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Sazerac Company, Inc. v. Fetzer Vineyards, Inc

United States District Court, N.D. California

April 27, 2017

SAZERAC COMPANY, INC., et al., Plaintiffs,


          William H. Orrick United States District Judge


         Plaintiffs Sazarac Company, Inc. and Sazarac Brands, LLC (collectively, “Sazerac”) brought this action for federal trademark and trade dress infringement and unfair competition against Fetzer Vineyards, Inc. (“Fetzer”). Sazerac alleges that Fetzer's 1000 Stories Zinfandel buffalo mark and trade dress infringe its BUFFALO TRACE word mark, Buffalo Logos, and trade dress for its BUFFALO TRACE bourbon whiskey. Fetzer moves for summary judgment on all of Sazerac's claims, on the grounds that they are necessarily predicated on Sazerac asserting rights over the generic term “bourbon, ” which it cannot do, and because Sazerac has failed to demonstrate a likelihood of confusion. But Fetzer mischaracterizes Sazerac's claims and overlooks its evidence. Sazerac has demonstrated a triable issue whether consumers are likely to be confused by Fetzer's buffalo and trade dress on its 1000 Stories Zinfandel. But because Sazerac failed to disclose properly how it would prove any monetary damages, it is not entitled to recover them. Fetzer's motion for summary judgment is GRANTED concerning Sazerac's ability to recover monetary damages and its infringement claims for six of the trademarks. Fetzer's motion is DENIED regarding the other two marks and the trade dress.



         A. Sazerac's Buffalo Trace Brand

         Sazerac owns the Kentucky-based Buffalo Trace Distillery, “the oldest continuously operating distillery in the United States.” Sazerac's Response to Interrogatories at 4:2-3 (Hadid Decl. Ex. A; Dkt. No. 76-2). The Distillery is a national historical landmark listed with the United States National Park Service. Id. In 1999, Sazerac adopted the Buffalo Trace name and introduced its BUFFALO TRACE brand bourbon whiskey. Id. at 3:23-25. The distillery and whiskey have received over 50 awards, including Distiller and Distillery of the Year, and Best Straight Bourbon and Double Gold Medal awards. Sazerac Business Record (Hadid Confidential Decl. Ex. L; Dkt. No. 70-7[placeholder]; Dkt. No. 70-8[under seal]). Sazerac “capitalized on BUFFALO TRACE's accolades, ” Opp'n at 4, by investing in advertising, and sales of the whiskey grew from 16, 000 cases in 2006 to over 3 million bottles in 2016. Comstock Dep. at 134:22-24; 427:19-22 (Hadid Confidential Decl. Ex. V; Dkt. No. 72-4[redacted]; Dkt. No. 72-5[under seal]).

         Sazerac has registered eight federal trademarks related to the BUFFALO TRACE Trade Dress and Buffalo Logos:

• Buffalo Logo, U.S. Reg. No. 2, 601, 650, issued July 30, 2002, for “bourbon” and related marketing goods;
• Buffalo Outline Logo, U.S. Reg. No. 2, 516, 318, issued December 11, 2001, for related marketing goods;
• Buffalo Ripped Label Design, U.S. Reg. No. 2, 476, 423, issued August 7, 2001, for “bourbon”;
• BUFFALO TRACE And Design, U.S. Reg. No. 2, 622, 735, issued September 24, 2002, for “bourbon” and related marketing goods;
• BUFFALO TRACE, U.S. Reg. No. 2, 294, 792, issued November 23, 1999, for “bourbon”;
• BUFFALO TRACE, U.S. Reg. No. 4, 859, 200, issued November 24, 2015, for “distilled spirits;”
• BUFFALO TRACE DISTILLERY WHITE DOG, U.S. Reg. No. 3, 835, 562, issued August 17, 2010, for “whiskey;” and
• WHITE BUFFALO, U.S. Reg. No. 4, 215, 557, issued September 25, 2012, for “vodka.”

See Registrations (Hadid Decl. Ex. C; Dkt. No. 76-4). It licenses use of the Buffalo Trace trademarks on products such as barrel heads, candles, and candies. Comstock Dep. at 196:13-16; see also Wyant Dep. at 188:19-22; 191:16-23 (Confidential Hadid Decl. Ex. W; Dkt. No. 72-6[redacted]; Dkt. No. 72-7[under seal]); Licensing and Coexistence Agreements (Confidential Hadid Decl. Exs. R, S, T, U; Dkt. Nos. 71-10, 71-12, 72-1, 72-3[all under seal]).

