C & L International Trading Inc. et al v. Chung Kee (USA) International Inc. et al

Filing 61

OPINION AND INJUNCTION: re: (76 in 1:13-cv-02763-LLS) MOTION Proposed Order for Permanent Injunction and Seizure re: (65) Order filed by American Tibetan Health Institute, Inc. For the reasons that follow, the injunction is granted. And as set forth herein. SO ORDERED. (Signed by Judge Louis L. Stanton on 6/25/2014) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

-----------------------------------------X
C&L INTERNATIONAL TRADING INC., KAM NG,
And K&C INTERNATIONAL TRADING INC.
Plaintiffs,

13 Civ. 2638 (LLS)
13 Civ. 2763 (LLS)

- against OPINION AND INJUNCTION
AMERICAN TIBETAN HEALTH INSTITUTE, INC.,
CHUNG KEE (USA) INTERNATIONAL INC., YAT
CHAU (USA) INC., TUNG REN TANG, RON FENG
TRADING INC., FARGO TRADING INC., YONG LONG
SUPERMARKET INC., and PO WING HONG FOOD
MARKET INC.,
Defendants.

-----------------------------------------X

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ELECTRONICALLY FILED.
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DATE FILED: (of~.:J //'f

AMERICAN TIBETAN HEALTH INSTITUTE, INC.,
Plaintiffs,
- against -

KAM NG, C&L INTERNATIONAL TRADING, INC.,
KANG LI TRADING, INC., and K&C
INTERNATIONAL TRADING, INC.,
Defendants.

-----------------------------------------X
American Tibetan Health Institute,

Inc.

("ATHI")

and Kam Ng

both sell Chinese herbal medicinal tea called "Tibetan Baicao
packaged in substantially similar boxes.

Tea,~

These cases are cross-

suits: each side sues the other side for trademark infringement,
among other claims, alleging its right to exclusive commercial use

1

of the name "Tibetan Baicao Tea" and design marks found on the tea
boxes.
The parties do not dispute that the tea boxes bearing the
disputed marks are sold in commerce, and are sufficiently similar
such that the
consumers.

sale of both is

likely to cause confusion among

The sole dispute is which party - ATHI or Kam Ng - has

the right to use the disputed marks in commerce.
ATHI moved to preliminarily enjoin Kam Ng from selling Tibetan
Baicao Tea.

All parties agreeing that the only material issues in

substantial dispute were which of them had first used its marks in
commerce in the United States and

(if it was ATHI)

whether ATHI

had thereafter abandoned the marks, the hearing on that motion was
consolidated with a
65(a) (2).

trial on the merits under Fed.

R.

Civ.

P.

A jury trial of those two issues was held from March 24

to 27, 2014.

The jury determined that ATHI was the first to use

its trademarks in commerce, and did not later abandon the marks.
For the reasons that follow, the injunction is granted.
Discussion

As a remedy for unauthorized use in commerce of a trademark,
where such use is likely to cause confusion, a court has the "power
to grant injunctions,

according to the principles of equity and

upon such terms as the court may deem reasonable, to prevent the
violation of any right of the registrant of a mark registered in
the Patent and Trademark Office," 15 U.S.C.A.
2

§

1116 (West).

ATHI

filed

to

register the

disputed marks

on the

USPTO' s

principal register in March 2012, which is prima facie evidence of
ATHI's ownership of the disputed marks and exclusive right to use
them in commerce, see 15 U.S.C.
Registration does not,

§

1115(a).

however,

give priority over persons

who had used and not abandoned the disputed marks prior to the
registration, see 15 U.S.C. 1057(c) (1).

ATHI's registration does

"not preclude another person from proving any legal or equitable
defense or defect, including those set forth in subsection (b) of
this section, which might have been asserted if such mark had not
been registered," 15 U.S.C.

§

1115(a).

