Johanna Farms, Inc. v. Citrus Bowl, Inc.

• Decision Date: 25 May 1978
• Docket Number: No. 78 C 286.,78 C 286.
• Citation: 468 F. Supp. 866
• Parties: JOHANNA FARMS, INC., Plaintiff, v. CITRUS BOWL, INC., and Tropicana Products, Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

468 F. Supp. 866

JOHANNA FARMS, INC., Plaintiff, v.CITRUS BOWL, INC., and Tropicana Products, Inc., Defendants.

No. 78 C 286.

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

May 25, 1978.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Bell, Wolkowitz, Beckman & Klee, New York City, for plaintiff.

Burns, Doane, Swecker & Mathis, Alexandria, Va., for defendants.

MEMORANDUM AND ORDER

BRAMWELL, District Judge.

The matter at hand concerns the first step taken in an action commenced by Johanna Farms, Inc.(hereinafter "Johanna") against Citrus Bowl, Inc. and Tropicana Products, Inc.(hereinafter "Tropicana") for permanent injunctive relief, an accounting of profits, and for punitive as well as compensatory damages.The claim upon which this relief is predicated sounds in common law trademark infringement, unfair competition and a violation of section 43(a) of the Lanham Act,15 U.S.C. § 1125(a)(1970).

The focal point of this controversy is centered upon the use of the trademark PURE MAID and the diamond stylized logo associated therewith in the sale and distribution of citrus drinks in a limited geographical market comprised of seven states in the northeastern and middle atlantic region of the United States.Thus, the basic problem that has arisen is the presence of two unyielding competitors vying for the same spot in the marketplace.In its complaint, Johanna alleges a superior right to use this mark in this circumscribed market and, as evidence of this right, points to nearly eight years of allegedly uninterrupted exclusive use in promoting and selling both orange and grapefruit juices under this label.In support of its claim, plaintiff alleges that the continued sale of the defendants' product under the PURE MAID mark and logo will destroy the value of the mark and will irreparably injure the business it has established.Plaintiff further complains that the defendants' product is debasing its reputation as the defendants' product is inferior to its own.They argue that consumers will impute their dissatisfaction with the defendants' product to the plaintiff.

Plaintiff buttresses its assertion of a superior right to the PURE MAID mark by laminating this claim with a stratum of defenses.Initially, the plaintiff argues that the defendants are presently precluded from asserting any right or assailing the underlying soundness of the plaintiff's claimed right as the PURE MAID mark was freed of any restraints placed upon its use by virtue of an abandonment.Specifically, the plaintiff submits that the near eight year delay by the defendants in asserting their purported title to PURE MAID coupled with their knowledge of the plaintiff's use of the mark evidences the defendants' intent to abandon the mark as a matter of fact.The plaintiff further maintains that the Trustee of Juice Corporation of America, the first business to use the mark, sold the mark in gross thereby precipitating the abandonment of the goodwill and the consequential destruction of the mark as a matter of law.

Underlying this defense is yet another layer to the wall which is claimed to foreclose the defendant from presently stepping forward under a color of right.Plaintiff insists that the silent passage of time begat prejudice in that during these eight years, it labored hard at the sowing and nurturing of its business under the PURE MAID mark.It is simply unfair, plaintiff argues, to presently allow the defendants to harvest the fruits of this labor.Therefore, plaintiff concludes, the defendants' inertia demands the application of the doctrine of laches.

Despite the defendants' admission of Johanna's use of PURE MAID, they vigorously dispute the plaintiff's claim of the right to use this mark.Initially, they allege that the defendants, not the plaintiff, possess the title and the right to use this mark through their purchase of the mark at the aforementioned bankruptcy sale.Furthermore, they argue that neither the passage of time nor the use by the plaintiff can divest them of this right as the specter of bad faith lurks within the plaintiff's act of appropriation and subsequent use.Finally, they contend that the plaintiff's claim of abandonment as a matter of fact is not supported by the facts and that the claim of abandonment as a matter of law in view of the facts is not only devoid of any merit but is also purely speculative at this juncture.Although the defendants did not in turn cross-move for preliminary relief, the plaintiff's claim did prompt them to counterclaim for permanent injunctive relief barring the plaintiff from further use of the PURE MAID mark, an accounting of profits, and both compensatory and punitive damages.

