CHERYL L. POLLAK, United States Magistrate Judge.
On November 17, 2003, plaintiff Haggar International Corporation, d/b/a Montana Food Industries ("Haggar"), commenced this action, pursuant to 15 U.S.C. § 1115(b), against United Company for Food Industry Corporation ("United") and Trans Mid-East Shipping & Trading Agency, Inc. ("Trans Mid-East") (collectively, the "defendants").
Subsequently, United and Trans Mid-East filed answers to the Complaint, and then later filed counterclaims against Haggar for trademark infringement, trademark cancellation, unfair competition, trademark dilution, and various other claims under New York State law. (Ans.
On December 19, 2006, Haggar filed the first motion for summary judgment, seeking to dismiss defendants' counterclaims on the grounds of laches and acquiescence, arguing that defendant United had waited too long to assert its claims of trademark ownership. Upon referral, this Court issued a Report and Recommendation, dated March 11, 2008, recommending that plaintiffs motion for summary judgment be denied because there existed sufficient questions of material fact as to whether Haggar's procurement of the MONTANA trademark was fraudulent, since a party asserting the equitable defenses of laches and acquiescence must do so with "clean hands." On June 4, 2008, the district court adopted the Report and Recommendation.
On April 1, 2009, defendants filed a second motion for summary judgment, seeking to preclude plaintiff from asserting any equitable defenses such as laches or acquiescence. This Court issued a Report and Recommendation, dated September 22, 2010, 2010 WL 5560089, recommending that defendants' motion be denied, again because genuine issues of material fact remained on the question of whether Haggar committed fraud in its application to the United States Patent and Trademark Office ("USPTO") filed in 1989. In an opinion and order dated January 5, 2011, the district court adopted the Report and Recommendation.
On February 4, 2011, the parties consented to have the case assigned to the undersigned for all purposes, including entry of judgment, and waived their right to a jury trial, consenting to allow this Court to decide the issues. The case proceeded to trial, which was held before this Court from May 16 through May 18, 2011. The Court notes that several of the key witnesses had passed away prior to trial. Thus, at trial, Haggar's case-in-chief consisted of the live testimony of Ms. Hala Boulos ("Ms. Boulos"), as well as portions of the deposition transcripts of Sherif Boulos
For the reasons stated below, the Court finds in favor of plaintiff and Orders the cancellation of United's MONTANA work mark, Trademark Registration No. 2,724,085, and an accounting of monetary damages owed to Haggar by defendants.
Although the parties disagree on certain critical facts relating to the development and use of the MONTANA marks and the relationships between the parties, some facts are not in dispute, and the Court has referred to these undisputed facts to provide a chronological framework in which the trial testimony may be analyzed.
It is undisputed that on December 30, 1987, Haggar filed a trademark application with the USPTO, seeking to register the word mark "MONTANA." (Defs.' 2007 56.1 Stmnt ¶¶ 10; Pl.'s 2009 56.1 Stmnt ¶ 22). The application, which was signed by Boulos, included a declaration as to ownership. (Defs.' 2009 56.1 Stmnt ¶ 23; Pl.'s 2009 56.1 Stmnt ¶ 23). It is also undisputed that Haggar presented several packaging bags ("specimen bags") to the USPTO in connection with the application; these bags were marked "Product of Egypt by the United Food Company for Food Industry." (Defs.' 2009 56.1 Stmnt ¶ 23-25; Pl.'s 2009 56.1 Stmnt ¶¶ 23-25). When Haggar failed to respond to requests from the USPTO for additional documentation to prove ownership of the MONTANA mark, the USPTO deemed the application abandoned as of November 4, 1988. (Defs.' 2009 56.1 Stmnt ¶¶ 25-27; Pl.'s 2009 56.1 Stmnt ¶¶ 25-27).
In 1988, following the submission of the 1987 application, Alan Mund, Esq. ("Mund"), Haggar's then attorney,
Sometime thereafter in 1989, Haggar filed a second trademark application. This application was approved by the USPTO, and on March 6, 1990, the USPTO issued Trademark Registration 1,585,940 to Haggar for the word trademark "MONTANA." (Pl.'s 2006 56.1 Stmnt ¶¶ 1-2; Defs.' 2007
In 1991, Haggar registered its word and design trademarks with the United States Customs Service ("Customs"), stating that there were no foreign business entities authorized or licensed to use these trademarks abroad. (Defs.' 2009 56.1 Stmnt ¶¶ 43-44; Pl.'s 2009 56.1 Stmnt ¶¶ 43-44). Thereafter, in the summer of 1995, based on Haggar's claimed ownership of the MONTANA mark, Customs seized a container of United products bearing the MONTANA mark that had been imported by Nile. (Defs.' 2009 56.1 Stmnt ¶ 46; Pl.'s 2009 56.1 Stmnt ¶ 46).
On March 25, 2002, United filed a Petition to Cancel (the "Petition") Haggar's rights in the MONTANA marks. (Pl.'s 2006 56.1 Stmnt ¶¶ 10, 46; Defs.' 2007 Resp.
Section 43(a) of the Lanham Act, 15 U.S.C. § 1115, prohibits a person from using "any word, term, name, symbol, or device, or any combination thereof," 15 U.S.C. § 1125(a), that is used "in commerce... in the ordinary course of trade," 15 U.S.C. § 1127, and "which ... is likely to cause confusion ... as to the origin, sponsorship, or approval of his or her goods...." 15 U.S.C. § 1125(a)(1). See Louis Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108, 114-16 (2d Cir.2006). In explaining the objectives of the Lanham Act, the Supreme Court noted that the Act "`does not exist to reward manufacturers for their innovation in creating a particular device;' ... but rather, by preventing competitors from copying `a source-identifying mark,' `reduce[s] the
In order to sustain a cause of action for trademark infringement, the plaintiff must establish two elements: (1) that "the mark or dress is distinctive as to the source of the good or service at issue," and (2) "that there is the likelihood of confusion between the plaintiffs good or service and that of the defendant."
The Lanham Act provides that: "The owner of a trademark used in commerce may apply to register his or her trademark under this chapter on the principal register hereby established...." 15 U.S.C. § 1051(a)(1). Nevertheless, trademark ownership rights go to the "first-to-use, not [the] first-to-register." 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 16:18 (4th ed.2010). Such rights "develop when goods bearing the mark are placed in the market and [are] followed by continuous commercial utilization." Buti v. Perosa, S.R.L., 139 F.3d 98, 103 (2d Cir.), cert.
Despite the general rule that trademark ownership rights go to the "first-to-use, not [the] first-to-register," 2 McCarthy, supra, § 16:18, when a trademark is registered on the USPTO's principal register (the "register"), the Lanham Act provides that the registration "shall be admissible in evidence and shall be prima facie evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the mark in commerce...." 15 U.S.C. § 1115(a). A mark gains "incontestable" status after it "has been in continuous use for five consecutive years subsequent to the date of registration and is still in use in commerce...." 15 U.S.C. § 1065 (including other conditions not at issue here). Incontestable trademarks are "conclusive" evidence of the owner's exclusive right to use the mark. 15 U.S.C. § 1115(b); see KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 117, 125 S.Ct. 542, 160 L.Ed.2d 440 (2004).
The Lanham Act provides a number of defenses to charges of infringement of an incontestable trademark, including: "(1) that the registration or the incontestable right to use the mark was obtained fraudulently; ... (5)" that the alleged infringers were rightful continuous prior users of the mark, or "... (9) that equitable principles, including laches, estoppel, and acquiescence, are applicable."
This Court must decide which party owns the MONTANA marks in the United States and thus holds the right to use them on packages of frozen vegetables sold in this country. It is undisputed that the marks have reached incontestible status by virtue of Haggar's 1989 USPTO registration. Since incontestible trademarks are "conclusive" evidence of the owner's exclusive right to use the mark absent a valid defense, defendants, in order to defend themselves against Haggar's claim of infringement, must successfully invoke at least one of the defenses provided for in the Lanham Act. See 15 U.S.C. § 1115(b). Accordingly, defendants claim that Haggar obtained its incontestible status
The Court first turns to defendants' claim that Haggar obtained its rights to the marks fraudulently.
Although it is undisputed that Haggar registered the MONTANA marks with the USPTO in 1989, United contends that the registrations were fraudulently obtained and that the word and design trademarks should be cancelled.
Fraud in obtaining a trademark registration occurs when an applicant knowingly makes a false, material misrepresentation of fact in connection with its application. See Maids to Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d 1899, 1905 (T.T.A.B.2006); see also Tuccillo v. Geisha NYC, LLC, 635 F.Supp.2d 227, 241 (E.D.N.Y.2009) (stating that "[t]o prevail on a cause of action for trademark cancellation on grounds of fraud on the [USPTO], it is necessary for the petitioner to demonstrate that the statements (1) were made with knowledge of their falsity, and (2) were material to the determination to grant the application"). Since direct evidence of deceptive intent is rarely available, subjective intent to deceive can be inferred from indirect and circumstantial evidence. In re Bose Corp., 580 F.3d 1240, 1243-44 (Fed.Cir.2009); see also Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed.Cir.2008), cert. denied, ___ U.S. ___, 129 S.Ct. 1595, 173 L.Ed.2d 678 (2009).
However, a party alleged to have committed fraud may rely on good faith as a defense: "Fraud ... will not lie if it can be proven that the statement, though false, was made with a reasonable and honest belief that it was true...." Maids to Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d at 1905. The alleged fraudulent misstatements must be more than an "error or inadvertence," and instead must show a "deliberate attempt to mislead the [USPTO]." Orient Exp. Trading Co., Ltd. v. Federated Dep't Stores, Inc., 842 F.2d 650, 653 (2d Cir.1988) (internal quotations omitted). Indeed, fraud on the USPTO "implies some intentional deceitful practice or act designed to obtain something." Maids to Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d at 1905 (citing Cerveceria India Inc. v. Cerveceria Centroamericana, S.A., 10 U.S.P.Q.2d 1064, 1065 (T.T.A.B.), aff'd, 892 F.2d 1021 (Fed.Cir.1989)).