It is a defense to the charge of infringement:
( 5) That the mark whose use by a party is
charged as an infringement was adopted without
knowledge of the registrant's prior use and
has been continuously used by such party or
those in privity with him from a date prior to
(A) the date of constructive use of the mark
established pursuant to section 1057 (c) of
this title, (B) the registration of the mark
under this chapter if the application for
registration is filed before the effective
date of the Trademark Law Revision Act of
1988, or (C) publication of the registered
mark under subsection (c) of section 1062 of
this title:
Provided, however, That this
defense or defect shall apply only for the
area in which such continuous prior use is
proved;
15 U.S.C.A.

§

1115(b) (6).

"Under this statutory scheme, defendants' rights to its mark
extend only as far as the area where its continuous prior use of
3

that mark preempted plaintiff's
Allard Enterprises,

constructive use of its mark,"

Inc. v. Advanced Programming Res.,

Inc., 146

F.3d 350, 361 (6th Cir. 1998).
Kam Ng claims that, notwithstanding ATHI's first sale in the
United States,

she sold her trademarked product in Chinatown in

New York before ATHI

registered the marks or

sold its product

there, and that she is therefore entitled to trademark protection
of the disputed marks in New York.
Resolution

of

that

dispute

turns

on which party used the

disputed marks in commerce first in New York, and whether Kam Ng
had knowledge of ATHI's prior use.
At trial, ATHI introduced a sales invoice dated May 4, 2009,
showing its predecessor's sale of Tibetan Baicao Tea to a national
distributor in San Francisco.
Shirley Lee,

ATHI Trial Ex. 4.

a founder and the president of ATHI,

credibly

testified at trial that, through that national distributor, ATHI's
tea, bearing the disputed marks, was sold in New York, Los Angeles
and San Francisco as early as May 4, 2009, and thereafter expanded
to other places:
Q.

Mrs. Lee, can you tell us when's the very
first time that the Tibetan baicao tea
was sold?

A.

Year 2009, May 4th.

*

*

*

*
4

Q.

Can you describe where did you sell the
product to?

A.

New York, Los
that's all.

Q.

This is for the beginning of time?
You
have other places you continued selling
the product?

A.

Yes.

Angeles,

San

Francisco,

Lee Direct, Trial Tr. vol. 1, 51:21-23, 56:17-21, Mar. 24, 2014.
The 2009 sales comprised "Approximately 5,000 boxes," Id. at
52:5.
While Kam Ng testified at trial that she sold tea in New York
using the name "Tibetan Baicao Tea" in December 2009
Trial Tr.

vol.

3,

235:6-25,

Mar.

26,

2014),

(Ng Direct,

she stated that she

did not begin using the design marks on her tea packaging until
November or December 2010:
Q.

Did those shipments from Mr. Ou contain
an image on it of a scroll and teacup?

A.

No.

*

*

*

*

Q.

When did you first start to sell Tibetan
baicao tea in a package containing the
scroll and teacup design that I just
showed you, that you had received from
Mr. Ou?

A.

It was by the end of 2010, between either
November or December.

Id. at 238:24-239:1, 241:5-9.

5

Ms. Ng testified that as early as March 2009,
she received from a Tibetan medical student,

she sold tea

but not that those

sales made use of any packaging bearing the disputed marks:
Q.

When did you first come in contact with
Baicao Tea?

A.

I believe it was on March 1st, 2009.

*

*

*

*

Q.

Who brought it to your attention?

A.

One student
medicine.

*

who

was

*

*

learning

Tibetan

*

Q.

And what information did you get about
Tibetan Baicao Tea?

A.

I only got the tea bags without the box.

*

*

*

*

Q.

I'm referring to the date that you say
you first started selling the Tibetan
Baicao Tea that you received from Mr. Ou.

A.

I sold Mr. Ou's tea in December 2009, but
on March 1st of 2009 I sold the tea that
the student who learned Tibetan medicine
gave me.

Id. 222:2-2-3, 222:10-11, 222:22-23, 236:15-20
Ms. Ng produced no documentary evidence of those sales.
Ms. Ng introduced invoices from a distributor in China, dated
August 18, 2010 and September 7, 2010, that she testified were for
her purchase of Tibetan Baicao Tea, although the invoices did not
identify Tibetan

Baicao Tea

as

the
6

purchased

i tern,

but

rather

described the contents of the shipment to Ms. Ng as "seafood dry
cargo."

