Weil Ceramics & Glass, Inc. v. Dash

• Decision Date: 12 September 1985
• Docket Number: Civ. A. No. 84-2157.
• Citation: 618 F. Supp. 700
• Court: U.S. District Court — District of New Jersey
• Parties: WEIL CERAMICS & GLASS, INC., a New York Corporation, Plaintiff, v. Bernard DASH and Jalyn Corporation, a New Jersey Corporation, Defendants.

618 F. Supp. 700

WEIL CERAMICS & GLASS, INC., a New York Corporation, Plaintiff, v. Bernard DASH and Jalyn Corporation, a New Jersey Corporation, Defendants.

Civ. A. No. 84-2157.

United States District Court, D. New Jersey.

August 14, 1985.

As Amended September 12, 1985.

Poms, Smith, Lande & Rose by Bernard R. Gans, Los Angeles, Cal. and Kirsten, Friedman & Cherin by Harold Friedman, Newark, N.J., for plaintiff.

Carella, Byrne, Bain & Gilfillan by John N. Bain, Roseland, N.J., for defendant.

OPINION

DEBEVOISE, District Judge.

                                        CONTENTS
                I. INTRODUCTION
                II. FACTS
                        A. The Parties
                        B. The Trademark
                        C. Defendants' Action
                        D. The Complaint
                

                III. DISCUSSION
                       A. Section 33(b). Exclusive Right to Use
                       B. Section 32(1)(a). Unauthorized Use
                              1. Confusion—Genuine Goods
                              2. Exhaustion Doctrine—Separate
                                 and Independent Good Will
                              3. Likelihood of Confusion
                       C. Unauthorized Importation
                IV. CONCLUSION
                

I. INTRODUCTION

The instant trademark infringement action concerns the importation and sale of what is commonly referred to as "grey market" goods. Grey market goods are goods produced by a foreign manufacturer bearing the manufacturer's trademark which are legally purchased abroad under a particular trademark and are sold in competition with goods of the United States trademark owner of the same mark. Vivitar Corp. v. United States, 761 F.2d 1552, 1555, 225 USPQ 990, 991 (Fed.Cir.1985); Parfums Stern, Inc. v. United States Customs Service, 575 F.Supp. 416, 418 (S.D. Fla.1983). These goods are also referred to as "parallel imports" where the United States trademark owner is an importer of the goods as well. Vivitar, 761 F.2d 1555, 225 USPQ at 991.

Plaintiff Weil Ceramics & Glass, Inc. ("Weil") filed this action against the defendants Bernard Dash and Jalyn Corp. asserting claims under the Lanham Trademark Act of 1946 ("the Act"), as amended, 15 U.S.C. § 1051 et seq. The case is now before the Court on cross-motions for summary judgment.

II. FACTS

A. The Parties

Weil is a New York corporation in the business of importing and distributing fine giftware. Defendant Jalyn Corp. is a New Jersey corporation which engages in the purchase and sale of giftware and other items. Defendant Dash is the president of Jalyn and provides general managerial duties to the corporation. Dash and his wife are the current stockholders and the sole owners of Jalyn.

B. The Trademark

In 1963 Weil began importing porcelain and ceramic vases, statuettes and figurines bearing the trademark "Lladro" and a distinctive flower logo placed on the base of the goods. The Lladro trademark was placed on the goods by the manufacturer in Spain, Lladro, S.A., a Spanish corporation. In 1966, Lladro S.A. designated Weil as the exclusive United States distributor of Lladro porcelain, and granted Weil the right to obtain a United States trademark for the Lladro mark in its own name. Exhibit 5 to Weil's reply brief.

On February 8, 1966, Weil filed an application with the United States Patent and Trademark Office ("USPTO") to register the trademark "Lladro" for porcelain and ceramic ware. On September 5, 1967, the USPTO registered the trademark on the Principal Register. Weil subsequently filed an affidavit with the USPTO under Sections 8 and 15 of the Act, 15 U.S.C. §§ 1058 and 1065, asserting that the mark was still in use and had been in continuous use for five consecutive years. This affidavit was accepted and filed by the USPTO on December 21, 1972.

The acceptance and filing of Weil's combined Section 8 and 15 affidavit by the USPTO gave Weil significant rights over the Lladro trademark in the United States. Under Section 8, Weil's registration of the mark remains in full force for 20 years, or until September 5, 1987. 15 U.S.C. § 1058(a). Under Section 15, Weil's right to use the mark became "incontestable." 15 U.S.C. § 1065. When a mark is incontestable, its validity can no longer be challenged in court, except in the situations outlined in the statute. See Callman, Unfair Competition, Trademarks & Monopolies, § 25.06 (4th Ed.1983 & 1984 Cum. Supp.) (hereafter "Callman").

