Seed Services, Inc. v. Winsor Grain, Inc., et al

Filing 70

ORDER re: TEMPORARY RESTRAINING ORDER signed by Chief Judge Anthony W. Ishii on 3/9/2012. (Service deadline: 3/12/2012, Responses due by 3/19/2012, Motion Hearing set for 3/26/2012 at 01:30 PM in Courtroom 2 (AWI) before Chief Judge Anthony W. Ishii. (Kusamura, W)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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SEED SERVICES, INC., a California
corporation,

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Plaintiff,
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v.
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WINSOR GRAIN, INC., a Minnesota
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corporation, WILLIAM L. COOK, an
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individual, and DOES 1 through 35,
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inclusive,
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Defendants.
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____________________________________ )

CASE NO. 1:10-CV-2185 AWI GSA
ORDER RE: TEMPORARY
RESTRAINING ORDER

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I. History

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Plaintiff Seed Services, Inc. (“Seed Services”) produces and supplies seeds for

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agricultural production. Defendant Winsor Grain, Inc. (“Winsor Grain”) sells Seed Services’s

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products in the Middle East. Defendant William Cook (“Cook”) is the owner and president of

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Winsor Grain (collectively “Defendants”). On August 30, 2010, Seed Services and Defendants

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entered into a contract whereby Seed Services agreed to buy certain assets of Winsor Grain

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(“Contract”). In key part, Winsor Grain agreed to give Seed Services its trademarks (the use of

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the name “California Gold” among others), to turn over its customer list, to have Cook act as

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Seed Services’s agent for nine months, and to cease all new sales to the Middle East. In return,

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Seed Services agreed to pay Winsor Grain a total of $1,000,000.
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Seed Services filed suit on November 22, 2010, alleging Defendants violated the Contract

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by selling seed to Erzam Agricultural Trading Co. in Saudi Arabia (“Erzam”), one of the

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customers on the list. Recently, Seed Services also alleged that Cook has sought to sell seeds he

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calls “California Gold” grown in Australia to Erzam. Seed Services originally sought a

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temporary restraining order in December 2011; the motion was denied as it concerned trademark

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violations, which was a claim that was not part of this case. Seed Services filed an amended

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complaint that alleged violations of the Lanham Act. Seed Services has now made a motion for

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an ex parte temporary restraining order. Doc. 66.

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II. Legal Standards
Under Fed. Rule Civ. Proc. 65(b), a court may issue an ex parte temporary restraining

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order only if: (1) it clearly appears...that immediate and irreparable injury, loss, or damage will

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result to the applicant before the adverse party or that party’s attorney can be heard in opposition,

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and (2) the applicant’s attorney certifies to the court in writing the efforts, if any, which have

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been made to give the notice and the reasons supporting the claim that notice should not be

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required. Fed. R. Civ. Pro. 65(b); Reno Air Racing Ass’n v. McCord, 452 F.3d 1126, 1130 (9th

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Cir. 2006). Rule 65(b)’s requirements are “stringent,” and temporary restraining orders that are

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granted ex parte are to be “restricted to serving their underlying purpose of preserving the status

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quo and preventing irreparable harm just so long as is necessary to hold a hearing, and no

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longer.” Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 438-39 (1974).

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The substantive standard for granting a temporary restraining order is the same as the

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standard for entering a preliminary injunction. Bronco Wine Co. v. U.S. Dep't of Treasury, 997

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F.Supp. 1309, 1313 (E.D. Cal. 1996); Lockheed Missile & Space Co. v. Hughes Aircraft Co.,

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887 F.Supp. 1320, 1323 (N.D. Cal. 1995). A plaintiff seeking a preliminary injunction must

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establish: (1) that he/she is likely to succeed on the merits, (2) that he/she is likely to suffer

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irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in

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his/her favor, and (4) that an injunction is in the public interest. Winter v. Natural Res. Def.

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Council, Inc., 555 U.S. 7, 18 (2008). “Injunctive relief...must be tailored to remedy the specific
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harm alleged.” Park Vill. Apt. Tenants Ass’n v. Mortimer Howard Trust, 636 F.3d 1150, 1160

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(9th Cir. 2011).

