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Seed Services, Inc., A California Corporation v. Winsor Grain

April 11, 2012

SEED SERVICES, INC., A CALIFORNIA CORPORATION,
PLAINTIFF,
v.
WINSOR GRAIN, INC., A MINNESOTA CORPORATION, WILLIAM L. COOK, AN INDIVIDUAL, AND DOES 1 THROUGH 35, INCLUSIVE,
DEFENDANTS.



ORDER RE: PRELIMINARY INJUNCTION

Plaintiff has obtained a temporary restraining order against Defendants prohibiting them from infringing upon certain trademarks; Plaintiff now seeks a preliminary injunction. Defendants oppose the motion. The court grants Plaintiff's request for a preliminary injunction.

I. History

Plaintiff Seed Services, Inc. ("Seed Services") produces and supplies seeds for agricultural production. Defendant Winsor Grain, Inc. ("Winsor Grain") sells Seed Services's products in the Middle East. Defendant William Cook ("Cook") is the owner and president of Winsor Grain (collectively "Defendants"). On August 30, 2010, Seed Services and Defendants entered into a contract whereby Seed Services agreed to buy certain assets of Winsor Grain ("Contract"). In key part, Winsor Grain agreed to give Seed Services certain trademarks registered in the United States (the use of the name "California Gold" among others), to turn over its customer list, to have Cook act as Seed Services's agent for nine months, and to cease all new sales to the Middle East. In return, Seed Services agreed to pay Winsor Grain a total of $1,000,000.

Seed Services filed suit on November 22, 2010, alleging Defendants violated the Contract by selling alfalfa seed to Erzam Agricultural Trading Co. in Saudi Arabia ("Erzam"), one of the customers on the list. Recently, Seed Services also alleged that Cook has sought to sell alfalfa seeds grown in Australia to Erzam under the brand "California Gold". Seed Services originally sought a temporary restraining order in December 2011; the motion was denied as it concerned trademark violations, which was a claim that was not part of this case. Seed Services filed an amended complaint that alleged violations of the Lanham Act. Seed Services made a motion for temporary restraining order and preliminary injunction. Doc. 66. The temporary restraining order was granted pending resolution of the preliminary injunction motion. Doc. 70. Defendants filed an opposition to the motion. Doc. 75. The court ordered additional briefing. Doc. 80. The parties complied and the matter was taken under submission without oral argument.

II. Legal Standards

A plaintiff seeking a preliminary injunction must establish: (1) that he/she is likely to succeed on the merits, (2) that he/she is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his/her favor, and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 18 (2008). "Injunctive relief...must be tailored to remedy the specific harm alleged." Park Vill. Apt. Tenants Ass'n v. Mortimer Howard Trust, 636 F.3d 1150, 1160 (9th Cir. 2011).

III. Discussion

In relevant part, the Contract provided that Seed Services would acquire Winsor Grain's customer list and the associated right to sell to those customers in the Middle East and certain tradenames or trademarks to Seed Services, including: (a) U.S. Trademark Registration No. 3,909,586, the "California Gold" mark; (b) U.S. Trademark Registration No. 2,755,555, the "Frisco" mark; (c) U.S. Trademark Registration No. 2,958,765, the "Pacific Grain and Seed Brand" mark; (d) U.S. Trademark Registration No. 2,982,806, the "Circle and Plant Design" mark; (e) U.S. Trademark Registration No. 2,986,619, the "Red Panic" mark; and (f) U.S. Trademark Registration No. 2,987,117, the "PSW and Design" mark. Doc. 66, Part 2, Ex. 2, (21-25 of 34). The "California Gold" mark was filed with the U.S. Patent and Trademark Office on May 27, 2004 and registered on January 25, 2011; it is described as "Mark: California Gold. Drawing Type: An illustration drawing with word(s)/letter(s)/number(s) in stylized form." Doc. 66, Part 2, (23 of 34). A picture shows the trademark consists of an image which includes the strongly bolded words "California Gold" between two stylized vertical stalks of grain; there is additional text in smaller font size describing the product as "certified alfalfa seed," a "Product of U.S.A.," and other information. See Doc. 66, Part 3, Ex. 5, (16 of 18). The trademark was recorded as assigned to Seed Services on September 23, 2011. Doc. 66, Part 2, (23 of 34).

