West Indian Sea Island Cotton Ass'n v. Threadtex, Inc.

• Decision Date: 09 April 1991
• Docket Number: No. 89 Civ. 7895 (RJW).,89 Civ. 7895 (RJW).
• Citation: 761 F. Supp. 1041
• Parties: WEST INDIAN SEA ISLAND COTTON ASSOCIATION INCORPORATED, the Government of Barbados, the Government of Antigua and Barbuda, the Government of Montserrat, Caribbean Sea Island Cotton Co., Ltd. and Sea Island Cotton Fabrics and Fashions Ltd., Plaintiffs, v. THREADTEX, INC., Sea Island Cotton Growers Ltd. and Bernard Richman, Defendants.
• Court: U.S. District Court — Southern District of New York

761 F. Supp. 1041

WEST INDIAN SEA ISLAND COTTON ASSOCIATION INCORPORATED, the Government of Barbados, the Government of Antigua and Barbuda, the Government of Montserrat, Caribbean Sea Island Cotton Co., Ltd. and Sea Island Cotton Fabrics and Fashions Ltd., Plaintiffs, v. THREADTEX, INC., Sea Island Cotton Growers Ltd. and Bernard Richman, Defendants.

No. 89 Civ. 7895 (RJW).

United States District Court, S.D. New York.

April 9, 1991.

COPYRIGHT MATERIAL OMITTED

Gilbride, Tusa, Last & Spellane, New York City (Bennett H. Last, Eric H. Seltzer, Jay B. Solomon, Eden L. Rohrer, of counsel), for plaintiffs.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City (Cameron Clark, Conna A. Weiner, Brian H. Havel, of counsel), for defendants.

ROBERT J. WARD, District Judge.

Defendants Threadtex, Inc. ("Threadtex"), Sea Island Cotton Growers Ltd. ("Growers"), and Bernard Richman ("Richman") move, pursuant to Rule 56, Fed.R. Civ.P., for summary judgment dismissing the complaint in the above-captioned action. Defendants further move, pursuant to Rule 12(c), Fed.R.Civ.P., to dismiss claims fifteen and sixteen of the complaint, and to dismiss the entire complaint as against Richman for failure to state a claim upon which relief may be granted. Both parties seek sanctions pursuant to Rule 11, Fed.R. Civ.P. For the reasons that follow, defendants' motion is granted in part and denied in part. Plaintiffs' application for Rule 11 sanctions is denied, and defendants' application for sanctions is granted in part.

BACKGROUND

Plaintiff West Indian Sea Island Cotton Association ("WISICA") is a corporation organized under the laws of Antigua. According to plaintiffs, WISICA is an incorporated association of representatives of growers of a certain type of cotton known as "Sea Island cotton," including the governments of nations which produce Sea Island cotton. Plaintiffs Caribbean Sea Island Cotton Co., Ltd. ("Carsicot") and Sea Island Cotton Fabrics and Fashions Ltd. ("Seacot") are corporations which were formed in August and September of 1989, respectively, and which are organized under the laws of Barbados. Plaintiffs claim that Carsicot is engaged in the business of marketing lint, yarn, textiles and finished products made from Sea Island cotton, and that Seacot is in the business of manufacturing and selling fabrics and piece goods made from Sea Island cotton. Plaintiffs The Government of Barbados ("Barbados"), The Government of Antigua and Barbuda ("Antigua"), and The Government of Montserrat ("Montserrat") are the governments of West Indian islands in which Sea Island cotton is grown, and are members of WISICA.

Defendant Threadtex is a New York corporation which markets and sells textiles, fabrics and piece goods. Defendant Growers is a New York corporation formed by Threadtex. Defendant Richman, a citizen of the state of New York, is the President and majority shareholder of Threadtex.

The gravamen of plaintiffs' complaint in the instant action concerns defendants' use of the term "Sea Island cotton" to describe products undisputedly made from Egyptian Giza 45 cotton. Plaintiffs assert that "it is improper, misdescriptive and deceptive to describe Egyptian Giza 45 cotton as Sea Island Cotton." Plaintiffs' Statement Pursuant to Local Rule 3(g) ("Plaintiffs' 3(g) St."), filed July 2, 1990, at ¶ 23. Defendants counter that it is entirely accurate and proper to label their Egyptian cotton "Sea Island cotton."

Certain facts are not disputed. In 1963, WISICA registered in the United States a certification mark for use on goods made from fine long staple West Indian cotton. That mark consisted of an island with two palm trees enclosed in a double rectangle surrounding the words "Certified by West Indian Sea Island Cotton Association (Inc.)." Above the island, the words "Sea Island" appeared, and below the island was printed "WISICA." In February 1983, the mark was not renewed and it therefore lapsed.

