Leelanau Wine Cellars, Ltd. v. Black & Red, Inc.

• Decision Date: 20 September 2007
• Docket Number: No. 06-2391.,06-2391.
• Citation: 502 F.3d 504
• Parties: LEELANAU WINE CELLARS, LTD, Plaintiff-Appellant, v. BLACK & RED, INC. and Roberta Kurtz, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

502 F.3d 504

LEELANAU WINE CELLARS, LTD, Plaintiff-Appellant, v. BLACK & RED, INC. and Roberta Kurtz, Defendants-Appellees.

No. 06-2391.

United States Court of Appeals, Sixth Circuit.

Argued: July 17, 2007.

Decided and Filed: September 20, 2007.

ARGUED: Kenneth B. Morgan, Morgan Associates, PLC, Birmingham, Michigan, for Appellant. Thomas Richard Behm, Gruel Mills Nims & Plyman, Grand Rapids, Michigan, for Appellees. ON BRIEF: Kenneth B. Morgan, K. Dino Kostopoulos, Morgan Associates, PLC, Birmingham, Michigan, for Appellant. Thomas Richard Behm, Brion J. Brooks, Gruel Mills Nims & Plyman, Grand Rapids, Michigan, for Appellees.

Before: GIBBONS and SUTTON, Circuit Judges; BECKWITH, Chief District Judge.^*

OPINION

JULIA SMITH GIBBONS, Circuit Judge.

This case arose out of a trademark dispute between two Michigan wine producers: plaintiff-appellant Leelanau Wine Cellars, Ltd (LWC) and defendant-appellee Black & Red, Inc. (B & R), owned by defendant-appellee Roberta Kurtz. Following district court proceedings that resulted in an appeal to this court and a remand to the district court, the district court conducted a bench trial on LWC's Lanham Trademark Act, 15 U.S.C. § 1114, claim. Following the bench trial, the district court issued written findings of fact and conclusions of law in which it rejected LWC's claim that B & R's use of the mark "Chateau de Leelanau Vineyard and Winery" created a likelihood of confusion among consumers. The court entered judgment in favor of defendants-appellees, and LWC appealed.

For the reasons below, we affirm the district court.

I.

In 1981, Michigan's Leelanau Peninsula was designated an Approved American Viticultural Area (AVA). 27 C.F.R. § 9.40. Federal regulation defines a "viticultural area" as a "delimited grape-growing region distinguishable by geographical features, the boundaries of which have been delineated . . . ." 27 C.F.R. § 9.11. An area's designation as an AVA permits the name of the area to be used as an "appellation of origin" on wine labels and in advertising.

Both LWC and B & R own and operate wineries located in the Leelanau Peninsula. LWC began operating its winery in 1977. In 1997, LWC successfully applied with the United States Patent and Trademark Office (USPTO) for registration of the mark "Leelanau Cellars" on the Principal Register. In 1990, Kurtz and Joanne Smart¹ formed B & R. B & R was initially devoted exclusively to growing fruit, including apples, cherries, plums, and grapes and, prior to 1999, sold its grape harvest to wineries, including LWC. In 1995, B & R received permission from the Michigan Department of Commerce to do business as "Le Coeur de Leelanau" and registered that entity as a vineyard and winery. In 1999, B & R, for the first time, utilized a part of its grape harvest to produce wine. B & R elected in 2000 to change the name Le Coeur de Leelanau to "Chateau de Leelanuau Vineyard and Winery." That same year, B & R received permission from the Bureau of Alcohol, Tobacco, and Firearms to sell wine. B & R began selling its wine in earnest in January 2001 and ceased its other fruit growing activities in 2005. During this period, B & R was aware of the existence of LWC and had been for approximately 20 years.

In October 2000, Michael Jacobson, the owner of LWC, directed a letter to Kurtz and Smart notifying them that their use of the word "Leelenau" as part of the name for their wine "infringes upon the exclusive rights we have to do business under the names Leelanau Wine Cellars, Ltd. and Leelanau Cellars." B & R continued to utilize the name, however, and ultimately applied for and received a trademark from the state of Michigan in November 2000. In October 2003, B & R successfully registered the name Chateau de Leelanau Vineyard and Winery on the Principal Register of the USPTO. Smart testified that B & R believed—after consultation with attorneys—that LWC was incorrect in asserting that it held the exclusive right to use the word "Leelanau" in its brand name.

