Miller Brewing Co. v. Falstaff Brewing Corp.

• Decision Date: 13 January 1981
• Docket Number: Civ. A. No. 80-0382.
• Citation: 503 F. Supp. 896
• Parties: MILLER BREWING COMPANY v. FALSTAFF BREWING CORPORATION (a Rhode Island corporation) and Falstaff Brewing Corporation (a Delaware Corporation).
• Court: U.S. District Court — District of Rhode Island

503 F. Supp. 896

MILLER BREWING COMPANY v. FALSTAFF BREWING CORPORATION (a Rhode Island corporation) and Falstaff Brewing Corporation (a Delaware Corporation).

Civ. A. No. 80-0382.

United States District Court, D. Rhode Island.

October 29, 1980.

On Motion for Stay January 13, 1981.

COPYRIGHT MATERIAL OMITTED

Edwin Hastings, and Edward J. Regan, of Tillinghast, Collins & Graham, Providence, R.I., Anthony Fletcher, of Conboy, Hewitt, O'Brien & Boardman, New York City, for plaintiff.

David A. Schechter, Providence, R.I., Steven J. Cannata, of Alioto & Alioto, San Francisco, Cal., for defendant.

OPINION AND ORDER

PETTINE, Chief Judge.

This is an action brought by the Miller Brewing Company for unfair competition and false designation of origin, pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and for trademark dilution under Rhode Island law, R.I.G.L. § 6-2-12. Since 1972, Miller has brewed and marketed a reduced calorie beer called LITE. Miller is seeking a preliminary injunction to prevent Falstaff Brewing Corporation from using the symbol "Lite" in connection with its sale of a similar beer product. Jurisdiction exists under 15 U.S.C. § 1121 and 28 U.S.C. § 1338(a) for the federal claims, under 28 U.S.C. § 1338(b) for the related state claims, and under 28 U.S.C. § 1332(a) for all claims because the corporate parties are citizens of different states.

Factual Setting

The rather sparse record in these preliminary injunction proceedings consists of several affidavits and exhibits. The pertinent background facts, which are not in dispute, are as follows.

Miller, a Wisconsin corporation, is the nation's second largest brewer and seller of beer, distributing several brands on a nationwide basis. In 1972, Miller acquired Meister Brau, Inc., a bankrupt Chicago-based brewer, including all rights to existing brands of beer marketed by Meister Brau. One of these brands was LITE, a reduced calorie beer which Meister Brau had introduced, with only moderate success, in 1967. Miller continued the LITE brand, while spending a year reformulating its recipe, packaging, and advertising. The new label Miller adopted (which remains substantially unchanged today) featured the word LITE in large, dark blue letters on a white background; LITE was the most prominent symbol on the label, with the name "Miller" appearing in fairly tiny letters on the side of the can. See Appendix A.

In 1973, Miller began to test market the reformulated LITE in four regions, including Rhode Island, accompanied by intensive advertising. Sales of LITE exceeded 100,000 barrels in 1973, which was more than double the 1972 figure. Miller added over a dozen test markets in 1974; in that year, sales exceeded 440,000 barrels and advertising expenditures exceeded $4 million. Finally, in 1975, LITE was introduced nationwide, advertising costs tripled to $12 million, and sales topped 2.5 million barrels. Sine 1975, sales of Miller LITE have increased steadily, reaching 10.5 million barrels in 1979. Miller has continued its heavy advertising campaign; it spent $27 million in 1979, primarily on commercials during televised sports events.

Although Miller's LITE was the first reduced calorie beer to be sold by a national brewery on a nationwide basis, a few small breweries had marketed similar beers in various locales prior to 1975. The success of LITE brought an avalanche of competition. In late 1975, Jos. Schlitz Brewing Company, one of the nation's largest breweries, introduced a reduced calorie beer called "Schlitz Light Beer." The appearance of numerous regional brands followed quickly, and in 1977 the world's largest brewer, Anheuser-Busch, introduced its "Natural Light" beer. Today, major national and regional brewers make and promote somewhere between two and three dozen brands of reduced calorie beers, many of them denominated "light."

Since Miller began to test market LITE in 1973, no brewery other than Falstaff has attempted to use the symbol "lite" to identify its brand of reduced calorie beer (with three insignificant exceptions, all of which are currently the subject of actual or threatened litigation by Miller).¹ After the filing of this action, but possibly before service of the complaint, Falstaff shipped over 27,000 cases of reduced calorie beer in containers bearing the label "Falstaff Lite" to various cities in fourteen states. All shipments were halted by a temporary restraining order issued by this Court on October 7, 1980.

