Davidoff Extension v. Davidoff Comercio e Indus.

• Decision Date: 31 August 1990
• Docket Number: Civ. No. 89-0029(JP).
• Parties: DAVIDOFF EXTENSION S.A. and Davidoff Et Cie., Plaintiffs, v. DAVIDOFF COMERCIO E INDUSTRIA LTDA., Surtidora Panamericana Inc., and Aero-Boutiques de Puerto Rico, Inc., Defendants.
• Court: U.S. District Court — District of Puerto Rico

747 F. Supp. 122

DAVIDOFF EXTENSION S.A. and Davidoff Et Cie., Plaintiffs, v. DAVIDOFF COMERCIO E INDUSTRIA LTDA., Surtidora Panamericana Inc., and Aero-Boutiques de Puerto Rico, Inc., Defendants.

Civ. No. 89-0029(JP).

United States District Court, D. Puerto Rico.

August 31, 1990.

COPYRIGHT MATERIAL OMITTED

Fernando Pérez Colón, Jorge R. Dávila, González Badillo & Dávila, San Juan, P.R., for plaintiffs.

Jorge Luis Guerrero Calderón, San Juan, P.R., for defendants.

OPINION AND ORDER

PIERAS, District Judge.

Plaintiffs Davidoff Extension S.A. ("Davidoff Extension") and Davidoff Et Cie. have filed the instant case under the provisions of the Lanham Act, 15 U.S.C. §§ 1051-1127 ("the Act,") seeking monetary and equitable relief for defendants' alleged trademark infringement of the federally registered trademark "DAVIDOFF." Plaintiffs also claim relief under the laws of Puerto Rico related to trademark infringement and unfair competition. 28 U.S.C. § 1338(b). Plaintiff Davidoff Et Cie. alleges that it has been authorized by Davidoff Extension to use the DAVIDOFF trademark on and in connection with tobacco products and various smoker's articles.

Plaintiff Davidoff Extension claims that it owns the United States Trademark DAVIDOFF because such trademark has been properly registered with the United States Patent and Trademark Office since November 9, 1976, and claims exclusive use of its trademark. Plaintiffs allege that following the federal registration of the DAVIDOFF trademark, defendant Davidoff Comercio E Industria, Ltda. began the sale and distribution in Puerto Rico of substandard quality cigars under a counterfeit DAVIDOFF trademark, all in violation of 15 U.S.C. §§ 1114(1), and 1125(a).

Defendant Davidoff Comercio E Industria Ltda. claims senior use of the trademark because it registered in 1982 and 1983 the DAVIDOFF trademark with the Department of State Trademark Office of the Commonwealth of Puerto Rico. Davidoff Comercio E Industria Ltda. has filed a counterclaim against plaintiffs claiming that a stipulation and settlement agreement entered between plaintiffs and codefendants Surtidora Panamericana, Inc. and Aeroboutiques de Puerto Rico, Inc., constitutes unfair competition.¹ Upon these same grounds, Davidoff Comercio E Industria has also filed a cross-claim against codefendants Aeroboutiques of Puerto Rico, Inc. and Surtidora Panamericana, Inc. Davidoff Comercio E Industria Ltda. alleges that such settlement agreement is an unfair competition because it has adversely affected the sales of its products bearing the DAVIDOFF trademark allegedly owned by Davidoff Comercio E Industria Ltda.

This Court has subject matter jurisdiction pursuant to 15 U.S.C. § 1121(a) and 28 U.S.C. § 1338. The requisite Initial Scheduling and Pretrial Conferences were held and the case came to be tried by the Court. Based on the evidence submitted by the parties and after due deliberation, this Court now makes the following Findings of Fact and Conclusions of Law.

I. FINDINGS OF FACT

1. Both plaintiffs, Davidoff Extension S.A., a corporation, and Davidoff Et Cie., a partnership, are organized under the laws of Switzerland.

2. Defendant Comercio E Industria Ltda., now known as David Comercio E Industria, ("Comercio E Industria") is a partnership organized under the laws of Brazil.

3. Defendants Surtidora Panamericana, Inc. and Aeroboutiques de Puerto Rico, Inc. are both corporations organized under the laws of Puerto Rico.

4. On November 9, 1976, plaintiff Davidoff Extension S.A. registered the trademark "DAVIDOFF" at the United States

Patent and Trademark Office, under Registration No. 1,052,564, for Cigars, Cigarettes, Pipe Tobacco, Pipes, Cigar Cases, Cigarette Cases, Lighters for Cigars and Cigarettes, Refills for Lighters for Cigarettes and Cigars, and Matches. See Plaintiffs' Exh. 1.

5. On March 23, 1982, defendant Comercio E Industria registered trademark "DAVIDOFF" in the Department of State Trademark Office of Puerto Rico under Registration No. 23,984. Comercio E Industria also filed a statement to the effect that such trademark has been continuously used and applied to tobacco goods in its business in Puerto Rico since March 21, 1981. This registration applies only to tobacco.

