Bell v. Starbucks U.S. Brands Corp., Civ.A. G-04-169.

• Decision Date: 19 August 2005
• Docket Number: No. Civ.A. G-04-169.,Civ.A. G-04-169.
• Citation: 389 F.Supp.2d 766
• Parties: Rex Wayne BELL, Plaintiff, v. STARBUCKS U.S. BRANDS CORP. and Starbucks Corp. d/b/a Starbucks Coffee Company, Defendants.
• Court: U.S. District Court — Southern District of Texas

389 F.Supp.2d 766

Rex Wayne BELL, Plaintiff, v. STARBUCKS U.S. BRANDS CORP. and Starbucks Corp. d/b/a Starbucks Coffee Company, Defendants.

No. Civ.A. G-04-169.

United States District Court, S.D. Texas, Galveston Division.

August 19, 2005.

COPYRIGHT MATERIAL OMITTED

John S. Egbert, Loren Jeremy Craft, Egbert Law Offices, Houston, TX, for Plaintiff.

Marc Louis Delflache, Fulbright & Jaworski, Houston, TX, John C. Rawls, Sarah A. Silbert, Fulbright and Jaworski LLP, Los Angeles, CA, for Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

KENT, District Judge.

This cause was originally filed on March 17, 2004. Plaintiff herein sought declaratory relief that his use of "Star Bock" or "Starbock" does not infringe on Defendants' "Starbucks" trademark. He also asked for a judgment that he is not diluting Defendants' trademark under federal or state law or violating unfair competition laws. Defendants counterclaimed on all issues seeking exactly opposite relief. At the time of filing, the matter was routinely set for a Rule 16 Scheduling Conference, which occurred on June 2, 2004. Counsel for both sides appeared and announced ready, and pursuant to agreement of counsel and the Court, the matter was set for non-jury adjudication before the Court, on June 6, 2005. Such setting was confirmed by a routine Scheduling Order entered by this Court's Magistrate Judge, Hon. John R. Froeschner, on June 9, 2004. Docket Call was held regarding such trial setting on June 2, 2005, and again counsel for both sides appeared and announced ready for trial. On that date, again with agreement of counsel, the trial date was adjusted slightly, to commence June 6, 2005. Trial proceeded non-jury, Hon. Samuel B. Kent presiding, throughout that day. At the conclusion thereof, the Court established a post-trial submissions schedule which has been, in all timely respects, complied with.

The Court, having carefully considered all pleadings on file in this matter, having carefully considered and having reviewed the trial testimony of all live witnesses, and having made credibility assessments in regard thereto, having considered and having reviewed exhibits entered in this matter, having carefully considered the Pre-Trial Order, together with all attachments, and the post-trial submissions, hereby enters its Findings of Fact and Conclusions of Law, pursuant to FED.R.CIV.P. 52.

FINDINGS OF FACT

1. Plaintiff Rex Wayne Bell ("Bell") owns and operates a small, part-time business in Galveston, Texas, operating under the name "The Old Acoustic Café". This is a small, informal acoustical music venue which is open typically only on Thursday, Friday and Saturday nights. Musicians, typically accompanied by acoustical instruments (guitars and the like) perform. An admission fee is charged, which Bell generally gives to the entertainers. His sole source of income in this establishment is from the sale of beer, limited other beverages, limited cold snacks and souvenir items promoting an alcoholic beverage sold only there, identified as "Starbock Beer" and/or "Star Bock Beer". He is a former musician and very much enjoys his contacts in the music industry and the promotion of young artists. His beer sales are only an adjunct to those interests.

2. This Court has jurisdiction over the subject matter of this cause, pursuant to 28 U.S.C. § 1331 and § 1338(a), inasmuch as such arises under the Lanham Act, 15 U.S.C. § 1051 et seq. and the Federal Trademark Dilution Act, 15 U.S.C. § 1125(c) and § 1127, 28 U.S.C. § 2201-2202, as well as being a declaratory judgment action arising under the Lanham Act, 15 U.S.C. § 1051 et seq. Finally, the Court has jurisdiction pursuant to 28 U.S.C. § 1332(a), inasmuch as this action is between citizens of different states and the matter in controversy exceeds the sum of $75,000.00, exclusive of interest and costs. This Court has jurisdiction over the subject matter of those claims that arise under state law based upon the principals of supplemental jurisdiction, as provided in 28 U.S.C. § 1367, as well as the provisions of 28 U.S.C. § 1338(b), allowing jurisdiction over claims for dilution and unfair competition joined with substantial and unrelated claims under the federal trademark laws. Jurisdiction has not been contested by any of the parties. Venue is proper in this Court as well, inasmuch as Plaintiff conducts his business in this Division, indeed only within a few blocks of the courthouse, and Defendants do extensive business in this District and Division. Venue has not been contested by any of the parties, either.

