Polo Fashions, Inc. v. Gordon Group

• Decision Date: 14 May 1985
• Docket Number: Civ. No. C-83-1291-D.
• Citation: 627 F. Supp. 878
• Court: U.S. District Court — Middle District of North Carolina
• Parties: POLO FASHIONS, INC., Plaintiff, v. The GORDON GROUP, Lionel Gordon, V.C. Matthews, Alley Boy Fashions, Inc., Defendants, V.C. Matthews Associates, Inc., Additional Defendant, and Allan Ackerman, Defendant and Third-Party Plaintiff, MS. MADAME McGRIFFIN, INC., Additional Defendant and Third-Party Plaintiff, v. Lionel GORDON, Third-Party Defendant.

627 F. Supp. 878

POLO FASHIONS, INC., Plaintiff, v. The GORDON GROUP, Lionel Gordon, V.C. Matthews, Alley Boy Fashions, Inc., Defendants, V.C. Matthews Associates, Inc., Additional Defendant, and Allan Ackerman, Defendant and Third-Party Plaintiff, MS. MADAME McGRIFFIN, INC., Additional Defendant and Third-Party Plaintiff, v. Lionel GORDON, Third-Party Defendant.

Civ. No. C-83-1291-D.

United States District Court, M.D. North Carolina, Durham Division.

May 14, 1985.

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Cynthia Leigh Wittmer, William C. Pappas, Charles C. Meeker, Raleigh, N.C., Morton Amster, Phillip H. Gottfried, New York City, for Polo Fashions, Inc.

J. William Blue, Jr., Chapel Hill, N.C., for the Gordon Group and Lionel Gordon.

David I. Smith, Burlington, N.C., for V.C. Matthews and V.C. Matthews Associates, Inc.

Thomas C. Manning, Raleigh, N.C., Jack B. Swerling, Columbia, S.C., for Allan Ackerman, Alley Boy Fashions, Inc., and Ms. Madame McGriffin, Inc.

MEMORANDUM OPINION

BULLOCK, District Judge.

This action for trademark infringement and unfair competition arises from the alleged introduction into commerce by Defendants of various items of clothing not manufactured by Plaintiff bearing embroidered emblems which are virtually indistinguishable from portions of Plaintiff's own registered trademarks. Plaintiff, Polo Fashions, Inc., instituted this action seeking injunctive relief and damages against Defendant Lionel Gordon, and has since amended its complaint to include the various other parties defendant. A preliminary injunction has been issued against Defendant Gordon, and the matter is now before the court on Plaintiff's motion for summary judgment on the issue of liability. The Defendants have responded to Plaintiff's motion, Plaintiff has submitted a reply brief to each of the Defendants' responses, and the matter is now ready to be ruled upon. For the reasons stated herein, Plaintiff's motion will be granted with respect to each claim for relief as to Defendants Lionel Gordon, V.C Matthews Associates, Inc., and V.C. Matthews, but will be denied as to Defendants Allan Ackerman, Ms. Madame McGriffin, Inc., and Alley Boy Fashions, Inc.

I. PARTIES TO THIS ACTION

A. Polo Fashions, Inc.

The Plaintiff, Polo Fashions, Inc., is a well-known fashion house which, under the direction of its chairman, Ralph Lauren, styles, manufactures and sells, both directly and through related companies and licensees, diverse articles of men's and women's wearing apparel. Polo uses and owns the trademarks POLO, RALPH LAUREN, POLO BY RALPH LAUREN, and the fanciful representation of a polo player on a horse ("The Polo Player Symbol"), both individually and as composite trademarks including Ralph Lauren and the polo player symbol ("the Ralph Lauren Logo") which it adopted as early as 1967.¹ (The polo player symbol and the Ralph Lauren Logo trademarks are hereinafter collectively referred to as "the Polo trademarks.") Polo establishes and maintains quality and fashion standards for products and services identified by the Polo trademarks. The Polo trademarks have come to have a secondary meaning indicative of origin, relationship, sponsorship and/or association with Polo, and are among the most well-known in the fashion field, according to Defendants' own admissions. Products carrying the Polo trademarks are readily identifiable by members of the purchasing public with Polo.

Polo is the owner of several U.S. trademark registrations which are Polo trademarks, including U.S. Trademark Registration Nos. 984,005 of May 14, 1974, for the Ralph Lauren Logo for diverse items of apparel; and 1,050,722 of October 19, 1976, for the Ralph Lauren Logo for diverse items of women's apparel, among others. These registrations are all valid and subsisting.²

B. Defendant Lionel Gordon.

Defendant Lionel Gordon ("Gordon") first entered the business of selling embroidered sweaters and shirts in 1979, forming The Gordon Group, a North Carolina corporation, for this purpose. The Gordon Group was not very successful and was dissolved in June of 1981 (prior to the events giving rise to this case). Gordon continued in an individual capacity to buy sweaters, shirts, and other garments, have them embroidered, and distribute them for resale.

