Tovaritch Spirits Int'l SA v. Luxco, Inc.
| Decision Date | 21 December 2012 |
| Docket Number | Case No. 4:11CV950 JCH |
| Parties | TOVARITCH SPIRITS INTERNATIONAL SA, Plaintiff(s), v. LUXCO, INC., Defendant(s). |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court following a bench trial conducted on November 19 and 20, 2012. Having considered the pleadings, trial briefs, exhibits, and proposed findings of fact and conclusions of law submitted by the parties, the Court hereby makes and enters the following findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.
1. Plaintiff Tovaritch Spirits International SA ("Plaintiff" or "Tovaritch") is a corporation organized and existing under the laws of Switzerland with its principal place of business located at Rue de Rhone 100, Geneve 3, Switzerland 1211. Plaintiff is a manufacturer and exporter of Russian vodka.
2. Defendant Luxco, Inc. ("Defendant" or "Luxco") is a manufacturer, marketer, distributer, and seller of spirits and alcoholic beverages throughout the United States.
3. The TOVARITCH brand of vodka is made in St. Petersburg, Russia, and currently is exported to 28 countries around the world.
4. The word TOVARITCH means "comrade" in Russian.
5. The first bottle of TOVARITCH vodka was bottled in 1999.
6. Defendant is the owner of U.S. Trademark Registration No. 1,036,350 for the trademark TVARSCKI for vodka and gin. Defendant's predecessor-in-interest, the David Sherman Corporation ("DSC"), acquired the TVARSCKI trademark in 1987. The TVARSCKI trademark was registered on March 23, 1976, based on first use and first use in commerce on December 31, 1959.
7. DSC changed its name to Luxco, Inc., at the end of 2005 or the beginning of 2006.
8. Defendant is also the owner of U.S. Trademark Registration No. 1,161,228 for the trademark TV for vodka. DSC had acquired the TV trademark in 1987. The TV trademark was registered on July 14, 1981, based on first use and first use in commerce on December 31, 1959.
9. DSC had also acquired U.S. Trademark Registration No. 411,825 for the trademark TOVARISCH in 1987, but Defendant decided against selling vodka under the TOVARISCH trademark because it thought the trademark was too close to Defendant's TVARSCKI trademark.
10. Generally, Defendant sells vodka and other spirits with the TVARSCKI trademark to distributors or wholesalers, who in turn sell to retailers, who in turn sell to consumers. Defendant does not sell vodka with the TVARSCKI trademark directly to consumers.
11. Non-vodka spirits make up a small percentage of the total sales of the TVARSCKI brand.
12. TVARSCKI vodka is sold currently, on average, for $7.99-$9.99 for a 750 mL bottle and for $15.00-$16.99 for a 1.75 L bottle.
13. TVARSCKI vodka is sold in nineteen states.1 TVARSCKI vodka is a regional brand primarily sold in the Midwest and the middle South.14. TVARSCKI vodka is produced in St. Louis, Missouri.
15. Defendant sells TVARSCKI vodka in 80 proof, 90 proof, 100 proof, and "light." Defendant also sells TVARSCKI vodka in the following flavors: black raspberry, cherry, grape, lemon, orange, and peppermint.
16. In 2009, Defendant's gross sales for the TVARSCKI brand were $7.97 million. In 2010, Defendant's gross sales for the TVARSCKI brand were $7.85 million. In 2011, Defendant's gross sales for the TVARSCKI brand were $7.97 million. These totals include all sales from all TVARSCKI spirits products.
17. The TVARSCKI brand constitutes approximately five percent of Defendant's business.
18. The name "TVARSCKI" has no apparent meaning or connection to vodka.
19. Plaintiff became aware of the TOVARISCH trademark in the United States in 2000 while conducting research into the global market concerning the name TOVARITCH.
20. On June 23, 2000, Eugenio Litta, the founder and CEO of Plaintiff, contacted DSC to inquire about purchasing the TOVARISCH trademark.
21. At the time that Mr. Litta contacted DSC, Defendant did not have a vodka product on the market that used the TOVARISCH trademark.
22. The parties did not arrive at an agreement for the sale of the TOVARISCH trademark.
23. In May or June 2001, Plaintiff filed a petition for cancellation of the TOVARISCH trademark with the United States Patent and Trademark Office ("USPTO").
24. On June 26, 2001, Plaintiff filed an application to register the trademark TOVARITCH with the USPTO.
25. On May 31, 2005, DSC voluntarily withdrew its registration for the TOVARISCH trademark.
26. On January 9, 2007, the USPTO issued U.S. Trademark Registration No. 3,197,190 for the trademark TOVARITCH for vodka.
27. On March 9, 2007, Defendant initiated a cancellation proceeding before the Trademark Trial and Appeal Board ("TTAB") seeking to cancel the TOVARITCH registration.