A party moving to cancel a trademark based on fraud on the USPTO bears the burden to prove the fraud by "clear and convincing evidence." Orient Exp. Trading Co., Ltd. v. Federated Dept. Stores, Inc., 842 F.2d at 653; Tuccillo v. Geisha, 635 F.Supp.2d at 241. When the allegation of fraud centers on a trademark applicant's signed oath, the charging party bears an especially high burden:
Maids to Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d at 1908. The party alleging fraud carries a "heavy burden of proof," and, in deciding whether fraud has been committed, the Court has "no room for speculation, inference or surmise and, obviously, any doubt must be resolved against the charging party." In re Bose Corp., 580 F.3d at 1243. Indeed, "the statement of an applicant that no other person to the best of his knowledge has the right to use the mark does not require the applicant to disclose those persons whom he may have heard are using the mark if he feels that the rights of such others are not superior to his. Thus, an applicant who has at least `color of title' to the mark is not guilty of fraud...." Yocum v. Covington, 216 U.S.P.Q. 210, 216-17 (T.T.A.B.1982).
In short, for United to prevail in its challenge to Haggar's registration on the basis of fraud, United must prove that Haggar deliberately and deceitfully made false statements in its 1989 application to the USPTO that were material to the determination to grant the application. Defendants must prove this claim by "clear and convincing evidence." Orient Exp. Trading Co., Ltd. v. Federated Dept. Stores, Inc., 842 F.2d at 653; Tuccillo v. Geisha, 635 F.Supp.2d at 241; Maids to Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d at 1905.
In its motion for summary judgment, United argued that Haggar had committed fraud in its August 2, 1989 application through false assertions in three aspects of the trademark application: 1) Haggar's assertion of ownership of the marks; 2) a false claimed date of first use; and 3) the presentation of specimen bags that did not bear United's name as manufacturer. The Court addresses each fraud claim in turn.
Sherif Boulos, in presenting the second trademark application to the USPTO in 1989, signed the oath required by statute stating that "to the best of his knowledge," no one else had the right to use the marks in commerce. Specifically, the oath provided that the signer
(Defs.' 2009 56.1 Stmnt ¶ 23; Pl.'s 2009 56.1 Stmnt ¶ 23). In their summation brief, defendants argue that the "[e]vidence shows that S. Boulos knew that [his] statements [in the application oath] were false" at the time he swore to them because he knew that United was the foreign manufacturer and first user of the marks, while Haggar was merely United's exclusive distributor in the United States and "did not secure any rights to the trademark MONTANA from sales in the United States of United's MONTANA products." (Defs.' Brief at 6-7).
For United to show that Haggar committed fraud by asserting ownership of the MONTANA marks in its 1989 application to the USPTO, United must prove, by clear and convincing evidence, that Haggar deliberately and deceitfully misrepresented itself to be the owner of the marks. Thus, if Haggar had "at least `color of title' to the mark," Yocum v. Covington, 216 U.S.P.Q. at 216-17, it did not commit fraud by asserting ownership.
This rule applies with equal force to protect a company that outright copies a mark that has been previously used abroad but that is not famous in the United States, uses the copied mark on goods sold in the United States, and then claims to have priority in the mark in the United States over the foreign originator. 2 McCarthy, supra, § 29.01[3] (citing Person's Co., Ltd. v. Christman, 900 F.2d 1565 (Fed.Cir.1990)). As Professor McCarthy explains in his treatise on trademark law:
Id. The original foreign user of the mark only retains priority in the United States over the copier if the copied mark "is so famous that its reputation is [already] known in the United States" prior to the efforts of the United States user and copier. Id. (citing All England Lawn Tennis Club Ltd. v. Creations Aromatiques, Inc., 220 U.S.P.Q. 1069 (T.T.A.B.1983) (enjoining an American from registering "Wimbledon Cologne," which displayed a picture of a tennis player on the bottle); Vaudable v. Montmartre. Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332, 123 U.S.P.Q. 357 (N.Y.Sup. Ct.1959) (enjoining an American from opening a New York restaurant called "Maxim's," named after the famous Paris restaurant of the same name)).
In this case, there is no dispute that prior to the time United first started doing business with al Masri and Haggar, "at the end of [19]85 or beginning of [19]86" (Tr.
Similarly, there was no evidence presented that the MONTANA brand was already so "famous" in the United States before Boulos/Haggar's entry into the United States market that United should be regarded as having established a foothold in the market for its products and consumer recognition of its brand before ever selling its goods here. The only testimony presented on this point was that of Iskandar Joudeh ("Joudeh"), the chief executive of defendant Trans Mid-East Shipping and Trading (Tr. at 452), who testified that since the time he "started this business, the frozen [vegetable] industry was synonymous [with MONTANA]. The only brand good name is MONTANA." (Id. at 473). However, Mr. Joudeh did not specify whether he was describing the United States or international market for Egyptian frozen vegetables, and since he did not begin importing United's products into the United States until 1991, his testimony about his U.S. customers' desires for United's frozen foods in 1991 to 2002 is irrelevant to the question of whether the MONTANA brand was famous in the United States prior to Haggar's use of the MONTANA marks in its sales. (See id. at 473-76).
By contrast, Hala Boulos testified that when she and Sherif first started selling United's frozen vegetables, it would take them 3 to 4 months to sell a container, and that they had to work particularly hard in order to sell the very first container they received, going door to door to local supermarkets and retailers for 4 months to convince them to carry the goods. (Id. at 534-35). Similarly, Alfi al Masri testified that prior to Mr. Boulos' efforts, United's name and brand was not well-known, let alone "famous," in the United States: "[Sherif] makes the distribution and he make a name. [...] Without Sherif, nobody can knows about United." (Defs.' Ex. HF at 38).
Since no other evidence addressing the fame of the mark in the United States was presented, the Court finds that United has failed to prove by "clear and convincing" evidence that the MONTANA brand was already famous in the United States before plaintiffs efforts.
However, the law is clear that where two companies operate within a manufacturer-distributor arrangement, the "exclusive U.S. distributor does not acquire ownership of a foreign manufacturer's mark any more than a wholesaler can
Ushodaya Enterprises, Ltd. v. V.R.S. Int'l, Inc., 63 F.Supp.2d at 335 (citing TMEP § 1201.06(a)).
"Absent a clear manifestation of intent by a supplier [or manufacturer] to transfer ownership of a trademark to a distributor, the supplier [or manufacturer] remains the rightful owner" of a trademark registration. Software AG, Inc. v. Consist Software Solutions, Inc., No. 08 CV 389, 2008 WL 563449, at *17 (S.D.N.Y. Feb. 21, 2008), aff'd, 323 Fed.Appx. 11 (2d Cir.2009); Tactica Int'l, Inc. v. Atlantic Horizon Int'l, Inc., 154 F.Supp.2d 586, 600 (S.D.N.Y.2001); Ushodaya Enterprises, Ltd. v. V.R.S. Int'l, Inc., 63 F.Supp.2d at 336. This is true even when two parties have an exclusive distributorship agreement; if that agreement comes to an end, "any rights which [the distributor] may have had in the mark during the life of the agency immediately revert[] to [the manufacturer]." Major-Prodotti Dentari-Societa in Nome Collettivo Di Renaldo, 161 U.S.P.Q. 437, 438 (T.T.A.B.1968) (finding that a domestic distributor's registration was void ab initio because the written agreement between the parties made clear that respondent had no proprietary rights in the mark at the time he filed the application which matured into the subject registration); see also Omag Optik Und Mechanik A.G. v. Weinstein, 85 F.Supp. 631, 635 (S.D.N.Y.1949) (stating that the distributor must demonstrate "a clear intention on the part of the manufacturer to transfer the mark to the distributor" before the distributor may lay claim to the benefits of the registration).
However, when "goods pass through the distributor's hands in the course of trade and the distributor gives them the benefit of its reputation or of its name and business style, this presumption [of trademark ownership in the foreign manufacturer] may be rebutted." Tactica Int'l, Inc. v.
Tecnimed SRL v. Kidz-Med, Inc., 763 F.Supp.2d at 403 (adopting the Sengoku and Tactica modifications to the Wrist-Rocket test
Defendants contend that Haggar was merely a distributor of United's products, and that, therefore, Boulos knew that United had the superior right to the marks; thus, his statement in the 1989 trademark application was knowingly false. Plaintiff, on the other hand, claims that during the time that Haggar sold United's goods in the United States, Haggar did business as al Masri's customer, and not as a distributor of United. It is undisputed that the business arrangement reached at the 1985 initial meeting between Boulos, al Masri, and Magdi Maamoun was not contemporaneously reduced to writing by the parties. (Defs.' Brief at 16 (citing Defs.' Ex. AT)). Thus, the nature of their business relationship is far from clear. Additionally, it appears that there was no oral or written agreement between the parties regarding Haggar's rights to use or register the MONTANA marks.
