Star Industries v. Bacardi & Company Ltd., Bacardi
| Decision Date | 22 June 2005 |
| Docket Number | Docket No. 04-1753-CV(CON).,Docket No. 04-0831-CV(L). |
| Parties | STAR INDUSTRIES, INC., Plaintiff-Appellant, v. BACARDI & COMPANY LIMITED, BACARDI U.S.A., and Anheuser-Busch, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Second Circuit |
Louis S. Ederer, Torys LLP (John Maltbie and Rosena Rasalingam, on the brief), New York, NY, for Plaintiff-Appellant.
William R. Golden, Kelley Drye & Warren LLP (Michelle M. Graham, Matthew D. Marcotte, Deborah L. Norman, and Martin Voke, on the brief), New York, NY, for Defendants-Appellees.
Plaintiff-appellant Star Industries appeals from a judgment for defendants-appellees, entered in the United States District Court for the Southern District of New York (Harold Baer, Jr., Judge), on January 30, 2004, after a bench trial, dismissing its federal claims under the Lanham Trade-Mark Act, 15 U.S.C. §§ 1051-1129, and pendent state law claims under N.Y. General Business Law §§ 360-1 & 349 and New York common law. Star also appeals from the district court's order entered March 23, 2004, denying its motion to reopen the trial record and to amend the findings of fact and conclusions of law. For the reasons stated below, we affirm.
Plaintiff-appellant Star Industries, Inc. ("Star") produces alcoholic beverages including, of particular relevance to this appeal, the "Georgi" brand of vodkas. Georgi vodka is sold primarily in New York state, and is one of the top selling vodkas in the New York metropolitan area. It is generally cheaper than the leading nationally distributed vodkas. Defendants-appellees Bacardi & Co. Ltd. and Bacardi U.S.A. (collectively "Bacardi") produce, import, and distribute "Bacardi" brand rums. Bacardi is the largest selling brand of hard liquor in the United States. Defendant-appellee Anheuser-Busch, Inc. is one of the leading producers of beers and malt beverages in the United States. In 2001 Anheuser-Busch and Bacardi entered into an exclusive trademark licensing agreement under which Anheuser-Busch produces malt beverages bearing the Bacardi logo.
In June 1996, inspired by the success of flavored vodkas introduced by leading international companies such as Stolichnaya, Star's president decided to develop an orange-flavored Georgi vodka. A new label was designed, consisting of the traditional Georgi label, which contains a coat of arms and a logo consisting of stylized capital letters spelling `Georgi' on a white background, together with three new elements: an orange slice, the words "orange flavored," and a large elliptical letter "O" appearing below the "Georgi" logo and surrounding all of the other elements. The "O" was rendered as a vertical oval, with the outline of the "O" slightly wider along the sides (about one quarter inch thick) and narrowing at the top and bottom (about one eighth inch thick); the outline of the "O" is colored orange and decorated with two thin gold lines, one bordering the inside and one bordering the outside of the outline. Star was apparently the first company to distribute an orange-flavored alcoholic beverage packaged in a bottle bearing a large elliptical orange letter "O."
Star's hope was that, just as consumers of orange-flavored Stolichnaya vodka had begun referring to the vodka as "Stoli O," consumers would come to refer to orange-flavored Georgi vodka as "Georgi O." Accordingly, Star applied in 1996 to register "Georgi O" as a word trademark with the U.S. Patent and Trademark Office ("PTO"). Reasoning that consumers viewing the Georgi O label were likely to perceive the word "Georgi" as separate from the "O" design, and not as constituting a composite phrase, the PTO rejected Star's application. Between 1996 and 2002 Star promoted its new orange-flavored vodka, although it is unclear how vigorously, and it apparently had little success. Sales volume remained low even in New York state, and practically nil elsewhere. No evidence in the record suggests that Georgi vodka has ever been commonly referred to by consumers as "Georgi O."
