C-Cure Chemical Co., Inc. v. Secure Adhesives Corp., CIV-82-289C.

• Decision Date: 29 August 1983
• Docket Number: No. CIV-82-289C.,CIV-82-289C.
• Citation: 571 F. Supp. 808
• Parties: C-CURE CHEMICAL CO., INC., Plaintiff, v. SECURE ADHESIVES CORP., Olympia Floor & Wall Tile Co., and Joseph Schochet, Defendants.
• Court: U.S. District Court — Western District of New York

571 F. Supp. 808

C-CURE CHEMICAL CO., INC., Plaintiff, v. SECURE ADHESIVES CORP., Olympia Floor & Wall Tile Co., and Joseph Schochet, Defendants.

No. CIV-82-289C.

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

August 29, 1983.

COPYRIGHT MATERIAL OMITTED

Hedman, Casella, Gibson, Costigan & Hoare, New York City (Thomas M. Gibson, New York City, of counsel), and Mahoney, Berg & Cornell, Buffalo, N.Y. (Henry W. Cornell, Buffalo, N.Y., of counsel), for plaintiff.

Saperston, Day, Lustig, Gallick, Kirschner & Gaglione, Buffalo, N.Y. (Tricia Thomas Semmelhack, Buffalo, N.Y., of counsel), for defendants Secure Adhesives Corp. and Joseph D. Schochet.

Moot & Sprague, Buffalo, N.Y. (Richard F. Griffin, and Michael E. Ferdman, Buffalo, N.Y., of counsel), for defendant Olympia Floor & Wall Tile Co.

CURTIN, Chief Judge.

Plaintiff C-Cure Chemical Company, Inc., has brought this action against Secure Adhesives, Inc., a New York corporation; Olympia Floor and Wall Tile Co., a Canadian company; and Joseph Schochet, a Canadian resident and owner of Secure Adhesives. Plaintiff seeks injunctive and monetary relief under the Lanham Act, 15 U.S.C. § 1125(a), and under New York State law on a variety of trademark, trade dress, trade secret, unfair competition, and contract claims. Before the court is defendant Secure Adhesives' motion to vacate a preliminary injunction initially entered in this case, defendant Olympia's motion to dismiss this action, and plaintiff's motion to reinstate the preliminary injunction.

The relationship between these parties is complex, and it is helpful at the outset to describe their association. In March, 1978, Charles Johansen founded two corporations, the C-Cure Chemical Company, Inc., and C-Cure Products, Inc., in Houston, Texas. Johansen and others acquired the mortar and grout chemical concentrate business of the Pearsall Chemical Company, and through the C-Cure firms, they develop, manufacture, and distribute chemical concentrates. The concentrates are mixed with cement, sand, or other ingredients by local distributors, and the products are ultimately used in setting and grouting ceramic tile.

C-Cure refers to the local distributors who purchase its concentrates as "affiliates" and maintains that there is essentially a licensor-licensee relationship between plaintiff and the distributors. Distributors market the product for sale to retailers, and some of the C-Cure mixed products are sold in packages under the name of "C-Cure," while others are sold under private labels. These local affiliates are located primarily in the southern and the western portions of the United States.

In May of 1980, the assets of C-Cure Products, Inc., were transferred to C-Cure Chemical, Inc., and C-Cure Products is now virtually inactive.

Defendant Joseph Schochet was an employee of defendant Olympia Floor and Wall Tile Co. for many years. Knowing of Olympia's dissatisfaction with its mortar and grout suppliers, he decided to establish Secure Adhesives in 1978 to meet Olympia's mortar and grout requirements. Schochet received a loan from Olympia to establish Secure Adhesives, and he contacted various chemical concentrate supply corporations in the United States, one of which was the Pearsall Company. Whether Pearsall referred Schochet to C-Cure is unclear, but in any event, Schochet ultimately selected C-Cure as his supplier, because this company could supply him with chemical concentrates formulated by the Tile Council of America—which would be acceptable to Olympia (Docket Item 62, Schochet Deposition at 30). Sometime during the summer of 1978, C-Cure Products sent Secure Adhesives a contract to formalize their relationship. This contract was dated June 28, 1978, and was never signed (Docket Item 1, Complaint, Exhibit A).

In August of 1978, Secure Adhesives, Inc., was incorporated in New York as a manufacturer of thin set mortars and grout and related tile products. Schochet became the sole stockholder of Secure Adhesives, and he was later named vice president of Olympia.

Despite the absence of a written contract, Secure Adhesives purchased chemical concentrates from C-Cure Products and C-Cure Chemical Company, commencing in August, 1978, until November, 1981. During this time, C-Cure Products and Secure Adhesives entered into an arrangement whereby Secure would purchase concentrates from C-Cure and then resell the completed product back to C-Cure for sale in New York State. Again, there does not appear to be any contract memorializing this arrangement. The sale of the completed product was made under the name of "C-Cure Products of New York," and the business office was maintained at Secure's offices in Buffalo.

