Sazerac Co. v. Fetzer Vineyards, Inc., Case No. 3:15-cv-04618-WHO.

• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
• Citation: 251 F.Supp.3d 1288
• Docket Number: Case No. 3:15-cv-04618-WHO.
• Parties: SAZERAC COMPANY, INC., et al., Plaintiffs, v. FETZER VINEYARDS, INC., Defendant.
• Decision Date: 27 April 2017

251 F.Supp.3d 1288

SAZERAC COMPANY, INC., et al., Plaintiffs,
v.
FETZER VINEYARDS, INC., Defendant.

Case No. 3:15-cv-04618-WHO.

United States District Court, N.D. California.

Signed April 27, 2017

Thomas Michael David Hadid, Cooley LLP, Palo Alto, CA, Peter Joel Willsey, Shane Michael Rumbaugh, Vincent J. Badolato, Cooley LLP, Washington, DC, for Plaintiffs.

Steven Rob Disharoon, Anoush Cyrus Holaday, Edward D. Baldwin, Esq, Wood Smith Henning and Berman LLP, Concord, CA, Robert C. Holtzapple, Farella Braun & Martel LLP, San Francisco, CA, for Defendant.

ORDER ON FETZER'S MOTION FOR SUMMARY JUDGMENT

William H. Orrick, United States District Judge

INTRODUCTION

Plaintiffs Sazarac Company, Inc. and Sazarac Brands, LLC (collectively, "Sazerac") brought this action for federal trademark and trade dress infringement and unfair competition against Fetzer Vineyards, Inc. ("Fetzer"). Sazerac alleges that Fetzer's 1000 Stories Zinfandel buffalo mark and trade dress infringe its BUFFALO TRACE word mark, Buffalo Logos, and trade dress for its BUFFALO TRACE bourbon whiskey. Fetzer moves for summary judgment on all of Sazerac's claims, on the grounds that they are necessarily predicated on Sazerac asserting rights over the generic term "bourbon," which it cannot do, and because Sazerac has failed to demonstrate a likelihood of confusion. But Fetzer mischaracterizes Sazerac's claims and overlooks its evidence. Sazerac has demonstrated a triable issue whether consumers are likely to be confused by Fetzer's buffalo and trade dress on its 1000 Stories Zinfandel. But because Sazerac failed to disclose properly how it would prove any monetary damages,

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it is not entitled to recover them. Fetzer's motion for summary judgment is GRANTED concerning Sazerac's ability to recover monetary damages and its infringement claims for six of the trademarks. Fetzer's motion is DENIED regarding the other two marks and the trade dress.

BACKGROUND

I. FACTUAL BACKGROUND¹

A. Sazerac's Buffalo Trace Brand

Sazerac owns the Kentucky-based Buffalo Trace Distillery, "the oldest continuously operating distillery in the United States." Sazerac's Response to Interrogatories at 4:2–3 (Hadid Decl. Ex. A; Dkt. No. 76–2). The Distillery is a national historical landmark listed with the United States National Park Service. Id. In 1999, Sazerac adopted the Buffalo Trace name and introduced its BUFFALO TRACE brand bourbon whiskey. Id. at 3:23–25. The distillery and whiskey have received over 50 awards, including Distiller and Distillery of the Year, and Best Straight Bourbon and Double Gold Medal awards. Sazerac Business Record (Hadid Confidential Decl. Ex. L; Dkt. No. 70–7[placeholder]; Dkt. No. 70–8[under seal] ). Sazerac "capitalized on BUFFALO TRACE's accolades," Opp'n at 4, by investing in advertising, and sales of the whiskey grew from 16,000 cases in 2006 to over 3 million bottles in 2016. Comstock Dep. at 134:22–24; 427:19–22 (Hadid Confidential Decl. Ex. V; Dkt. No. 72–4[redacted]; Dkt. No. 72–5[under seal] ).

Sazerac has registered eight federal trademarks related to the BUFFALO TRACE Trade Dress and Buffalo Logos:

• Buffalo Logo, U.S. Reg. No. 2,601,650, issued July 30, 2002, for "bourbon" and related marketing goods;

• Buffalo Outline Logo, U.S. Reg. No. 2,516,318, issued December 11, 2001, for related marketing goods;

• Buffalo Ripped Label Design, U.S. Reg. No. 2,476,423, issued August 7, 2001, for "bourbon";

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• BUFFALO TRACE And Design, U.S. Reg. No. 2,622,735, issued September 24, 2002, for "bourbon" and related marketing goods;

• BUFFALO TRACE, U.S. Reg. No. 2,294,792, issued November 23, 1999, for "bourbon";

• BUFFALO TRACE, U.S. Reg. No. 4,859,200, issued November 24, 2015, for "distilled spirits;"

• BUFFALO TRACE DISTILLERY WHITE DOG, U.S. Reg. No. 3,835,562, issued August 17, 2010, for "whiskey;" and

• WHITE BUFFALO, U.S. Reg. No. 4,215,557, issued September 25, 2012, for "vodka."

See Registrations (Hadid Decl. Ex. C; Dkt. No. 76–4). It licenses use of the Buffalo Trace trademarks on products such as barrel heads, candles, and candies. Comstock Dep. at 196:13–16; see also Wyant Dep. at 188:19–22; 191:16–23 (Confidential Hadid Decl. Ex. W; Dkt. No. 72–6[redacted]; Dkt. No. 72–7[under seal] ); Licensing and Coexistence Agreements (Confidential Hadid Decl. Exs. R, S, T, U; Dkt. Nos. 71–10, 71–12, 72–1, 72–3[all under seal] ).