         B. Fetzer's 1000 Stories Wine

         In 2011, Fetzer's Chief Executive Officer, Giancarlo Bianchetti, arrived in the United States and noticed a trend of American pride that he labeled “Americana.” Bianchetti Dep. at 22:10-17 (Disharoon Decl. Ex. C; Dkt. No. 63-6). He also saw an opportunity for a wine brand specifically targeting men. Id. at 22:2-3. In late 2013, he read a Smithsonian Magazine article entitled “101 Objects that Made America, ” one of which was the buffalo, and thought the image embodied the concepts of the “male trend” and “Americana” swelling in the country. Id. at 22:23- 23:8; 25:15-27:3; see also Affinity Creative Group Document (Confidential Hadid Decl. Ex. VV; Dkt. No. 75-13[under seal]). He decided it was the “perfect icon” for a new wine brand. Bianchetti Dep. at 28:16-24. He says that he had not heard of Sazerac or its Buffalo Trace Bourbon Whiskey until after the lawsuit. Id. at 21:2-16.

         As Fetzer proceeded with plans for its new wine brand, Rodrigo Maturana, vice-president of marketing, sought inspiration from other products tapping into the “All-American” spirit. Maturana Dep. at 37:25; 55:8-10; 56:20-21 (Disharoon Decl. Ex. D; Dkt. No. 63-7). He does not recall specifically looking at beverage products, and he denies pre-lawsuit knowledge of Sazerac and its Buffalo Trace whiskey. Id. at 56:16-21, 156:24-157:6. Fetzer retained Affinity Creative Group to assist in the brand development and design. Id. at 59:4-17. The marketing team eventually settled on the name “1000 Stories, ” which derived from playwright David Mamet's depiction of the American buffalo, symbol of the West, telling a thousand stories, “whether roaming free or stuffed.” Id. at 93:23-95:11.

         The team decided that the 1000 Stories brand was going to target the same demographic as the American bourbon consumer because that aligned with the intended all-American, male-oriented concept.[2] Id. at 121:23-122:1; see also id. at 134:15-23 (Confidential Hadid Decl. Ex. X; Dkt. No. 72-9[under seal]); “1000 Stories Shoot” Email (Id. Ex. Z; Dkt. No. 72-13[under seal]). It decided to age the wine in bourbon barrels to aid in targeting male consumers.[3] It chose to prominently include the text “Bourbon Barrel Aged” on the label, in part to differentiate it on the market. Devries Dep. at 77:3-78:4 (Disharoon Decl. Ex. F; Dkt. No. 63-9); Rice Dep. at 93:4- 12 (Hadid Decl. Ex. XX; Dkt. No. 76-14); see also Fetzer Marketing Document (Confidential Hadid Decl. Ex. EE; Dkt. No. 73-9); Marketing Email (Confidential Hadid Decl. Ex. WW; Dkt. No. 75-15[under seal]); 2016 Go to Market Plan (Confidential Hadid Decl. Ex. DD; Dkt. No. 73-7[under seal]). Its marketing materials note that the wine is aged in “old bourbon barrels from famed distilleries such as Heaven Hill and Four Roses.” Fetzer Marketing Document (Confidential Hadid Decl. Ex. EE; Dkt. No. 73-9). And it advertised its 1000 Stories wine in bourbon-focused magazines, including Whiskey Advocate and Bourbon review, and promoted the product at events aimed at bourbon drinkers. E.g., Whiskey Advocate, Fall 2015 edition (Hadid Decl. Ex. D; Dkt. No. 76-5); Bourbon Review (Id. Ex. E; Dkt. No. 76-6); see also Bourbon Classic Sponsor Ticket Form (Confidential Decl. Ex. FF; Dkt. No. 73-11[under seal]); Email Exchange Re: Bourbon Classic (Id. Ex. GG; Dkt. No. 73-13[under seal]); Email Exchange Re: Bourbon Review Ad (Id. Ex. HH; Dkt. No. 74-1[under seal]); Email Exchange Re: Whiskey Advocate (Confidential Hadid Decl. Ex. II; Dkt. No. 74-3[under seal]). In its internal documents, it mentions a goal to target Sazerac's consumers in particular. Fetzer Innovations PP (Confidential Hadid Decl. Ex. KK; Dkt. No. 74-7[under seal]). It even proposed a sangria recipe combining its 1000 Stories wine with Sazerac's Buffalo Trace Bourbon. Email Exchange (Confidential Hadid Decl. Ex. MM; Dkt. No. 74-11[under seal]).

         C. Expert Reports

         Sazerac hired a market research firm to “design and conduct a study that would measure the extent, if any, to which Fetzer's use of the buffalo design trade dress in connection with red zinfandel wine is or is not likely to cause confusion among prospective purchasers of red zinfandel wine.” Johnson Survey ¶ 5 (Hadid Decl. Ex. H; Dkt. No. 76-9). According to the Johnson Survey, 46 percent of respondents believed that the 1000 Stories red zinfandel came from the same company or had a business relationship with the company that makes Buffalo Trace. Johnson Survey ¶¶ 30-31, 33-34.[4]

         Sazerac also submitted an expert report from alcoholic beverage industry expert C. Drew DeSarno, who offered the opinion that “beverage-alcohol companies regularly capitalize upon and expand brand equity of their trademarks across alcoholic beverage categories[, ]” which leads consumers to associate “similar brand imagery and logos on brands in different alcoholic beverage categories” as products from the same company. Desarno Report at 25 (Hadid Decl. Ex. I, Dkt. No. 76-10). He further opined that “Fetzer is trading on the goodwill developed by Sazerac for Buffalo Trace Bourbon and consumers would likely believe Buffalo Trace is either selling or endorsing Fetzer's 1000 Stories brand of wine.” Id. at 26 (capitalization omitted).


