Topps Co., Inc. v. Cadbury Stani S.A.I.C.
| Decision Date | 15 May 2008 |
| Docket Number | Docket No. 06-5316-cv. |
| Citation | 526 F.3d 63 |
| Parties | The TOPPS COMPANY, INC., Plaintiff-Appellant, v. CADBURY STANI S.A.I.C., f/k/a Productos Stani Sociedad Anonima Industrial y Comercial, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
David G. Ebert, New York, NY, (Patricia Hewitt, Mioko Tajika, Caitlin L. Bronner, Ingram Yuzek Gainen Carroll & Bertolotti, LLP, New York, NY, of counsel), for Plaintiff-Appellant.
Dennis P. Orr, New York, NY, (Stefan W. Engelhardt, John W.R. Murray, Morrison & Foerster LLP, New York, NY, of counsel), for Defendant-Appellee.
Before: CARDAMONE, and POOLER, Circuit Judges, and KEENAN,* District Judge.
Plaintiff appeals from a grant of summary judgment in favor of defendant in litigation between two multinational corporations. This litigation concerns chewing gum, principally "Bazooka" bubble gum, known in this country by its small—less than an inch—paper-wrapped package and accompanying comic strip. Chewing gum is a pastime engaged in since ancient times when the substance chewed was a resin taken directly from certain trees. Nowadays people generally chew the industrially-produced version. They do so for a variety of reasons, including: to cleanse teeth and freshen breath; to focus the mind during athletic competitions; to calm the stomach; and to take the place of smoking. One's inability to chew gum while simultaneously carrying out other routine activities, such as walking, is sometimes used as an epithet. And, of course, because gum is today a sugary confection it is sweet and chewing gum is enjoyable and fun.
Such a widely enjoyed product is a big seller in the marketplace and a dispute over the manufacture and distribution of "Bazooka" bubble gum and another brand in parts of South America is what precipitated the instant litigation. On this appeal we review a grant of summary judgment to defendant, which had been licensed for many years by plaintiff to make and sell these products. In reaching its decision the United States District Court for the Southern District of New York (Haight, J.) relied heavily on an analysis of trademark rights and the sale of goodwill that led it into a complex and evolving area of the law. We believe it erred here as well as in other aspects of its reasoning. Yet, it is not our purpose in this opinion to plant new guideposts into the trademark terrain. We write, rather, simply to explain why this case was not ripe for summary judgment.
The Topps Company, Inc. (Topps or plaintiff) is a New York corporation that makes and sells chewing gum under a number of brand names, including the "Bazooka" brand. Cadbury Stani S.A.I.C., f/k/a Productos Stani Sociedad Anonima Industrial y Comercial (Stani or defendant) is an Argentinian corporation to which, beginning in 1957, Topps granted, through a series of licensing agreements, the exclusive right to manufacture, sell and distribute "Bazooka" and other Topps chewing gum brands in five South American countries: Argentina, Bolivia, Chile, Paraguay and Uruguay. See Topps Co. v. Cadbury Stani S.A.I.C., 454 F.Supp.2d 89, 91 (S.D.N.Y.2006).
The original 1957 licensing agreement provided for Topps to share with Stani "the know-how, formulae, processes and techniques used by Topps" in return for royalties on Stani's sales. The 1957 agreement was set to expire after 20 years. But in 1976, one year short of the contract's termination, the parties executed a new agreement, providing for the continued sharing of "manufacturing technology, marketing concepts and techniques, administrative and consultive assistance and trademark use" in return for Stani paying a yearly license fee. The 1976 agreement had a term of ten years, with an option for Stani to extend it for another ten years.
Four years later, in 1980, the parties simultaneously executed two additional agreements that are the subject of the present dispute. One was an Amended and Restated License Agreement. It contained terms similar to those set out in the 1976 license agreement, but extended the license until April 30, 1996. Paragraph 2 of the 1980 license agreement stated that Topps granted to Stani
the exclusive non-assignable right and license to manufacture in Argentina, Bolivia, Chile, Paraguay and Uruguay and sell within the Territory, during the continuance of this Agreement, Licensed Products employed by TOPPS in [enumerated locations] and in any subsequent established affiliated plants of TOPPS.
This language was nearly identical to that of paragraph 2 of the 1976 license agreement, except that the 1976 agreement referred to "Licensed Products utilizing TOPPS Technology" (emphasis added) while the 1980 agreement referred simply to "Licenced Products."
