American Economy Ins. Co. v. Reboans, Inc., C-92-4341-DLJ.

• Decision Date: 22 June 1995
• Docket Number: No. C-92-4341-DLJ.,C-92-4341-DLJ.
• Citation: 900 F. Supp. 1246
• Court: U.S. District Court — Northern District of California
• Parties: AMERICAN ECONOMY INSURANCE COMPANY, Plaintiff, v. REBOANS, INC., a California corporation dba Nikaido dba Heiseido dba America-Ya, et al., Defendants.

900 F. Supp. 1246

AMERICAN ECONOMY INSURANCE COMPANY, Plaintiff, v. REBOANS, INC., a California corporation dba Nikaido dba Heiseido dba America-Ya, et al., Defendants.

No. C-92-4341-DLJ.

United States District Court, N.D. California.

December 27, 1994.

Order Denying Reconsideration June 22, 1995.

Kathleen E. Hegen, Jacqueline M. Jordan, Boornazian Jensen & Garthe, Oakland, CA, for American Economy Ins. Co.

Jacqueline Jordan Leung, Boornazian Jensen & Garthe, Oakland, CA, for American States Ins. Co.

Jack R. Nelson, Crosby Heafey Roach & May, Oakland, CA, for Reboans, Inc., Heiseido Inc, Charles W. Bogar, Jo Ann Bogar.

Katherine M. Basile, Heller Ehrman White & McAuliffe, Palo Alto, CA, for Hunting World Inc.

ORDER

JENSEN, District Judge.

A hearing was held on November 30, 1994 on defendant and cross-complainant's motion for reconsideration and partial summary judgment. Kathleen E. Hegen appeared for plaintiff and cross-defendant American Economy Insurance Company ("American States") and Kenneth M. Seeger appeared for defendant and cross-complainant Reboans, Inc. ("Reboans"). For the reasons stated below, defendant Reboans' motions for reconsideration and partial summary judgment are GRANTED.

I. BACKGROUND

Reboans is a California corporation that formerly owned and operated three gift shops, Nikaido, Heiseido and America-Ya, all of which are located in the Union Square area of downtown San Francisco. Charles Bogar is the sole shareholder and officer of Reboans. Jo Ann Bogar is a former shareholder and officer.

Reboans specializes in the import, export and retail sale of famous brand-name merchandise, including leather goods, apparel, jewelry, handbags, accessories, luggage and other merchandise. Reboans' retail activities in San Francisco have focused primarily on tourists, especially Japanese tourists. To that end, Reboans advertises in tour books distributed for use by Japanese tourists visiting the United States, and solicits San Francisco Hotels and tour guides to direct tourists to Reboans' stores by distributing handbills. These advertisements display the names of many of the product lines carried by the gift shops, including (until recently) the "Dunhill" name. In addition, until recently Reboans prominently displayed the "Dunhill" name on posters and placards in its store windows and on point-of-purchase displays in its retail stores.

Dunhill manufactures and markets pipes, pens, leather goods, jewelry and accessories under its trademarked name "DUNHILL" and its trademark stylized "D" design.

On February 10, 1993, Dunhill filed a complaint against Reboans and Charles Bogar, as Reboans' sole shareholder, seeking to recover damages for trademark infringement, false designation of origin, trademark counterfeiting, racketeering, unfair competition and injury to business reputation.

In its complaint, Dunhill alleged that Reboans is not an "authorized" retailer, that it is not authorized to use Dunhill's trademarks in its advertisements or to sell Dunhill products, that Reboans wrongly displays Dunhill's trademarks "DUNHILL" and the stylized "D" logo in its advertisements and wrongly sells copies of Dunhill's products and that Dunhill is sustaining actual resulting injury.

Dunhill's first claim for relief, which is for "trademark counterfeiting," alleges that

The counterfeiting, imitating or copying of Alfred Dunhill's registered trademarks, and the sale and offering for sale of such goods bearing counterfeits of Alfred Dunhill's registered DUNHILL work marks and stylized "D" logos, have confused, and are likely to continue to confuse or deceive the public into believing defendant' products originate from or are associated with plaintiff.

Dunhill's second claim, for "trademark infringement," alleges that:

This counterfeiting, imitating, copying and unauthorized use of Alfred Dunhill's registered DUNHILL work marks and stylized "D" logos constitutes trademark infringement and trademark counterfeiting and is likely to cause confusion, deception and mistake among the consuming public and those who view defendants' goods bearing Alfred Dunhill's trademarks as indicating an association between defendants' counterfeit goods and plaintiff's trademarks.