         Sazerac became aware of Fetzer's 1000 Stories brand through a Certificate of Label Approval (“COLA”) filed with the United States Alcohol and Tobacco Tax and Trade Bureau. Fetzer's Response to Interrogatories at 5:11-15 (Hadid Decl. Ex. A, F; Dkt. Nos. 76-2, 76-7).[5] It “sent Fetzer a letter requesting that Fetzer re-brand and refrain from the use of buffalo imagery on its alcoholic beverage products.” Opp'n at 6; see 2/26/15 Sazerac Letter to Fetzer (Dkt. No. 76-8). It reasoned that “the 1000 Stories Buffalo Logo creates a likelihood of consumer confusion given that (1) [Fetzer's] logo uses a depiction of a buffalo similar to the Buffalo Trace buffalo logos…; (2) [Fetzer's] wine is advertised as having been aged in used bourbon barrel; (3) [Fetzer is] using [its] logo in connection with a related alcoholic beverage; and (4) [Fetzer's] product is likely to be sold and marketed through the same channels that Sazerac uses for its Buffalo Trace products.” 2/26/15 Letter at 1-2.

         Fetzer continued to use the buffalo imagery on its 1000 Stories brand, and on October 6, 2015, Sazerac filed a complaint for (1) trademark infringement under 15 U.S.C. § 1114, Compl. ¶¶ 33-39; (2) federal unfair competition under 15 U.S.C. § 1125(a), id. ¶¶ 40-43; (3) federal trade dress infringement under 15 U.S.C. § 1125(a), id. ¶¶ 44-50; (4) common law trademark infringement, id. ¶¶ 51-55; and (5) unfair competition under California Business and Professional Code § 17200, et seq., id. ¶¶ 56-60. Compl. (Dkt. No. 1). On March 3, 2016, Sazerac amended the complaint to add Sazerac Brands, LLC as a plaintiff. First Am. Compl. (“FAC”)(Dkt. No. 36). On February 16, 2017, Fetzer moved for summary judgment or partial summary judgment “as to the entire Complaint, or, alternatively, that partial summary judgment be granted as to the first, second, third, fourth, and/or fifth causes of action, including as to each individual trademark infringement claim…, as well as on the claims for monetary damages, treble damages, and attorneys' fees[.]” Mot. at 1 (Dkt. No. 63[redacted]; Dkt. No. 64-8[under seal]).


         Summary judgment on a claim or defense is appropriate “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.” Fed.R.Civ.P. 56(a). In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the non-moving party's claim, or to a defense on which the non-moving party will bear the burden of persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this showing, the burden then shifts to the party opposing summary judgment to identify “specific facts showing there is a genuine issue for trial.” Id. The party opposing summary judgment must then present affirmative evidence from which a jury could return a verdict in that party's favor. Anderson v. Liberty Lobby, 477 U.S. 242, 257 (1986).

         On summary judgment, the Court draws all reasonable factual inferences in favor of the non-movant. Id. at 255. In deciding a motion for summary judgment, “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Id. However, conclusory and speculative testimony does not raise genuine issues of fact and is insufficient to defeat summary judgment. See Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).


         Fetzer's main contention is that Sazerac's claims necessarily depend on it asserting rights in the generic term “bourbon, ” and since it cannot do that, its entire complaint must be dismissed as a matter of law. It also argues that the claims must fail because Sazerac has presented no evidence of consumer confusion. Mot. at 2. In the alternative, it argues for partial summary judgment because Sazerac's “case is based on a combination of elements on the 1000 Stories label[, ]” there is no evidence of misbranding, no showing of secondary meaning, no evidence to support the monetary and treble damages claim, and no showing that this is an exceptional case justifying the award of attorneys' fees. Id. at 2-3.


         Sazerac's causes of action for federal trademark infringement under the Lanham Act, 15 U.S.C. § 1114, common law trademark infringement, and unfair competition are subject to the same “ultimate test” of “whether the public is likely to be deceived or confused by the similarity of the marks.” New W. Corp. v. NYM Co. of California, 595 F.2d 1194, 1201 (9th Cir. 1979). “Likelihood of confusion exists when consumers are likely to assume that a product or service is associated with a source other than its actual source because of similarities between the two sources' marks or marketing techniques.” Shakey's Inc. v. Covalt, 704 F.2d 426, 431 (9th Cir. 1983). Courts look to the following factors,

[S]imilarities between the protected and the allegedly infringing marks, the class of goods in question and the corresponding degree of care likely to be exercised by purchasers in selecting a product, the marketing channels, the intent of the alleged infringer, evidence of actual confusion, and the fame of the prior mark.

Id. (footnote omitted). A party need only show a likelihood of confusion and “actual confusion is not necessary to a finding of likelihood of ...

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