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

Filing 99

AMENDED OPINION AND INJUNCTION: The June 25, 2014, Order and Injunction (13 Civ. 2638 (LLS) Dkt. No. 61; 13 Civ. 2763 (LLS) Dkt. No. 84) is amended to read as follows: American Tibetan Health Institute, Inc. ("ATHI") and Kam Ng both sell Ch inese herbal medicinal tea called "Tibetan Baicao Tea," packaged in substantially similar boxes. These cases are cross-suits: each side sues the other side for trademark infringement, among other claims, alleging its right to exclusive comm ercial use 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 sale of both is l ikely to cause confusion among consumers. 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 trial on the merits under Fed. R. Civ. P. 65(a)(2). 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. (See Order.) (Signed by Judge Louis L. Stanton on 12/3/2014) Filed In Associated Cases: 1:13-cv-02638-LLS, 1:13-cv-02763-LLS(ajs)

,,

·- R1G1r' '\ L
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. 263
13 Civ. 276

(LLS)
(LLS)

- against AMENDED
OPINION AND IN

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.,

CTION

Defendants.

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

ELt..l~K

AMERICAN TIBETAN HEALTH INSTITUTE, INC.,

DOC tt:~--"'"=~r.r-:­
DATE F

Plaintiff,
- against -

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

-----------------------------------------X
The June 25,

2014, Order and Injunction (13 Civ. 2

Dkt. No. 61; 13 Civ. 2763 (LLS) Dkt. No. 84) is amended t

read as

follows:
American Tibetan Health Institute,

Inc.

( "ATHI")

a

Kam Ng

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

1

These cases a

cross-

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

use

of the name "Tibetan Baicao Tea" and design marks found o

the tea

boxes.
The parties do not dispute that the tea boxes bea ing the
disputed marks are sold in commerce, and are sufficientl

similar

such that the sale of both is likely to cause confusi n among
consumers. 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 sellin

Tibetan

Baicao Tea. All parties agreeing that the only material 'ssues 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 m tion was
consolidated with a

trial on the merits under Fed.

R.

Ci v.

P.

65(a) (2). A jury trial of those two issues was held from March 24
to 27,

2014. The jury determined that ATHI was the firs

its trademarks in commerce, and did not later abandon th

to use
marks.

For the reasons that follow, the injunction is gran
Discussion

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

according to the principles of e

2

and

violation of any right of the registrant of a mark regis ered in
the Patent and Trademark Office." 15 U.S.C.
ATHI

filed

to

§

1116(a).

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 prio
registration. See 15 U.S.C.

§

to the

1057(c) (1). ATHI's registra ion does

"not preclude another person from proving any legal or
defense or defect, including those set forth in subsecti
this section, which might have been asserted if such mar
been registered." 15 U.S.C.

§

1115(a).

It is a defense to the charge of infringement:
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.

§

1115(b)(5).
3

had not

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

use of

that mark preempted plaintiff's

mark."

constructive use of it

Allard Enters., 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 Chin town in

New York before ATHI

registered the marks

or

sold its

product

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

of

that

dispute

turns

on which party

disputed marks in commerce first in New York,

sed the

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. ATHI Trial Ex. 4.
Shirley Lee,

a founder and the president of ATHI,

credibly

testified at trial that, through that national distribute , ATHI's
tea, bearing the disputed marks, was sold in New York, Lo

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),

(N

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.
5

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

Ng testified that as early as March 2009,

she

old tea
t

she received from a Tibetan medical student,

those

sales made use of any packaging bearing the disputed mar
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. at 222:2-3, 222:10-11, 222:22-23, 236:15-20
Ms. Ng produced no documentary evidence of those sa es.
Ms. Ng introduced invoices from a distributor in Chi a, dated
August 18, 2010 and September 7, 2010, that she testified were for

6

her purchase of Tibetan Baicao Tea, although the invoices did no
identify Tibetan Baicao Tea

as

the purchased

item,

rathe

bu

described the contents of the shipment to Ms. Ng as "sea ood dr
cargo." See Kam Ng Trial Ex.