B. Fetzer's 1000 Stories Wine

In 2011, Fetzer's Chief Executive Officer, Giancarlo Bianchetti, arrived in the United States and noticed a trend of American pride that he labeled "Americana." Bianchetti Dep. at 22:10–17 (Disharoon Decl. Ex. C; Dkt. No. 63–6). He also saw an opportunity for a wine brand specifically targeting men. Id. at 22:2–3. In late 2013, he read a Smithsonian Magazine article entitled "101 Objects that Made America," one of which was the buffalo, and thought the image embodied the concepts of the "male trend" and "Americana" swelling in the country. Id. at 22:23–23:8; 25:15–27:3; see also Affinity Creative Group Document (Confidential Hadid Decl. Ex. VV; Dkt. No. 75–13[under seal] ). He decided it was the "perfect icon" for a new wine brand. Bianchetti Dep. at 28:16–24. He says that he had not heard of Sazerac or its Buffalo Trace Bourbon Whiskey until after the lawsuit. Id. at 21:2–16.

As Fetzer proceeded with plans for its new wine brand, Rodrigo Maturana, vice-president of marketing, sought inspiration from other products tapping into the "All–American" spirit. Maturana Dep. at 37:25; 55:8–10; 56:20–21 (Disharoon Decl. Ex. D; Dkt. No. 63–7). He does not recall specifically looking at beverage products, and he denies pre-lawsuit knowledge of Sazerac and its Buffalo Trace whiskey. Id. at 56:16–21, 156:24–157:6. Fetzer retained Affinity Creative Group to assist in the brand development and design. Id. at 59:4–17. The marketing team eventually settled on the name "1000 Stories," which derived from playwright David Mamet's depiction of the American buffalo, symbol of the West, telling a thousand stories, "whether roaming free or stuffed." Id. at 93:23–95:11.

The team decided that the 1000 Stories brand was going to target the same demographic as the American bourbon consumer because that aligned with the intended all-American, male-oriented concept.² Id. at 121:23–122:1; see also id. at 134:15–23 (Confidential Hadid Decl. Ex. X; Dkt. No. 72–9[under seal] ); "1000 Stories Shoot" Email (Id. Ex. Z; Dkt. No. 72–13[under seal] ). It decided to age the wine in bourbon barrels to aid in targeting male consumers.³ It chose to prominently include

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the text "Bourbon Barrel Aged" on the label, in part to differentiate it on the market. Devries Dep. at 77:3–78:4 (Disharoon Decl. Ex. F; Dkt. No. 63–9); Rice Dep. at 93:4–12 (Hadid Decl. Ex. XX; Dkt. No. 76–14); see also Fetzer Marketing Document (Confidential Hadid Decl. Ex. EE; Dkt. No. 73–9); Marketing Email (Confidential Hadid Decl. Ex. WW; Dkt. No. 75–15[under seal] ); 2016 Go to Market Plan (Confidential Hadid Decl. Ex. DD; Dkt. No. 73–7[under seal] ). Its marketing materials note that the wine is aged in "old bourbon barrels from famed distilleries such as Heaven Hill and Four Roses." Fetzer Marketing Document (Confidential Hadid Decl. Ex. EE; Dkt. No. 73–9). And it advertised its 1000 Stories wine in bourbon-focused magazines, including Whiskey Advocate and Bourbon review, and promoted the product at events aimed at bourbon drinkers. E.g. , Whiskey Advocate, Fall 2015 edition (Hadid Decl. Ex. D; Dkt. No. 76–5); Bourbon Review (Id. Ex. E; Dkt. No. 76–6); see also Bourbon Classic Sponsor Ticket Form (Confidential Decl. Ex. FF; Dkt. No. 73–11[under seal] ); Email Exchange Re: Bourbon Classic (Id. Ex. GG; Dkt. No. 73–13[under seal] ); Email Exchange Re: Bourbon Review Ad (Id. Ex. HH; Dkt. No. 74–1[under seal] ); Email Exchange Re: Whiskey Advocate (Confidential Hadid Decl. Ex. II; Dkt. No. 74–3[under seal] ). In its internal documents, it mentions a goal to target Sazerac's consumers in particular. Fetzer Innovations PP (Confidential Hadid Decl. Ex. KK; Dkt. No. 74–7[under seal] ). It even proposed a sangria recipe combining its 1000 Stories wine with Sazerac's Buffalo Trace Bourbon. Email Exchange (Confidential Hadid Decl. Ex. MM; Dkt. No. 74–11[under seal] ).

C. Expert Reports

Sazerac hired a market research firm to "design and conduct a study that would measure the extent, if any, to which Fetzer's use of the buffalo design trade dress in connection with red zinfandel wine is or is not likely to cause confusion among prospective purchasers of red zinfandel wine." Johnson Survey ¶ 5 (Hadid Decl. Ex. H; Dkt. No. 76–9). According to the Johnson Survey, 46 percent of respondents believed that the 1000 Stories red zinfandel came from the same company or had a business relationship with the company that makes Buffalo Trace. Johnson Survey ¶¶ 30–31, 33–34.⁴

Sazerac also submitted an expert report from alcoholic beverage industry expert C. Drew DeSarno, who offered the opinion that "beverage-alcohol companies regularly capitalize upon and...