However, "the factors used in determining the question of ownership" of the MONTANA mark "are the same whether or not [Haggar] is given the title of `distributor.'" Tactica Int'l, Inc. v. Atlantic Horizon Int'l, Inc., 154 F.Supp.2d at 600. Indeed, "the resolution of who has the right to the mark in this case does not turn on whether the [plaintiff] was an exclusive distributor for [defendants]." Wrist-Rocket Mfg. Co. v. Saunders, 379 F.Supp. at 910. If the Court finds that United's "rights in the mark, vis-a-vis [Haggar's] rights, [were] known by [Boulos] to be superior or clearly established, e.g., by court decree or prior agreement of the parties," then it must find that the mark belonged to United and Boulos' application was fraudulent. However, if Boulos had "a reasonable basis for believing that no one else ha[d] the right to use the mark in commerce," then his oath was "not fraudulent." Maids to Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d at 1908. Specifically, if Haggar gave United's products "the benefit of its reputation or of its name and business style," thereby overcoming the general presumption of ownership in a foreign manufacturer, it would have at least color of title and therefore not be guilty of fraud in its 1989 USPTO trademark application.
To determine the question of whether Haggar is responsible for giving the MONTANA brand "the benefit of its reputation or of its name and business style" in the United States, the Court applies the modified Wrist-Rocket factors to the time period from 1985, when United and Haggar began doing business together, to 1989, when Haggar filed its second trademark application and the companies ended their relationship.
Both Haggar and United claim to have invented the MONTANA marks and to have been the first to affix them to their packaging bags.
Boulos testified that he first conceived of using MONTANA as Haggar's trademark in 1985, and that he first used the term MONTANA when he submitted his fictitious name application in the United States. (Defs.' Ex. HB at 65-66). Boulos admitted that the word "Montana" does not have any significance in the Egyptian language (id. at 77), and that he was inspired to choose Montana Food Industry as the fictitious name for his company by "the company producing the Moon-tana products."
Mr. Boulos also testified that he first had the Haggar packaging bags marked with "MONTANA" in 1985 or 1986, using his own designs. (Id. at 66-68). He identified Plaintiffs Exhibit 6, the word mark MONTANA, bearing the USPTO registration number of 1585940, and Plaintiffs Exhibit 7, the graphic mark of a cartoon boy, holding a basket of vegetables,
However, Boulos admitted using United's two cartoon chef mark in another context. Examining the United frozen garden peas packaging bag label marked as Defendants' Exhibit CC, he acknowledged that the two cartoon chefs logo displayed on the label is a trademark of United. (Defs.' Ex. HC at 190). When subsequently presented with Defendants' Exhibit B, a letter signed by him bearing the letterhead of Montana Food Industries and including the same two cartoon chefs logo in the upper left hand corner, Boulos unapologetically stated that he "was just using" the two cartoon chefs logo because "that's not a trademark, that's a logo." (Id. at 191-92). Despite his mistaken assertion that the logo was not a trademark, Boulos admitted that the logo identified United's products, and that he sent this letter sometime in 1986 or 1987, during the time he was importing frozen food products from United. (Id. at 192).
According to Boulos, he had "poly bags" printed by an Egyptian company, Nile Company for Printing, based on Mr. Boulos' design. (Defs.' Ex. HB at 55-56; Defs.' Ex. HC at 158). Mr. Boulos claims that he, not United, supplied the bags for United to use in packaging its products for him to sell (Defs.' Ex. HB at 80); that he sent United "thousands of bags" at a time (id.); and that he never used United's MONTANA packaging. (Defs.' Ex. HC at 153-54). "I always sold MONTANA, not Moon-tana. [...] Without Egypt next to it. It was always just MONTANA." (Id. at 153). However, he was unable to produce an example bag or bills reflecting printing done by Nile. (Defs.' Ex. HB at 81).
As for the labels on the bags, Boulos initially testified equivocally, stating that the first Haggar label bearing the MONTANA mark was produced in 1985 or 1986, but subsequently he stated explicitly that these labels were in production on September 1, 1985. (Id. at 70). However, plaintiff produced no documentary evidence corroborating the claim that Haggar had begun producing MONTANA labels by September 1, 1985.
United's claim to inventing the mark rests on the testimony of Seif Bisada ("Bisada"), Maamoun, and al Masri. At his deposition, taken on December 12, 2006, Bisada testified that from 1982 to 1988 or 1989, he worked as the general manager of a French company named Matal Egypt ("Matal"),
Although Maamoun confirmed that someone at Matal "[s]uggested a name Montana because Montana represented mountains of ice, and because we deal with frozen food...." (Tr. at 235-36), Maamoun credited an Egyptian governmental agency named Dar Alhilal with designing the accompanying logo, showing "the boy and girl, and the ... ice mountain below them." (Id. at 236-37). Maamoun stated that United's board approved the name MONTANA and the logo in a 1985 meeting (id. at 236-38), and that neither Mr. Boulos, nor Ms. Boulos, nor Mr. al Masri participated in United's selection of the MONTANA mark. (Id. at 339).
Bisada confirmed that Sherif Boulos was not present when the MONTANA brand name was adopted by United. (Defs.' Ex. HH at 19-20). Bisada also confirmed that in 1984 and 1985, after United adopted the brand name MONTANA, United's frozen foods were shipped in bags printed with the MONTANA brand name and the two cartoon chefs logo. (Id. at 20, 41-42, 62). When shown Defendants' Exhibit DG — the bags provided by Haggar to the USPTO as specimen bags in its first trademark application — Bisada testified that these were the same type of MONTANA-branded bags used by United when it first began operations. (Id. at 22). Even though Haggar represented in its 1987 application that Defendants' Exhibit DG was an example of Haggar's own bags, Ms. Boulos admitted that Haggar submitted United's packaging bags as the specimen bags in support of its ultimately abandoned 1987 trademark application. (Defs.' Ex. HA at 124-25). This admission concurred with the testimony of Bisada, who stated that during the period from 1984 to 1985, when he supervised United's food production plant, he never saw United use a bag other than the type represented by Defendants' Exhibit DG. (Id. at 62-63, 72).
Bisada explained that each bag had "United Company for Food Industry" written on the outside. (Defs.' Ex. HH at 24). When products were packed in clear bags and put into cartons, the carton would be marked MONTANA. (Id. at 47-48). Bisada, who observed the packaging area of the factory, testified that all of the goods produced at United's Egyptian factory were packed in bags or cartons marked MONTANA, and he knew of no other company in Egypt using MONTANA to identify its goods. (Id. at 27, 31).
Based on what he personally observed at the plant and in Egyptian supermarkets, Bisada testified that United used the MONTANA brand on products sold in Egypt during the period from 1984 to 1986. (Id. at 40-41, 66). Indeed, according to Bisada, MONTANA is a famous mark in Egypt. (Id. at 31). He testified that United never used packaging branded with "MONTANA Egypt;" it only used the word MONTANA by itself. (Id. at 58). However, Bisada conceded that he "didn't
Maamoun testified that United used the MONTANA mark on its products "[s]ince we started producing, from the day we started ..." around "the end of '84" (Tr. at 255), and that from the beginning, the MONTANA marks were "printed and put on the bag, the logo, trade, the name, and everything." (Id. at 255-56). Moreover, Maamoun testified that United never used the two word term "Moon-tana" in its mark. (Id. at 275).
Maamoun identified three examples of these packaging bags, depicting the logo of "the boy and the girl, and this is the ice mountain," with the word mark MONTANA.
Maamoun stated that in Egypt, "[y]ou cannot ship without the name and the mark." (Tr. at 256). Accordingly, as of September 1986, United had commercially registered the mark MONTANA for "[t]he company Montana, United Company of Montana, for producing products — United Company for manufacturing products, nutritional products, called Montana." (Id. at 238-39, 251; Defs.' Ex. BU (showing "the commercial registration and the stamp of the government," dated September 6, 1986)). According to Maamoun, United used the marks on its business
Strikingly, even Haggar's own witness, Alfi al Masri, testified that United, not Haggar, first chose the brand name MONTANA and created the two chefs logo; he also admitted that the first goods sent to Boulos displayed this branding and logo. (Defs.' Ex. HF at 25). Asked about the origin of the MONTANA brand name, al Masri explained that although he advised Mamdouh Maamoun to base his brand name on the name of his younger daughter, United did not follow this advice and instead chose the word MONTANA, which has nothing to do with Maamoun's daughter. (Id. at 25-26).
Mr. al Masri conceded that he did not provide the plastic bags to United for packaging the frozen vegetables that he shipped to Boulos, but he did give United instructions about the details to be written on the packaging in order to comply with United States regulations. (Id. at 22). Mr. al Masri acknowledged that United printed sample bags with the MONTANA name on them and provided them for his review. (Id. at 22-23).
Mr. al Masri confirmed that he shipped "many tons, about 200 tons" of United's goods featuring the two chefs logo and the MONTANA name; however, he testified that he was not familiar with the ice mountain logo. (Id. at 27). Nevertheless, he explicitly stated that United, not Haggar, owns the logo and trademark displayed in Plaintiffs Exhibit 3, which is a photocopy of the specimen bag Haggar attached to its 1987 trademark application. (Id. at 29).
Even given that the Court has "no room for speculation, inference or surmise[, and that] ... any doubt must be resolved against the charging party," In re Bose Corp., 580 F.3d at 1243, after reviewing the parties' testimonial and documentary evidence, as well as their post-trial submissions, the Court finds that United, not Haggar, invented and first affixed the MONTANA word mark. Although Boulos claimed to have created the MONTANA name, the Court finds it telling that al Masri unequivocally confirmed that United created the MONTANA mark and printed the packaging bags for the frozen goods it shipped to al Masri and Boulos. In so testifying, al Masri corroborated the testimony of Maamoun and Bisada that United chose the MONTANA mark shortly after building its frozen food production factory.