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III. Discussion
The Contract provided that Seed Services would acquire Winsor Grain’s customer list

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and the associated right to sell to those customers in the Kingdom of Saudi Arabia and the

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Middle East. Winsor Grain also assigned the name “Winsor Grain” and certain tradenames or

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trademarks to Seed Services, including: (a) U.S. Trademark Registration No. 3,909,586, the

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“California Gold” mark; (b) U.S. Trademark Registration No. 2,755,555, the “Frisco” mark; (c)

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U.S. Trademark Registration No. 2,958,765, the “Pacific Grain and Seed Brand” mark; (d) U.S.

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Trademark Registration No. 2,982,806, the “Circle and Plant Design” mark; (e) U.S. Trademark

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Registration No. 2,986,619, the “Red Panic” mark; and (f) U.S. Trademark Registration No.

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2,987,117, the “PSW and Design” mark. Doc. 66, Part 2, Ex. 2, (21-25 of 34). Subsequently,

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Cook attempted to sell alfalfa seed grown in Australia to Seed Services customers in Saudi

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Arabia under the “California Gold” brand. Doc. 66, Part 6, Ashour Declaration.

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“[I]n order to show a probability of success in the causes of action for trademark

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infringement, false designation of origin and unfair competition, [parties] need show that a

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likelihood of confusion exists.” Sardi’s Restaurant Corp. v. Sardie, 755 F.2d 719, 723 (9th Cir.

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1985), citations omitted. “[I]rreparable injury may be presumed from a showing of likelihood of

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success on the merits of a trademark infringement claim.” Brookfield Communs., Inc. v. West

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Coast Entertainment Corp., 174 F.3d 1036, 1066 (9th Cir. 1999), citing Metro Publ’g, Ltd. v. San

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Jose Mercury News, 987 F.2d 637, 640 (9th Cir. 1993). Likelihood of confusion is determined

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by an eight factor test: “1. strength of the mark; 2. proximity of the goods; 3. similarity of the

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marks; 4. evidence of actual confusion; 5. marketing channels used; 6. type of goods and the

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degree of care likely to be exercised by the purchaser; 7. defendant’s intent in selecting the mark;

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and 8. likelihood of expansion of the product lines.” AMF, Inc. v. Sleekcraft Boats, 599 F.2d

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341, 348-49 (9th Cir. 1979). The marks are identical. The products are substantially the same

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product. The marketing channel used is a narrow one: Cook approached Seed Services’s
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customers directly, and also approached its Middle Eastern sales agent. It also appears that Cook

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chose to use the “California Gold” brand to capitalize on the goodwill/reputation that brand has

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built up. These factors suggest that Seed Services will prevail on the merits of the Lanham Act

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claim. The likelihood of confusion supports a finding of irreparable harm in the absence of an

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injunction. The equities favor Seed Services and an injunction is in public interest.

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Seed Services argues that “on March 6, 2012, supplemental documents were received

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from Winsor Grain indicating (a) as late as the end of December 2011, Mr. Cook was continuing

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to offer ‘California Gold’ alfalfa, to Seed Services’ customers in Saudi Arabia, and (b) that at

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least one shipment of alfalfa, with an unknown brand name, had been shipped by Mr. Cook to

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Qatar.” Doc. 66, Part 5, Brief, at 3:9-12; see Doc. 66, Part 2, Exs. 7 and 8, (33-34 of 34). Mr.

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Cook’s continuing efforts at selling “California Gold” branded alfalfa seed justifies granting a

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restraining order without hearing from Defendants in opposition.

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This injunction involves activity outside the United States. To support this sort of

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injunction under the Lanham Act, “there are three criteria that must be considered: (1) there must

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be some effect on American foreign commerce; (2) the effect must be sufficiently great to present

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a cognizable injury to plaintiffs under the federal statute; (3) the interest of and links to American

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foreign commerce must be sufficiently strong in relation to those of other nations.”

