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Winery v. Grenade Beverage LLC

United States District Court, E.D. California

August 15, 2014

E. & J. GALLO WINERY, Plaintiff,
v.
GRENADE BEVERAGE LLC, Defendant.

FINDINGS AND RECOMMENDATIONS RECOMMENDING THAT PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT BE PARTIALLY GRANTED AND DEFENDANT'S MOTION FOR SUMMARY JUDGMENT BE DENIED ECF NO. 56, 65

STANLEY A. BOONE, District Judge.

On June 25, 2014, Plaintiff E. & J. Gallo Winery ("Plaintiff") and Defendant Grenade Beverage LLC ("Defendant") filed cross motions for summary judgment. (ECF Nos. 56, 65.) The motions were referred to the undersigned magistrate judge for Findings and Recommendations pursuant to 28 U.S.C. § 636(b)(1) and Local Rule 72.

The hearing on the motions for summary judgment took place on August 13, 2014. Steven Weinberg and Michael Salvatore appeared on behalf of Plaintiff and Steven Yuen appears on behalf of Defendant. For the reasons set forth below, the Court finds that Plaintiff is entitled to summary judgment and recommends that Plaintiff's motion be partially granted and Defendant's motion be denied.

I.

BACKGROUND

Plaintiff filed this action on May 22, 2013. (ECF No. 1.) Plaintiff asserts trademark infringement and other related claims against Defendant arising from Defendant's marketing of an energy drink called "El Gallo" and the potential marketing of an energy drink called "El Gallito." Plaintiff claims Defendant's "El Gallo" products violate Plaintiff's "Gallo" trademark for wines.

The following facts were jointly submitted by both Plaintiff and Defendant as undisputed in their Joint Stipulation of Undisputed Facts in Support of Plaintiff E. & J. Gallo Winery's Motion for Summary Judgment, filed on June 25, 2014. (ECF No. 57.)

Plaintiff is a California corporation with its principal place of business in Modesto, California. (Joint Stipulation of Undisputed Facts in Supp. of Pl. E. & J. Gallo Winery's Mot. for Summ. J. ("JUF") No. 1.) Defendant is a California limited liability company with its principal place of business in Orange, California. (JUF No. 2.) The "GALLO" mark as used for wine products has been displayed in different formats over the years. (JUF No. 3.)

Plaintiff has sold wine under the "GALLO WIGNATURE SERIES" trademark since October 2011. (JUF No. 4.) GALLO wines can be found in many different areas of liquor stores and other off-premise retail stores. (JUF No. 5.) GALLO wines are currently sold in over 93, 000 off-premise and 22, 000 on-premise retailers located throughout the United States. (JUF No. 6.) Over 1.5 billion bottles of GALLO wines have been sold in the United States since 1996. (JUF No. 7.) GALLO wines currently are sold through over 235 wholesale distributors in the United States. (JUF No. 9.) Wines currently sold under a GALLO trademark include GALLO FAMILY VINEYARDS, GALLO FAMILY VINEYARDS ESTATE, GALLO FAMILY VINEYARDS SINGLE VINEYARD, GALLO FAMILY VINEYARDS SONOMA RESERVE, GALLO SIGNATURE SERIES, and GALLO vermouth. (JUF No. 10.)

Rooster Design logos have been displayed on all bottles of GALLO FAMILY VINEYARDS, GALLO FAMILY VINEYARDS ESTATE, GALLO FAMILY VINEYARDS SINGLE VINEYARD, GALLO FAMILY VINEYARDS SONOMA RESERVE, and GALLO SIGNATURE SERIES wines and GALLO vermouth sold in the United States since 2005. (JUF No. 11.) Over the years, Plaintiff has made extensive use of television, radio and print advertising in advertising and promoting GALLO wines. (JUF No. 12.) Over the last few years, Plaintiff has advertised GALLO FAMILY VINEYARDS wine on many popular websites reaching a wide spectrum of consumers, including the websites of the Huffington Post, Woman's Day, Hollywood, Recipe.com, Good House Keeping, IMDB, Food and Wine, Life and Style, ABC, BravoTV, Oprah, All Recipes, Parade, Better Homes and Gardens, Bazaar, the Weather Channel, Match.com, Taste of Home, U.S. Magazine, Yahoo, and the Rachel Ray Show. (JUF No. 14.)