See Kam Ng Trial Ex. H,

229:2-235:6, March 26, 2014.

I; Ng Direct, Trial Tr. vol. 3,

She als

introduced her application

to the New York State Department of St te for trademark protection
for the disputed marks.

That applic tion stated that her first

use of the marks in commerce was March 2010.

See Kam Ng Trial Ex.

J; Ng Direct, Trial Tr. vol. 3, 250:6 251:22, March 26, 2014.
Upon my appraisal of the document ry evidence as a whole, and
the credible and germane testimony, the conclusion is inevitable
that ATHI began selling its tea,

bea ing the disputed marks,

New York City in May 2009, before Kam

in

g began selling her produce

bearing such marks there.
Kam Ng protests that she was not
York.

ware of ATHI's sales in New

But I take judicial notice th

York's Chinatown is a

small market,

and

I

find that Kam

g' s

offer and sale of her

product "in a green box that was subs antially similar" to ATHI's
predecessor's box
after

ATHI's

coincidence,

(Kam Ng's April 21

entry

into

that

but of copying.

2014 Br.
was

Furthe more,

law right to the disputed marks

the
Ms.

2),

seven months

result,

not

of

Ng has no common

ATHI's predecessor used

the disputed marks in New York first.
Accordingly, Kam Ng's innocent p
on the merits.

7

user defense is rejected

The

motion

for

an

injunction

(Dkt.

No.

45)

is

therefore

granted, as follows.
Injunction

Having reviewed the papers before it,

and being fully

advised, the Court permanently restrains and enjoins Kam Ng, C&L
International

Trading

Inc.,

International Trading Inc.
agents,

Kang

Li

Trading

Inc.,

and

K&C

("Defendants"), each of them, and their

servants, employees, attorneys, and all others in active

concert or participation with Defendants, from:
1. Engaging in any conduct which violates the Stipulated Order
for Temporary Relief

(Dkt. No.

23)

entered by this Court on May

14, 2013, and the continued ceasing of product sales bearing the
so called "old packaging"(see Dkt. No. 34);
2.
claims

Making any statement or representation whatsoever which
ownership

of

or

disparages

ATHI' s

product

branding

or

packaging by referring to it as "old," "former," or equivalent;
3.

Using any of American Tibetan Health Institute,

Inc.'s

copyrighted material contained in Registration No. VA 1-855-049;
4.

Using any of American Tibetan Health Institute,

Inc.'s

copyrighted material contained in Registration No. VA 1-879-630;
5. Using American Tibetan Health Institute, Inc.'s trademark
U.S.

Reg.

No.

4330639,

or any other confusingly similar mark in

any manner, on their goods;

8

6. Using American Tibetan Health Institute, Inc.'s trademark
U.S.

Reg.

No.

4330640,

or any other confusingly similar mark in

any manner, on their goods;
7. Using American Tibetan Health Institute, Inc.'s trademark
U.S.

Reg.

No.

4330569,

or any other confusingly similar mark in

any manner, on their goods;
8. Using American Tibetan Health Institute, Inc.'s trademark
U.S.

Reg.

No.

3943436,

or any other confusingly similar mark in

any manner, on their goods;
9. Using American Tibetan Health Institute, Inc.'s trademark
U.S. Application Serial No.

85/894,301, or any other confusingly

similar mark in any manner including horizontal or vertical layout
of same or similar font and characters, on their goods;
10. Using American Tibetan Health Institute, Inc.'s trademark
U.S. Application Serial No. 85/939,652, or any other confusingly
similar mark in any manner, on their goods;
11. Using American Tibetan Health Institute,

Inc.'s Tibetan

Baicao Tea packaging trade dress, including any other confusingly
similar green color, on the packaging of their goods;
12.

Selling or offering to sell,

distributing,
product

named,

making,
marked

or
or

importing
labelled

manufacturing,

into
or

the

United

otherwise

supplying,
States

identified

any
as

"Tibetan Baicao Tea" or "Baicao Tea" in English or any foreign
equivalent;
9

13.

