Bambu Sales, Inc. v. Sultana Crackers, Inc.

• Decision Date: 14 March 1988
• Docket Number: 86 CV 2045.,No. 86 CV 1928,86 CV 1928
• Citation: 683 F. Supp. 899
• Parties: BAMBU SALES, INC., Plaintiff, v. SULTANA CRACKERS, INC., Bernard Gold and Brian Gold, Defendants and Third Party Plaintiffs, v. NU SERVICE TOBACCO CO. INC., Third Party Defendants. BAMBU SALES, INC., Plaintiff, v. GULACK TRADING CO., INC.; Bernard Gulack; NU Service Tobacco Co., Inc., and William Brooks, Defendants.
• Court: U.S. District Court — Eastern District of New York

683 F. Supp. 899

BAMBU SALES, INC., Plaintiff, v. SULTANA CRACKERS, INC., Bernard Gold and Brian Gold, Defendants and Third Party Plaintiffs, v. NU SERVICE TOBACCO CO. INC., Third Party Defendants.

BAMBU SALES, INC., Plaintiff, v. GULACK TRADING CO., INC.; Bernard Gulack; NU Service Tobacco Co., Inc., and William Brooks, Defendants.

Nos. 86 CV 1928, 86 CV 2045.

United States District Court, E.D. New York.

March 14, 1988.

COPYRIGHT MATERIAL OMITTED

Milton Springut, Amster, Rothstein & Ebenstein, New York City, for plaintiff.

Gardin, Schotsky & Rappaport, P.C., Melville, N.Y. (Arnold Lesser, New York City, of counsel) for Sultana Crackers and Brian Gold.

Herman R. Perper, Spring Valley, N.Y., for Gulack Trading Co. and Bernard Gulack.

John A. Mitchell, Mitchell & Incantalupo, Forest Hills, N.Y., for defendants and third party defendants Nu Service Tobacco Co., Inc., and William Brooks.

MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

On January 4, 1988, the Court received the annexed amended Report and Recommendation ("Report") of the Honorable Allyne R. Ross, United States Magistrate. None of the parties to the motions have filed written objections pursuant to 28 U.S. C. § 636(b)(1); Local R.Mag.P. 7. After a de novo review, I hereby adopt the Report as the opinion of this Court.

SO ORDERED.

RECOMMENDATION AND REPORT

ALLYNE R. ROSS, United States Magistrate:

Plaintiff, Bambu Sales, Inc. ("Bambu"), the registered owner of United States trademark rights for the use of the name BAMBU in connection with cigarette paper, brings suit for trademark infringement and unfair competition against Sultana Crackers, Inc. ("Sultana"), Nu Service Tobacco Co., Inc. ("Nu Service") and Gulack Trading Co., Inc. ("Gulack") and certain of their principals. The suit alleges unauthorized distribution in the United States of Bambu cigarette paper in packaging bearing counterfeit BAMBU marks.¹ The case has been referred to the undersigned for recommendation and report on the parties' cross-motions for summary judgment and for other relief.

THE FACTS

A. Plaintiff's Acquisition of the BAMBU Mark

Sometime prior to 1907, plaintiff's predecessor, Papeleras Reunidas, S.A. ("Papeleras"), a Spanish manufacturer and distributor of cigarette paper, adopted and registered the BAMBU mark on and in connection with cigarette paper in the United States Patent and Trademark Office. In approximately 1976, plaintiff Bambu was designated the exclusive United States distributor of paper sold under the BAMBU mark. Since that time, as part of its sales and distribution activities, plaintiff has extensively promoted its product, advertising the BAMBU mark throughout this country in newspapers, magazines, and trade publications.

In October of 1984, following the insolvency of Papeleras, its liquidators assigned to plaintiff, for stated consideration, all of the Spanish company's "right, title and interest in the United States" to the BAMBU mark "together with the goodwill of the business symbolized thereby." (Agreement of October 9, 1984, as amended by Agreement of October 15, 1984). From the date of that assignment to the present, plaintiff has continued its business of selling and distributing BAMBU cigarette paper in the United States. Its sales have risen annually, to a volume of 22 million booklets in its 1986 fiscal year.

B. Defendants' Activities

In mid-1986, Rodesol International ("Rodesol"), a domestic jobber, distributed to wholesalers in the United States cigarette paper bearing the BAMBU mark packaged in booklets and boxes displaying counterfeits of the BAMBU mark. These sales were not authorized by plaintiff Bambu.² During May and June of 1986, each of the corporate defendants in this action — Sultana, Nu Service and Gulack — purchased, directly or indirectly, Rodesol's unauthorized merchandise, and resold some quantity of that product, again in sales which Bambu had not authorized.