GALLO wines can be purchased online at numerous online alcoholic beverage retail websites. (JUF No. 15.) Many third party articles have been published over the years about the Gallo family, the Gallo Winery and Gallo products, including GALLO wines. (JUF No. 16.) Since the mid-1990s, Plaintiff has engaged in numerous co-promotional campaigns with partners such as the NFL and Heineken, in connection with marketing Plaintiff's GALLO wines. (JUF No. 17.) Plaintiff has produced and continues to produce a wide variety of point of sale displays and other materials for GALLO wines, which are and have for many years been displayed in both off-premise and on-premise retail locations. (JUF No. 18.) The "For All Your Families" campaign generated over 119 million impressions for the GALLO FAMILY VINEYARDS brand. (JUF No. 20.) Plaintiff's GALLO FAMILY VINEYARDS has been the sponsor of a campaign started in 2009 and still running called "Every Cork Counts" in which Plaintiff donates a certain amount of money to Meals on Wheels for every GALLO FAMILY VINEYARDS wine cork or photo of a GALLO FAMILY VINEYARDS wine cork submitted to Plaintiff by consumers. (JUF No. 21.)

In addition to the facts listed in the jointly submitted statement of facts, the following facts are undisputed, as Defendant concedes they are undisputed in its response to Plaintiff's separate statement of facts.

Plaintiff is the owner of U.S. trademark Registration No. 3091520 of a Rooster Design, which trademark has been in use since November 2005, which registration is valid and subsisting, and Plaintiff's exclusive rights in Reg. No. 3091520 are incontestable. (Def. Grenade Beverage LLC.'s Resp. to Pl. E. & J. Gallo Winery's Sep. Stmt. in Supp. of Mot. for Summ. J. ("Def.'s Resp.") No. 19.) Plaintiff is the owner of U.S. trademark Registration No. 2159050 of a Rooster Design, which registration is valid and subsisting, and Plaintiff's exclusive rights in Reg. No. 2159050 are incontestable. (Def.'s Resp. No. 20.)

GALLO wines, and virtually all of Plaintiff's wine products can be purchased online through Plaintiff's Barrel Room website www.thebarrelroom.com. (Def.'s Resp. No. 45.) Plaintiff's point of sale displays and other materials for GALLO wines for many years have been displayed in many different areas of off-premise locations. (Def.'s Resp. No. 58.) Plaintiff and its distributors and/or retail customers have conducted wine tastings for GALLO wines in both off-premise and on-premise locations, which have been open to and attended by consumers. (Def.'s Resp. No. 59.) Plaintiff spent over $6.4 million in 2012 and over $6 million in 2013 for advertising and promoting GALLO FAMILY VINEYARDS wine products. (Def.'s Resp. No. 89.)

Defendant's first sale of its EL GALLO product was made to The Car Spa car wash in Irvine, CA, on or around October 20, 2011. (Def.'s Resp. No. 96.) Defendant has sold its EL GALLO product in Irvine, CA, Santa Ana, CA, Anaheim, CA, Los Angeles, CA, Corona, CA, Los Alamitos, CA, Fresno, CA, Austin, TX, Norwalk, CA, Las Vegas, NV, Lake Forest, CA, Mission Viejo, CA, Orange, CA, Phoenix, AZ, Bakersfield, CA, Laguna Beach, CA, Tustin, CA, Turlock, CA, La Habra, CA, Irwindale, CA, Porterville, CA, City of Commerce, CA, El Monte, CA, Manor, TX, Larkspur, CO, Centennial, CO, Aurora, CO, and Menlo Park, CA. (Def.'s Resp. No. 97.)

Defendant's EL GALLO product was sold at retail pricing that was determined by charging slightly more than ROCK STAR energy drink, and slightly less than MONSTER energy drink. (Def.'s Resp. No. 105.) At least one bar displayed the EL GALLO product next to alcoholic beverages. (Def.'s Resp. No. 106.) The EL GALLO product was promoted as a mixer for alcoholic beverages on a Colorado news program. (Def.'s Resp. No. 107.) Defendant was familiar with GALLO wines before the inception of Grenade Beverage LLC or the creation of the EL GALLO product. (Def.'s Resp. No. 108.) Defendant's distribution and advertising of its EL GALLO product were limited. (Def.'s Resp. No. 119.)

The following facts are undisputed, as Plaintiff concedes they are undisputed in its response to Defendant's separate statement of facts.

Plaintiff has never applied to register the EL GALLO mark with the United States Patent and Trademark Office. (Pl. E. & J. Gallo Winery's Resp. to Def. Grenade Beverage LLC's Separate Statement in Supp. of Mot. for Summ. J. ("Pl.'s Resp.") No. 2.) Plaintiff has never applied to register the EL GALLITO mark with the USPTO. (Pl.'s Resp. No. 4.)

