Helene Curtis v. National Wholesale Liquidators, Inc., 95-CV-666 (DRH).
| Decision Date | 13 March 1995 |
| Docket Number | No. 95-CV-666 (DRH).,95-CV-666 (DRH). |
| Citation | 890 F. Supp. 152 |
| Parties | HELENE CURTIS, Plaintiff, v. NATIONAL WHOLESALE LIQUIDATORS, INC., Defendant. |
| Court | U.S. District Court — Eastern District of New York |
James T. Reynolds, Reynolds, Caronia & Gianelli, Hauppauge, NY, and James R. Phelps, Hyman, Phelps & McNamara, P.C., Washington, DC, for plaintiff.
Gerard F. Dunne, Gerard F. Dunne, P.C., New York City, for defendant.
In the above-referenced action, Plaintiff Helene Curtis, Inc. alleges that Defendant National Wholesale Liquidators, Inc. has violated certain provisions of the Lanham and Tariff Acts by offering for sale certain "gray market goods." Gray market goods are "goods made by a foreign manufacturer, `legitimately sold abroad under a particular trademark, ... imported into the United States and sold in competition with goods of the owner of the United States trademark rights in the identical mark.'" Dial Corp. v. Encina Corp., 643 F.Supp. 951, 952 (S.D.Fla. 1986) (quoting Vivitar Corp. v. United States, 761 F.2d 1552, 1555 (Fed.Cir.1985), cert. denied, 474 U.S. 1055, 106 S.Ct. 791, 88 L.Ed.2d 769 (1986)). Currently before this Court is Plaintiff's motion for a preliminary injunction enjoining Defendant from the distribution or sale of such goods through its retail stores in the United States. For the reasons set forth below, Plaintiff's motion is granted.
Plaintiff Helene Curtis, Inc. is the exclusive owner of the United States trademark for certain "Finesse" hair-care products. (Wentz Decl. at ¶ 3; Not.Mot.Ex. C1.) Plaintiff has manufactured, distributed, and sold Finesse products in the United States since 1982. (Pl.Mem. at 2.) In March, 1984, Plaintiff licensed Helene Curtis, Ltd., a Canadian corporation (hereinafter "Helene Curtis Canada"), to manufacture, distribute, and sell in Canada hair-care products bearing the Finesse trademark. (License Agmt. at ¶ 1.)
Since May, 1990, Defendant National Wholesale Liquidators, Inc., a wholesale distributor and operator of retail stores, purchased Finesse products from Plaintiff and sold such products in its retail stores in the United States. (Pl.Mem. at 5.) In January, 1995, however, Plaintiff learned that Defendant would no longer purchase Finesse products from Plaintiff, for Defendant had acquired Finesse products manufactured by Helene Curtis Canada (hereinafter "Canadian products"1) for sale in its retail stores in the United States. (Id.) On February 21, 1995, Plaintiff brought on by order to show cause a motion seeking to enjoin Defendant from distributing the Canadian products in the United States. On February 23, 1995, this Court entered a temporary restraining order against Defendant, enjoining Defendant from distributing or selling in the United States any aerosol products manufactured by Helene Curtis Canada. On March 3, 1995, the Court conducted a hearing with regard to Plaintiff's motion for a preliminary injunction.2
The following constitutes the Court's findings of fact with regard to the testimony and exhibits that were received in evidence at the preliminary injunction hearing.
Dr. Norman Meltzer, Plaintiff's Corporate Director of Product Integrity, began his testimony with a description of the general process of product design and development. Dr. Meltzer explained that prior to the acceptance of a particular formula for each of its products, Plaintiff spends millions of dollars to determine whether the product will be satisfactory to the intended consumer.
Specifications are developed for all products, and during the manufacturing process, the products are subjected to a rigorous system of quality control "so that when Plaintiff makes batches of that formula, they will be reproducible and Plaintiff will make the same product every time." (Tr. at 6.)
Any potential changes to the formula of a particular product are carefully reviewed to ensure that the essential characteristics of the product will not be compromised, and any new formulas are tested with consumer groups to determine their marketability.
Dr. Meltzer and his staff are also responsible for approval of product labeling, including, for example, graphics and ingredient lists. His department also reviews product labels to ensure that they are in compliance with all applicable legal requirements.
Having reviewed the Canadian products offered for sale by Defendant, Dr. Meltzer testified that none of the products would be approved for sale in the United States by his quality control staff.
Although the characteristics of each of the Canadian products will be discussed separately below, all of the Canadian product labels differ from their United States counterparts in certain respects. First, all of the Canadian products are labeled in French as well as English, while the U.S. products are labeled only in English. Secondly, the quantity of the Canadian products are measured in milliliters, while the U.S. products are measured in ounces. Thirdly, the Canadian product labels, unlike the labels on the U.S. products, do not contain a list of ingredients, as required by federal law.