Threadtex applied in May 1983 to register a logo mark consisting of an island with two palm trees enclosed in a double oval surrounding the words "SEA ISLAND COTTON." In connection with its application to register this logo, Threadtex represented to the Patent and Trademark Office ("PTO") examiner that it believed that WISICA had abandoned its mark, and that no other person had the right to use the mark that it sought to register. Threadtex further told the PTO examiner that the cotton which it sold was "genuine Sea Island cotton." Plaintiffs claim that both of these statements were false and misleading. Defendants insist that both were entirely true and accurate. In any event, it is undisputed that the logo ultimately registered with the PTO did not contain the words "Sea Island Cotton,"¹ but instead substituted the words "imported cotton fabric."

In July 1984, during the pendency of Threadtex's application for registration of the above-described logo, WISICA filed an application to register its previously expired certification mark. While WISICA's application was pending, Threadtex's logo was approved and was published for opposition. No party opposed the mark, and it was thereafter registered on July 9, 1985. In November 1985, WISICA's certification mark was published for opposition. Threadtex filed a notice of opposition with the Trademark Trial and Appeal Board (the "TTAB"), stating that it was a United States supplier of Sea Island cotton and fabric, that it believed that WISICA was no longer in existence, and that Sea Island cotton was no longer grown in commercial quantities in the West Indies. Ultimately, after WISICA failed to respond to interrogatories served by Threadtex, the TTAB granted Threadtex's motion pursuant to Rule 37, Fed.R.Civ.P. and sustained its opposition to the registration of WISICA's certification mark. WISICA did not seek reconsideration of this judgment, nor did it seek judicial review.

Also in November 1985, an English subsidiary of Threadtex brought a proceeding in the Office of the Secretary of State for Trade and Industry in Great Britain (the "British proceeding") seeking to cancel WISICA's certification mark in the United Kingdom on the grounds of abandonment. In April 1988, a decision was rendered denying Threadtex's application to strike the certification mark and stating that it was improper for Threadtex to label its Egyptian cotton "Sea Island cotton."

Plaintiffs claim that, although the registration of WISICA's U.S. certification mark lapsed in 1983, products made of West Indian Sea Island cotton and products utilizing the WISICA certification mark have been continuously sold in the United States and are presently being sold in this country. In addition, plaintiffs assert that Seacot is currently selling and marketing WISICA certified products in the United States, and that Seacot and Carsicot are presently attempting to sell and market West Indian Sea Island yarn and fabric in the U.S.

Defendants hotly contest these factual assertions. They insist that "plaintiffs have not engaged in any commercial activity relating to cotton in the United States within memory." Memorandum of Law in Support of Defendants' Motion to Dismiss the Complaint and for Sanctions ("Defendants' Memorandum"), filed April 3, 1990 at 2. In support of this contention, defendants cite statistics suggesting that West Indian cotton production has been "declining or minimal and erratic." Id. at 9. Defendants further offer the affidavit of Richman, who is "unaware of a single effort by any plaintiff to promote, advertise, certify or sell Sea Island cotton in the United States during the last 30 years." Id. at 11 (citing Affidavit of Bernard Richman, filed April 3, 1990 ("Richman Aff.")). Finally, defendants cite the affidavit of James O.J. Nurse ("Nurse"), an Agricultural Economist with expertise in the area of Caribbean agricultural production, who states that he is unaware of any West Indian cotton being exported to the United States, with the exception of a single shipment to Threadtex in 1987.

In response to defendants' assertions of inactivity on plaintiffs' part, and in opposition to the motion for summary judgment, plaintiffs have submitted several affidavits. Clifton E. Maynard ("Maynard"), Managing Director of Carsicot and formerly Permanent Secretary of the Ministry of Agriculture of the Government of Barbados, states that:

From personal experience as Permanent Secretary of the Ministry of Agriculture of the Government of Barbados and a Managing Director of Carsicot, I know that WISICA has continuously certified West Indian Sea Island Cotton and made its certification mark available to users of genuine Sea Island Cotton. Products made from that Sea Island Cotton have been sold throughout the world, including the United States. Sales have been limited by the scarcity of the product and by the activities of Defendants, but there have always been sales and attempted sales in the United States.

Affidavit of Clifton E. Maynard ("Maynard Aff."), filed July 2, 1990 at 16. Maynard notes that the statements of Nurse are not to the contrary, as plaintiffs do not purport to export cotton lint to the United States. Rather, as Maynard explains, the lint is exported to nations, such as Japan, which possess the required machinery to spin it into high quality Sea Island cotton yarn. That yarn, according to plaintiffs, is then made into fabrics by mills in Japan and elsewhere, and those fabrics are thereafter used to make finished or piece goods in various countries, including the United States. Plaintiffs assert that fabrics and finished piece goods derived from West Indian Sea Island cotton are sold in the United States and are often certified by WISICA.

Elkin Leroy Ward ("Ward"), the President of WISICA and a farmer whose crops include Sea Island Cotton, states in his Declaration that the WISICA certification mark has been used continuously in the United States since at least 1960. Ward asserts that in 1967 he...