As for the cartoon logo, the evidence demonstrates that United was the first to design and use the two chefs logo and the evidence suggests that the shipments to Haggar were for at least some period of time packaged in bags with the two chefs logo and the MONTANA mark. However, the Court credits Boulos' testimony that he had the mark consisting of the boy with the basket drawn up sometime after he had been importing United's frozen foods. Although the logo is similar to the two chefs logo in that it consists of a cartoon character, there are substantial differences including the absence of the female figure and the ice mountain and the addition of the basket with vegetables and the star burst. While this mark may have been designed to avoid the scrutiny of the USPTO, it was clearly designed and first used by Haggar.
Turning to the second modified Wrist-Rocket factor, the Court must determine which company's name and identifying information appeared on the packaging with
Both parties incorporate the contested mark "Montana" in their corporate names and use it on various documents. Plaintiff Haggar International Corporation did business as Montana Food Industries, while defendant United's full corporate name is United Company for Food Industry Corporation (Montana).
United's witnesses, Maamoun and Bisada, testified that from the very beginning, United always packaged their frozen food products in bags bearing the word mark MONTANA, along with United's two chefs and ice mountain logos. (Id. at 259-61, 263-66; see also Defs.' Exs. CD, CE, BF). In fact, Maamoun stated that United used "[t]he same bag the same logo" for every shipment "to all countries," including the United States, and began doing so sometime between 1984 and 1986. (Tr. at 260-61, 263-65).
By contrast, Boulos contended that during the period from 1985-1989, when it was importing United's frozen food products, Haggar printed its own packaging bags, which featured the MONTANA mark and Haggar's boy carrying a basket logo; Boulos claimed that Haggar sent these bags to United to be used in packaging the goods instead of United's usual bags. (Defs.' Ex. HB at 63, 66-68, 80-81). Mr. Boulos suggested that Haggar's business arrangement with United called for United to use Haggar's bags to pack the goods and then for United to ship containers full of frozen foods packed in Haggar's bags to the United States for Haggar to sell. (See id. at 79-80; Defs.' Ex. HC at 183, 257-58).
Mr. Boulos also reviewed Defendants' Exhibit CA, a copy of a label for a package of frozen vine leaves bearing the MONTANA mark across the top of the label, a large rendering of the two chefs logo in the middle along with the words "Product of Egypt by the United Company of Food Industry," and a smaller ice mountain logo at the bottom with MONTANA appearing in an arch above the mountain's peak. (Defs.' Ex. HC at 180; Defs.' Ex. CA). Boulos stated that this is "the first that I ever see MONTANA without Egypt." (Defs.' Ex. HC at 180). In answer to counsel's question about whether Haggar had ever "receive[d] packaging from United... such as shown in Defendants' Exhibit" CA, Boulos testified, "No ... sometimes we had some packaging mixed with ours that showed like in the container, in the same container. Some items will go out of bags, they will pack it in their own...." (Id. at 183). He stated that he never complained to United in writing, only orally, telling United "to always do [my] bags which I printed in Egypt, but some of the items I couldn't print for the whole packaging...." (Id.)
Similarly, Boulos admitted importing taro roots from United, and acknowledged that he had seen Defendants' Exhibit CB, a United food label for taro roots bearing the MONTANA trademark (id. at 184), as well as the words "Product of Egypt by the United Company of Food Industry." (Defs.' Ex. CB). However, although he admitted receiving this packaging from United at some point during their business relationship, he explained that "sometimes it will be coming with the container that is not upon my order. It will come just 100, 200, 300 cartons of this subject, of the MONTANA Egypt." (Defs.' Ex. HC at 184-85). When this happened, Boulos "always" immediately contacted United, "but they said that they run out of bags.... they run out of this specific packaging and they are waiting for my package to come and they replaced it with this." (Id. at 185). Boulos suggested that United may have intentionally not used the Haggar packaging bags that he provided: "Maybe they were trying to implant this or maybe force this, their own trademark on the market." (Id.)
Although Mr. Boulos acknowledged that United's label exhibits indicate it was using MONTANA on its food packaging in January 1988, Boulos stated that "as far as I remember, it was not supposed to be MONTANA, it was MONTANA Egypt." (Id. at 186). Nevertheless, he admitted
Further supporting United's claim and undermining his own, Mr. Boulos explained that in Egypt, the "authority of export" regulates exports, and he identified Defendants' Exhibit FH as a document issued by the "authority of export and import in Egypt," dated October 10, 1985, indicating that United is officially "registered [with] the export authority officials." (Id. at 218-219). Although this document does not mention any trademark associated with United, an amendment to the previous registration, dated September 9, 1986, added the term "MONTANA," not MONTANA Egypt or Moon-tana, as a trademark associated with United's exports. (Id. at 219-20). Although Boulos contended that "the export authority ... has nothing to do with the trademark," he admitted that the export authority has the ability to seize products that are not labeled in accordance with their requirements. (Id. at 220-21).
Mr. Boulos acknowledged that United used the word "MONTANA" in invoices for frozen vegetables to be shipped by boat to Alfi al Masri in Los Angeles. (Defs.' Ex. HB at 98-99). Defendants' Exhibit BO, an invoice dated December 20, 1985, bears the United name, the company's address and "MONTANA," written in Arabic. In the description section of the invoice, it states that "all the products are MONTANA mark." (Id. at 99-100). Another invoice for a shipment of goods, dated February 12, 1986, and entitled "First Sale from United to Montana," also contained United's letterhead and the ice mountain logo, with the word MONTANA written above the mountain peak.
When asked to explain why this and another invoice, marked as Defendants' Exhibit FT, did not say "MONTANA Egypt," which is what Boulos had claimed was United's logo, Boulos asserted that these were merely "the invoice, different from the packaging," and that there was no reason to complain
When shown a letter dated July 4, 1987, which al Masri had sent to United in an effort to "improve the packing" (Defs.' Ex. HF at 56, 58-59), Mr. Boulos, who admitted he had never previously seen Defendants' Exhibit FM, testified that he wanted United to use double bags, putting the frozen vegetables in a clear bag first, and then inside a printed bag. (Defs.' Ex. HC at 259). He explained that there had been problems with "a lot of bags [being] below weight" and the need to have labels on the outer part of the carton that described the validity and production dates, as well as the ingredients of the contents of the carton." (Id. at 225). Although the letter stated that "We hope your company will start at once the preparation of the new bag required for exports to the USA and carrying the following inscription: Packed for Montana Food Industries — P.O. Box, CA, USA" (id. at 261), Boulos denied that this letter indicated that United was packaging the goods in its own bags and not using Haggar's bags; he asserted that the complaints could have referred to Haggar's packaging as well. (Id. at 257-58). However, he admitted that for some "items we did not have packaging. We used United's." (Id. at 260).
Given al Masri's testimony concerning Defendants' Exhibit FM, Boulos' admission that at times Haggar used United's bags, and the undisputed facts that the specimen bags Haggar submitted to the USPTO in support of its 1987 application contained the words "Product of Egypt by the United Company of Food Industry," the Court finds that at least some of the frozen vegetables that Haggar sold in the United States from 1985 to 1989 were packaged in bags labeled with United's company name and with the MONTANA mark. Without testimony or documentary evidence reflecting what percentage of the bags in the commercial marketplace during this time period carried the MONTANA mark with either United's or Haggar's names, it is impossible for the Court to determine exactly how the branding appeared to the public, and how closely the public associated either company with the MONTANA food product. While the Court finds that the evidence with respect to this second modified Wrist-Rocket factor favors United, the Court is not persuaded that defendants have met their burden of proof by clear and convincing evidence.
The third Wrist-Rocket factor requires the Court to evaluate which company was responsible for maintaining the quality of the product. Here, it is undisputed that United exercised full control over the operations of the packaging factory and the quality and uniformity of the food product. However, the evidence is equally clear that Haggar, not United, was the company that
As a general matter, Maamoun testified that United ensures the quality of its products through "medical administration ... and a license." (Tr. at 377). He described United's quality control process as involving several layers of review, but he admitted that even using those "American techniques," "it's possible for merchandise to come from us wrong," and stated that even "Coca Cola Company ... has mistakes." (Id. at 440). According to defendants, the Egyptian Ministry of Health reviews a random sampling of 10 percent of a company's shipments. (Id. at 444). Defendants introduced Exhibit CK, a report from the Egyptian Ministry of Health, dated January 26, 1986, stating that it had reviewed a single shipment of United products. (Id. at 441, 443-44).
Although United ran quality control at the factory level, it was Haggar that responded to quality concerns from American customers. Ms. Boulos identified Plaintiffs Exhibit 51 as a telex, dated March 23, 1988, signed by Boulos and sent from al Masri's office to Mr. Maamoun at United (id. at 98, 102; Pl.'s Ex. 51), which stated: "We received complaint from our lawyer in California that some customers were sick eating Montana products. We don't have complete info yet, need all about documents to get insurance." (Id. at 98; Pl.'s Ex. 51). According to Ms. Boulos, this was "a very serious matter," requiring her father, al Masri, to pay a lawyer to deal with the complaint; United did not reimburse him for this expense, and that "whenever there is a complaint anything [al Masri] was taking the responsibility." (Id. at 99-100; Pl.'s Ex. 51). Indeed, she stated that al Masri was never reimbursed by United for goods that arrived in a damaged condition. (Id. at 541).
Maamoun acknowledged that Boulos was the one who informed United that there had been a problem with the merchandise in one of its shipments to Haggar, and that consequently the customer rejected some of it. (Id. at 440). However, Maamoun denied any awareness of the notice from Customs, indicating that it had seized and subsequently destroyed one of Haggar's shipments due to the contaminated MONTANA-branded products within. (Id. at 446-49; Defs.' Ex. D).
