTY, O 18 19 CAL LIFORNIA, an otherwise DENIED. nd e Defenda its office agents, servants, emp ant, ers, ployees, and attorneys ar hereby EN d re NJOINED and d 20 21 RES STRAINED fro directly or indirectly using the m om y mark “Stark R Raving” in c connection w the with 22 adve ertisement, promotion, distribution, offering for sale or sellin of wine o related go p d ng or oods or 23 serv vices in Sono County, California. oma , Issuance of this preli e iminary inju unction is con ntingent upo Plaintiffs filing proof of issuance of on f 24 25 a bo in the am ond mount of $50 00.0019 by no later than 2 o 2:00 p.m. on November 30, 2012. Should n r 26 19 27 28 Ru 65(c) of th Federal Ru of Civil Procedure req ule he ules P quires that the party seekin an injunctio must post e ng on secu urity “in an am mount that the court consid proper to pay the costs and damage sustained b any party e ders o s es by foun to have bee wrongfully enjoined or restrained.” F R. Civ. P 65(c). D nd en y Fed. Pro. Defendant seeks a $5,0 000,000.00 bo based upo its expected harm if the Court issues a nationwide injunction. There is no ond on e show wing that Diag will suffe more than negligible har if enjoined from Sonom County. T geo er n rm d ma There is no 33 3 1 Plaintiffs fail to file proof of such undertaking by that time, this injunction shall be dissolved without 2 further Order by the Court. 3 4 5 6 This Order Terminates Docket Number 26. IT IS SO ORDERED. Date: November 1, 2012 _______________________________________ YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE 7 8 9 10 11 Northern District of California United States District Court 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 evidence that Stark Raving™ wine is being sold in Sonoma County or that Diageo will be harmed if prevented from entering that market. The Court, in its discretion, will require Plaintiffs post $500.00 as security. 34