Best Cellars Inc. v. Grape Finds at Dupont, Inc.

• Decision Date: 31 March 2000
• Docket Number: No. 99CIV12254(RWS).,99CIV12254(RWS).
• Parties: BEST CELLARS INC., Plaintiff, v. GRAPE FINDS AT DUPONT, INC., Grape Finds, Inc., Hornall Anderson Design Works, Inc., Michael Green, Doug Campbell and John Mazur, Defendants.
• Court: U.S. District Court — Southern District of New York

90 F.Supp.2d 431

BEST CELLARS INC., Plaintiff, v. GRAPE FINDS AT DUPONT, INC., Grape Finds, Inc., Hornall Anderson Design Works, Inc., Michael Green, Doug Campbell and John Mazur, Defendants.

No. 99CIV12254(RWS).

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

March 31, 2000.

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Gerald B. Lefcourt, P.C., New York City (Gerald B. Lefcourt, Sheryl E. Reich, of Counsel), Leon Friedman, New York City, for Plaintiff.

Kenyon & Kenyon, New York City (Joseph F. Nicholson, David A. Lammey, of Counsel), Blank Rome Comisky & McCauley, Philadelphia, PA (Richard P. McElroy, Timothy D. Pecsenye, Mary Ann Mullaney, of Counsel), for Defendants Grape Finds at Dupont, Inc. Grape Finds, Inc., Doug Campbell and John Mazur.

Norwick & Schad, New York City (Kenneth P. Norwick, of Counsel), for Defendant Hornall Anderson Design Works Inc.

Richards & O'Neil, New York City (Frank J. Golding, of Counsel), Bacon & Thomas, Alexandria, VA (Charles R. Wolfe, Jr., William F. Heinze, of Counsel), for Defendant Michael Green.

OPINION

SWEET, District Judge.

Plaintiff Best Cellars, Inc. ("Best Cellars") has moved for a preliminary injunction, pursuant to Rule 65, Fed.R.Civ.P., to enjoin defendants Grape Finds at Dupont, Inc. ("GFDI"), Grape Finds, Inc. ("GFI" and, together with GFDI, "Grape Finds"), H. Douglas Campbell III ("Campbell"), John B. Mazur ("Mazur"), Michael Green ("Green"), and Hornall Anderson Design Works, Inc. ("Hornall Anderson") (collectively, "Defendants") from infringing on various intellectual property rights claimed by Best Cellars under the Lanham Act, 15 U.S.C. § 1125, the Copyright Act, 17 U.S.C. § 101 et seq., and the New York common law of unfair competition. Defendants have moved, pursuant to Rule 12(b)(2), Fed.R.Civ.P., to dismiss the action for lack of personal jurisdiction.

This action presents difficult issues, particularly with respect to the law of trade dress protection, itself a complex and shifting field of judicial interpretation. See, e.g., Wal-Mart Stores, Inc. v. Samara Bros., ___ U.S. ___, 120 S.Ct. 1339, ___ L.Ed.2d ___ (2000). The action involves a unique concept, the retail sale of wine by taste, captured and exemplified in the particular trade dress of the Best Cellars stores. It presents the tension between the protection of certain intellectual property and free and open competition. Under the particular facts of this case, the balance tips in favor of protection.

A three-day hearing, at which the parties were well-represented by counsel, established facts sufficient to find, for purposes of granting preliminary injunctive relief, that Grape Finds copied protectible elements of Best Cellars' trade dress, engaged in unfair competition, and infringed on Best Cellars' copyrighted brochure. By contrast, the facts established are insufficient to warrant granting of injunctive relief on Best Cellars' claims of trade dress dilution or breach of confidentiality.

The Parties

Best Cellars, a retail wine seller, is a New York corporation with its principal place of business in Manhattan and retail stores in Manhattan, Brookline, Massachusetts, and Seattle, Washington.

GFDI is a Washington, D.C. corporation with its principal place of business in Washington, D.C. It is a retail wine seller servicing the Washington, D.C. metropolitan area.

GFI is a Maryland corporation with its principal place of business in Washington, D.C. GFI is the parent corporation of, and owns 100% of, GFDI.

Mazur, a Virginia resident, is president, a director, and a principal shareholder of Grape Finds.

Campbell, a Washington, D.C. resident, is vice-president, a director, and a principal shareholder of Grape Finds.

Green is a current vice-president and shareholder of Grape Finds and a co-founder, former partner in, and current shareholder of Best Cellars. He is a resident of Washington, D.C., though he maintains an apartment in Manhattan.

Hornall Anderson, a design firm, is a Washington State corporation with its principal place of business in Seattle.

Prior Proceedings

Best Cellars filed its original complaint in this action on December 21, 1999, and on December 22, by order to show cause, sought a preliminary injunction.

On December 23, 1999, Grape Finds, Campbell, and Mazur served on Best Cellars their motion to dismiss for lack of personal jurisdiction and alternative motion to transfer for improper venue.

