Roederer v. CarriÓn, Civil No. 06-213 (JNE/SRN)

• Decision Date: 10 August 2010
• Docket Number: Civil No. 06-213 (JNE/SRN)
• Parties: Champagne Louis ROEDERER, Plaintiff, v. J. GARCIA CARRIÓN, S.A., and CIV USA, Defendants.
• Court: U.S. District Court — District of Minnesota

732 F.Supp.2d 836

Champagne Louis ROEDERER, Plaintiff,

v.J. GARCIA CARRIÓN, S.A., and CIV USA, Defendants.

Civil No. 06-213 (JNE/SRN).

United States District Court,

D. Minnesota.

Aug. 10, 2010.

Allen W. Hinderaker, Esq., John A. Clifford, Esq., and Heather J. Kliebenstein, Esq., Merchant & Gould P.C., appeared for Plaintiff Champagne Louis Roederer.

Peter J. Gleekel, Esq., Michael T. Olsen, Esq., and Bradley J. Walz, Esq., Winthrop & Weinstine, P.A., appeared for DefendantsJ. Garcia Carrión, S.A., and CIV USA.

NON-CONFIDENTIAL FINDINGS OF FACT AND NON-CONFIDENTIAL CONCLUSIONS OF LAW

JOAN N. ERICKSEN, District Judge.

This matter came before the Court for trial starting on February 10, 2010, and ending on February 24, 2010, to determine whether use of the name CRISTALINO on cava produced by J. Garcia Carrión, S.A., (Carrión) and imported by CIV USA, infringes or dilutes the CRISTAL trademarks of Champagne Louis Roederer (Roederer).¹ Based on the evidence received at trial, the Court makes the following Non-Confidential Findings of Fact and Non-Confidential Conclusions of Law.²

NON-CONFIDENTIAL FINDINGS OF FACT

I. Sparkling wine

1. Still wine, or wine without bubbles, is made by a fermentation process that converts grape sugar into alcohol and carbon dioxide. The carbon dioxide in still wine is released by the wine producer after fermentation.

2. Sparkling wine, or wine with bubbles, is made using a second fermentation process that converts still wine into sparkling wine. According to the traditional method, also known as the "Method Champenoise" or "champagne method," the second fermentation occurs in the bottle in which the sparkling wine is sold. The carbon dioxide is trapped in the bottle, dissolves into the wine, and escapes as bubbles when the sparkling wine is released from the bottle. According to the alternative "bulk" or "Charmat" method, the second fermentation takes place in a large tank or vat. After the second fermentation is complete, the contents of the tank are pumped into bottles for sale. The traditional method of producing sparkling wine results in higher-quality wine than the Charmat method.

3. Champagne and cava are both sparkling wines. When used properly, the term "champagne" denotes a sparkling wine made according to the traditional method from grapes grown in the Champagne region of France. A vintage champagne is made from grapes of the same year's harvest. A non-vintage champagne is made from grapes of different years' harvests. The term "cava" denotes a sparkling wine made in the Catalonia region of Spain.

II. The U.S. sparkling wine market

4. The United States has a three-tier distribution system for alcohol, including wine. According to this system, a foreign wine producer sells wine to an importer. The importer then sells the wine to retailers, which are typically hotels, restaurants, and liquor stores. The retailers sell the wine to the consumer. Each tier sets its own price for the wine. Wine producers are prohibited by law from communicating directly with or selling directly to consumers, but an importer may communicate with its distribution network, including retailers.

5. The size of the U.S. sparkling wine market was relatively constant between 1995 and 2006. With the exception of 1999, sparkling wine consumption between 1995 and 2006 varied between 11.8 and 13.3 million cases. In 1999, sparkling wine consumption increased to 15.7 million cases due to the millennium celebration. The sparkling wine market peaks in May, June, November, and December because large numbers of celebratory events, including graduations, weddings, and holidays, occur during those months.

6. Most consumers who purchase wine, including sparkling wine, in liquor stores have only a cursory knowledge of wine. Despite the efforts of champagne producers to educate consumers about the differences between champagne and other sparkling wines, consumers continue to receive mixed messages about the meaning of "champagne" because some sparkling wines made outside the Champagne region of France identify themselves as "champagne." Consequently, many consumers do not distinguish between champagne and other sparkling wines.

7. Consumers generally enter liquor stores with a price point and type of wine in mind. It is unusual for a consumer to purchase a wine at a price significantly different from the original price point. When inexperienced consumers purchase a more-expensive product, they educate themselves about the product by asking the retailers questions. Consumers who purchase less-expensive bottles of wine ask fewer questions, although some will ask for guidance or discuss the wine regardless of price.