Defendant offered for sale a Canadian shampoo that is labeled as "Daily Treatment Shampoo For Dull or Overstyled Hair." (Pl. Ex. 1a.) Dr. Meltzer identified the two U.S. products that are most similar by way of description: "Regular Shampoo for Normal Hair" (Pl.Ex. 1b), and "Extra Moisturizing Shampoo For Dry Or Overstyled Hair." (Pl. Ex. 1c.) Dr. Meltzer testified that the chemical formulas for these products are not identical. He explained that although all of the products contain conditioners that enable hair to be combed and styled easily, the Canadian product is not as "highly conditioning" as the U.S. products. (See Tr. at 13.) The three shampoos are also dissimilar in their physical appearance: the Canadian shampoo is milky white in appearance; the "Regular Shampoo" is clear with a "blue tinge"; and the "Extra Moisturizing Shampoo" is milky beige in color. (Id. at 15.) Finally, the three products are packaged in similar blue plastic bottles, although each bears a different-colored accent stripe.
Defendant offered for sale two types of Canadian after-shampoo conditioning treatments. The first is labeled as "Revitalizing Intensive Treatment For Permed or Coloured Hair." (Pl.Ex. 2a.) Dr. Meltzer identified two U.S. products that bear similar descriptions: "Revitalizing Conditioner For Permed Or Color-Treated Hair" (Pl.Ex. 2b), and "Intensive Conditioning Treatment."3 (Pl.Ex. 2c.) Again, Dr. Meltzer testified that the formulas for these products are not identical, and noted that the three products differ in their texture.4 (Tr. at 20.) Finally, the products are packaged differently: the Canadian product is packaged in a tube, while the "Revitalizing Conditioner" is packaged in a bottle, and the "Intensive Conditioning Treatment" is packaged in a foil packet. Finally, each of the products bears a different-colored accent stripe.
The second Canadian after-shampoo treatment offered for sale by Defendant is labeled "Extra Moisturizing Conditioner For Dry or Damaged Hair." (Pl.Ex. 3a.) The comparable U.S. product identified by Dr. Meltzer bears a strikingly similar label: "Extra Moisturizing Conditioner For Dry Or Overstyled Hair." (Pl.Ex. 3b.) Dr. Meltzer testified that the formulas of these two products are not identical, and that the viscosities of the product are "somewhat different." (Tr. at 23.) The products are packaged in similar blue bottles, and bear similarly-colored accent stripes.
Defendant offered for sale three types of Canadian hair spray. The first is an aerosol spray labeled "Regular Hold Hair Spray." (Pl.Ex. 4a-1.) The U.S. product identified as bearing the most similar description is the aerosol "Natural Hold Hair Spray." (Pl.Ex. 4b-2.) Again, Dr. Meltzer testified that the formulas of these products are not identical; and, more specifically, he explained that, unlike the U.S. product, the percentage of Volatile Organic Compounds ("VOCs") in the Canadian product exceeds eighty percent, in violation of the law of certain states. (Tr. at 25.) Finally, although the products are packaged in similar blue canisters, they contain different-colored accent stripes.
The second Canadian aerosol hair spray product offered for sale by Defendant is labeled "Extra Hold Hair Spray." (Pl.Ex. 4a-2.) The comparable U.S. product bears an identical description. (Pl.Ex. 4b-1.) Again, however, the formulas of these two products are not identical, and, unlike the U.S. product, the percentage of VOCs in the Canadian product exceeds eighty percent. (Tr. at 25-26.) The accent stripes on the canisters are also different in color.
Defendant also offered for sale a non-aerosol Canadian hair spray, labeled "Extra Hold Unscented Non-aerosol Hair Spray." (Pl.Ex. 5a.) The comparable U.S. product, which bears a similar description, is labeled "Unscented Extra Hold Hair Spray Non-Aerosol." (Pl.Ex. 5b.) As with the other hair spray products listed above, the formulas are not identical, and the percentage of VOCs in the Canadian product exceeds eighty percent. (Tr. at 26-27.) The products are packaged in similar blue bottles, although the protective covering for the bottle-necks differ greatly in size.
Defendant offered for sale a styling product labeled "Ultimate Control Spray Gel." (Pl.Ex. 6a.) The comparable U.S. product bears an identical name. (Pl.Ex. 6b.) Again, Dr. Meltzer testified that the products do not possess identical formulas. More specifically, he explained that the Canadian product contains more alcohol than the U.S. product, and the amount of alcohol affects the drying characteristics of the product. (Tr. at 27, 29.) Packaging of the products is virtually identical, although the labels bear different-colored...
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