H,

229:2-235:6, March 26,

She also introduced her applicatio

2014.

I; Ng Direct, Trial Tr. vol.

3,

to the New York State Department of State for trademark p
for the disputed marks. That application stated that her

irst us!

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 documentary evidence as

I

ole,

an~

the credible and germane testimony, the conclusion is i evitabli
that ATHI began selling its tea,

bearing the disputed

arks,

i
!

New York City in May 2009, before Kam Ng began selling he

product

bearing such marks there.
Kam Ng protests that she was not aware of ATHI's sal sin Net
York.

t

But I take judicial notice that New York's Chinatown is

small market,

and I

find that Kam Ng' s

offer and sal

product "in a green box that was substantially similar"
predecessor's box

(Kam Ng's April 21,

2014 Br.

2),

of hef
o

ATHI'~
monthh
!

after

ATHI's

entry

into

that

market

was

the

result,

not

of
I

coincidence, but of copying. Furthermore, Ms. Ng has no c mmon la~
right to the disputed marks because ATHI's predecessor used th
disputed marks in New York first.

7

Accordingly, Kam Ng's innocent prior user defense is rejecte
on the merits.
The motion for an injunction (13 Civ. 2763 (LLS) Dkt. No. 45)
is therefore granted, as follows.
Injunction

Having reviewed the papers before it, and being fully advised,
the

Court

permanently

and

restrains

International

Trading,

Inc.,

International

Trading,

Inc.

their agents,

servants,

Kang

Li

enjoins
Trading,

("Defendants") ,

employees,

Kam

g,

C&

Inc.,

and

K&

t em,

an

each

attorneys,

of

and all

active concert or participation with Defendants, from:
1.

claims

Making any statement or representation whatsoev r whic
ownership

of

or

disparages

ATHI' s

product

0

packaging by referring to it as "old," "former," or equi
2. Using the registered trademark TIBETAN BAICAO TE

or it

Chinese equivalent;
3.

Using

counterfeit,
TEA

mark

marketing,

in

TIBETAN

copy,

BAICAO

TEA,

or

any

or colorable imitation of the TIBET N BAICA

connection

offer for sale,

with

the

distribution,

and/or sale of goods not th

genuin

products of ATHI in, from, or to the United States;
4. Passing off,

inducing or enabling others to sel

or pas

off any goods falsely bearing the TIBETAN BAICAO TEA mark

n, from

or to the United States;
8

5.

Shipping,

returning,

delivering,

holding

or

transferring,

for

otherwise

sale,

distributing,

moving,

stor ng,

or

disposing of in any manner goods falsely bearing the TIBET N BAICAO
TEA mark, in, from, or to the United States;
6.

Using American Tibetan Health Institute,

Inc.'s Tibetan

Baicao Tea packaging trade dress, including any other co fusingly
similar green color, on the packaging of their goods;
7.

Selling or offering to

distributing,
product

making,

named,

or

marked

sell,

importing

or

labelled

manufacturing,

into
or

the

United

any

fied

otherwise

tes

as

"Tibetan Baicao Tea" in English or any foreign equivalen
8.

Selling or offering to

distributing,

making,

or

sell,

importing

manufacturing,

into

the

United

any

product bearing the TIBETAN BAICAO TEA mark;
9.

Making

any

statement

or

representation

what so ver,

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 Defendan s are in
any manner associated or connected with American Tibet
Institute,

Inc.,

or are sold, manufactured,

Health

licensed, s onsored,

approved or authorized by ATHI.
This

Order

in

no

way

limits

ATHI's

right

application for Seizure Order on an ex parte basis,
9

to

ring

an

cordance

with 15 U.S.C.
ATHI

marks

§

by

1116(d), upon the discovery of any furth ruse of
the

Defendants,

agents,

servants,

attorneys, or others in active concert or participation
So ordered.
DATED:

New York, New York
December ), 2 014

D. J.

10