C. Defendants' Actions

It is undisputed that since 1982 defendants have distributed and sold porcelain products bearing the Lladro trademark in the United States without Weil's permission or authorization. The parties have stipulated that the goods which defendants sell are genuine Lladro merchandise and are not a copy or imitation. See Stip. of Facts at 8(b). Defendants acquired these goods from a foreign source on the grey market and imported them for sale in the United States. The goods are apparently obtained through retailers and distributors which are customers of Lladro, S.A. See Dash Aff. at ¶ 4.

D. The Complaint

Weil filed a three count complaint on June 1, 1984. Subject matter jurisdiction is based on 15 U.S.C. § 1121 (granting original jurisdiction for all actions arising under the Act) as well as 28 U.S.C. §§ 1331 and 1338(a). Weil's complaint seeks declaratory and injunctive relief as well as monetary damages. The first count alleges that defendants' acts violated Weil's exclusive right to use the Lladro mark under § 33(b) of the Act, 15 U.S.C. § 1115(b). The second count asserts that defendants' conduct constituted infringement of Weil's trademark in violation of § 32(1)(a) of the Act, 15 U.S.C. § 1114(1)(a). Finally, the third count alleges that defendants violated Weil's exclusive right to import products bearing the Lladro trademark under 15 U.S.C. § 1124 and 19 U.S.C. § 1526. Since the cross-motions are addressed to all three counts, I will discuss each claim seriatim.

III. DISCUSSION

A. Section 33(b)—Exclusive Right to Use

Section 33(b) of the Act, 15 U.S.C. § 1115(b), provides, in pertinent part:

(b) If the right to use the registered mark has become incontestable under section 1065 of this title, the registration shall be conclusive evidence of the registrant's exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the affidavit filed under the provisions of said section 1065 subject to any conditions or limitations stated therein except when one of the following defenses or defects is established: ... (Emphasis added.)

Since defendants have not disputed the incontestability of the Lladro mark, Weil asserts that it may maintain an action under § 33(b). Weil further asserts that an action under § 33(b) does not require a showing of confusion, deception or mistake, as would an action under §§ 32, 42 or 43 of the Act.

I need not decide whether a showing of confusion is required under § 33(b) since I conclude that that section does not create a private cause of action. Obviously, a cause of action is not expressly stated in the statute. Thus, if a cause of action exists under the statute it must be implied.

In Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087, 45 L.Ed.2d 26 (1975), the Supreme Court listed four relevant criteria in determining whether a private right of action should be implied under a federal statute. In Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979), the Court noted that the four Cort factors were relevant only in determining Congressional intent since implication of a private right of action was a matter for the legislature and not the courts. "Our task is limited solely to determining whether Congress intended to create the private right of action asserted." Id. See also Transamerica Mortgage Advisors v. Lewis, 444 U.S. 11, 23-24, 100 S.Ct. 242, 249, 62 L.Ed.2d 146 (1979). Since the question is one of statutory construction, Cannon v. University of Chicago, 441 U.S. 677, 688, 99 S.Ct. 1946, 1952, 60 L.Ed.2d 560 (1979), the court should consider the language of the statute, the legislative history and the statutory scheme. See Touche Ross, 442 U.S. at 568-71, 99 S.Ct. at 2485-86.

The language of § 33(b) does not establish any intent by Congress to create a cause of action. The statute makes an incontestable mark conclusive evidence of an owner's right to use the mark. It merely states the evidentiary status of an incontestable mark. Under § 33(a) a registered mark is prima facia evidence of the owner's right to use the mark, while under § 33(b) an incontestable mark becomes conclusive evidence. More importantly, the statutory scheme provides persuasive evidence that § 33(b) was not intended to create an implied right of action. Section 32(1)(a) expressly provides that any person who uses a copy of a registered mark shall be liable in a civil action. 15 U.S.C. § 1114(1)(a). Thus, § 32 provides an effective remedy for the owner of a mark which has been improperly used by another, whether or not the mark is incontestable. If § 33(b) had been intended to create a private right of action, then there would have been no need for § 32(1)(a). Thus, since § 32 expressly provides a remedy, the statutory scheme effectively negates any Congressional intent to create a cause of action under § 33(b). Finally, if there is anything in the voluminous legislative history of the Lanham Act which establishes that a private right of action was intended under § 33(b), I have not been referred to it. In light of its express language and the statutory scheme, however, any such evidence would not be persuasive.

Therefore, I conclude that Weil's infringement action will rise or fall under § 32. Cf. U.S. Jaycees v. Philadelphia Jaycees, 639 F.2d 134, 137 n. 3 (3d Cir.1981) (stating that incontestability is relevant in determining "strength" of trademark but analyzing infringement action under § 32). The recent decision of the Supreme Court in Park'N Fly, Inc. v. Dollar Park and Fly, Inc., ___ U.S. ___, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985), does not require a different conclusion. In Park 'N Fly, the court reversed the Ninth...