Perfect Pearl Co. v. Majestic Pearl & Stone, Inc.

• Decision Date: 14 August 2012
• Docket Number: No. 10 Civ. 3998(PAE).,10 Civ. 3998(PAE).
• Citation: 887 F.Supp.2d 519
• Parties: PERFECT PEARL CO., INC. d/b/a Majestic Pearl Co., Plaintiff, v. MAJESTIC PEARL & STONE, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

887 F.Supp.2d 519

PERFECT PEARL CO., INC. d/b/a Majestic Pearl Co., Plaintiff,

v.MAJESTIC PEARL & STONE, INC., Defendant.

No. 10 Civ. 3998(PAE).

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

Aug. 14, 2012.

Anthony F. Lo Cicero, Holly Pekowsky, Amster, Rothstein & Ebenstein LLC, New York, NY, for Plaintiff.

Panagiota Betty Tufariello, Law Offices of P.B. Tufariello, P.C., Selden, NY, for Defendant.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

Plaintiff Perfect Pearl Co. (“Perfect”) brings claims of unfair competition and false advertising against defendant Majestic Pearl & Stone, Inc. (“Majestic”), under the Lanham Act, 15 U.S.C. § 1051 et seq., and New York common law. It alleges that Majestic has infringed on its exclusive right to use the trademarks MAJESTIC and MAJESTIC PEARL (the “MAJESTIC marks” or the “marks”). Majestic has counterclaimed, asserting that it is the rightful owner of the MAJESTIC marks and that Perfect has infringed on its trademark rights.

Both parties now move for summary judgment on their respective claims. For the reasons that follow, Perfect's motion is, in substantial part, granted: The Court finds that Perfect, having been the first to use the MAJESTIC marks in the area of pearl jewelry, has the exclusive right to use those marks in connection with pearl jewelry, although not in connection with other products, including pearl beads and loose pearls, which represent the vast majority of Majestic's business. Majestic's motion for summary judgment is denied in its entirety. Perfect also moves to strike that portion of Majestic's reply memorandum of law asserting an affirmative defense of laches. That motion is denied without prejudice as moot.

I. Background¹

Perfect Pearl is a manufacturer of pearl jewelry sold under the name “Majestic.” Majestic Pearl is a wholesale retailer of pearl beads as well as pearl jewelry, products it also sells under the name “Majestic.” Historically, both parties have largely been business-to-business operations: Rather than selling their products directly to consumers, they have sold to retailers and designers, who in turn sell them (often rebranded) to consumers. In recent years, however, Perfect has begun to sell directly to consumers through the television shopping channel QVC and its website, www. QVC. com. This lawsuit ensued when the parties learned of each other's use of the word “majestic” in connection with marketing and selling pearl jewelry. Each party argues that it is entitled to exclusive use of the marks at issue, MAJESTIC and MAJESTIC PEARL, and that the other must be enjoined from using them.

A. Perfect's Use of the Marks

Perfect was established in 1955 by brothers Joseph and Albert Spitzer. Perfect 56.1 ¶ 1. In 1965, Perfect obtained a certificate of “doing business as” Majestic Pearl Company.² A. Spitzer Deck ¶ 7. Since then, Perfect has used the name Majestic Pearl Company as a business name. In January 1993, the company leased a showroom in New York under the name Majestic Pearl Company. Id. Ex. B. Since at least 1986, company employees have identified themselves to customers as representing “Majestic Pearl.” Perfect 56.1 ¶ 25. Perfect also uses the name Majestic Pearl on catalogs that it sends to consumers. Id. ¶ 23.

Also in 1965, Perfect began to sell a line of jewelry under the name “majestic.” ³Id. ¶ 2. This line of jewelry bears the MAJESTIC marks on the tags which are affixed to the items, id. ¶ 11; Perfect represents that jewelry such as necklaces, bracelets, and earrings have always been sold with hanging tags or on cards that have “Majestic” in stylized lettering on the front, id. ¶¶ 13–19. In support of this claim, Perfect has adduced evidence that on June 21, August 19, and December 14, 1994, Perfect placed orders with the First Card Company for earring cards bearing the MAJESTIC marks. Edelstein Deck Ex. A. The total number of cards ordered in 1994 was 18,000. Id. Current and former Perfect employees Donna Bova, Angela Grogan, Albert Spitzer, Eli Spitzer, and Mark Wachs, state in their respective declarations that the tags and cards used on the company's jewelry have always looked similar to the ones currently used. See Bova Decl. ¶¶ 5–6; Grogan Decl. ¶¶ 10, 12; A. Spitzer Decl. ¶¶ 1112; E. Spitzer Decl. ¶¶ 89; Wachs Decl. ¶¶ 9–10. Collectively, these statements cover the period from 1965 to 1996. Perfect has submitted photos of the current versions of these jewelry tags and cards which are white with MAJESTIC in black letters. A. Spitzer Decl. Exs. C & D. There is, however, no direct evidence in the record as to what the tags and cards looked like before 1996.