Mr. al Masri monitored, maintained, and worked to improve the quality of the goods Haggar was selling in the United States, writing the letter in July 1987, seeking to "improve the packing" of the goods because the quality had deteriorated significantly. (Defs.' Ex. HF at 56-60; Defs.' Ex. HC 224-25). It was also al Masri, not United, who appears to have been monitoring United's compliance with United States packaging and labeling laws. (Tr. at 78-79, 112-13). In February of 1989, another container imported from United was stopped by the Department of Health and Human Services, in Los Angeles, and detained because of labeling issues: "mandatory labeling omitted, false or misleading labeling." (Id. at 107-08, 109; Pl.'s Ex. 62). Ms. Boulos explained that her husband, Mr. Boulos, took care of the problem and that, although it took some time to resolve, the container was eventually released by the FDA. (Id. at 109-10).
Given United's hands-off approach to the United States market, the Court finds that United has failed to carry its burden to show by clear and convincing evidence that United was responsible for maintaining the quality and uniformity of the product in the United States. While United maintained the factory where the goods were produced, it also appears that United primarily left Haggar to fend for itself in the United States market and that ultimately,
With respect to the public's perception of the MONTANA brand and its source, Joudeh testified that during the period from 1991 to 2002, when he was not importing United's MONTANA-branded products, his customers often approached him and asked for MONTANA-branded goods, either specifying that they wanted United's MONTANA brand or asking in a way that he understood to mean that they were only interested in the MONTANA-branded goods that were produced by United. (Tr. at 473, 475-76). According to Joudeh, "all the middle east people" were interested in buying United's MONTANA brand, and while it was not available in the United States from 1995 to 2002, he did see it sold in Jordan and Lebanon during this period. (Id. at 474-75).
Hala Boulos disputed this testimony, claiming that customers were not conscious of the company names behind the products. According to Ms. Boulos, when United resumed exporting goods to the United States in approximately 2005 or 2006, this caused confusion among the customers because: "They have a MONTANA white bag. My MONTANA bag is a green bag. So when you go to a supermarket and you ask I want MONTANA Molokhia bag, [you have to specify] the white or the green." (Id. at 147-49).
Ms. Boulos also testified that it was Haggar, rather than United, that made the product known in the United States. (See discussion supra at Part I.A.1). Hala and Sherif Boulos began selling United's frozen vegetables when they were still relatively unknown to United States consumers. (Defs.' Ex. HF at 38). As Ms. Boulos testified, it would take Haggar 3 to 4 months to sell a container, and that they had to work particularly hard in order to sell the very first container they received, going door to door to local supermarkets and retailers for 4 months to convince them to carry the goods. (Tr. at 534-35). Similarly, Alfi al Masri testified that prior to Mr. Boulos' efforts, United's name and brand was not well-known, let alone "famous," in the United States: "[Sherif] makes the distribution and he make a name. [...] Without Sherif, nobody can knows about United." (Defs.' Ex. HF at 38).
The parties provided very little testimony and documentary evidence that speaks to the question of to whom the public made complaints. The only complaint from purchasers discussed at trial was the lawsuit filed by people who got sick from eating vegetables from a contaminated shipment. (See discussion supra at Part I.A.1.c). Although the complaint allegedly named United as the defendant (Defs.' Brief at 13 (citing Defs.' Ex. HF at 76)), it was Haggar's lawyer who fielded the calls and handled the case, and it was al Masri who paid the legal expenses. (Tr. at 112-13).
Since, on balance, the evidence shows that it was Haggar that made the product known among United States consumers and responded to their complaints, the Court finds that United has not met its burden to prove that the public identified the source of the products as United. Accordingly, the Court finds in favor of Haggar on the fourth modified Wrist-Rocket factor.
Some courts also consider which party paid for advertising, Autotech Tech. Ltd. P'ship v. Automationdirect.Com, Inc.,
As previously discussed, for United to prevail in its challenge to Haggar's registration on the basis of fraud, United must prove, by clear and convincing evidence, that Haggar deliberately and deceitfully misrepresented itself to be the owner of the MONTANA mark in its 1989 application to the USPTO. (See discussion supra at Part I. A).
The evidence suggests that United knew of Haggar's interest in acquiring rights to the mark as early as 1988 when United received the letter from Haggar's attorney, Mr. Mund, asking United to assign the rights to the MONTANA mark to Haggar. (See Defs.' 2009 56.1 Stmnt ¶ 28; Pl.'s 2009 56.1 Stmnt ¶ 28; Pl.'s Ex. 22). United appears to have ignored the letter, as well as follow-up letters Mr. Mund sent dated July 1, 1988 and August 1, 1988. (See Tr. at 119-20). United neither replied to Mund's letters nor immediately took steps in response to secure its own rights.
Additionally, the Wrist-Rocket factors favoring Haggar provide further support
In short, even if defendants could show that Haggar did not actually own the MONTANA mark when Boulos submitted Haggar's 1989 USPTO application — a point on which the Court finds the evidence to be equivocal — defendants have failed to carry their heavy burden of showing by clear and convincing evidence the deliberate misrepresentation necessary to overcome the incontestible status of plaintiffs mark. See In re Bose Corp., 580 F.3d at 1243. Considering the especially high burden placed on the party charging fraud against one who has signed an oath, see id.; Maids to Order of Ohio. Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d at 1908, United has failed to prove that Haggar's assertion of ownership constituted a deliberate and material misrepresentation of fact in connection with its application.
Defendants' second claim of fraud is based on the statement by Haggar in its 1989 trademark application that "Haggar's claimed date of first use of the mark was months earlier than when it placed its first order with United." (Defs.' Brief at 35). It is undisputed that in its application, Haggar represented that it first used the MONTANA mark in commerce on September 1, 1985. (Pl.'s Ex. 6; Defs.' Ex. HB at 68, 136-38; Defs.' 2009 56.1 Stmnt ¶ 36; Pl.'s 2009 56.1 Stmnt ¶ 36), and the evidence suggests that the actual date of first use was later, in 1986. (See Tr. at 433-436).
Specifically, when asked at his deposition, Mr. Boulos could not recall when Haggar made its first sale in the United States. (Defs.' Ex. HB at 70-71, 76). Although when he was shown Defendants'
Similarly, Ms. Boulos stated that Haggar did not receive its first shipment of MONTANA-branded products until sometime "in early '86." (Tr. at 176; Defs.' Ex. BO). This evidence seems consistent with Mr. Mund's letter to Mr. Lyon, which states that the first meeting between the parties occurred in "approximately September of 1985." (Defs.' Ex. AT at 1). Thus, it is clear that, as of September 1, 1985, no shipment of United's goods had arrived in the United States, and therefore Haggar could not have sold any goods marked with the MONTANA brand as of this date. Accordingly, the date of first use as indicated on the application to the USPTO was not accurate.
However, even if Haggar provided an inaccurate date of first use in its 1989 trademark application, this alone does not constitute fraud on the USPTO. To rise to the level of fraud, the false statement must be made knowingly and have been material to the USPTO's decision to grant Haggar's trademark application. Mister Leonard, Inc. v. Jacques Leonard Couture, Inc., 23 U.S.P.Q.2d 1064 (T.T.A.B. 1992). First, plaintiff argues that when the application to the USPTO was prepared, it was Haggar's attorney, Alan Mund, who chose to list September 1, 1985 on Haggar's trademark application as the date the name and logo were first used (Defs.' Ex. HB at 77): Boulos testified that "[i]t was not me. It was the lawyer." (Id.) Boulos further claimed that he did not give Mund the dates to enter on the 1989 trademark applications. (Id.)
More importantly, it is unclear that the date of first use was material in this case. Given that there was no simultaneously pending application by United or anyone else competing to register the MONTANA mark, even if the date of first use was actually 1986, it is not clear to the Court that the date of first use would have factored in any significant way into the USPTO's decision. The distinction between 1985 and 1986 only becomes relevant and material if the USPTO had to determine which of two companies had the superior claim because of first use in United States commerce.
Again, the burden is on defendants to prove by "clear and convincing" evidence that Boulos had a subjective intent to deceive the USPTO, and the Court must apply this standard strictly. American Flange & Manufacturing Co. v. Rieke Corp., 80 U.S.P.Q.2d 1397, at *26 (T.T.A.B. 2006). In applying this standard, it must resolve "any doubt ... against a finding of fraud." Standard Knitting, Ltd. v. Toyota Jidosha Kabushiki Kaisha, 77 U.S.P.Q.2d 1917, 1926 (T.T.A.B.2006). Indeed, "[fjraud in trademark cancellation ... must be proved to the hilt with little or no room for speculation or surmise, [but allow] considerable room for honest mistake, inadvertence, erroneous conception of rights, and negligent omission...." Yocum v. Covington, 216 U.S.P.Q. at 216.
Even if there was a mistake made in the date listed on the application, it is unclear that Boulos was responsible for the error
Finally, the Court turns to the third of defendants' fraud claims-namely, that Haggar committed fraud in providing packaging bags in support of its 1989 trademark application that did not contain any reference to United as the manufacturer of the frozen food products contained inside.
It is undisputed that in December 1987, plaintiff Haggar filed a trademark application with the USPTO for the word mark "MONTANA" and that, with its application, Haggar submitted several packaging bags, marked "Product of Egypt by The United Food Company for Food Industry." (Defs.' 2009 56.1 Stmnt ¶¶ 22-23, 25; Pl.'s 2009 56.1 Stmnt ¶¶ 22-23, 25). It is further undisputed that thereafter, Haggar failed to respond to a request from the USPTO for additional documentation as proof of ownership of the MONTANA word mark, and the application was deemed abandoned as of November 4, 1988. (Defs.' 2009 56.1 Stmnt ¶¶ 25-27; Pl.'s 2009 56.1 Stmnt ¶¶ 25-27).