Plaintiff has abandoned its claims for damages as well as for any other monetary relief in this action, except for costs and attorneys' fees should it prevail. (Pl.'s Resp. No. 9.)

Plaintiff has never sold any nonalcoholic beverages except for water and does not intend to sell any nonalcoholic beverages except for water. (Pl.'s Resp. Nos. 23-25.) Plaintiff has no plans to sell energy drinks. (Pl.'s Resp. No. 26.)

II.

LEGAL STANDARDS FOR MOTIONS FOR SUMMARY JUDGMENT

Under Federal Rule of Civil Procedure 56, "[a] party may move for summary judgment... if 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." Summary judgment must be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case..." Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986). "[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate the absence of a genuine issue of material fact." Id.

III.

DISCUSSION

A. Plaintiff's Trademark Claims

Plaintiff argues that it is entitled to summary judgment because there is no genuine dispute as to any material fact with respect to its trademark claim. Trademark claims are governed by 15 U.S.C. § 1125, which prohibits the use in commerce of any word, term, name, symbol, or device, or any combination thereof, which is likely to cause confusion or to cause mistake or to deceive as to the affiliation, connection, or association of such person with another person or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person. To state a trademark claim, a plaintiff must meet three basic elements: (1) distinctiveness, (2) nonfunctionality, and (3) likelihood of confusion. Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery , 150 F.3d 1042, 1047 (9th Cir. 1998).

1. Distinctiveness

"To be valid and protectable, a mark must be distinctive.' Distinctiveness measures the primary significant of the mark to the purchasing public.'" Zobmondo Entertainment, LLC v. Falls Media, LLC, 602 F.3d 1008, 1113 (9th Cir. 2010) (quoting Quiksilver, Inc. v. Kymsta Corp. , 466 F.3d 749, 760 (9th Cir. 2006)). Federal registration of a trademark "provides prima facie evidence' of the mark's validity and entitles the plaintiff to a strong presumption' that he mark is a protectable mark. Id.

Plaintiff has introduced evidence that the GALLO mark is federally registered and that Plaintiff owns that GALLO mark. (See Pl. E. & J. Gallo Winery's Statement of Undisputed Facts in Supp. of its Mot. for Summ. J. Nos. 6-8.) Defendant contends that these facts are disputed because the El Gallo Girl Corporation registered and owns a federal trademark for "El Gallo Giro." (See Def.'s Resp. Nos. 6-8.) Defendant also contends that the fact that Plaintiff owns the federally registered GALLO trademark is irrelevant. The Court rejects Defendant's objection on relevance grounds. The ownership of the GALLO trademarks is clearly relevant.

Defendant's objection based upon the ownership of the El Gallo Giro trademark does not create a genuine dispute with respect to whether Plaintiff registered and owned the GALLO trademark. The fact that the El Gallo Giro trademark exists does not create a factual dispute regarding whether Plaintiff owned and registered the separate GALLO trademark.

Since Plaintiff has established that the GALLO mark has been properly registered, the burden shifts to Defendant to show that the mark is not protectable. Zobmondo Entertainment, LLC, 602 F.3d at 1114. Defendant's opposition does not raise any arguments challenging Plaintiff's prima facie showing that the GALLO mark is distinctive because it was properly registered. Accordingly, the Court finds that Plaintiff has met the first element of a trademark infringement claim.

2. Nonfunctionality

"A product feature is functional and cannot serve as a trademark if the product feature is essential to the use or purpose of the article or if it affects the cost or quality of the article, that is, if exclusive use of the feature would put competitors at a significant, non-reputation-related disadvantage." Kendall-Jackson Winery, Ltd. , 150 F.3d at 1048 (internal quotations and citations omitted).

There is no dispute that the GALLO mark is nonfunctional, as the term "GALLO" does not describe a feature of Plaintiff's products. Accordingly, the Court finds that Plaintiff has met the second element of a trademark infringement claim.

3. Likelihood of Confusion

"The core element of trademark infringement is the likelihood of confusion, i.e., whether the similarity of the marks is likely to confuse customers about the source of the products." Brookfield Communications, Inc. v. West Coast Entertainment Corp. , 174 F.3d 1036, 1053 (9th Cir. 1999) (internal quotations and citations omitted). "We look to the following factors for guidance in determining the likelihood of confusion: similarity of the conflicting designations; relatedness or proximity of the two companies' products or services; strength of [the plaintiff's] mark; marketing channels used; degree of care likely to be exercised by purchasers in selecting goods; [the defendant's] intent in selecting its mark; evidence of actual confusion; and likelihood ...


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