Stone Brewing Co. v. Millercoors LLC

• Decision Date: 27 March 2020
• Docket Number: Case No.: 3:18-cv-00331-BEN-LL
• Parties: STONE BREWING CO., LLC, Plaintiff / Counterclaim Defendant, v. MILLERCOORS LLC, Defendant / Counterclaim Plaintiff.
• Court: U.S. District Court — Southern District of California

445 F.Supp.3d 1113

STONE BREWING CO., LLC, Plaintiff / Counterclaim Defendant,

v.MILLERCOORS LLC, Defendant / Counterclaim Plaintiff.

Case No.: 3:18-cv-00331-BEN-LL

United States District Court, S.D. California.

Signed March 27, 2020

J. Noah Hagey, Jeffrey Michael Theodore, John Tobias Rowe, Rebecca Horton, Bram Schumer, BraunHagey & Borden, LLP, San Francisco, CA, for Plaintiff / Counterclaim Defendant.

Brittany Blueitt Amadi, Pro Hac Vice, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, Christopher T. Casamassima, WilmerHale, Kent Brian Goss, Valerie Meiling Goo, Crowell & Moring LLP, Los Angeles, CA, Matthew John Worthington, Pro Hac Vice, WilmerHale, Denver, CO, Vinita Ferrera, Pro Hac Vice, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, Molly A. Jones, Crowell & Moring LLP, San Francisco, CA, for Defendant / Counterclaim Plaintiff.

ORDER:

(1) GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT;

(2) DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; and(3) DENYING AS MOOT PLAINTIFF'S MOTION TO STRIKE PORTIONS OF DEFENDANT'S SUMMARY JUDGMENT BRIEFS OR, IN THE ALTERNATIVE, FOR LEAVE TO FILE SUPPLEMENTAL BRIEF

[ECF Nos. 175, 170, 271.]

Hon. Roger T. Benitez, United States District Judge Before the Court is Plaintiff Stone Brewing Co., LLC's ("Plaintiff") and Defendant MillerCoors LLC's ("Defendant") Motions for Summary Judgment, as well as Plaintiff's Motion to Strike portions of Defendant's Summary Judgment Briefs or, in the alternative, for Leave to File Supplemental Brief. All three motions are fully briefed, and the Court has considered all the arguments presented, even those not discussed in this Order. To the extent that an argument is not acknowledged in this Order, it is rejected.

BACKGROUND

For purposes of this decision, the Court assumes the parties are familiar with the procedural history and many disputed facts of the suit. The Court relies on the background facts provided in the Complaint and the parties' summary judgment motions to provide the following brief case background.

Plaintiff Stone is a San Diego-based craft brewer that has sold its artisanal Stone® beers nationwide for over two decades. (Doc. No. 1 ¶ 17.) From the beginning, Stone developed and maintained its trademark and brand. Stone's founders applied for the STONE® mark on July 29, 1997. Id. at 4. The mark was registered without objection on June 23, 1998, under U.S. Registration No. 2,168,093. Id. Roughly ten years later, on or about June 28, 2008, the Patent Trade Office ("PTO") recognized Stone's continuous use of the brand and granted Stone's Combined Declaration of Use and Incontestability application, making the STONE® mark incontestable. Id. Today, every Stone beer bears the registered incontestable trademark STONE®. Id. ¶ 20. Stone filed suit in this matter out of concern for its brand reputation.

Defendant Molson Coors is a multi-national beer conglomerate formed after a series of mergers involving Coors, Miller, and Canadian brewing giant Molson. In the United States, Molson Coors operates through its subsidiary, Defendant MillerCoors. Among the dozens of brands in its portfolio, MillerCoors has sold domestic lager brand Keystone since 1989. Id. at 33.

The Keystone line of beers consists of Keystone, Keystone Ice, and Keystone Light. (Doc. No. 44 at 1.) Since its inception, MillerCoors and its predecessors have sold "Keystone" sub-premium beer in cans with a primary KEYSTONE® mark and prominent imagery of the Colorado Rocky Mountains. (Doc. No. 1 at 34.) The name "Keystone" is the name of a popular ski resort town founded in the 1970s in Colorado. The mountain range depicted on the can is styled after Wilson Peak located in the Rockies. Id.

From 1989 through today, Keystone cans have been updated from time to time but have always prominently featured the KEYSTONE® mark. For at least the past twenty-three years, Keystone packaging and advertising have also borne the nickname "STONES." (Doc. No. 44 at 1.)

