Haggar Int'l Corp. v. United Co. For Food Indus. Corp.

• Decision Date: 28 November 2012
• Docket Number: No. 03 CV 5789(CLP).,03 CV 5789(CLP).
• Citation: 906 F.Supp.2d 96
• Parties: HAGGAR INTERNATIONAL CORPORATION, doing business as Montana Food Industries, Plaintiff, v. UNITED COMPANY FOR FOOD INDUSTRY CORPORATION, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

906 F.Supp.2d 96

HAGGAR INTERNATIONAL CORPORATION, doing business as Montana Food Industries, Plaintiff,

v.UNITED COMPANY FOR FOOD INDUSTRY CORPORATION, et al., Defendants.

No. 03 CV 5789(CLP).

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

Nov. 28, 2012.

Edwin D. Schindler, Coram, NY, Robert E. Lyon, Los Angeles, CA, Laurie Ann Poulos, Holland & Knight LLP, New York, NY, for Plaintiff.

Gloria Tsui–Yip, Howard C. Miskin, Wendi Opper Uzar, Yasmin Pooyan, Miskin & Tsui–Yip LLP, New York, NY, for Defendants.

MEMORANDUM AND ORDER

CHERYL L. POLLAK, United States Magistrate Judge.

On November 17, 2003, plaintiff Haggar International Corporation, d/b/a Montana Food Industries (“Haggar”), commenced this action, pursuant to 15 U.S.C. § 1115(b), against United Company for Food Industry Corporation (“United”) and Trans Mid–East Shipping & Trading Agency, Inc. (“Trans Mid–East”) (collectively, the “defendants”).¹ Plaintiff's Second Amended Complaint, filed April 27, 2004, contains eleven causes of action alleging, inter alia, that defendants violated various provisions of the Lanham Act and New York State law through the use of plaintiff's registered trademark “MONTANA,” ² and that defendants sought to disrupt plaintiff's use of the trademark. Specifically, plaintiff alleges claims for federal trademark infringement and use of a counterfeit mark, in violation of 15 U.S.C. § 1114(1), unfair competition, pursuant to 15 U.S.C. § 1125(a), cancellation of federal trademark registration under 15 U.S.C. § 1064, and additional trademark infringement claims under New York State law. (Compl. ³ ¶¶ 98–188). The Complaint also alleges that defendants sought to cause damage to plaintiff's good will by, inter alia, seeking to cancel plaintiff's mark, registering the mark in defendants' name, marketing competing foods bearing the MONTANA mark, disparaging plaintiff's products, and attempting to cause the Bureau of Customs and Border Protection (“Customs”) to deny entry of plaintiff s products into the United States. ( Id.)

Subsequently, United and Trans Mid–East filed answers to the Complaint, and then later filed counterclaims against Haggar for trademark infringement, trademark cancellation, unfair competition, trademark dilution, and various other claims under New York State law. (Ans.⁴ ¶¶ 12–92). Defendants claim that they are the rightful owners of the both the MONTANA word and design marks (collectively, the “MONTANA marks”). (Ans. ¶ 9).

On December 19, 2006, Haggar filed the first motion for summary judgment, seeking to dismiss defendants' counterclaims on the grounds of laches and acquiescence, arguing that defendant United had waited too long to assert its claims of trademark ownership. Upon referral, this Court issued a Report and Recommendation, dated March 11, 2008, recommending that plaintiff's motion for summary judgment be denied because there existed sufficient questions of material fact as to whether Haggar's procurement of the MONTANA trademark was fraudulent, since a party asserting the equitable defenses of laches and acquiescence must do so with “clean hands.” On June 4, 2008, the district court adopted the Report and Recommendation.

On April 1, 2009, defendants filed a second motion for summary judgment, seeking to preclude plaintiff from asserting any equitable defenses such as laches or acquiescence. This Court issued a Report and Recommendation, dated September 22, 2010, 2010 WL 5560089, recommending that defendants' motion be denied, again because genuine issues of material fact remained on the question of whether Haggar committed fraud in its application to the United States Patent and Trademark Office (“USPTO”) filed in 1989. In an opinion and order dated January 5, 2011, the district court adopted the Report and Recommendation.

On February 4, 2011, the parties consented to have the case assigned to the undersigned for all purposes, including entry of judgment, and waived their right to a jury trial, consenting to allow this Court to decide the issues. The case proceeded to trial, which was held before this Court from May 16 through May 18, 2011. The Court notes that several of the key witnesses had passed away prior to trial. Thus, at trial, Haggar's case-in-chief consisted of the live testimony of Ms. Hala Boulos (“Ms. Boulos”), as well as portions of the deposition transcripts of Sherif Boulos⁵ (“Boulos” or “Sherif”) and Alfi al Masri ⁶ (“al Masri”). Defendants' case-in-chief consisted of the live testimony of Mamdouh Maamoun ⁷ (“Maamoun” or “Mamdouh”) and Alex Joudeh (“Joudeh”), as well as portions of the deposition transcripts of Sief Bisada (“Bisada”) and Lawrence Cohen, Esq. (“Cohen”).

For the reasons stated below, the Court finds in favor of plaintiff and Orders the cancellation of United's MONTANA work mark, Trademark Registration No. 2,724,085, and an accounting of monetary damages owed to Haggar by defendants. ⁸ To the Court's knowledge, United's design trademark registration is merely pending (Ans. ¶ 9); accordingly, the Court does not address cancellation of United's design trademark at this time.

