JL Beverage Co. v. Beam, Inc.
| Decision Date | 24 August 2017 |
| Docket Number | Case No. 2:11-cv-00417-MMD-CWH |
| Parties | JL BEVERAGE COMPANY, LLC, Plaintiff, v. BEAM, INC. et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
(Defs.' Renewed Motion for Summary Judgment - ECF No. 170)
Before the Court is Defendants Beam Inc. and Jim Beam Brands Co.'s (collectively "Jim Beam") Renewed Motion for Summary Judgement as to the Unavailability of Damages. (ECF No. 170.) Jim Beam's Motion seeks to limit the kinds of damages Plaintiff JL Beverage Company, LLC ("JL") may seek at trial. The Court has reviewed the Motion as well as JL's response (ECF No. 177) and Jim Beam's reply (ECF No. 178). For the reasons stated below, the Motion is granted in part and denied in part.
The facts giving rise to this action are set out in detail in the Court's previous orders and in the Ninth Circuit's opinion reversing an earlier order granting summary judgment on different grounds. (ECF Nos. 98, 107, and 157.)
The facts relevant to this order, which are undisputed unless otherwise indicated, are as follows:
A. Johnny Love Vodka
JL was formed in July 2005, and purchased the Johnny Love brand from a third party. The purchase included a then-pending application to register the Johnny Love Vodka & design trademark. (ECF No. 169-2 at 9-10, 30-32.) JL began using the lips trademarks below in 2004 and registered them in 2005 and 2011:
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(ECF No. 36-1 ¶¶ 2-4.) Both images appear on the Johnny Love line of vodkas:
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(Id.)
JL markets its line of Johnny Love Vodka nationwide and works with distributors in at least 20 states. (ECF No. 62-1 ¶ 3; ECF No. 62-2.) In 2009 it altered its business strategy and began working with "entrepreneurial-based business representation that had pre-existing local and territorial specific regional ties of close bar and retail relationships." (ECF No. 176-1 ¶ 2.) One such organization was a North Carolina company called Enkamp LLC. (Id. ¶5.)
In December 2011 Shaun Robertson, a manager at Enkamp, emailed JL a list of times he had interacted with people who had confused Johnny Love Vodka with PUCKER Vodka in one way or another. (ECF No. 36-2 at 4-5.) Robertson also forwarded JL anemail in which an administrator with the North Carolina Alcoholic Beverage Control Commission noted that "Jim Beam's new line of vodka [l]ooks a lot like Johnny Love." (Id. at 7.)
JL delivered a cease and desist letter to Jim Beam on March 18, 2011. (ECF No. 36-1 at 17-19.) The letter identified JL's trademark and its basis for believing Jim Beam's design infringed upon it. (Id.) JL also filed letters of protest with the USPTO in regards to Jim Beam's trademark applications for its bottle design. (ECF No. 37-1 at 4.)
B. PUCKER Vodka
Jim Beam sold a line of liquors called PUCKER under a license with a third party since March 1996. (ECF No. 57 ¶ 4.) The PUCKER bottles included a set of lips which corresponded to the flavor of the liquor. The lips and two corresponding designs were registered trademarks. (Id. ¶ ¶6.) Jim Beam purchased the PUCKER brand entirely from the third party in 2010 and began developing a line of PUCKER vodka. (Id. ¶ 7, 8.) At least one Jim Beam employee was aware of Johnny Love's vodkas and had contacted JL to inquire about their sales. (ECF No. 44 ¶¶ 4-5.)