6. On May 18, 1983, the Department of State Trademark Office of Puerto Rico issued the registration of the DAVIDOFF trademark to Comercio E Industria under trademark No. 24,714. This registration applies only for matches.

7. On May 18, 1983, the Department of State Trademark Office of Puerto Rico issued the registration of the DAVIDOFF trademark to Comercio E Industria under trademark No. 24,715. This registration applies for smoker's articles.

8. All of the parties in this case sell cigars, smoking tobacco and smoker's articles using the same trademark. Neither party had the other's permission to use the DAVIDOFF trademark. Upon an examination of both trademarks used by the parties in this case, the Court finds that such marks are indistinguishable. Both symbols can be used interchangeably. Moreover, the testimony of Mr. José Manuel Aponte, General Manager of Aeroboutiques of Puerto Rico, Inc. and Surtidora Panamericana, Inc., established actual consumer confusion between plaintiff's and defendant's tobacco products. Mr. Aponte's testified how various consumers had purchased Comercio E Industria's tobacco products bearing the DAVIDOFF mark from his duty-free stores, and disapproved of their substandard quality as compared to the authentic Davidoff quality.

9. In September, 1982, Comercio E Industria made its first sale of cigars in Puerto Rico through codefendants Aeroboutiques de Puerto Rico, Inc., and Surtidora Panamericana, Inc. The last sale was made on February 28, 1988. These sales were made in interstate and foreign commerce. Both Aeroboutiques de Puerto Rico, Inc., and Surtidora Panamericana, Inc., bought and sold Comercio E Industria's products in the total sum of $70,000.00.

10. Mr. Hans Peter Koenig, Comercio E Industria's agent since 1981, admitted that before Comercio E Industria used the DAVIDOFF trademark in Puerto Rico, he had knowledge of plaintiff's use of the trademark in Switzerland. Mr. Koenig also admitted that he had been living in Switzerland from 1955 to 1975-76. During 1978, Mr. Koenig met with Dr. Schneider, who is the Director and President of Davidoff Extension and partner in Davidoff Et Cie., at Dr. Schneider's office in Switzerland. At the time of Koenig's visit, Dr. Schneider's office had various displays bearing the DAVIDOFF trademark. Dr. Schneider also testified that since 1971 the DAVIDOFF trademark has been advertised throughout Switzerland, and in other countries.

11. It was not until April, 1989, that plaintiffs began to sell cigarettes under the DAVIDOFF trademark in Puerto Rico. Plaintiffs will continue to sell their tobacco products in Puerto Rico. Comercio E Industria's products bearing the DAVIDOFF trademark were last sold in Puerto Rico during 1988.

12. Codefendants Aeroboutiques de Puerto Rico, Inc. and Surtidora Panamericana, Inc. entered into a settlement agreement with plaintiffs. As the result of this settlement, the Court entered a partial judgment and an injunction.

13. The parties stipulated that this would be all the evidence to be presented pertaining to defendants Aeroboutiques and Surtidora.²

14. On August 10, 1983, the United States District Court for the Southern District of Florida, entered an Injunction and Judgment by Default against Defendant Comercio Industria, Ltda. (now Comercio E Industria) and in favor of Davidoff Extension, S.A. That Court held that: "Defendants' business card and sample box of cigars both bear the trademark `Davidoff' and infringe plaintiff's registered trademarks." The Court further enjoined Comercio Industria, Ltda. "from directly or indirectly using the name `Davidoff' or any similar name in connection with any commerce in the United States involving tobacco or smokers' products, whether by use as a business name, trademark, service mark or any other designation...." See Plaintiffs' Exh. 10.

II. CONCLUSIONS OF LAW

A. Federal and State Trademark Infringement

Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), provides that,

(1) Any person who shall, without the consent of the registrant —

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive;

* * * * * *

shall be liable in a civil action by the registrant for the remedies hereinafter provided.

In similar form, Puerto Rico's Trademark Statute, 10 L.P.R.A. § 202, provides in pertinent part that,

Any person who without the consent of the owner of a trademark reproduces, counterfeits, copies or imitates any trademark and affixes the same to merchandise of substantially the same descriptive properties as those set forth in the registration, or to labels, signs, prints, packages, wrappers or receptacles intended to be used upon or in connection with the sale of merchandise of substantially the same descriptive properties as those set forth in such registration, or uses or shall have used such reproduction, counterfeit, copy or imitation in commerce in Puerto Rico, shall be liable to an action for damages, and if the case is decided for the plaintiff the court shall determine the amount of indemnity.

A brief examination of both these statutes demonstrates that likelihood of confusion is an essential element of a trademark infringement claim under both statutes. It is well settled that under the Lanham Act, an essential element of a claim for trademark infringement is the likelihood of confusion among prospective purchasers of plaintiff's products caused by the defendant's use of plaintiff's trademark. Volkswagenwerk...