Perfect sells its jewelry primarily to women's clothing and accessory retailers, although it also sells directly to customers through QVC and its website, www. QVC. com. Perfect 56.1 ¶ 3; see also Majestic 56.1 ¶ IV(D)(1)-(6). Certain retailers sell Perfect's jewelry through a “private label”—in this situation, the jewelry is not sold with the MAJESTIC marks and is instead sold with the retail store's own logo or mark. Perfect 56.1 ¶¶ 3031. There are, however, a number of retailers who sell Perfect's jewelry with the MAJESTIC marks present on the tags and cards.⁴ One such retailer is the chain store Petite Sophisticate. Id. ¶ 32. Barbara Kraselsky, a buyer for Petite Sophisticate from 1987 to 1992, attested that the store sold Perfect's jewelry and that “[t]he earrings came on MAJESTIC earring cards and the necklaces were featured with MAJESTIC string tags.” Kraselsky Decl. ¶ 6. “That,” she added, “was the way we displayed them to the customers.” Id. Perfect's records show that the Majestic line of jewelry generated more than $1 million in revenue each year between 1988 and 2010. Perfect 56.1 ¶ 51. The sales data does not, however, indicate how much of that revenue is attributable to goods sold with the MAJESTIC marks as opposed to those sold under a private label.

Perfect's business model has remained fundamentally the same up to the present. The company continues to sell its Majestic line of jewelry with the MAJESTIC marks affixed to it by the necklace tags and earring cards. The jewelry is still sold to national women's clothing and accessories retailers as well as directly to consumers through QVC. Accordingly, Perfect's use of the marks before Majestic's entry into the market may fairly be described as limited to (1) selling pearl jewelry; (2) to national clothing and accessories retailers; (3) including tags bearing the MAJESTIC marks; and (4) from a showroom in New York City.

B. Majestic's Use of the Marks

Majestic was established in Hong Kong in 1980 by Chu Sing Wang; it began selling jewelry in the United States in 1996.⁵ Majestic 56.1 ¶ 1(A). It is incorporated in New York and maintains an office in Manhattan. Id. Majestic primarily sells wholesale freshwater pearl beads to bead shops, jewelry manufacturers, and designers. Id. ¶¶ I(P)-(R). The company also sells pearl jewelry, although this accounts for only a small portion of Majestic's business. Connie Wang, Majestic's Chief Financial Officer, testified that jewelry accounted for only about 5% of Majestic's overall business. C. Wang Dep. 40.

Majestic first used the MAJESTIC marks in commerce in 1996 when it began to sell its products in the United States. Majestic 56.1 ¶ IV(A)(1). The company uses the marks in various formats. Majestic's pearl beads are sold to customers in bags that bear the MAJESTIC marks. J. Wang. Dep. 57. The marks also appear on a sticker that is used to seal the bags when the pearls are shipped to customers. C. Wang Dep. 46–47. Additionally, the MAJESTIC marks appear on the tags affixed to all the jewelry sold by Majestic, as well as on the bags or boxes in which the jewelry is packaged. J. Wang Dep. 55.

Majestic advertises its products using the MAJESTIC marks in trade publications, at trade shows, and on its website. Majestic 56.1 ¶ IV(A)(3). According to Majestic's business records, it has spent $2,324,406.47 on advertising in connection with the MAJESTIC marks since 1996. Tufariello Support Aff. Exs. 17–25. A sizable portion of that spending is at the many trade shows which Majestic representatives attend each year, at which the company sells and markets its product to business consumers. Majestic 56.1 ¶¶ IV(A)(5)(6). At these shows, Majestic distributes promotional “giveaways” such as pens and pearl care guides which bear the MAJESTIC marks. J. Wang Dep. 46–47.

In 2001, Majestic obtained a registration with the Patent and Trademark Office (“PTO”) for the trademark MAJESTIC in connection with the sale of pearls. See Section I.C, infra. During the time in which Majestic had a valid registered trademark for MAJESTIC, it designed its promotional materials to include the registration symbol (“®”) next to the word “majestic.” After Majestic's registration lapsed in 2008, the company continued to use promotional materials with the ®. J. Wang Dep. 62–65. In October 2009, as a result of this litigation, Majestic learned that it no longer had a current registration for the mark and “stopped using [the ®] immediately.” C. Wang Dep. 116.

C. Prior Registrations of the Marks

On June 29, 2000, Majestic initiated proceedings in front of the PTO to register MAJESTIC in connection with the sale of freshwater pearls. Lo Cicero Decl. Ex. A. Majestic filed an “actual use” application, indicating that it was currently using the mark it was seeking to register and was not registering it for future use. Id. On February 28, 2001, the PTO issued a Notice of Publication and demanded that any opposition to the registration be filed by April 13, 2001. Id. On June 5, 2001, with no opposition having been filed, the registration was granted. Id. That registration was given U.S. Trademark Registration No. 2,457,367. Id. On March 8, 2008, Majestic's registration of the MAJESTIC mark lapsed following Majestic's failure to file the requisite paperwork demonstrating continued use of the...