28. On March 24, 2011, the TTAB ordered the cancellation of U.S. Trademark Registration No. 3,197,190 for the trademark TOVARITCH in Cancellation No. 92047201. The TTAB found a likelihood of confusion exists between Plaintiff's TOVARITCH mark and Defendant's TVARSCKI trademark.
29. The TTAB also rejected Plaintiff's laches argument, finding there was no evidence of 1) clear notice to Defendant that Plaintiff intended to begin to use the TOVARITCH mark in the United States, 2) Defendant's awareness that Plaintiff would file a registration with the USPTO, nor 3) Plaintiff's use of the TOVARITCH mark in the United States. Thus, the TTAB found that Plaintiff did not establish undue delay by Defendant in filing Cancellation No. 92047201 nor any prejudice to Plaintiff due to any alleged delay.
30. Plaintiff filed its Complaint in this Court on May 24, 2011, for judicial review of the decision of the TTAB in Cancellation No. 92047201.
31. In its Complaint, Plaintiff argues the TTAB erroneously concluded that 1) TOVARITCH and TVARSCKI are confusingly similar, and 2) Defendant's claim is not barred by laches.
32. Defendant filed counterclaims in this action, alleging Plaintiff's continued sale of TOVARITCH vodka constitutes federal trademark infringement under 15 U.S.C. § 1114, unfair competition under 15 U.S.C. § 1125(a)(1), trademark infringement and unfair competition under Missouri law, and trademark dilution under Missouri law.
33. The only remedy sought by Defendant for the violations alleged in Defendant's counterclaims is a permanent injunction.
34. Plaintiff's current and only importer for TOVARITCH vodka in the United States is W.J. Deutsch & Sons.
35. Plaintiff's previous importer was Rose Importing. Plaintiff signed a distribution agreement with Rose Importing on February 15, 2006, identifying the territory for the distribution of TOVARITCH vodka as the states of Illinois, Michigan, Ohio, Georgia, and Texas.
36. In September 2012, Defendant's President and CEO, Donn Lux, first saw TOVARITCH vodka offered for sale in a store in the United States. At that time, Mr. Lux saw TOVARITCH vodka offered for sale in a Total Wine store in California.
37. Total Wine is a national retailer that offers in-store wine and spirits sales as well as sales over the Internet.
38. In the United States, TOVARITCH vodka is sold currently, on average, for $9.99-$10.99 for a 750 mL bottle.
1. Plaintiff filed its Complaint for judicial review of the decision of the TTAB in Cancellation No. 92047201, and this Court has subject matter jurisdiction over this appeal pursuant to 15 U.S.C. § 1071(b)(1) and 28 U.S.C. § 1331.
2. Defendant filed counterclaims alleging violations of the Federal Trademark Act of 1946 ("the Lanham Act") and Missouri law. This Court has jurisdiction over Defendant's counterclaims for trademark infringement and unfair competition under 15 U.S.C. §§ 1114 and 1125 and 28 U.S.C. § 1331, and this Court has supplemental jurisdiction over Defendant's state-law claims pursuant to 28 U.S.C. § 1367.3. Venue is proper in this district pursuant to 28 U.S.C. § 1391(c) and 15 U.S.C. § 1071(b)(1).
4. After the TTAB has issued an opinion, the Lanham Act provides the disfavored party with two avenues of appeal: the party may either appeal directly to the United States Court of Appeals for the Federal Circuit or to any federal district court having jurisdiction over the parties. See 15 U.S.C. § 1071(b).
5. "An appeal to the Federal Circuit is an appeal of record, meaning that the Federal Circuit may not consider any new evidence and must decide the case on the same record that was before the TTAB." Hope Hamilton, Note, Parsing the Standard of Review Puzzle: How Much Deference Should Federal District Courts Afford Trademark Trial and Appeal Board Decisions?, 12 FED. CIR. B.J. 489, 493 (2002) (citation omitted); see also Bd. of Regents of University of Wisconsin Sys. v. Phoenix Intern. Software, Inc., 653 F.3d 448, 451-52 (7th Cir. 2011) ().
6. "In contrast to appeals to the Federal Circuit, the Lanham Act expressly allows appellants of TTAB decisions appealing to a federal district court to present new evidence, as well as bring additional claims that were outside of the TTAB's jurisdiction." Hamilton, supra, at 497 (citation omitted); see also Phoenix Intern. Software, 653 F.3d at 451-52 ( ).
7. In Dickinson v. Zurko, 527 U.S. 150, 152 (1999), the United States Supreme Court held that, in the context of the review of a decision of the Patent and Trademark Office ("PTO") in the Federal Circuit, the Federal Circuit was to apply the standard of review articulated in the AdministrativeProcedure Act ("APA"). Although the Supreme Court in Zurko left open which of the APA's review standards was appropriate, the Federal Circuit has since concluded that the APA's "substantial...
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