Idv North America, Inc. v. S & M Brands, Inc.
| Decision Date | 20 October 1998 |
| Docket Number | Civil Action No. 3:97cv809. |
| Citation | 26 F.Supp.2d 815 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | IDV NORTH AMERICA, INC. and R & A Bailey Co. Limited, Plaintiffs, v. S & M BRANDS, INC., Defendant. |
Howard Feller, Brian C. Riopelle, Scott A. Simmons, McGuire, Woods, Battle & Booth, Richmond, VA, Albert Robin, Robin, Blecker, Daley & Driscol, New York City, Emily K. Breslin, The Paddington Corporation, Fort Lee, NJ, for Plaintiffs.
James C. Roberts, Alan D. Wingfield, Mays & Valentine, Richmond, VA, Everett W. Gee, III, Sarah A. Keefe, Womble, Carlyle, Sandridge & Rice, Atlanta, GA, for Defendant.
IDV North America, Inc. and R & A Bailey Co. Limited instituted this action against S & M Brands, Inc., alleging claims for statutory trademark infringement under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), and for statutory unfair competition under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). The action was tried by the Court, sitting without a jury. Having reviewed the exhibits and the testimony of the witnesses, the Court makes the findings of fact and conclusions of law which are set forth below.
R & A Bailey, an Irish corporation with its principal place of business in Dublin, Ireland, produces all BAILEYS Irish Cream and BAILEYS LIGHT Irish Cream liqueur. The products are made in Ireland and sold worldwide. Since 1979, IDV, as the successor by merger to The Paddington Corporation, has been the exclusive importer and distributor of BAILEYS liqueurs in the United States. IDV, therefore, is responsible for all sales, marketing, advertising, merchandising, and promotion of the product in the United States.
On January 18, 1983, R & A Bailey was issued a registered United States trademark "BAILEYS" for liqueurs; and, on January 19, 1993, it received a registered United States trademark, "BAILEYS LIGHT," also for liqueurs. (Pls.' Trial Exs. 1,2.) On December 17, 1996, R & A Bailey was issued a United States trademark, "BAILEYS," for ice cream; and, on July 8, 1997, R & A Bailey obtained a registered United States trademark, "BAILEYS YUM," for alcoholic beverages, namely cordials and liqueurs. (Pls.' Trial Exs. 3,4.) Most recently, on January 13, 1998, R & A Bailey was issued a registered United States trademark, "BAILEYS," for coffee cups and ceramic accessories.
BAILEYS liqueurs are sold in the United States through a network of wholesalers and retailers. The channels of trade for BAILEYS liqueurs includes wholesalers, state liquor control stores, private retail liquor outlets, grocery stores, drug stores, duty-free outlets, airplanes, and a number of so-called "on-premises accounts," such as restaurants, bars, and hotels. Some of those channels of trade also sell cigarettes.
BAILEYS liqueur1 is targeted to a market which IDV describes as "sophisticated socializers who enjoy `real chat' with friends, good food and drink." (Def.'s Trial Ex. 8.) According to an IDV fact sheet, that market was thought to be comprised of college-educated, professional men and women, age 25-44, with an individual income in excess of $35,000. (Id.) The target market for BAILEYS LIGHT liqueurs is "100% female" and, according to IDV, that market consists of "health-conscious, sophisticated socializers who enjoy `real chat' with friends and enjoy good, healthy, food and drink." (Id.) The IDV fact sheet indicates that the primary market for BAILEYS LIGHT is the college-educated, female professional or homemaker, age 35-54, with an individual income in excess of $35,000. (Id.)2
The BAILEYS liqueur products are deliberately promoted as premium brand items. To that end, the packaging, marketing and advertising for the liqueur products are depicted in a sophisticated manner, often with sensual overtones. (See, e.g., Pls.' Trial Ex. 6.) The advertising, bottling, packaging, and promotions all are intended to connote wealth and sophistication. In pursuit of these sophisticated, well-heeled consumers, BAILEYS liqueur products are advertised in such magazines as Victoria, Harpers Bazaar, Redbook, Smithsonian, Civilization, American Heritage, Black Enterprise, Food & Wine, Mens Journal, Travel & Leisure, Glamour, Self, Mademoiselle, People, Bon Appetit, Gourmet, GQ, George, Skiing, Martha Stewart Living, Cosmopolitan, Tennis, New York Magazine, Us, and Sojourner. This deliberate appeal to affluence is reflected in the current price point for BAILEYS liqueurs: $19 to $20 per 750 ml bottle.