Falstaff is a Delaware corporation that brews and markets a variety of beers in sixteen states. After deciding to add a lower calorie beer to its product line, and possibly anticipating litigation, Falstaff procured regulatory approval for several different labels to use in connection with the new brand.² Two of these labels are identical in all material respects but one. Beneath the word "Falstaff" both display a light blue shield, similar in configuration to that used on the regular Falstaff label, inside of which is printed in white letters the dominant word on the label. On one label the word is "Light," on the other, "Lite." See Appendices B & C. Sometime before July 31, 1980, Falstaff began to brew its reduced calorie beer, bottling at least some of it in containers bearing the "Lite" label. Soon after shipment of Falstaff Lite commenced, it was stopped by my order.

Previous Litigation

The emergence of reduced calorie beers competing with Miller's LITE was accompanied by considerable litigation. In at least four prior actions, Miller has sought to prevent other brewers from using the word "light" in marketing their brands of lower calorie beer. This case is the first to involve a competitor's attempted use of the symbol "lite," and so it would appear distinguishable on its facts from the cases that have gone before. However, the preceding cases took a broad approach to the legal issues raised by use of the symbols "light" and "lite." Therefore, a review of those cases is necessary to complete the background of the present litigation and to identify potential sources of collateral estoppel.

When Miller acquired Meister Brau in 1972, one of the assets it obtained was the trademark LITE, which had been registered on the principal register of the U.S. Patent Office in 1969. See 15 U.S.C. § 1052; Miller Brewing Co. v. G. Heileman Brewing Co., Inc., 427 F.Supp. 1192, 1195-96 (W.D. Wis.1977). Shortly after competing brands of reduced calorie beer started to appear on the market in 1975, Miller began to file trademark infringements actions to enjoin use of the word "light" in connection with sale of this type of beer. Several such actions were pending in November, 1975 when Miller sought a preliminary injunction against the Heileman Brewing Co. Heileman had test-marketed a reduced calorie beer bearing a label on which "LIGHT" was by far the most prominent word. The district court found that LITE was a suggestive term for lower calorie beer, and that the symbol therefore constituted a valid trademark. In the alternative, the court found that if LITE were descriptive rather than suggestive, Miller "has provided fairly persuasive evidence" that the symbol had acquired secondary meaning which merited protection.³ Miller Brewing Co. v. G. Heileman Brewing Co., Inc., 427 F.Supp. at 1199-1201. Accordingly, the court issued an injunction. On appeal, the Seventh Circuit reversed. 561 F.2d 75 (7th Cir. 1977), cert. denied, 434 U.S. 1025, 98 S.Ct. 751, 54 L.Ed.2d 772 (1978). Looking solely to definitions of "light" in dictionaries and other reference works and ignoring the evidence of public understanding of the symbol LITE that the trial court had found persuasive, the Court of Appeals concluded:

The word "light," including its phonetic equivalent "lite," being a generic or common descriptive term as applied to beer, could not be exclusively appropriated by Miller as a trademark "despite whatever promotional effort Miller may have expended to exploit it."

Id. at 81 (emphasis supplied), quoting Henry Heide, Inc. v. George Ziegler Co., 354 F.2d 574, 576 (7th Cir. 1965).

Strictly speaking, the italicized language was probably unnecessary to the court's decision, for the only symbol allegedly misused was "light." Any doubts about the scope of the Heileman holding were, however, soon resolved. Concurrently with the Heileman litigation, Miller was attempting to enjoin Schlitz' use of the words "Schlitz Light Beer" on its new lower calorie beer product. Miller's amended complaint in that action alleged not only trademark infringement but also a § 43(a) claim that Schlitz was "palming off" its product as Miller's. After the Seventh Circuit's decision in Heileman, Schlitz moved for summary judgment on the basis of collateral estoppel. The district court granted the motion as to both the trademark and the § 43(a) claims. In addition, the court ordered the cancellation of Miller's registration of the mark LITE.⁴Miller Brewing Co. v. Jos. Schlitz Brewing Co., 449 F.Supp. 852 (E.D. Wis.1978). The Seventh Circuit affirmed in part, stating:

For purposes of the law of collateral estoppel, the Heileman decision was a final determination that "LITE" is generic and therefore not entitled to trademark protection .... The district court did not err in ordering the registrations cancelled.

605 F.2d 990, 996-97 (7th Cir. 1979), cert. denied, 444 U.S. 1102, 100 S.Ct. 1067, 62 L.Ed.2d 787 (1980).

With respect to Miller's unfair competition claim, however, the Court of Appeals vacated the district court's entry of summary judgment. It reasoned:

The absence of trademark protection does not mean that Miller must submit to a competitor's palming off its product as the product of Miller. The difficulty of its palming off claim, as presently alleged, is that it is based upon the same facts as the trademark infringement claims.

Id. at 997.

The court remanded the case to permit Miller to further amend its complaint "to state an unfair...