Paragraph 3 of the 1980 license agreement stated
[t]he TOPPS Trademarks and the TOPPS Technology shall at all times remain the exclusive property of TOPPS or its assigns and the rights hereby granted to STANI shall be by way of license or, if required by trademark regulations within the Territory, by way of registered user rights.
Again, this language was nearly identical to that used in the 1976 licensing agreement. In addition, both agreements defined Topps Trademarks as "all Chewing Gum and Other Topps Products trademarks, owned, used or originated by TOPPS," and they defined Topps Technology as "the specialized knowledge and experience of TOPPS applicable to the manufacture and/or sale of Licensed Products," including "formulae, recipes, processes, equipment utilization, labour and equipment standards, ingredient specifications, factory management and production planning techniques, factory facility design and layout and quality control procedures, including gum base technology."
The 1980 and 1976 license agreements provided for early termination by either party on certain grounds, and both specified that upon termination Stani, among other things, would have no further right "to use any of the TOPPS Trademarks or the TOPPS Technology except for use in connection with selling and disposing of Licensed Products on hand" under specified conditions.
Further, Paragraph 30 of the 1980 license agreement (like Paragraph 32 of the 1976 agreement) contained the following language
All the terms of the Agreement between the parties are herein set forth and no modification, amendment alteration or variation of the terms of this Agreement shall be valid unless in writing signed by TOPPS and STANI. No agreement, letter or other communication between the parties shall be deemed to be a modification or amendment of this Agreement or any terms hereof, unless such agreement, letter or other communication expressly provides that it is intended to be a modification or amendment of this Agreement.
On the same day the 1980 license agreement was executed, the parties also signed what they termed an Escrow Agreement. This escrow agreement set out the terms by which the minute book, stock book, and stock certificates of one Verco Holding Corporation would be held in escrow and delivered to Stani's owner on May 31, 1996 unless Stani defaulted under the 1980 license agreement or other enumerated events occurred. The preamble to the escrow agreement stated, "Topps has transferred legal title to the registration in Argentina of the trademarks `Bazooka', `Topps' and related trademarks to the Verco Holding Corp., a New York corporation, all of the capital stock of which is issued in the name of [Stani's owner]." In exchange for the transfer, Stani paid Topps $100,000. Topps, 454 F.Supp.2d at 98.
The 1980 license agreement expired by its own terms on April 30, 1996, and it appears the escrow agent, as provided in the escrow agreement, transferred the stock and corporate papers to Stani's owner on May 31, 1996. Topps, 454 F.Supp.2d at 98. Three years later, in 1999, Topps brought the present suit against Stani, contending that Stani continued to use Topps chewing gum formulas (considered Topps Technology under the license agreements) after April 30, 1996, and that it transferred these formulas and other Topps Technology to its parent company, Cadbury, all in breach of the 1980 license agreement. Topps maintained Stani's conduct constituted wrongful misappropriation of trade secrets under New York tort law. Stani responded by (1) denying it continued to use Topps chewing gum formulas, and (2) arguing that even if it had, such conduct was neither a breach of the agreement nor a wrongful misappropriation because the agreement granted it the right to use plaintiff's formulas. Topps, 454 F.Supp.2d at 99.
On Stani's motion, the district court granted it summary judgment on all but one of Topps' claims. Id. at 108. The court separated these claims from the one remaining claim in order to render a final, appealable judgment. Topps Co. v. Cadbury Stani, S.A.I.C., 2006 WL 3247360, at *4 (S.D.N.Y.2006). The trial court concluded that the 1980 licensing agreement, read in conjunction with both the contemporaneously signed escrow agreement and the prior (1976) licensing agreement, unambiguously gives Stani the right to continue using Topps chewing gum formulas even after the 1996 expiration date. Topps, 454 F.Supp.2d at 101-07. Reasoning from this conclusion, it went on to hold there was neither a breach of contract, nor a wrongful misappropriation of trade secrets. Id. at 107-08. From the ensuing dismissal of its claims, Topps now appeals.
We review a grant of summary judgment de novo applying the same tests used by the district court. See, e.g., Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153, 157 (2d Cir. 2000). Imposing this procedural remedy is appropriate only when there is no genuine issue with regard to any material fact and the moving party is entitled to...
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