FACTUAL AND LEGAL BACKGROUND

I. Facts Not in Dispute

Although the parties disagree on certain critical facts relating to the development and use of the MONTANA marks and the relationships between the parties, some facts are not in dispute, and the Court has referred to these undisputed facts to provide a chronological framework in which the trial testimony may be analyzed.

United is an Egyptian corporation engaged in the business of freezing, packaging, and distributing Egyptian fruits and vegetables. (Compl. ¶¶ 16, 32; Defs.' 2007 56.1 Stmnt ⁹ ¶ 2).¹⁰ At some point in the 1980s, Sherif Boulos began distributing United's frozen food products in the United States; these products were imported through Boulos' father-in-law, Alfi al Masri. (Defs.' 2009 56.1 Stmnt ¹¹ ¶ 13; Pl.'s 2009 56.1 Stmnt ¹² ¶ 13). In 1986, Boulos incorporated Haggar International Corporation in California and began distributing United frozen foods in the United States, using the MONTANA mark. (Defs.' 2009 56.1 Stmnt ¶¶ 16–18). The parties disagree about who was responsible for creating and designing the marks and about the nature of the arrangement between Boulos and United regarding the distribution of United's food products in the United States.

It is undisputed that on December 30, 1987, Haggar filed a trademark application with the USPTO, seeking to register the word mark “MONTANA.” (Defs.' 2007 56.1 Stmnt ¶¶ 10; Pl.'s 2009 56.1 Stmnt ¶ 22). The application, which was signed by Boulos, included a declaration as to ownership. (Defs.' 2009 56.1 Stmnt ¶ 23; Pl.'s 2009 56.1 Stmnt ¶ 23). It is also undisputed that Haggar presented several packaging bags (“specimen bags”) to the USPTO in connection with the application; these bags were marked “Product of Egypt by the United Food Company for Food Industry.” (Defs.' 2009 56.1 Stmnt ¶¶ 23–25; Pl.'s 2009 56.1 Stmnt ¶¶ 23–25). When Haggar failed to respond to requests from the USPTO for additional documentation to prove ownership of the MONTANA mark, the USPTO deemed the application abandoned as of November 4, 1988. (Defs.' 2009 56.1 Stmnt ¶¶ 25–27; Pl.'s 2009 56.1 Stmnt ¶¶ 25–27).

In 1988, following the submission of the 1987 application, Alan Mund, Esq. (“Mund”), Haggar's then attorney,¹³ sent a letter to United seeking to have United assign its rights to the MONTANA mark to Haggar. (Defs.' 2009 56.1 Stmnt 128; Pl.'s 2009 56.1 Stmnt ¶ 28). What happened to that letter is a source of dispute between the parties. However, it is undisputed that in 1989, the relationship between United and Haggar ended, and United began using Nile Imports, Inc. (“Nile” or “Nile Foods”) to distribute its products. (Defs.' 2009 56.1 Stmnt ¶¶ 32–33, 41; Pl.'s 2009 56.1 Stmnt ¶¶ 32–33, 41).

Sometime thereafter in 1989, Haggar filed a second trademark application. This application was approved by the USPTO, and on March 6, 1990, the USPTO issued Trademark Registration 1,585,940 to Haggar for the word trademark “MONTANA.” (Pl.'s 2006 56.1 Stmnt ¶¶ 1–2; Defs.' 2007 56.1 Stmnt ¶ 13). On April 3, 1990, the USPTO issued a design trademark, bearing Trademark Registration No. 1,590,078, to Haggar for its logo. (Pl.'s 2006 56.1 Stmnt ¶ 5; Defs.' 2007 56.1 Stmnt ¶ 13). On October 25, 1989, United filed its own application to register the MONTANA mark and its logo, only to abandon the application on February 20, 1991. (Pl.'s 2006 56.1 Stmnt ¶¶ 10, 17).

In 1991, Haggar registered its word and design trademarks with the United States Customs Service (“Customs”), stating that there were no foreign business entities authorized or licensed to use these trademarks abroad. (Defs.' 2009 56.1 Stmnt ¶¶ 43–44; Pl.'s 2009 56.1 Stmnt ¶¶ 43–44). Thereafter, in the summer of 1995, based on Haggar's claimed ownership of the MONTANA mark, Customs seized a container of United products bearing the MONTANA mark that had been imported by Nile. (Defs.' 2009 56.1 Stmnt ¶ 46; Pl.'s 2009 56.1 Stmnt ¶ 46).

On March 25, 2002, United filed a Petition to Cancel (the “Petition”) Haggar's rights in the MONTANA marks. (Pl.'s 2006 56.1 Stmnt ¶¶ 10, 46; Defs.' 2007 Resp.¹⁴ ¶¶ 44, 46). When Haggar failed to respond to the Petition, the USPTO entered a default judgment on September 13, 2002, cancelling Haggar's registration. United then filed its own application to register the word mark in September 2002. (Pl.'s 2006 56.1 Stmnt ¶ 60, Ex. 16; Defs.' 2007 Resp. ¶ 60; Pl.'s Ex.¹⁵ 67). On June 10, 2003, the USPTO issued Trademark Registration No. 2,724,085 to United for the word trademark “MONTANA.” (Defs.' Ex.¹⁶ FA). When Haggar moved to set aside the default judgment, claiming not to have received notice of the Petition, the default was set aside and Haggar's registration was restored on or before March 18, 2004.¹⁷ (Pl.'s 2006 56.1 Stmnt ¶ 42; Defs.' 2007 Resp. ¶ 42). The parties have now cross-sued each other for ownership of the MONTANA...