MillerCoors undertook efforts to ‘refresh’ its KEYSTONE image by introducing an updated can and package design, in or around April 2017. Id. ¶ 38. MillerCoors also began acquiring various independent craft beer breweries like Saint Archer Brewing , through its craft beer holding entity, Tenth and Blake Beer Company , to expand its holdings and reduce competition. Id.

MillerCoors's ‘refreshed’ can design took "KEYSTONE" and separated "KEY" and "STONE" onto separate lines. (Doc. No. 30-1 at 10.) Its ‘refreshed’ packaging emphasized "STONE" rather than "KEYSTONE" Id. Similar advertising campaigns began to feature the redesigned Keystone can often accompanied by slogans or taglines such as the August 2017 campaign "Hunt the STONE." Id.

Since introducing the ‘refreshed’ can and package design, Keystone Light has gone from MillerCoors's worst, to its best-selling beer of the entire Keystone line. At this same time, Stone noticed a discernable drop in its sales as current and potential purchasers were allegedly confused by Keystone's new can and packaging. To further complicate matters, in many areas of the country, STONE® and KEYSTONE® use identical distribution and marketing channels. Id. ¶ 64.

LEGAL STANDARD

Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material if it could affect the outcome of the case under governing law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute of material fact is genuine if the evidence, viewed in light most favorable to the non-moving party, "is such that a reasonable jury could return a verdict for the non-moving party." Id.

The Party moving for summary judgment bears the initial burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the moving party has the burden of proof at trial on an issue, the moving party must affirmatively show that no reasonable jury could find other than in the moving party's favor. Id. at 331, 106 S.Ct. 2548 (Brennan, J., dissenting). Where the non-moving party has the burden of proof at trial, "the moving party may discharge its burden of production by either (1) negating an essential element of the opposing party's claim, or (2) showing that there is an absence of evidence to support the non-moving party's case." Synoptek, LLC v. Synaptek Corp. , No. 16-1838-CJC (JCGX), 2018 WL 3359017, at *4 (C.D. Cal. June 4, 2018) (citing Adickes v. S.H. Kress & Co. , 398 U.S. 144, 158-60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) and Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ).

Once the moving party meets its initial burden, the non-moving party must go beyond the pleadings and show that there is a genuine issue for trial. Anderson , 477 U.S. at 250, 106 S.Ct. 2505. It can do this by citing to specific parts of the materials in the record or by showing that the materials cited by the moving party do not compel a judgment in the moving party's favor. Fed. R. Civ. P. 56(c). The opposing party may also object to the movant's evidence. Synoptek , 2018 WL 3359017, at *4 (citing Fed. R. Civ. P. 56(c)(2) ).

The Court will first address the parties Motion's for Summary Judgment, followed by Plaintiff's Motion to Strike.

DISCUSSION

I. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

A. Plaintiff's Request for Judicial Notice

Plaintiff requests that the Court take judicial notice of several documents from United States Patent Trademark Office's ("USPTO") "File History" for U.S. Trademark numbers: 77284884 for "STONES", 85002333 for "HOLD MY STONES", and 2168093 for "STONE".

A court may take judicial notice of a fact that is not subject to reasonable dispute because it "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b)(2). Defendant did not object to the Court taking judicial notice of the documents. Courts may also take judicial notice of " ‘records and reports of administrative bodies,’ file histories, and application materials." Balance Studio, Inc. v. Cybernet Entm't, LLC , No. 15-CV-04038-DMR, 2016 WL 1559745, at *1 (N.D. Cal. Apr. 18, 2016) (quoting Mack v. South Bay Beer Distributors, Inc. , 798 F.2d 1279, 1282 (9th Cir. 1986) ); see Oroamerica Inc. v. D & W Jewelry Co., Inc. , 10 F. App'x. 516, 517 n.4 (9th Cir. 2001).

Because the documents are not subject to reasonable dispute, are capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned, and are a matter of public record, (see Lee v. City of L.A. , 250 F.3d 668, 689 (9th Cir. 2001) ), the Court GRANTS Plaintiff's Request for Judicial Notice.

B. Ownership of a Valid and Legally Protectable Mark

Under the Lanham Act, a mark may become incontestable if it is not challenged within five years of its registration. See 15 U.S.C. § 1065(3). To become incontestable, Section § 1065(3) requires that the registered mark be continuously used in commerce for "five consecutive years" subsequent to the date of registration and still be in use in commerce. Id. The registration of an incontestable mark is "conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark." 15 U.S.C. § 1115(b).

In this case, the first two elements of a claim for federal trademark infringement are met. First, Plaintiff holds a valid trademark in STONE® as it was registered without objection on July 23, 1998, under U.S. Reg. No. 2,168,093. (Doc. No. 175 at 4.) Second, in 2008 (approximately ten years after...