In starting down the path of litigation, the plaintiff immediately approached the bench for the issuance of a preliminary injunction which would prohibit the defendant from further use of PURE MAID in the market area claimed to be the plaintiff's own.Following a hearing on this motion, the requested relief was denied and although no final conclusions may be drawn in advance of trial, the Court stated that a written opinion expounding on the reasons for this denial would follow.In fulfilling this promise herein, and in accordance with Rule 52 of the Federal Rules of Civil Procedure, the Court's bench ruling was based upon the following findings of fact and conclusions of law.

IFINDINGS OF FACT

1) Johanna Farms, the plaintiff herein, is a New Jersey corporation with a principal place of business in Flemington, New Jersey.The amount in controversy, exclusive of interest and costs, is in excess of $10,000.

2) Citrus Bowl, Inc., a defendant herein, is a New York corporation with a principal place of business in Whitestone, New York.

3) Tropicana Products, Inc., a defendant herein, is a Florida corporation having its principal place of business in Bradenton, Florida.

4) The trademark PURE MAID is of sufficient distinctiveness to entitle it to protection.

5) Insofar as it is germane to this action, the trademark PURE MAID and its symbolic logo were first adopted and used in as early as 1957 on citrus drinks by Juice Corporation of America (hereinafter "JCA").

6) Kurt Goldman, who was the president of plaintiff in 1967 and who remains in that position to date, knew that the PURE MAID mark had been adopted and used by JCA prior to its use by the plaintiff.As early as 1967, plaintiff had transacted business with JCA through the purchase of fruit concentrate from JCA.

7) During 1968, JCA experienced financial difficulties which culminated in the institution of bankruptcy proceedings.Consequently, the PURE MAID mark became vested in the trustee in Bankruptcy as an asset of the estate.

8) Murry Verlin was the president of JCA at or around the time of the commencement of JCA's bankruptcy proceedings.He was first introduced to Mr. Goldman in 1967 and later transacted business with Mr. Goldman in the aforementioned sale of frozen concentrate.In late 1969, in the midst of JCA's bankruptcy proceedings, Mr. Verlin became associated with the plaintiff as a broker for Johanna.

9) In 1968, the defendant Tropicana entered into an agreement with JCA's trustee whereby Tropicana was granted the right to use the PURE MAID mark in connection with its European market operations.Said agreement was confirmed by the Bankruptcy Court on February 29, 1968.The Court's order specifically stated that notice of the agreement had been given to Mr. Verlin.Furthermore, the order categorically stated that said order was not intended to affect the disposition by the Trustee of the United States rights of the bankrupt in the PURE MAID mark.

10) Before January of 1970, Mr. Goldman learned of JCA's bankruptcy.According to Mr. Goldman, Mr. Verlin approached Mr. Goldman in January of 1970 and told him to use the PURE MAID label.Knowing of JCA's prior use of PURE MAID, at least in New York, and the goodwill established through this use, Mr. Goldman testified that he decided to use the mark intending to capitalize on this goodwill.

11) At some point thereafter, Mr. Goldman investigated the alleged use of PURE MAID in Europe by an unidentified Detroit based corporation.However, he did not investigate and the evidence does not reflect whether PURE MAID was being used by or under the direction of the Trustee in the domestic market.Furthermore, Mr. Goldman did not seek the advice at this time of the Trustee or an attorney with respect to his contemplated use.

12) Other than the Trustee's agreement with Tropicana, no evidence was submitted as to the use, non-use, or improper use of the subject mark by the Trustee or others.

13) In January of 1970, the same month in which Mr. Verlin approached Mr. Goldman, the plaintiff ordered the manufacture of PURE MAID caps, exhibits 1 and 2 in evidence.Within ten days of receipt of these caps on April 9, 1970, said caps were used on bottled juice products which were subsequently distributed in New York and possibly other states.Since April of 1970, the plaintiff has used and continues to use the PURE MAID mark on its juice products which are disseminated in New York, New Jersey, Delaware, Pennsylvania, the District of Columbia, Maryland and Connecticut.

14) Subsequent to April of 1970, Mr. Goldman became aware of a bankruptcy sale concerning JCA's estate at which the Trustee planned to sell the rights in the PURE MAID mark.In July of 1970, this sale was held.Mr. Goldman testified that he attended this sale and bid on the mark with the intent of purchasing whatever rights existed in the mark.Despite the fact that Mr. Goldman offered the highest bid of $11,500 for the domestic use and concomitant goodwill of PURE MAID, Tropicana was awarded the title as it was the highest bidder for the combined domestic and foreign rights to the use of the mark.

15) The documents confirming the purchase by Tropicana of the rights in the PURE MAID mark explicitly recite a transfer of...