In March of 1989, Haggar independently obtained new packaging from Egypt that bore the MONTANA mark, but which eliminated the mountain peak drawing and depicted a cartoon boy chef with a basket, in contrast to the two chefs logo previously used by United. (Defs.' 2009 56.1 Stmnt ¶ 31; Pl.'s 2009 56.1 Stmnt 131; Defs.' Exs. AT, DI, FJ). On this new packaging, Haggar used the name "Montana Food Industries" without any reference to United. (Defs.' 2009 56.1 Stmnt ¶¶ 29, 31; Pl.'s 2009 56.1 Stmnt ¶¶ 29, 31).
The parties agree that any business relationship between United and Haggar ended in July of 1989 and that the last shipment of goods from United to Haggar was sent at this same time. (Defs.' 2009 56.1 Stmnt ¶¶ 32-33; Pl.'s 2009 56.1 Stmnt ¶¶ 32-33). On August 1, 1989, Alan Mund sent a letter to all of United's MONTANA retailers, but not to defendant United, claiming that Haggar owned the MONTANA mark and that in "`an effort to preclude further infringement of Montana's goodwill, Montana has redesigned its labeling and packaging.'" (Defs.' 2009 56.1 Stmnt ¶ 35; Pl.'s 2009 56.1 Stmnt ¶ 35). Haggar filed its 1989 trademark applications for the word mark MONTANA and the boy with a basket logo the following day. (Defs.' 2009 56.1 Stmnt ¶ 36; Pl.'s 2009 56.1 Stmnt ¶ 36). Haggar's 1989 applications omitted any reference to United or its previous trademark application for the MONTANA mark.
The question before the Court is whether Haggar fraudulently submitted the new specimen bags, without reference to United, in an attempt to deceive the USPTO about the true origin of the goods branded with the MONTANA mark. As with the questions of ownership of the mark and
Ms. Boulos testified that at the "[e]nd of '89, beginning of '90," Haggar began buying its goods in bulk from a different company in Egypt and repackaging them in California for sale in the United States. (Tr. at 114). "[W]e gave [the Egyptian bulk seller] the bags to put in the, to fill them with the product," and then Haggar paid an Irvine, Orange County, California-based company named Cleugh's Rhubarb to sort and pack the goods in the United States. (Id.)
With respect to the second trademark application, Ms. Boulos testified that Haggar relied on the advice of Mr. Mund to "change your packaging in order to reflect the name [and] address of the manufacturer, distributor, or packager of the product." (Id. at 185; Pl.'s Ex. 21). Thus, Defendants' Exhibits FJ and DI depict "[t]he boy with the basket," along with the word "MONTANA," listing the company's name as "Montana Food Industries, 13610 Ventura Boulevard, Sherman Oaks," an address Ms. Boulos acknowledged that Mr. Boulos used as the mailing address for Haggar for a period of time. (Id. at 192-95; Defs.' Exs. FJ, DI). The word United does not appear on the packaging. (Id. at 195).
According to Ms. Boulos, as of August 2, 1989, Haggar was not "doing any business in the United States with goods packed by United." (Id. at 128). Thus, in the August 2, 1989 trademark application, the paragraph in the application describing how Haggar was "processing and dealing with goods at that time," including its reference to Cleugh's Rhubarb, was "an accurate statement." (Id. at 127-28, 131; Pl.'s Ex. 5). The application included documents describing the Montana frozen vegetable bags that Haggar was using in 1989 to distribute food products from Cleugh's Rhubarb "to the states." (Id. at 129; Pl.'s Ex. 5).
Since it remains undisputed that Haggar had terminated its relationship with United prior to Haggar's filing of its 1989 trademark application, and that Haggar was acquiring frozen food products from another source (Tr. at 114; Defs.' 2009 56.1 Stmnt ¶¶ 32-33; Pl.'s 2009 56.1 Stmnt ¶¶ 32-33), the Court concludes that it would have been improper for Haggar to submit bags that included United's name when it applied for registration of the mark in 1989. At the very least, given that "any doubt [must be resolved] ... against a finding of fraud," Standard Knitting, Ltd. v. Toyota Jidosha Kabushiki Kaisha, 77 U.S.P.Q.2d at 1926, the Court finds that the defendants have failed to prove by "clear and convincing" evidence that the omission of United's name from the specimen bags submitted in support of Haggar's 1989 application was knowingly fraudulent.
Therefore, in sum, the Court finds that defendants have failed to prove that plaintiff obtained its trademark registrations through fraud. Accordingly, plaintiffs trademark for MONTANA retains its incontestable status against this challenge.
The Court now turns to defendants' "prior use" defense to the incontestable
In addition to fraud, the "prior use" defense is available under certain circumstances to defeat a trademark holder's claim that a mark has become incontestable. 15 U.S.C. § 1115(b)(5). The substance of this defense is as follows:
15 U.S.C. § 1115(b)(5). In essence, in order to establish a "prior use" defense, the defendants must show that United was a prior user of the mark in the United States, see De Beers LV Trademark Ltd. v. DeBeers Diamond Syndicate, 440 F.Supp.2d at 269, and that its use of the mark was "continuous and uninterrupted" from a date prior to plaintiffs registration to the present. Id.; see also Old Dutch Foods, Inc. v. Dan Dee Pretzel & Potato Chip Co., 477 F.2d 150, 153 (6th Cir.1973); Dial-A-Mattress Operating Corp. v. Mattress Madness, Inc., 841 F.Supp. 1339, 1353-54 (E.D.N.Y.1994).
In its March 8, 2011 letter and subsequent memorandum, filed on March 31, 2011, seeking to preclude defendants from raising a "prior use" defense, plaintiff argues that defendants could not possibly demonstrate the statutorily required prerequisite of "continuous use" of the contested mark from a time prior to Haggar's registration through the present because United admitted to not using the MONTANA mark in the United States for the six year period from 1997-2002.
However, interruption in the continuous use of a mark does not automatically preclude a party from relying on the "prior use" exception to incontestability. See City of New York v. Tavern on the Green, L.P., 427 B.R. 233, 242 (S.D.N.Y. 2010) (holding that defendant restaurant's two year break in the chain of use due to renovations was excused due to its clear intent to resume use of the mark once construction was complete); Cuban Cigar Brands v. Upmann International, 457 F.Supp. 1090 (S.D.N.Y.1978), aff'd, 607 F.2d 995 (2d Cir.1979). In Cuban Cigar Brands, the court held that "[a] party could bridge the gap in actual sales if sufficient showing were made of good will remaining after the use was halted and that the party had the intent to resume use." 457 F.Supp. at 1100, n. 43 (holding that Cuban cigar company did not lose the ability to raise a prior use defense when its exports to the United States were interrupted
In addition, plaintiff contends that defendants should be precluded from raising a "prior use" defense because in order for defendants to argue that the six year break in use should not affect defendants' ability to contest the mark, defendants would have to show that Haggar acted inequitably in enforcing its trademark registration. This, in turn, requires defendants to prove that Haggar obtained the registration with "unclean hands." According to plaintiff, any attempt to prove Haggar's "unclean hands" would rely upon the same proof, and be evaluated under the same "clear and convincing" standard, as defendants' fraud defense, and would thus be redundant and a waste of judicial resources.
It is undisputed that United's use of the mark in the United States was not "continuous and uninterrupted." Indeed, it is undisputed that United did not attempt to distribute its MONTANA-branded goods in the United States between 1995, when the Nile shipment was seized by Customs (Defs.' 2009 56.1 Stmnt ¶¶ 46-47; Pl.'s 2009 56.1 Stmnt ¶¶ 46-47), and 2002, when United resumed sales in the United States through Trans Mid-East and attempted to challenge Haggar's registration of the mark.
Although United, citing Cuban Cigar Brands v. Upmann International, 457 F.Supp. at 1100, n. 43, claims that this break in use is excusable because it was prevented from using the mark due to Haggar's enforcement of its trademark ownership rights through the involvement of Customs, this argument is unpersuasive because, as discussed above, the Court finds that Haggar did not acquire its trademark of the MONTANA mark by inequitable means. In addition, although Cuban Cigar suggests that "[a] party could bridge the gap in actual sales if sufficient showing were made of good will remaining after the use was halted and that the party had the intent to resume use," United has made no such showing. Indeed, United only presented evidence that it sought to assert its rights to the mark against Haggar in Egypt. United has failed to show that United States customers retained the association between MONTANA-branded goods and United, after United stopped using the mark in the U.S. market for six years.
Accordingly, the Court finds defendants' "prior use" defense to the incontestability of Haggar's MONTANA mark unavailing. Consequently, Haggar is entitled to the full benefits of the mark's now incontestable status. Given this finding, the Court finds that Haggar owns the exclusive right to use the MONTANA mark in the United States. See 15 U.S.C. § 1115(b); see also KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. at 117, 125 S.Ct. 542.
The Court also finds that plaintiff has established that the MONTANA word mark "is distinctive as to the source of the" goods at issue here and "that there is the likelihood of confusion between" Haggar's MONTANA-branded goods and United's. See ITC Limited v. Punchgini, Inc., 482 F.3d at 154. Accordingly, the Court holds that United, by virtue of its use of an identical word mark for virtually identical goods, has infringed on Haggar's
Having found that defendants have not proved either of their proffered defenses by clear and convincing evidence, the incontestible status of the MONTANA mark is conclusive evidence of Haggar's exclusive ownership of the mark. Therefore, United's counterclaims of infringement against Haggar must be denied and the Court's analysis need not proceed further. However, in the interest of completeness, the Court entertains Haggar's contention that United's counterclaims are barred by the equitable defenses of laches and acquiescence. The Court now turns to an analysis of Haggar's equitable defenses.