On May 23, 2001, LWC filed suit against B & R, Smart, and Kurtz in the United States District Court for the Western District of Michigan. An amended complaint followed on September 28, 2001. The amended complaint raised two claims under the Lanham Trademark Act, 15 U.S.C. §§ 1114 and 1125, a claim for common law unfair competition, and a claim under the Michigan Consumer Protection Act, Mich. Comp. Laws § § 445.901-445.922. On August 13, 2002, the district court issued a written order granting LWC's motion for partial summary judgment on the issue of liability on LWC's federal trademark claims and permanently enjoining B & R from using the term "Leelanau" in any trade or brand name for the sale of wine.² Following a two-day bench trial on August 28 and 29, 2002, on the issue of willfulness, the district court sent a letter dated October 11, 2002, to counsel, notifying them that it "probably erred" in granting summary judgment and a preliminary injunction to LWC. In light of the evidence at the bench trial, the district court explained, it was likely to rule that there was not a sufficient likelihood of confusion and rule in favor of B & R, but remained "open minded on the issue." The court issued an order November 21, 2002, setting forth the bases for its belief that its previous ruling was incorrect. LWC sought the opportunity to conduct a consumer survey, and the court denied that motion. On February 14, 2003, the court entered judgment in favor of B & R, withdrew its August 13 order in favor of LWC, and lifted the previously imposed injunction against B & R's use of the word "Leelanau." LWC appealed to the Sixth Circuit on March 13, 2003. On appeal, a panel of our court affirmed the district court's power to reconsider its previous ruling unilaterally, but reversed and remanded with instructions to the district court to permit LWC to conduct its consumer survey.

On remand, the district court permitted LWC to conduct its desired consumer survey. On August 15, 2006, the court held a bench trial on the issues of liability and damages. The district court issued its findings of fact and conclusions of law on September 7, 2006. In its order, the court considered the admissibility of LWC's consumer survey, conducted by Dr. Sara Parikh. It found that the survey was potentially unreliable but nevertheless allowed its admission. On the central issue of the likelihood of consumer confusion, the court applied the eight-factor test used in the Sixth Circuit to evaluate trademark infringement claims. It concluded that LWC did not possess a strong mark and that, because B & R distributed its wine primarily through its tasting rooms, it was unlikely that consumers would have to distinguish between LWC wines and B & R wines or incorrectly associate the company's products. Accordingly, the court determined that LWC failed to carry its burden of showing a likelihood of confusion among relevant consumers and entered judgment on behalf of B & R. LWC filed a timely notice of appeal.

II.

Federal law provides:

(1) Any person who shall, without the consent of the registrant —

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

(b) reproduce, counterfeit, copy, or colorably imitate a registered mark and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive,

shall be liable in a civil action by the registrant for the remedies hereinafter provided.

15 U.S.C. § 1114(1)(a)-(b).

A.

Only those marks that are "distinctive" as a matter of law are accorded trademark protection. Abercrombie & Fitch Stores, Inc. v. Am. Eagle Outfitters, Inc., 280 F.3d 619, 635 (6th Cir.2002). Certain marks, described as "arbitrary," "fanciful," or "suggestive" are "inherently distinctive" and protectable.³ See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S 763, 768, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). A so-called "generic" mark may never qualify for trademark protection.⁴ Id. Between these two poles lie "descriptive" marks.⁵ Marks that are descriptive are not inherently distinctive but may enjoy the benefit of protection if they develop a "secondary meaning." Id. at 769; Tumblebus, 399 F.3d at 761. This rule applies equally to phrases or terms that are "descriptive of the geographic origin of a product." Forschner Group, Inc. v. Arrow Trading Co., Inc., 30 F.3d 348, 353 (2d Cir.1994). A descriptive mark achieves secondary meaning when "in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product." Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 851 n. 11, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982). A geographically descriptive mark that has acquired secondary meaning "no longer causes the public to associate the goods [at issue] with a particular place but to associate the goods with a particular source." Burke-Parsons-Bowlby Corp. v. Appalachian Log Homes, Inc., 871 F.2d 590, 595 (6th Cir.1989).

The district court deemed LWC's mark geographically descriptive, and the parties rightly do not contest the correctness of that determination, as it is not clearly erroneous, DeGidio v. West Group Corp., 355 F.3d 506, 511 (6th Cir.2004) ("Ordinarily, we review the district court's classification of a term as `descriptive' or `suggestive' under the clear error standard."). "Where it is determined that the mark as perceived by potential...