8. Many consumers purchase sparkling wine at different price points depending on the reason for the purchase. Consumers commonly purchase a less-expensive sparkling wine for large gatherings and a more-expensive sparkling wine for special occasions such as anniversaries, weddings, birthdays, and New Year's Eve. In addition, consumers purchasing sparkling wine for a wedding reception may economize by purchasing a more-expensive sparkling wine for the wedding party and a less-expensive sparkling wine for the guests.

9. When purchasing wine in liquor stores, consumers are often hurried and make impulse purchases. They look for a wine they are familiar with based on prior consumption, advertising, newspaper or magazine articles, or word-of-mouth. Consumers rely on several cues when selecting a wine, including the name of the wine, the color of and fonts used on the labels, and the shape of the bottles.

10. Because consumers rely on labels, it is a common practice for a prestigious French winery to inform consumers of an affiliation or association between a less-expensive product and the winery by including the winery's name or a portion of it on the front label of the less-expensive product. Moet & Chandon, which produces DOM PERIGNON champagne, labels its California sparkling wines with the name "CHANDON." G.H. Mumm, which also produces a high-quality champagne, labels its California sparkling wines with "MUMM NAPA." Chateau Mouton-Rothschild, which produces a Bordeaux wine that sells for approximately $200 a bottle, labels its less-expensive wines MOUTON-CADET. The similarity in the names informs consumers of the connection between the less-expensive product and the French winery.

11. The vast majority of sparkling wine is sold in green bottles that have concave bases. The front labels on most bottles of sparkling wine do not have gold as the background color.³ Rather, the backgroundcolor can be one of any number of colors, including white, cream, black, yellow, red, brown, and blue. Many front labels include a distinguishing feature, such as a ribbon, stripe, or picture, in a contrasting color. Most front labels prominently display the winery's name. It is common for rosé sparkling wines to have a pink front label, and a few rosé sparkling wines have a pink-hued copper front label. Gold neck labels with a medallion on the front of the label are extremely common in the sparkling wine market, and many of the neck labels extend downwardly to accommodate the medallion. The medallions vary from an elaborate shield or crest to a circle identifying the winery or the sweetness of the sparkling wine. It is common for the neck labels to have a stripe or ribbon in a different color at the base. "Shoulder labels," or labels located between the front and neck labels, are rare.

III. The parties and their products

A. Champagne Louis Roederer

12. Roederer is a French company headquartered in Reims, which is in the Champagne region of France. Roederer is a family-owned business that was founded in 1776 by Nicolas Henri Schreider, the uncle of Louis Roederer. Louis Roederer took ownership of the company in 1826, at which time the company's name changed to Champagne Louis Roederer. Jean-Claude Rouzaud, a member of the Roederer family, is the president of Roederer's board of directors and its former chief executive officer. Members of the Roederer family make up the remainder of the board. In January 2006, Frederic Rouzaud, Jean-Claude Rouzaud's son, became the chief executive officer and general manager of Roederer. Roederer employs between 140 and 150 people on a year-round basis and an additional 600 people during the two-week harvest season.

13. Roederer owns a winery located in Reims where it produces vintage champagnes under the names CRISTAL and CRISTAL ROSÉ. CRISTAL champagne was first produced in 1876 at the request of Tsar Alexander II of Russia. According to Roederer tradition, the champagne was named "CRISTAL" because it was sent to Tsar Alexander II in crystal bottles.

14. The size of Roederer's vineyards and the quality of each year's grape harvest limits Roederer's production of CRISTAL champagne. Roederer only uses grapes from its own vineyards, and if the grapes in a year's harvest are below the standard required for CRISTAL champagne, Roederer does not produce CRISTAL champagne that year. The quality of CRISTAL champagne is enhanced by various wine-making practices, including harvesting the grapes by hand and aging the wine for six years in oak casks.

15. * * *. In 1995, Roederer sold * * * bottles of CRISTAL champagne in the United States. Roederer sold * * * bottles and * * * bottles in the United States in 2000 and 2004, respectively. With the exception of 2009, the demand for CRISTAL champagne has always exceeded its supply. An economic downturn caused the decreased demand for CRISTAL champagne in 2009. 16. Liquor stores typically sell CRISTAL champagne for between $200 and $280 per bottle. Restaurants, hotels, and nightclubs generally sell CRISTAL champagne for between $300 and $700 per bottle.

17. Roederer produces other champagnes, including BRUT PREMIER, BRUT VINTAGE, ROSÉ VINTAGE, and BLANC DE BLANCS champagne. CRISTAL and BRUT PREMIER champagne make up about 20% and 75% of Roederer's champagne production,...