Dunhill's third claim, for false designation of origin and false representations, alleges that

Defendants' willful counterfeiting, imitating or copying of Alfred Dunhill's registered DUNHILL word marks or stylized "D" logos, the unauthorized sale, purchase, distribution, and offering for sale of Dunhill branded goods, the false statements by defendants, and the use of the trade dress of plaintiff's products, constitutes a false designation of origin or a false description or representation that wrongly and falsely designates that such merchandise distributed and sold now or in the future by defendants, as originating from, and connected with, authorized by, or otherwise associated with Alfred Dunhill, and constitutes utilizing false descriptions or representations in interstate commerce.

Dunhill's eighth claim, for common law palming off, alleges that

Defendants' counterfeiting, imitating or copying of Alfred Dunhill's registered DUNHILL word marks or stylized "D" logos falsely designates from, or is otherwise associated with, Alfred Dunhill.

Defendant's acts have confused, and are likely to continue to confuse, mislead and deceive the public as to the source of sponsorship of defendants' goods, permitting defendants to palm off defendants' goods as those of Alfred Dunhill, all to the detriment of plaintiff and the unjust enrichment of defendants.

Dunhill's prayer for relief includes, inter alia, a request that the Court enjoin Reboans from

using any simulation, reproduction, counterfeit, copy or colorable imitation of Alfred Dunhill's registered DUNHILL word marks or stylized "D" logos, or any of Alfred Dunhill's registered or licensed trademarks or trade dress in connection with the promotion, advertisement, display, sale, offering for sale, manufacture, printing, importation, production, circulation or distribution of any product, in such fashion as to relate or connect such product in any way to Alfred Dunhill, or to any goods sold, manufactured, sponsored or approved by, or connected with Dunhill.

In addition, Dunhill prays for an order "directing that Reboans deliver for destruction all products, labels, signs, prints, packages ... and advertisements in their possession, or under their control, bearing work marks or stylized "D" logos, or any of Alfred Dunhill's trademarks...."

Finally, Dunhill prays for actual damages it claims to have suffered because of Reboans' alleged "trademark infringement, counterfeiting, false designation or origin and unfair competition."

In January 1989, Reboans purchased a Commercial General Liability ("CGL") insurance policy from plaintiffs and counterdefendants American States. The policy has been renewed and it was in effect during the time period in which the activities of which Dunhill complains took place.

Pursuant to the terms of the policy, American States agreed to pay the full costs and expenses of defending all lawsuits against Reboans (and/or Mr. Bogar, as it sole shareholder) for claims potentially covered under the policy.

The American States policy is divided into two separate coverage parts. Coverage Part A provides insurance for "bodily injury and property damage," while Coverage Part B separately provides insurance for "personal and advertising injury liability."

The "Advertising Injury" part of the American States policy provides coverage as follows: "This insurance applies to `advertising injury' only if caused by an offense committed: ... (2) In the course of advertising your goods, products or services."

"Advertising injury" is defined in the American States policy, in part, as: "Misappropriation of advertising ideas or style of doing business" and as "Infringement of copyright, title or slogan."

The American States policy does not define the terms "advertising," "your goods, products or services," "misappropriation," "advertising ideas," "style of doing business," "infringement," "copyright," "title," or "slogan."

At the time the Dunhill Complaint was filed, American States had already refused to defend Reboans against similar claims brought against Reboans by Hunting World (the "Hunting World action"). In fact, American States had already filed the present action against Reboans for declaratory relief arising out of American States' refusal to defend the Hunting World action and the parties had already briefed cross-motions for summary judgment. Nevertheless, Reboans and Bogar tendered the defense in the Dunhill lawsuit to American States, by letter dated February 16, 1993. Reboans included a copy of the Dunhill Complaint with the letter tendering coverage. Subsequently, Reboans provided American States with examples of Reboans' advertising materials displaying Dunhill's trademarked name (in both English and Japanese) and stylized "D" logo.

While the cross-motions for summary judgment were still pending, American States denied its obligation to defend Reboans and Bogar. By letter dated March 5, 1993, American States stated that it would amend its complaint in the present coverage dispute in order to add its refusal to defend Reboans in the Dunhill action to its refusal to defend Reboans in the Hunting World action.

The cross motions for summary judgment and partial summary judgment were heard by the Honorable Barbara Caulfield on May 2, 1994. Judge Caulfield filed an order (the "May 2nd Order") granting summary judgment to American States on its claim that it owed Reboans no duty to defend Reboans in the Hunting World action.

After Reboans filed a notice of appeal from the May 2nd Order, but before the district court entered judgment on it, American States filed the amended complaint claiming that it owed Reboans no duty to defend the Dunhill action. American States'...