BAILEYS Irish Cream liqueur is sold in distinctive, expensive-appearing dark brown glass bottles embossed with an intricate seal which itself connotes stature and affluence. (Def.'s Trial Ex. 12.) The display panel label on the bottle is gold, deep green, white, orange, and dark brown, with the word "BAILEYS®" in all capital white letters with gold shadows on an arching dark background. (Id.) Below the main display panel appear the words "ORIGINAL IRISH CREAM®" in white capital letters on a metallic orange arching background. (Id.) Below the words "ORIGINAL IRISH CREAM" and above the words "BAILEYS THE ORIGINAL," there is a picture of the Irish countryside. (Id.) "BAILEYS THE ORIGINAL" is depicted in white, small capital letters against a brown background. (Id.) Below that appears the words "R & A BAILEY" in gold script and the words "R & A BAILEY CO., DUBLIN, PRODUCT OF IRELAND" in black capital letters across a deep green background at the bottom of the label. (Id.) The label on the neck of the bottle bears the word "IMPORTED" four times around the bottle and identifies "R & A BAILEY" three times. (Id.) Gold seals adorn the labeling. (Id.) The label on the back of the product is brown, gold, and orange, bears the word "BAILEYS®" in white and gold capital letters, and includes the following product description: "Baileys is a natural marriage of fresh Irish cream, Irish Whiskey and the finest of spirits — blended to perfection." (Id.)
The product labeling of BAILEYS LIGHT liqueur is essentially the same as for BAILEYS original Irish Cream liqueur, except that the label of that product indicates that it is a "LIGHT" product. (Id.) The inscription on the back label reads: "Like original Baileys, Baileys Light is created by blending the natural goodness of Irish cream with the finest of Irish spirits."
All of BAILEYS advertising bears the same stylized labels and motifs as those which appear on the bottles and the packaging materials. All BAILEYS products are clearly identified as imported from Ireland and are promoted as distinctive by virtue of their unique Irish origin, qualities and ingredients. (See, e.g., Def.'s Trial Ex. 12.)
According to IDV, 60% of all BAILEYS liqueur products are consumed in personal residences. Most of the remaining 40% of the products are consumed in restaurants and bars. Although consumption of BAILEYS liqueurs often is in places where smoking of tobacco products also occurs, tobacco products are not now, and have never been, used to promote BAILEYS liqueurs. Nor is there currently any plan to associate tobacco product and BAILEYS liqueurs for purposes of advertising or promoting the liqueur products.
During the period 1987 through 1996, slightly in excess of $153 million was spent on advertising, merchandising, and promotion of BAILEYS liqueur products. (Pls.' Trial Ex. 11.) In addition to media advertising, IDV sponsors, in the BAILEYS name, ski events, figure skating events, and various food-related events. Today, BAILEYS liqueurs are the number one selling liqueur products in the world and they are the second leading liqueur products in the United States.
According to the testimony of Mac Bailey and his son, Steven, the Bailey family has been engaged in growing, buying, and selling tobacco in Virginia for five generations. Hence, the Bailey family's surname has been associated with the production and sale of tobacco for more than 100 years. Today, the Bailey family operates one of the largest tobacco farms in Virginia, serves as a tobacco dealer, and operates a large tobacco warehouse. On December 6, 1993, the family expanded its tobacco business by forming S & M Brands for the purposes of making and selling cigarettes, one ingredient of which is the tobacco grown on the Bailey family's farms. (See Def.'s Trial Ex. 6.) In July 1994, S & M Brands began selling cigarettes under the "Bailey's" name. On September 6, 1994, S & M Brands filed with the United States Trademark Office an application to register its Bailey's mark for cigarettes. The Trademark Office refused registration on its Principal Register but granted registration on the Supplemental Register for use with cigarettes.3 (Def.'s Trial Ex. 7.) The Trademark Office did not cite the plaintiffs' BAILEYS mark for liqueurs against that being offered by S & M Brands.
Bailey's cigarettes are very inexpensive and hence are classified as a generic brand. S & M Brands sells Bailey's cigarettes primarily at convenience stores and grocery stores located in Virginia and North Carolina. Convenience stores and grocery stores in North Carolina and Virginia cannot, by law, sell liquor or liqueurs; and, therefore, Bailey's cigarettes are not sold in the same channels of commerce as BAILEYS liqueur products in those states. Bailey's cigarettes are sold in Kentucky through cigarette outlet stores, which do not sell liquor products. In Georgia, Bailey's cigarettes are sold in convenience stores. According to Steven Bailey, Bailey's cigarettes are distributed in Virginia, North Carolina and Georgia through large grocery store chains, such as Food Lion, Winn Dixie and smaller independent grocery stores. S & M Brands intends to expand its marketing to other states and, in several...
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