Best Cellars filed its First Amended Complaint (the "Complaint") on December 27, 1999, and a Second Amended Complaint on January 11, 2000.

Also on December 27, 1999, the Honorable Richard M. Berman, sitting in Part I, granted jurisdictional and limited merits discovery.

Green filed his motion to dismiss for lack of personal jurisdiction on January 13, 2000.

Grape Finds, Campbell, and Mazur filed a motion to strike Best Cellars' Second Amended Complaint on January 19, and by letter dated January 20, 2000, Best Cellars indicated it would withdraw its Second Amended Complaint.

On January 26, 27, and 28, 2000, this Court held an evidentiary hearing on the preliminary injunction. Additional briefs were filed and concluding oral argument was held on February 14, 2000, at which point the motions were deemed fully briefed.

Findings of Fact

Best Cellars operates retail wine stores in New York, New York, Brookline, Massachusetts, and Seattle, Washington. The company was founded by Joshua Wesson ("Wesson"), Green, and Richard Marmet ("Marmet").

Wesson is an internationally recognized wine expert who has worked in the field since 1979. He has received national and international awards as a sommelier. For several years, he worked for top New York and Boston restaurants, helping to select their wine lists. In 1986, he started a wine consulting business, the clients of which included both top restaurants and other businesses. Throughout this period, he also wrote numerous articles on wine. In 1989, he co-authored, with David Rosengarten, an award-winning book entitled "Red Wine With Fish," which discussed the concept of "wine by style," i.e., categorizing wine by taste and weight, rather than by grape type or place of origin.

Wesson continued to promote the "wine by style" concept through additional writings and frequent speaking engagements. In the early 1990's, he began to think about developing a new kind of retail wine store where people who knew little or nothing about wine could feel as comfortable when shopping as wine connoisseurs, and in which the "wine by style" concept could be implemented. The name "Best Cellars" came to him in 1993.

In 1994 or 1995, Wesson began to include Green, who at the time was working at Acker Merrall & Condit, an upscale New York retail wine store, in the discussions for the new store. In 1995, Wesson met Marmet, a practicing lawyer who had written all of the wine sections for Food and Wine magazine's cookbooks. Wesson, Green, and Marmet then set out to make the Best Cellars concept a reality.

Wesson, with the input of Marmet and Green, spent considerable time before and during the design phase of the first Best Cellars store refining the "wine by style" concept. Wesson eventually reduced the "world of wine" to eight taste categories: sparkling wines, light-, medium-, and full-bodied white wines, light-, medium-, and full-bodied red wines, and dessert wines. For each category, he selected, after a long winnowing process, a single word to serve as a "primary descriptor." Words which were "runners-up" for each category became "secondary descriptors." The eight primary descriptors are: "fizzy" (for sparkling wine), "fresh" (light-bodied white), "soft" (medium-bodied white), "luscious" (full-bodied white), "juicy" (light-bodied red), "smooth" (medium-bodied red), "big" (full-bodied red), and "sweet" (dessert wine). This conceptual reduction is the heart of the Best Cellars "system."

A principal reason Wesson reduced the world of wine to eight taste categories was in order to demystify wine for casual, non-connoisseur purchasers who might be intimidated purchasing wine in a traditional wine store, where wines are customarily organized by grape type and place of origin. To the uninitiated, of course, grape type and place of origin provide no ready clues to a wine's flavor. In addition, the vast number of grape types and places of origin could easily overwhelm a novice. For these same reasons, Wesson also decided to limit the number of wines for sale at Best Cellars to approximately one hundred, and to price those wines at ten dollars or less. It was also decided to offer fifteen or twenty more expensive wines for "special occasions."

The co-founders consulted John Alison, an intellectual property attorney at Finnegan Henderson, a Washington, D.C. firm, for advice on how to protect what they were developing. They also looked for an architect, settling in April 1996, on the Rockwell Group ("Rockwell"), known for its designs of prominent restaurants. The lead architect from Rockwell for the Best Cellars project was Samuel Houston Trimble ("Trimble"). Trimble was asked to create an "anti-wine store," or, ideally, "not a wine store at all," as part of the effort to "reinvent the way that wine was retailed." (Tr. 18.) The partners also searched for a graphic design firm and ultimately settled on Hornall Anderson, after the bulk of Trimble's design work had been completed.

Hornall Anderson and Rockwell were provided with copies of Best Cellars' marketing and business plans. Hornall Anderson also signed a confidentiality agreement with Best Cellars.¹

Wesson and Trimble visited many wine stores in order to get ideas "about what not to do" (Tr. 286). Trimble and other architects from Rockwell then developed between six and eight different architectural interpretations of the ideas supplied to them by Wesson, Marmet, and Green. The co-founders met with Rockwell on a regular basis and eventually settled on the final design. Numerous...