C. The Complaints

In June of 1986, Bambu filed suit against the corporate defendants and certain of their principals alleging that the above-described acts constituted willful infringement of plaintiff's registered trademarks, in violation of Section 32(1) of the Lanham Trademark Act (the "Act"), 15 U.S.C. § 1114(1) (Count I); the use in commerce of false designations of origin and false descriptions and representations, in violation of plaintiff's rights under Section 43(a) of the Act, 15 U.S.C. § 1125(a) (Count II); and unfair competition under the common law (Count III). Plaintiff seeks declaratory and injunctive relief barring defendants' unauthorized use of the BAMBU mark, as well as damages, an accounting for profits realized as a result of the alleged infringement, costs and attorneys fees.

D. The Instant Motions

Plaintiff has moved for summary judgment on the issue of liability on each of its three claims against the corporate defendants and individual defendants William Brooks, the president of Nu Service, Brian Gold, Sultana's sales manager, and Bernard Gulack, the manager of Gulack Trading.³ Individual defendants Bernard Gold, president of Sultana, William Brooks and Bernard Gulack have, in turn, cross-moved for summary judgment dismissing the complaint as to them. Additionally, the Sultana defendants (Sultana and Brian and Bernard Gold) seek an order disqualifying plaintiff's counsel from representing plaintiff at any trial in this lawsuit, and defendants Nu Service and Brooks move to implead Rodesol as a defendant in this action.

In opposing plaintiff's summary judgment motion, defendants do not appear to contest any of the facts recited above. That is, they acknowledge their purchase and resale of the Rodesol merchandise; they do not dispute that its packaging bore unauthorized copies of the BAMBU mark; they themselves assert a high degree of similarity between the unauthorized marks and plaintiff's genuine BAMBU mark; and they assume that their sales were not in any way authorized by plaintiff.

Rather, in urging the existence of genuine issues of material fact precluding summary judgment, defendants jointly advance four arguments: First, they attack the validity of plaintiff's trademark, claiming that the assignment by which plaintiff purports to have acquired rights in the mark was an invalid assignment in gross (i.e., an assignment not accompanied by a transfer of good will), in violation of § 10 of the Lanham Act, 15 U.S.C. § 1060. Second, they contend that a 1984 order of the United States District Court for the Northern District of Illinois placing a lien on the trademark registration of plaintiff's predecessor, Papeleras Reunidas, casts a "cloud on plaintiff's title" to the mark, requiring further discovery. Third, they claim that their sales of paper bearing the BAMBU mark could not violate plaintiff's rights because, they assert, the paper itself was "not counterfeit." And fourth, they urge that plaintiff's failure to display on its product the statutory notice required by § 29 of the Lanham Act, 15 U.S.C. § 1111, bars each cause of action absent proof that defendants received actual notice of plaintiff's registration of the mark, a triable issue of fact. In addition to the above arguments that are jointly advanced by all defendants, Nu Service asserts that its December 1986 filing for Chapter 11 bankruptcy proceedings automatically stays this lawsuit as to it, presumably precluding the relief plaintiff seeks on this motion. Each of these arguments and each of defendants' additional motions will be addressed below.

DISCUSSION

A. The Summary Judgment Motions

1. The Governing Principles

Rule 56(c), Fed.R.Civ.P., provides that a court shall grant a motion for summary judgment if it determines that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." In considering the motion, "the court's responsibility is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, ___ U.S. ___, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987).

To defeat a summary judgment motion, however, assertedly unresolved factual issues must be material to the outcome of the litigation. "The mere existence of factual issues — where those issues are not material to the claims before the court — will not suffice...." Quarles v. General Motors Corp., 758 F.2d 839, 840 (2d Cir. 1985) (per curiam). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) ("Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment."). Further, where the moving party has carried its initial burden of demonstrating the absence of a genuine issue of material fact, the opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

As recently reformulated by the Supreme Court, the inquiry under the summary judgment standard is identical to that under the "reasonable jury" directed verdict standard. One asks "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 106 S.Ct. at 2512. "There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for the jury to return a verdict for that party." Id. at 2511. The application of these principles to the facts of this case is examined below.

2. Plaintiff's Motion for Summary Judgment Against the Corporate Defendants

a. The Validity of the Assignment of the BAMBU Mark

In opposition to plaintiff's summary...