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Ocean Garden, Inc. v. Marktrade Co., 953 F.2d 500, 503 (9th Cir. 1991). Seed Services is an

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American company selling goods produced in the United States to foreign customers. The

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crowding out of Seed Services’s sales to customers in Saudi Arabia meets the first factor and the

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monetary injury from those foregone sales meets the second factor. The third factor is further

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subdivided into seven considerations: “(1) Degree of conflict with foreign law....(2) Nationality

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of the parties....(3) Extent to which enforcement is expected to achieve compliance....(4) Relative

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significance of effects on U.S. as compared to elsewhere....(5) Explicit purpose is to harm U.S.

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commerce....(6) Foreseeability of such effect....(7) Relative importance of violations within the

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U.S.” Ocean Garden, Inc. v. Marktrade Co., 953 F.2d 500, 503-4 (9th Cir. 1991). In key part,

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Cook is an American citizen and Winsor Grain is an American company. The infringement

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knowingly harms Seed Services’s commerce in a significant manner. The facts of this case
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support an injunction that restricts the overseas activity of Defendants.

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IV. Order

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Plaintiff shall serve a copy of the Motion For Temporary Restraining Order and Order to

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Show Cause Why a Preliminary Injunction Should Not Issue, this Order, and all associated

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filings, on Defendants’ counsel by electronic service, including by facsimile transmission or

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federal express, on or before March 12 2012, at 1:00 PM.

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2.

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PM.

Defendants shall file any and all responsive papers on or before March 19, 2012, at 4:00

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Plaintiff may file reply papers on or before March 21, 2012, at 4:00 PM.

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A hearing on Plaintiff’s motion for preliminary injunction will be held on March 26,

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2012, at 1:30 PM in Courtroom Two.

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5.

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(2) days’ notice to Plaintiff, or upon such shorter notice as the court may allow.

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6.

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restraining order as required by Fed. Rule Civ. Proc. 65(c).

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7.

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concert or participation with them, either directly or through another entity including but not

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limited to Cook Land & Cattle Pty. Ltd., are temporarily restrained and enjoined from doing the

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following:

Defendants may apply to the Court for modification or dissolution of this Order upon two

Plaintiff shall post a bond in the amount of $25,000.00 as security for this temporary

William L. Cook, Winsor Grain, Inc., or their agents, employees, or persons acting in

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a.

Using for any purpose the name “Winsor Grain”;

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b.

Using for any purpose any tradenames or trademarks conveyed to Seed Services,

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including: (a) U.S. Trademark Registration No. 3,909,586, the “California Gold” mark; (b) U.S.

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Trademark Registration No. 2,755,555, the “Frisco” mark; (c) U.S. Trademark Registration No.

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2,958,765, the “Pacific Grain and Seed Brand” mark; (d) U.S. Trademark Registration No.

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2,982,806, the “Circle and Plant Design” mark; (e) U.S. Trademark Registration No. 2,986,619,

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the “Red Panic” mark; and (f) U.S. Trademark Registration No. 2,987,117, the “PSW and

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Design” mark. (Collectively these tradenames and trademarks and associated intellectual
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property rights, along with the name “Winsor Grain,” are the “Tradenames and Trademarks.”)
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Importing or attempting to import seeds to the Kingdom of Saudi Arabia or any

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other country in the Middle East using any of the Tradenames and Trademarks or any

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confusingly similar names or marks, including but not limited to the “California Gold” name and

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trademark registered in Australia by a company called “Cook Land and Cattle Pty. Ltd.”
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Selling or attempting to make sales of seeds utilizing any of the Tradenames and

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Trademarks or any confusingly similar marks to customers located in the Kingdom of Saudi

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Arabia or any other country in Middle East.
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Contacting any persons in the Middle East for the purposes of making sales of

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seeds to the Middle East under any of the Tradenames and Trademarks or any confusingly

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similar names or marks.

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8.

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IT IS SO ORDERED.

This temporary restraining order is entered on March 9, 2012, at 4:10 PM.

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Dated:
0m8i78

March 9, 2012
CHIEF UNITED STATES DISTRICT JUDGE

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