C. Defendants Allan Ackerman, Alley Boy Fashions, Inc., and Ms. Madame McGriffin, Inc.

Defendant Allan Ackerman ("Ackerman") is the president of Defendants Alley Boy Fashions, Inc., ("Alley Boy") and Ms. Madame McGriffin, Inc., ("McGriffin"). Alley Boy was incorporated in July 1980 and McGriffin was incorporated in March 1982. Ackerman Sales Corporation, of which Ackerman is the president, is the principal shareholder of Alley Boy and McGriffin. Ackerman makes all the decisions for all three corporations, Alley Boy, McGriffin, and Ackerman Sales. The business premises of Alley Boy and McGriffin are at the same location. While once a jobbing company,³ McGriffin is presently an inactive corporation that has one account receivable from money loaned to Alley Boy. (Defendants Ackerman, Alley Boy, and McGriffin are hereinafter collectively referred to as "Ackerman Defendants.")

The Ackerman Defendants began purchasing genuine Polo merchandise directly from Polo and from Polo's licensees in 1980. Ackerman purchased genuine Polo knit shirts, leather goods, suits, sportcoats, and sportswear from Polo and its licensees until January 1983, at which time Ackerman decided that Alley Boy was going to manufacture goods rather than operate as a jobber.

D. Defendants V. C. Matthews and V. C. Matthews Associates, Inc.

Defendant V.C. Matthews ("Matthews") is the president of Defendant V.C. Matthews Associates, Inc. ("Matthews Associates"). Matthews Associates was incorporated in North Carolina in January 1982. Matthews Associates brokers yarn, fabric, garments, machinery, and textile-related products.

II. FACTUAL BACKGROUND

A. The Present Action.

On December 16, 1983, Polo commenced this action, alleging that the sale by Defendant Gordon of garments embroidered with counterfeits and infringements of the Polo trademarks, including the polo player symbol trademark, constituted: (1) a violation of 15 U.S.C. § 1114(1), in that Defendant had infringed trademarks registered in the United States Patent and Trademark Office; (2) a violation of 15 U.S.C. § 1125(a), in that such sales involved the use in commerce of false designations of origin and false descriptions and representations; and (3) unfair competition under the common law.

At his deposition, Gordon identified the other Defendants in this action as having been involved in the embroidering or sale of garments bearing counterfeits and infringements of the Polo trademarks. Polo subsequently amended its complaint to include these Defendants. Defendants' answers essentially deny all the substantive allegations of Polo's amended complaint.

B. Defendants' Allegedly Infringing Activity.

There is no dispute in this case with respect to the fact that Gordon did have garments embroidered with a polo player virtually identical to the fanciful polo player symbol which forms a portion of several trademarks owned by Polo and registered with the United States Patent and Trademark Office. Nor do the parties dispute that in early 1982 Gordon shipped roughly 600 dozen shirts so embroidered to the Ackerman Defendants, or that approximately six weeks later most if not all⁴ of those shirts were shipped back to Gordon by Ackerman. Finally, there is no dispute that Gordon sold hundreds of the shirts returned to him by Ackerman to various purchasers; including 200 dozen to Defendant V.C. Matthews Associates, Inc., in Burlington, who in turn resold the shirts to Jamie Beene of Dallas, Texas, making $1,000.00 on the sale. Beyond this area of agreement, however, the facts and the conclusions to be drawn therefrom remain very much in dispute.

Gordon first had garments embroidered with a copy of Polo's polo player symbol in October of 1981. He purchased a number of sweaters from Pine State Knitting Mills in Mt. Airy, North Carolina, for about $12.00 each, and took them to Zodiac International Design, Inc., and Zodiac Originals, Inc., (collectively "Zodiac")⁵ to have them embroidered with different symbols. While Gordon was at Zodiac, he noticed that Zodiac was embroidering various goods with a polo player symbol. Gordon was aware that Zodiac embroidered the polo player symbol on merchandise for the Plaintiff, and he requested Zodiac officials to embroider his sweaters with the same symbol. Zodiac agreed and Gordon paid them between 30 and 50 cents to embroider each sweater (Gordon Dep., pp. 13-19, 21). Based on Gordon's deposition testimony and some additional calculations and assumptions of its own, Plaintiff contends that Gordon sold Ackerman approximately 400 sweaters and 12 dozen ties, all of which were embroidered with a copy of Polo's polo player symbol. Plaintiff alleges that Gordon received $15.00 each for the sweaters and $7.00 each for the ties. Despite admissions seemingly to the contrary,⁶ the Ackerman Defendants emphatically deny any purchase of ties or any other merchandise other than the 600 dozen knit shirts Gordon shipped to Ackerman.

According to Plaintiff, the Ackerman Defendants' transaction with Gordon involving the approximately 600 dozen embroidered shirts began early in 1982. At that time, Jasper Mills, a knitting mill, offered Gordon a large quantity of striped knit shirts that were left over from a sale to one of their customers. Gordon bought samples of these striped knit shirts, had them embroidered by Zodiac with a copy of Polo's polo player symbol and sent them to Ackerman as samples. Ackerman allegedly told Gordon that he would purchase all the shirts (embroidered with a copy of Polo's polo player symbol) Gordon could get his hands on. (Gordon Dep., pp. 32-33).

Plaintiff further contends that Gordon purchased well over 600 dozen of such...