Jim Beam hired an outside design firm to design packaging for PUCKER vodka. (Id. ¶ 9.) The firm eventually produced two options for bottles (with fourteen different options for bottle caps) to Maria Martin, the Director of Intellectual Property at Jim Beam. (Id. ¶¶ 9-11.) Martin sent the designs to Jim Beam's outside trademark counsel. (Id. ¶¶10-11.) Trademark counsel reviewed a trademark clearance search report that included, among other things, JL's Johnny Love Vodka & Design trademark. (ECF No. 47 ¶ 13.) Trademark counsel then produced an opinion letter, which Martin reviewed. The opinion letter identified the Johnny Love Vodka & Design trademark, among others, but Martin testified that she did not specifically look at or see that mark. (ECF No. 170-2 at 15-16.) Jim Beam then sent two final designs to yet another outside firm to conduct market research. (ECF No. 170-3 at 19-20.) In November 2010, Jim Beam settled on a final design below:
Jim Beam began producing PUCKER vodka in March 2011 and filed for trademarkprotection on, among other things, the lips design that was developed by the third party design firm. (Id. at 25; ECF No. 57 ¶ 13; ECF No. 169-15.) Jim Beam launched PUCKER vodka nationwide in April 2011. (ECF No. 170-3 at 9.)
C. The Parties' Conduct During Discovery1
JL has indicated that it intends to seek recovery of 1) actual damages, 2) any profits
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Jim Beam has earned because of infringement, and 3) a royalty similar to the royalty Jim Beam sought from another party in an unrelated case. (ECF No. 169-10 at 4-5.) In its initial disclosures, JL stated that a computation of damages "could not be determined" at that time. It also identified JL's manager, founder and sole employee, Thomas Diab, as the person most knowledgeable about its claims. (ECF No. 169-11 at 3, 7-8.) Jim Beam later sent an interrogatory requesting that JL "identify and describe with specificity the exact amount and type" of any monetary loss claim. JL did not provide a calculation of damages in response, instead it stated that it was "in the process of making a calculation" and would "supplement [its] response" when it could. (ECF No 169-10 at 4-5.)
Diab sat for two 30(b)(6) depositions. In the first, he testified that JL had "not done a calculation" of damages. (ECF No. 169-2 at 19-22.) In his second deposition a few months later, he testified that JL had no accounting information or any other source showing a measure of damages from Jim Beam's infringement. (ECF No. 170-1 at 5-8.)
Similarly, JL did not mention or calculate any royalties it sought to recover in its initial disclosures. (ECF No. 169-11.) In response to an interrogatory, JL states that it may seek a royalty similar to one Jim Beam sought in an unrelated case but did not have any calculation of what that figure would be. (ECF No. 169-10 at 4-5.) Finally, during Diab's second deposition, he testified that he did not have "any expert or independent report showing [or] suggesting a reasonable royalty" and could only speculate what a reasonable rate might be. (ECF No. 170-1 at 5-8.)
The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). Summary judgment is appropriate when the pleadings, the discovery and disclosure materials on file, and any affidavits "show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). An issue is "genuine" if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party and a dispute is "material" if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). Where reasonable minds could differ on the material facts at issue, however, summary judgment is not appropriate. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995). "The amount of evidence necessary to raise a genuine issue of material fact is enough 'to require a jury or judge to resolve the parties' differing versions of the truth at trial.'" Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 288-89 (1968)). In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmovingparty. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986).
The moving party bears the burden of showing that there are no genuine issues of material fact. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). "In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). Once the moving party satisfies Rule 56's requirements, the burden shifts to the party resisting the motion to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256. The nonmoving party "may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists," Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and "must do more than simply show that there is some metaphysical doubt as to the material facts." Orr v. Bank of Am., 285 F.3d 764, 783 (9th Cir. 2002) (internal citations omitted). "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient." Anderson, 477 U.S. at 252.
Fed. R. Civ. P. 26(a)(1) requires that a party include in its mandatory initial disclosures "a computation of each category of damages claimed," and that it also disclose the specific documents and materials "on which [that] computation is based." Fed. R. Civ. P. 37(c)(1) provides that a party that does not disclose the information required by Rule 26(a) () "is not allowed to use that information or witness to supply evidence on a motion ... unless the failure was substantially justified or is harmless." Fed. R. Civ. P. 37(c)(1). Furthermore, Fed. R. Civ. P. 56(a) and...
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