In 2000 Bacardi began to develop an orange-flavored rum, which it ultimately introduced nationally in 2001 under the name "Bacardi O." Bacardi's line of flavored rums originated in 1995 with "Bacardi Limon." Unlike Bacardi's other flavored rums, however, Bacardi O was produced and marketed bearing a distinct label consisting of the Bacardi logo and bat symbol above a large elliptical letter "O" against a clear background. This Bacardi "O" design was developed by a New York design firm, whose President and Creative Director supervised the design of the new label and claimed not to have had any awareness of the Georgi "O" design until after the instant lawsuit was filed. Like the Georgi "O," the Bacardi "O" was decorated with gold bordering, was colored in orange, and spanned most of the height of the bottle. Its appearance differed in certain respects from the Georgi "O" design, including lesser elongation, greater thickness, variable shading, and the use of a brighter variety of orange. Star presented some evidence at trial suggesting that Bacardi's local sales representatives and regional managers were aware of Georgi's product and its appearance prior to the development of the Bacardi "O" design, but no evidence of such awareness by those involved in the development of the new "O" design.
In March 2003 Anheuser-Bush launched a new orange-flavored version of its "Bacardi Silver" malt beverage, under the name "Bacardi Silver O3." This product also contained the Bacardi "O" design on the label. Under New York state law, malt beverages and hard liquors may not be sold in the same stores, malt beverages being sold primarily in grocery stores while hard liquors are sold in liquor stores.
In support of its contention that consumers and tradespeople were confused by the similar labels on Bacardi's and Georgi's orange-flavored beverages, Star presented the following evidence at trial: the testimony of a Star Vice President that she once overheard someone standing outside a Dunkin Donuts casually comment to a friend that Georgi's orange-flavored vodka was a Bacardi product; the testimony of an employee of Star's distributor that he himself had assumed on first seeing the Bacardi label that Bacardi must have obtained Star's permission to use its "O" design, and that he once had a conversation with a liquor store owner about the potential for consumers to be confused by the similar labels; and the testimony of a Star employee that he once saw a consumer at a liquor store select a bottle of Bacardi O in the belief that it was Georgi orange-flavored vodka. Star presented no consumer surveys or studies, while Bacardi and Anheuser-Busch each proffered a survey suggesting that there was no consumer confusion.
After sending a cease and desist letter to Bacardi in September 2001, Star filed the instant lawsuit in May 2002, amending its complaint to add Anheuser-Busch as a defendant in May 2003. In June 2003 Star applied with the PTO to register its "O" design.1 A bench trial was held in the district court in July and August of 2003. At closing argument on August 14, 2003, the district court inquired as to the status of Star's PTO application, which remained pending. The district court rejected Star's claims in their entirety by order dated December 31, 2003, holding Star's "O" design not protectable as a trademark, and holding in the alternative that, assuming the Georgi "O" design was a protectable trademark, such trademark was not infringed because Star's product was not likely to be confused with Bacardi's despite the similar "O" designs. Judgment was entered for defendants-appellees on all claims on January 30, 2004. On February 6, 2004, the PTO approved Star's application to register its "O" design. On February 17, 2004, Star moved in the district court to reopen the trial record to include evidence of the PTO's decision, seeking new conclusions of law that the design was protectable as a trademark and that there was a likelihood of confusion. The district court denied Star's motion by order dated March 19, 2004. Star filed notices of appeal from the judgment on February 17, 2004, and from the denial of its motion to reopen on April 2, 2004. Star asks this Court to enter a permanent injunction and remand for calculation of damages, or in the alternative to remand for reconsideration after supplementing the record with evidence of the PTO decision.
We conclude that the district court erred in holding Star's "O" design not protectable as a trademark. We therefore need not consider whether the district court erred in denying Star's motion to reopen the trial record. However, as we agree with the district court that Star has not established a likelihood of confusion with Bacardi's product, we affirm the district court's judgment for appellees.
"[T]o succeed in a Lanham Act suit for trademark infringement, a plaintiff has two obstacles to overcome: the plaintiff must prove that its mark is entitled to protection and, even more important, that the defendant's use of its own mark will likely cause confusion with plaintiff's mark." Gruner + Jahr USA Publ'g v. Meredith Corp., 991 F.2d 1072, 1074 (2d Cir.1993). We discuss these two elements of trademark infringement in turn.
At the time of judgment, Star's "O" design had not yet been approved for registration as a trademark by the PTO. An unregistered mark is entitled to protection under the Lanham Act if it would qualify for registration as a trademark. See Courtenay Communications Corp. v. Hall, 334 F.3d 210, 214 n. 2 (2d Cir.2003). To qualify for registration a mark must be sufficiently "distinctive" to distinguish the...
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