Defendants assert counterclaims of, inter alia, infringement and unfair competition, to which Haggar raises the equitable defense of laches. The defense is only available "to one who possesses a right which is firmly planted in good faith...." Anchor Savings Bank FSB v. Anchor Equities, Ltd., No. 86 CV 1623, 1988 WL 70645, at *6 (E.D.N.Y. June 2, 1988), aff'd, 872 F.2d 1021 (2d Cir.1989). "[A] party asserting an equitable defense such as laches must demonstrate that it comes before the court with clean hands." Road Dawgs Motorcycle Club of the U.S., Inc. v. Cuse Road Dawgs, Inc., 679 F.Supp.2d 259, 279 (N.D.N.Y.2009) (citations omitted); see also Freedom Calls Found, v. Bukstel, No. 05 CV 5460, 2006 WL 845509, at *23 (E.D.N.Y. March 3, 2006) (citing Gidatex, S.r.L. v. Campaniello Imps., Ltd., 82 F.Supp.2d 126, 130 (S.D.N.Y.1999)); Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. at 814, 65 S.Ct. 993.
Although defendants argue that "Haggar has unclean hands because it adopted United's mark with knowledge of United's superior trademark rights ... [and] committed fraud on the PTO when it applied for and obtained a trademark registration for `MONTANA.'" (Defs.' Brief at 56), the Court finds that Sherif Boulos had a good faith basis to believe that Haggar owned the superior right to the MONTANA mark when he signed the application oath in support of Haggar's 1989 trademark application. (See discussion supra Part II. A. 1). Thus, in order to prevail on its laches defense, Haggar must show that: (1) United had knowledge of Haggar's allegedly infringing use of the MONTANA mark; (2) that United inexcusably delayed in taking action to enforce its rights; (3) that Haggar will be prejudiced if United is permitted to assert rights to the MONTANA mark; and (4) that Haggar operated in good faith in its use of the mark. See Fusco Grp., Inc. v. Loss Consultants Int'l Inc., 462 F.Supp.2d 321, 329 (N.D.N.Y.2006) (citing McDonald's Corp. v. Druck & Gerner, P.C., 814 F.Supp. 1127, 1136 (N.D.N.Y.1993) and Dial-A-Mattress Operating Corp. v. Mattress Madness, Inc., 841 F.Supp. at 1356).
As discussed previously, the evidence suggests that United knew of Haggar's interest in acquiring rights to the MONTANA word mark as early as 1988 when United received the letter from Haggar's attorney, Mr. Mund, asking United to assign the rights to the mark to Haggar. (See discussion supra Part I.A.1. f). United appears to have ignored the letter, as well as follow-up letters that Mr. Mund
On October 25, 1989, United filed its own application for registration with the USPTO but the application was refused and United was sent a "non-final action" letter dated August 16, 1990 notifying United of Haggar's registration. (Pl.'s 2006 56.1 Stmnt ¶¶ 13, 17). United never responded to this letter from the USPTO and abandoned its own application on February 20, 1991, "pursuant to the advice of U.S. counsel," without contesting Haggar's registration. (Pl.'s 2006 56.1 Stmnt ¶¶ 10, 14-15, 17; Pl.'s Brief at 14, 18; Pl.'s Ex. 66).
United denies that it learned of Haggar's trademark registration through the `Non-final action' letter, claiming that the letter was mailed to a lawyer named Timothy T. Tyson
However, as noted earlier, at the time of this 1989 application, the Chairman of United was Magdi Maamoun, Mr. Maamoun's brother, and Magdi Maamoun's sworn, signed statements on the Petition to Cancel, directly contradict the characterization of the facts proposed by Mamdouh Maamoun. In that Petition, filed in 2002 and signed by Magdi Maamoun, United states that it filed an application with the USPTO to trademark MONTANA on October 25, 1989 and then abandoned the application on February 20, 1991 "pursuant to advice of U.S. counsel." (Pl.'s Ex. 66; Tr. at 426). Accordingly, the Court does not credit Mamdouh Maamoun's selfserving testimony, and finds that United had actual knowledge of Haggar's use of the MONTANA mark in the United States since at least 1990.
Even if United did not become aware of Haggar's registration until later, it is undisputed that in February 1991, Haggar's attorney filed Haggar's trademark registration for the MONTANA mark with U.S. Customs officials. (Defs.' 2009 56.1 Stmnt ¶ 43; Pl.'s 2009 56.1 Stmnt ¶ 43). It is also undisputed that in the summer of 1995,
In response to this news, Maamoun stated that he consulted with the Egyptian embassy in the United States (id. at 352-53), and it was his understanding that United could no longer object to Haggar's registration of the mark. (Id. at 352). Thus, according to Maamoun, United decided that it "[w]ould not send MONTANA [to the United States] at all" (id.); United did not try to sell its MONTANA-branded products in the United States from 1995 to 2002 because "we did not want to enter into problems." (Id. at 359). When asked if United wanted to sell its MONTANAbranded products in the United States during this time period, Maamoun answered, "No, that was it. We stopped because we were aware of the fact that we were not ... permitted...." (Id. at 360; see also id. at 363, 366-67). Therefore, it is undisputed that United knew by 1995 at the very latest that Haggar was using the MONTANA mark in the United States.
Moreover, it is undisputed that in 1990,
In assessing the reasonableness of the period of delay, the Court must measure from the time United knew or should have known of Haggar's allegedly infringing conduct to the date United asserted its rights. See Danjaq LLC v. Sony Corp., 263 F.3d 942, 952 (9th Cir.2001). The Second Circuit has held that in a dispute under the Lanham Act, a delay in excess of six years raises a presumption of laches. See Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir.1996) (basing the six year standard for presuming laches on the six year New York statute of limitations for alleging fraud). Once the presumption arises, the burden shifts to defendants to come forward with evidence to establish that the delay was excusable and that Haggar suffered no prejudice from the delay. Id.
Here, even construing the facts in a light most favorable to defendants, it is clear that United waited more than six years to assert its rights
In evaluating a laches claim, courts in this Circuit have employed a variety of different tests to balance the equities and determine if a claimant's delay was reasonable and excusable. In The Estate of Mantle v. Rothgeb, the court held that "[a] plaintiff's delay is excusable `[w]here plaintiff has not slept on her rights, but has been prevented from asserting them based, for example, on justified ignorance of the facts constituting a cause of action, personal disability, or because of ongoing settlement negotiations.'" No. 04 CV 4310, 2007 WL 4510326, at *5 (S.D.N.Y. Dec. 21, 2007) (citing Stone v. Williams, 873 F.2d 620, 625 (2d Cir.1989), vacated on other grounds, 891 F.2d 401 (2d Cir.1989), cert. denied, 496 U.S. 937, 110 S.Ct. 3215, 110 L.Ed.2d 662 (1990)). In Road Dawgs Motorcycle Club of the U.S., Inc. v. Cuse Road Dawgs, Inc., the court held that "[i]n determining the reasonableness of [a claimant's] delay, a court must weigh six factors: `(1) the strength and value of the mark; (2) plaintiffs diligence in the enforcement of his rights; (3) the harm to the plaintiff if relief is denied; (4) the good faith of the defendant; (5) the competitiveness of the parties; and (6) the harm to the defendant occasioned by the delay.'" 679 F.Supp.2d at 283 (holding that claimant's delay was reasonable because plaintiff diligently asserted its right to the disputed mark as soon as it became aware of
Finally, under the "doctrine of progressive encroachment," a claimant's delay may be found excusable because "a plaintiff is not obligated to file suit until the likelihood of confusion looms large and its rights to trademark protection have clearly ripened." Audi AG v. Shokan Coachworks, Inc., 592 F.Supp.2d 246, 267 (N.D.N.Y.2008) (internal citation omitted); see also Johnson & Johnson v. Actavis Grp. hf, No. 06 CV 8209, 2008 WL 228061, at *9 (S.D.N.Y. Jan. 25, 2008) (holding that "a plaintiff may delay in bringing suit until there is a likelihood of confusion due to the infringer's activities in the marketplace"). However, as the court in Audi AG v. Shokan Coachworks, Inc. recognized, "it is also true that a plaintiff cannot simply sleep on his rights and still gain protection from the doctrine of progressive encroachment." 592 F.Supp.2d at 267.
Here, United's delay was not reasonable under any of these tests. First, United was not "prevented from asserting [its claim] based, for example, on justified ignorance of the facts constituting a cause of action, personal disability, or because of ongoing settlement negotiations." The Estate of Mantle v. Rothgeb, 2007 WL 4510326, at *5. United was not ignorant of the facts underlying its claim. It is undisputed that United knew by 1995 at the very latest that Haggar was using the MONTANA mark in the United States and claiming sole ownership of the rights to the mark. (Defs.' 2009 56.1 Stmnt ¶ 46; Pl.'s 2009 56.1 Stmnt ¶ 46). When asked why he did not consult a U.S. trademark lawyer or take any other steps to enforce its claim for approximately seven years, Maamoun stated, "I am an attorney. It's not possible for me to send and contradict the American law, violate American law." (Tr. at 429-30). While United may claim ignorance about its ability to assert a claim to the mark at this time, such ignorance is not "justified." See The Estate of Mantle v. Rothgeb, 2007 WL 4510326, at *5.