Selling or offering to sell,

distributing,

making,

or

importing

manufacturing,

into

the

United

supplying,
States

any

product bearing the Baicao mark;
14.

Selling or offering to sell,

distributing,

making,

or

importing

manufacturing,

into

the

United

product bearing the word "baicaou in any language,

supplying,
States

any

including but

not limited to English, Chinese, or Tibetan transliterations;
15.

Making any statement

or

representation whatsoever,

or

using any false designation of origin or false description,

or

performing any act, which may or is likely to lead the trade or
public, or individual members thereof, to believe that any products
manufactured, imported, distributed, or sold by Defendants are in
any manner associated or connected with American Tibetan Health
Institute,

Inc.,

or are sold, manufactured,

licensed,

sponsored,

approved or authorized by ATHI.
It is further ORDERED that the United States Marshal for this
District, on the request of, by arrangement with, and assisted by
one or more attorneys or representatives of American Tibetan Health
Institute,
impound,

Inc.,

is

hereby

authorized

and

directed

to

seize,

and deliver for destruction to American Tibetan Health

Institute,

Inc. or its representatives any and all goods bearing

American Tibetan Health Institute, Inc.'s trademarks U.S. Reg. No.
4,330,639,

Reg.

No.

4,330,640,

Reg.

No.

4,330,569,

u.s.

Application Serial No. 85/894,301, or U.S. Application Serial No.
10

85/939,652 ("Goods Bearing ATHI's Marks"), as well as advertising
or marketing materials for the same and any means for making the
same,

the books and records

(including computer tapes or disks)

relating thereto, and the containers in which the same are held or
transported, which Defendants sell or attempt to sell, employing
whatever reasonable force is necessary under the circumstances to
carry

out

the

seizure,

premises owned,

leased,

including

that

necessary

to

enter

or controlled by the Defendants,

the

and/or

such other locations and things to be searched where Goods Bearing
ATHI's Marks and business records relating thereof may be found,
and

to

inspect

cabinets,

the

contents

containers,

of

cases,

any

desks,

rooms,

vehicles,

computers,

closets,

databases,

and

software or documents located in the areas under the control of
the Defendants.
To

enforce

compliance with

this

Order,

American Tibetan Health Institute,

Inc.

accompany

persons

the

Marshal

and

those

the

attorneys

for

or their designee will
working

under

his

supervision, and the Marshal shall inventory items so seized. Such
items

shall

be

in

the

constructive

possession

of

the

Marshal

although they shall be released to the custody of the attorneys
for

American

Tibetan

Health

Institute,

Inc.

or

stored

at

location(s) to be designated by the attorneys of American Tibetan
Health Institute, Inc. All products, means of making the product,
packaging

for

the

product,

and
11

other

items

seized

shall

be

appropriately tagged to permit identification.
be given a receipt therefor.

Defendants shall

Such products seized shall be made

available for inventory or inspection by any party or its counsel
during normal business hours.
Anyone interfering with the execution of this Order is subject
to arrest by the Marshal or his representative.
Counsel for American Tibetan Health Institute, Inc., on whose
behalf

the

Court

issues

this

Order,

will

act

as

a

substitute

custodian of any and all property seized pursuant to this Order
and

shall

arising
with

hold

harmless

from any acts,

the

seizure

and

the

Marshal

incidents,
possession

from

any

and

or occurrences
of

the

all

claims,

in connection

Defendants'

property,

including any third party claims.
When executing the seizure and impoundment provisions of this
Order, the Marshal shall serve only a copy of this Order by leaving
it at the usual places of business of the Defendants, or any agent
of the Defendants, or at the place where Goods Bearing ATHI's Marks
are found, with any person of suitable age and discretion.
American Tibetan Health Institute, Inc.'s attorneys or agents
shall promptly inspect all items seized, and if any items are found
to not be Goods Bearing ATHI's Marks, such items shall be returned
to

Defendants within fifteen business days

Order is executed.

12

after the date this

So ordered.
DATED:

New York, New York
June 25, 2014

LOUIS L. STANTON
U.

13

S.

D.

J.