Sales of C-Cure Products in New York were very low, and it is estimated that sales amounted to no more than $4,000.00 per year during the period when C-Cure labeled products were marketed in the State. It is unclear exactly when the agreement terminated, but it was only in effect for a short time, and C-Cure Products of New York ceased marketing products in New York in early 1981 (Docket Item 65, Johansen Deposition, pp. 34-36).

Secure Adhesives terminated its purchases from C-Cure Chemical in November of 1981 after a dispute over the price of chemical concentrates. Since that time, Secure Adhesives has purchased its concentrates from a Canadian corporation, Flextile, Limited.

The vast majority of Secure Adhesives' sales, both during and after its relationship with C-Cure, has been to defendant Olympia Floor & Wall Tile Co., a Canadian company. In fact, Olympia has traditionally purchased anywhere from 95 to 99 percent of all Secure's products, and there are only one or two local distributors of Secure Adhesive products located in the United States. Apparently, these local distributors are found in the Buffalo area.

When Secure Adhesives purchased its chemicals from C-Cure, the finished product was packaged in bags labeled "C-Cure" and either "C-Cure Chemical Co., Inc." or "C-Cure Products." The bags were supplied by C-Cure. Secure Adhesives then exported and sold these products to Olympia, and the bags contained instructions written in both the English and French languages. After ceasing to purchase chemical concentrates from C-Cure, Secure Adhesives has marketed its products under the name "Secure Adhesives." Bags of mortar and grout produced and exported by Secure and sold to Olympia are now labeled "Secure Adhesives," although there is evidence that there is still some stock of C-Cure labeled products for sale in Canada (Docket Item 17, Johansen Affidavit; Docket Item 19, Affidavit of John Carton; Docket Item 20, Affidavit of Andrew Hukowich).

There is no evidence that there are any C-Cure labeled products still for sale in New York State, and plaintiff has submitted an affidavit which describes the sale and purchase of a bag of "Secure" mortar in Buffalo in April of 1982. Although plaintiff requested and received a bag of "Secure," plaintiff notes that the sales receipt written by sales personnel lists the product as a 50-pound bag of "C-Cure" (Docket Item 11, Affidavit of Henry Cornell).

Defendant Olympia Floor and Wall Tile Co. is a division of a Canadian corporation, Olympia and York Developments Ltd. Olympia has been engaged in the business of selling ceramic tile for some 25 years, and it is the largest supplier of ceramic tile in Canada. Sales by the corporation have averaged well over $50 million (Cdn.) per year. In addition to ceramic tiles, Olympia also sells various glues and adhesives to its customers which are used to install ceramic tiles, and prior to the formation of Secure Adhesives, Olympia purchased its mortar and grout products from a company called "L & M Ceramo."

Although Olympia assisted Schochet in establishing Secure Adhesives, Olympia owns no beneficial interest in Secure, and while the two entities obviously have a close business affiliation, their formal relationship is one of vendor-purchaser (Docket Item 21, Affidavit of Ralph Reichmann). Additionally, it seems clear that Olympia does no business in the United States (Docket Item 109).

In June of 1979, Olympia attempted to register the trademark "C-Cure" with the Canadian Trade Marks Office. On January 23, 1981, the Henkel Corporation filed a statement of opposition to the C-Cure trademark application. Henkel is a Minneapolis-based corporation which sells acrylic resins in the United States and Canada under the name "G-Cure" and advertises this product in both Canadian and American publications. The mark "G-Cure" was registered with the U.S. Patent and Trademark Office on December 18, 1973 (No. 974,741) and with the Canadian Trade Marks Office on May 16, 1980 (No. 244,800). In December of 1981, Olympia decided to abandon its registration efforts (Docket Item 33, Carton Affidavit).¹

In the course of this litigation, plaintiff discovered that defendant Olympia was selling 4 kilogram boxes of grout labeled "C-Cure" and "Olympia" in Canada during the spring of 1982. Olympia responds that this name was chosen in error and that upon discovery in May of 1982, the packages were voluntarily relabeled under the name "unibond." Olympia admits that some sales of this "C-Cure" labeled grout were made between January and May of 1982 and further admits that it was unable to prevent these sales. Olympia estimates that its sales of this product under the "C-Cure" label totaled less than $10,000 (Cdn.) and that the grout contained in these boxes was "manufactured in Canada, purchased by Olympia in Canada, and sold by Olympia only in Canada" (Docket Item 89, Exhibit A, Affidavit of Marcu Terner). Secure Adhesives also categorically denies that it was in any way involved with the manufacture of this particular product (Docket Item 86, Rich Affidavit; Docket Item 87, Semmelhack Affidavit).

Plaintiff's involvement in Canada is far more limited. C-Cure Chemical itself has made no sales there and places no advertisements in...