3. Bell applied for registration of the "Starbock Beer" trademark with the United States Patent and Trademark Office and the application was subsequently approved and published for opposition. During the opposition phase, Defendants filed a Notice of Opposition to Bell's application and mailed "cease and desist" letters to Bell alleging that Bell's mark would: cause confusion as to the origin of the parties' respective goods; misappropriate Starbucks' goodwill; and further violate federal, state, and common law dilution principals. Defendants insisted that Bell immediately cease all use of the "Starbock Beer" trademark, destroy all signage and materials bearing this trademark, and abandon the trademark application. Pending the resolution of this litigation, the United States Patent and Trademark Office suspended the opposition period and stayed all proceedings regarding Bell's registration application approval.

4. Defendants have continuously done business under the trademarks and trade names "Starbucks®," "Starbucks® Coffee," and "Starbucks® Coffee Company" since 1971. The Starbucks® mark is the subject of at least 60 trademark registrations issued by the United States Patent and Trademark Office, and has been similarly registered in more than 130 foreign countries.

5. Bell filed a Complaint in this action, seeking a declaratory judgment that Bell's use of the "Star Bock Beer" mark in connection with alcoholic beverages is not in violation of any rights Defendants may have pursuant to: the Federal Law of Trademark Infringement as set forth in 15 U.S.C. § 1114; the Federal Law of Unfair Competition as set forth in 15 U.S.C. § 1125; the Common Law of Unfair Competition; the Federal Trademark Dilution Act as set forth in 15 U.S.C. § 1125; and, the Texas Anti-Dilution Statute as set forth in Tex. Bus. & Com.Code Ann. § 16.29 (Vernon 2002). Defendants Starbucks® U.S. Brands Corporation and Starbucks® Corporation d/b/a Starbucks® Coffee Company ("Starbucks") contest those claims, and have concurrently asserted counterclaims against Bell, alleging: federal trademark dilution, in violation of 15 U.S.C. § 1125(c) and § 1127; federal trademark infringement, in violation of 15 U.S.C. § 1114(1); violation of 15 U.S.C. § 1125(a); violation of the Texas Anti-Dilution Statute, Tex. Bus. & Com.Code Ann. § 16.29 (Vernon 2002); violation of Texas Common Law Trademark Dilution; and, the common law doctrine of unfair competition. Bell of course contests these counter-claims.

6. Bell concedes receipt of the cease and desist demands from Starbucks and further concedes that he ignored such; instead retaining counsel and filing suit. However, beyond continuing to sell the beer that he had on hand at the time of receipt of such notification, and the related memorabilia and small advertising products (caps, t-shirts, etc.), out of his Old Acoustic Café, he has undertaken no other product production, sales or advertising or promotional efforts.

7. On the other hand, he readily conceded in his trial testimony that he has encouraged his friends in the music industry to favorably mention and endorse Star Bock Beer, that he sought out, benefitted from and encouraged extensive local and national media coverage of this "David vs. Goliath" controversy, and that his ultimate ambition is to be "just as big and successful as Starbucks."

8. Bell continues to make use, in commerce, of the "Starbock" and/or "Star Bock" logos, but with an important distinction. In the correspondence and official notifications to and from the United States Patent and Trademark Office, Bell sought a trademark for "Starbock Beer." Currently, and for the last several months prior to temporarily suspending operations shortly after the trial, Bell used a somewhat distinctive and modified logo (Exhibit 1) that has "Star" on one line, "Bock" beneath it, and "Beer" beneath that in red superimposed over a blue star on a white field, in a circular logo, with "Since 2003" immediately below the three words, and in circular form around the outside of the logo, the information "Born in Galveston — The Old Quarter Acoustic Café". As noted above, this product is sold exclusively at the The Old Quarter Acoustic Café, on a limited number of nights per week, and only in association with the presentation of live musical performances by acoustical artists. Bell's crowds are of relatively small size, the facility only seating a few dozen people at most, and his patrons tend to be both locals and regulars, for the most part. No Starbucks® Coffee Company products are sold in the facility, and Star Bock Beer is not sold outside the facility.

9. Bell testified that he had his beer brewed by a contract brewer in Brenham, Texas. He does not know the recipe for the beer or indeed any of its ingredients. He oversees no aspects of the production of the beer, has no idea actually how it is made, and can only state that the production of his beer is in compliance with state health laws. Other than that simple statement, he has no knowledge whatever of its contents, preparation, aging, or kegging. It is sold in draft form, not in bottles or cans. He had a limited production made in the early stages of this controversy, and once that was sold out, he suspended any further production, awaiting the outcome of this litigation. Tragically, in regard to which the Court expresses its most...