Under the six factor test articulated in Road Dawgs, defendants have presented scant evidence concerning the strength and value of the MONTANA mark, and there has been no discussion of the competitiveness of the parties or the harm that defendants will suffer if relief is denied. 679 F.Supp.2d at 283. Defendants rest their argument almost exclusively on the alleged bad faith of Haggar and on United's efforts to enforce its rights to the mark in Egypt through police and legal action. Not only has the Court rejected the argument that Haggar and Mr. Boulos acted in bad faith, but United's enforcement efforts in Egypt are irrelevant to its claims in the United States. "The principle of territoriality is fundamental to trademark law. A trademark has a separate legal existence under each country's laws, and trademark rights exist in each country solely according to that nation's laws." Topps Co., Inc. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 70 (2d Cir. 2008) (internal citation omitted). United's legal actions against Haggar and Mr. Boulos in Egypt are relevant only to the ownership and use rights to the mark in Egypt; Egyptian courts have no jurisdiction over use of the mark in the Untied States. See id. Indeed, although defendants argue that United's efforts in Egypt "put Haggar on notice that United did not intend to sleep on its rights" (Defs.' Brief at 58), this is only true with respect to United's rights in Egypt. United took no action asserting its rights in the United States until March 25, 2002, when it filed
Finally, the doctrine of progressive encroachment does not save United's claim here. There has been a "likelihood of confusion due to [Haggar's] activities in the [United States] marketplace," Johnson & Johnson v. Actavis Grp. hf, 2008 WL 228061, at *9, since Haggar began selling frozen vegetables in packaging marked with the MONTANA brand name but without any mention of United. At the very least, United's claim "clearly ripened," Audi AG v. Shokan Coachworks, Inc., 592 F.Supp.2d at 267, in 1995 when Haggar enlisted Customs to stop United's MONTANA-branded containers from entering the United States. When asked what changed between his understanding in 1995 that he could not challenge Haggar's trademark registration and 2002, when United filed its petition to cancel Haggar's registration, Maamoun testified that the decision was due to the success of his police complaint against Mr. Boulos' Egyptian MONTANA plant. (Tr. at 430). After he got a judgment from the Egyptian court guaranteeing that no MONTANA-branded merchandise would be going from that plant to America, he concluded that "there was nothing else to be done in Egypt" and therefore he attempted again to register his trademark in the United States. (Id. at 430-31).
Not only is this explanation unpersuasive, but the doctrine of "progressive encroachment" refers to changes in the use by the alleged infringer, not to changes in the understanding or knowledge of the claimant. See Audi AG v. Shokan Coachworks, Inc., 592 F.Supp.2d at 267. Thus, the Court does not find any change in Haggar's use of the mark between 1995 and 2002 that qualifies as "progressive encroachment," justifying United's delay in attempting to enforce its rights. Consequently, the Court does not find United's delay reasonable or excusable.
The party raising the equitable defense of laches affirmatively establishes actual prejudice when it shows that the passage of time has made evidence unavailable or difficult to obtain. Robins Island Pres. Fund, Inc. v. Southold Dev. Corp., 959 F.2d 409, 424 (2d Cir.) (holding that "defendant may suffer prejudice ... because the delay makes it difficult to garner evidence to vindicate his or her rights"), cert. denied, 506 U.S. 1001, 113 S.Ct. 603, 121 L.Ed.2d 539 (1992); see also Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 65 (2d Cir.1983) (holding that "an inequity might result in a case where a claim is permitted to go forward where relevant evidence has been lost due to a petitioner's delay in bringing suit"); Dress for Success Worldwide v. Dress 4 Success, 589 F.Supp.2d 351, 365 (S.D.N.Y.2008) (stating that in the typical laches cases, prejudice is shown by demonstrating that "certain witnesses and evidence are now unavailable"); The Estate of Mantle v. Rothgeb, 2007 WL 4510326, at *5.
Here, plaintiff argues that "[i]n the many years since February 1991, when United affirmatively decided to abandon its trademark application after being informed of Haggar's MONTANA registration... witnesses, including Haggar's own founder and principal, have died, law firms have disbanded and/or cannot locate previously available files, and memories cannot be presumed to be as reliable when recalling events which took place a decade or more ago...." (Pl.'s Brief at 52). In addition, plaintiff contends that if United had acted in a timely fashion, "Haggar could have either vindicated its rights using
Defendants argue that "Haggar did not and cannot show evidentiary prejudice because all of the key witnesses were either deposed at length, or present at the trial" and because "nearly all of the records relating to the business relationship between United and Haggar, the key issue in this case, are still available and many were admitted at the trial." (Defs.' Brief at 58). Moreover, defendants contend that "Haggar cannot show financial prejudice, because it did not present any evidence of its financial reliance on the delay, its costs of promoting its MONTANA products, or any other financial burden brought on by this litigation."
First, the Court finds defendants' economic argument unpersuasive. It is unquestionable that Haggar, which has been using the MONTANA brand in the United States since 1986, would suffer negative economic consequences if forced to discontinue its use of the mark now. Indeed, in their response to the Rule 56.1 Statement submitted by plaintiff in conjunction with its summary judgment motion on the issue of laches, defendants did not challenge plaintiffs statement that "Haggar continued to import, sell and expand its business under the MONTANA mark exclusively in the United States for the past ten or more years" and thus Haggar would "be economically prejudiced by the waste of the economic resources it has expended in the interim if it were now forced to discontinue use of the trademark MONTANA, and if its United States trademark registration for the word mark MONTANA were now cancelled." (See Pl.'s 2006 56.1 Stmnt ¶ 47; Defs.' 2007 56.1 Stmnt ¶ 47). Although no evidence has been presented on the precise amount of this damage, the Court does not need a precise accounting in order to find that Haggar would suffer economic prejudice if United was now allowed to claim sole rights to the MONTANA mark in the United States.
Moreover, defendants are incorrect that "all of the key witnesses" either testified at trial or were deposed. Magdi Maamoun, United's president and the only representative of United present for the initial meeting with Boulos and al Masri, died in 2007 (Tr. at 231) without having been deposed. Furthermore, the Court notes that while Mr. Boulos and Mr. al Masri's depositions were available for the Court's consideration, their deaths prior to trial deprived the Court of the ability to assess their demeanor — and thus their credibility — while testifying.
Finally, as an example of the deleterious effects of time on the memories of witnesses, the Court notes how little Leonard Cohen, Esq., remembered about his and his firm's involvement with the parties in this case. Mr. Cohen was deposed on July 10, 2006 concerning his representation of Mr. Terzibachian and Nile Foods, specifically regarding the 1995 Customs seizure, and his former colleague Timothy Tyson, Esq.'s alleged representation of United,
Consequently, the Court finds that plaintiff would suffer prejudice if United was allowed now to assert a challenge to the MONTANA mark.
Finally, as discussed supra, the Court finds that Haggar operated in good faith in using the MONTANA mark in the United States and registering the mark in its name with the USPTO. Consequently, the Court finds that Haggar has successfully shown each of the four elements necessary to prevail on its equitable defense of laches. See Fusco Grp., Inc. v. Loss Consultants Int'l Inc., 462 F.Supp.2d at 329 (citing McDonald's Corp. v. Druck & Gerner, P.C., 814 F.Supp. at 1136 and Dial-A-Mattress Operating Corp. v. Mattress Madness, Inc., 841 F.Supp. at 1356). Given that approximately 12 years passed between the date Haggar registered the mark in the United States and the date United challenged the registration, the Court finds in favor of Haggar on each of defendants' counterclaims. See Lincoln Logs Ltd. v. Lincoln Pre-Cut Log Homes, 971 F.2d 732, 734, 23 U.S.P.Q.2d 1701, 1703 (Fed.Cir.1992) (stating that "a laches or estoppel defense in an opposition (or cancellation) proceeding may be based upon the Opposer's failure to object to an Applicant's registration of substantially the same mark") (emphasis in original).
Haggar also asserts the equitable defense of acquiescence to defendants' counterclaims. See Carl Zeiss Stiftung v. VEB Carl Zeiss Jena, 433 F.2d 686, 703 (2d Cir.1970), cert. denied, 403 U.S. 905, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971). The difference between laches and acquiescence is that "acquiescence implies active consent, while laches implies a merely passive consent." Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 462 (4th Cir.), cert. denied, 519 U.S. 976, 117 S.Ct. 412, 136 L.Ed.2d 325 (1996). Defendants contend that plaintiff is barred from asserting the acquiescence defense because they allege that plaintiff comes to the court with "unclean hands." (Defs.' Brief at 60-61). As it did in the laches context above, the Court rejects this argument and holds that Haggar is entitled to assert that United consented to Haggar's use of the MONTANA mark in the United States. However, since the Court has already concluded that defendants' counterclaims are barred by laches, there is no need to address Haggar's defense of acquiescence further.
For the reasons stated above, the Court finds in favor of plaintiff on all of its federal trademark claims and finds against defendant on all of their federal trademark counterclaims. The Court hereby Orders the cancellation of United's MONTANA word mark, Trademark Registration No. 2,724,085, and an accounting of monetary damages owed to Haggar by defendants.
The Clerk is directed to send copies of this Order to the parties either electronically through the Electronic Case Filing (ECF) system or by mail.
2 McCarthy, supra, § 16.10. Courts have held that use of a mark on a shipping label attached to a container is properly regarded as "affixed" to the product, In re Schering-Plough Corp., 211 U.S.P.Q. 69 (T.T.A.B.1981), but that the same mark placed on the packing invoice insert is not. 2 McCarthy, supra, § 16.10[1] (citing In re Dura Corp., 188 U.S.P.Q. 701 (T.T.A.B.1975)). "Advertising and documentary use of a symbol apart from the goods does not constitute a statutory `trademark use' of that symbol." 2 McCarthy, supra, § 16.10[1] (citing Powermatics, Inc. v. Globe Roofing Products Co., 52 C.C.P.A. 950, 341 F.2d 127, 144 U.S.P.Q. 430 (1965)). Here, given that the MONTANA brand cannot be placed directly on the frozen vegetables themselves, the key inquiry for the Court to determine is whether the goods were initially packaged in United's bags or Haggar's bags. The marks used on invoices and other correspondence are irrelevant as they do not constitute "affixed" uses. Id.