In this motion, Seed Services alleges Defendants have attempted to infringe on the "California Gold" mark by trademarking the name "California Gold" in Australia and making inquiries about selling alfalfa seed under that name to Seed Services's customers in Saudi Arabia. The alleged impending infringement concerns Cook and the Cook Land and Cattle Pty., Ltd. ("CLAC"). CLAC applied for the "California Gold" mark with the appropriate Australian government entity on April 1, 2011 and was registered on November 2, 2011; it is described as "Indexing Details - Word Constituents: California Gold. Indexing Details- Image Constituents: Grain, Ear Stylized Two." Doc. 66, Part 3, Ex. 6, (17 of 18). A picture shows that the trademark consists of an image with the strongly bolded words "California Gold" between two stylized vertical stalks of grain. Doc. 66, Part 3, Ex. 6 (18 of 18). A comparison between the American and Australian trademarks shows that the vertical stalks of grain are identical and the words "California Gold" share the exact same font.

Defendants argue that CLAC is not a party to this case and the court has no jurisdiction over CLAC, and they can not be held responsible for CLAC's actions. Cook claims "2. As of April of 2010, CLAC is wholly owned by the William L. Cook Revocable Trust. It is an Australian company with its principal place of business in South Australia. CLAC's primary purpose is to make and oversee various financial investments using assets belonging to the William L. Cook. CLAC does not perform any of its business within the boundaries of the United States. 3. I am only one of several directors for CLAC, but I am not the president. The management and operational decisions for CLAC are made by an officer or agent of the company who resides in Australia." Doc. 81, Cook Declaration, 1:24-2:3. Seed Services has provided documents from the Australian Securities and Investments Commission which shows that Cook is the sole owner of CLAC and that he and his wife are two of the three directors of the company. Doc. 83, Part 1, Exs. A and B (4-18 of 20). CLAC is not a party to this case but Cook is plainly responsible for CLAC's actions. He admits that "I suggested that CLAC register the Australian trademark 'California Gold.'" Doc. 81, Cook Declaration, at 2:18-19. CLAC's actions must be imputed to Cook.

Gamal Ashour, Seed Services's sales broker, states "Mr. Cook has approached Australian suppliers about selling 'CUF' alfalfa seeds to Saudi Arabian customers under the 'California Gold' brand." Doc. 66, Part 6, Ashour Declaration, at 2:19-20 (4 of 12).*fn1 The inquiries were quite specific. Cook sent an e-mail to at least two people representing Australian growers in November 2011 proposing to sell Australian seed stating "We will use the California Gold bag....If you can come up with one container, we could introduce it into [Saudi Arabia], giving us a one year jump." Doc. 66, Part 3, Ex. 2, (9 of 18). Cook also sent an e-mail to Erzam, an existing Seed Services customer, on December 28, 2011 stating "There is a possibility that a good line of certified alfalfa seed will come out of Australia this year. It will be in a bag, California Gold, the added phrase: 'American genetics for the best quality, Australian grown for economic.' If you like this idea, let me know. You might like an exclusive on this. Let's keep this to ourselves for the time being. OK?" Doc. 66, Part 2, (33 of 34). The court notes that these e- mail were apparently sent by Cook himself and not another representative of CLAC.

Cook states, "I have not used the Australian trademark nor have I made any sales or attempted sales using that trademark." Doc. 81, Cook Declaration, at 2:21-22. Defendants argue "All Plaintiff can arguably show is that Defendants made inquiries. That does not support an injunction." Doc. 75, Opposition, at 2:16-17. While it may be true that Defendants have not consummated a sale to Saudi Arabia using the "California Gold" brand, the clear evidence shows that Defendants have the capability and intent to do so and are taking active measures to covertly accomplish such sales within a matter of weeks or months. In the trademark context, a showing of imminent infringement is sufficient. See American Bd. of Psychiatry & Neurology v. Johnson-Powell, 129 F.3d 1, 4 (1st Cir. 1997) (affirming denial of preliminary injunction where "imminent infringement" not shown).

Seed Services also vaguely suggests that a preliminary injunction should issue based on the claim that Defendants are in violation of a non-compete clause contained in the Contract "by selling alfalfa seed to any country in the Middle East." Doc. 66, Part 5, Brief, at 15:13. Defendants challenge that the Contract does not include a valid non-compete clause. Doc. 75, Opposition, at 6:1-7. Whether or not a preliminary injunction ...


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