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30Jan/160

“Clearly Canadian” Makes for a Clearly Good Trademark Opinion

By David Lilenfeld on January 30, 2016

David Lilenfeld comments on this trademark infringement opinion, in which the owners of trademarks CLEARLY CANADIAN and CLEARLY KOMBUCHA do battle.

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON

THE CLEARLY FOOD & BEVERAGE CO., INC.,

Plaintiff,

v.

TOP SHELF BEVERAGES, INC.,

Defendant.

ORDER GRANTING IN PART AND DENYING IN PART SUMMARY JUDGMENT

I.      INTRODUCTION

Before the court is Defendant Top Shelf Beverages, Inc.’s (“Top Shelf”) motion for summary judgment. (See Mot. (Dkt. # 47).) (David Lilenfeld: we learn right away what the case is about; have you already formed an opinion?) This is a trademark case involving two brands of bottled beverages: “Clearly Canadian” sparkling water and “Clearly Kombucha” fermented tea. (David Lilenfeld: according to wikipedia, Kombucha refers to any of a variety of fermented, lightly effervescent sweetened black or green tea drinks that are commonly intended as functional beverages). Having considered the submissions of the parties, the balance of the record, and the relevant law, and deeming oral argument unnecessary, the court GRANTS in part and DENIES in part Top Shelf’s motion for summary judgment.

II.      BACKGROUND

Unless otherwise noted, the following facts are undisputed. Plaintiff The Clearly Food & Beverage Co. (“Clearly Food”) owns the trademark “Clearly Canadian,” United  States Trademark Registration No. 1,697,898, as used on “flavored mineral waters, fruit flavored mineral waters, non-flavored mineral waters, carbonated mineral waters, non-carbonated mineral waters, bottled drinking waters, spring waters, soft drinks and fruit juices.” (Resp. (Dkt. # 54)) at 4; Ledden Decl. (Dkt. # 47-3) Ex. 2 (“Assignment”).)

Clearly Food obtained this trademark from the now-defunct Clearly Canadian Beverage Corporation (“CC Beverage”) in January 2012. (David Lilenfeld: out of bankruptcy is always an interesting way to acquire trademark rights). (See Assignment.) CC Beverage sold bottles of flavored sparkling water under the brand name “Clearly Canadian.” (Req. for Not. (Dkt. # 49) Ex. E (“Trustee’s Rep.”).) After struggling for several years to compete in the beverage market (David Lilenfeld: which we all know is insanely competitive), CC Beverage filed for bankruptcy in March 2010. (Id.; Req. for Not. Ex. D (“Bank. Filing”).) In January, 2012, the Clearly Canadian trademark was sold to Clearly Food on behalf of CC Beverage’s secured creditors. (Ledden Decl. Ex. 1 5    (“Not. of Seizure”).) Although by that time the product was no longer being manufactured (David Lilenfeld: how long had the trademark been unused -- an important issue), Clearly Food intended to “reintroduce Clearly Canadian” by “bringing back the original legacy line in its premium glass teardrop bottle (6+ flavors).” (David Lilenfeld: this sounds like there may be a trademark tacking issue here) Decl. Ex. 3 (“Khan 8/23/11 Email”), see also Ex. 14 (“2012 Bus. Plan”) (detailing Clearly Food’s product development and pricing, marketing, sales, and distribution strategies, with a goal to “enter full-scale commercial production by March 2013 for North America”).)

Since then, manufacturing of Clearly Canadian beverages in limited quantities has resumed. (Dabish Decl. (Dkt. # 56) ¶¶ 2-5.) (David Lilenfeld: again, how long was the non-use period?). Bottles of Clearly Canadian sparkling water have been sold online. (Colley Dep. (Dkt. # 57-1) at 91:6-92:4.) Clearly Food is engaged in an online pre-sales campaign directed at consumers, and has also received larger-scale orders from several beverage distributors. (2d Khan Decl. (Dkt. # 93-13) at ¶¶ 3-5.) (David Lilenfeld: Here an important fact to keep in mind). Clearly Food plans to begin selling its products in retail grocery stores in 2015.  (Lilenfeld PC: it seems that the period of non-use was roughly three years (from 2012 to 2015)).

Top Shelf was founded by Caleb Cargle and Alison Zarrow in 2009. (David Lilenfeld: could be setting-up a senior user debate). (Cargle Decl. (Dkt. # 47-1) ¶ 2; see generally Cargle Dep. (Dkt. # 57-3) at 35:17-37:19.) Top Shelf currently sells a flavored kombucha beverage under the trademarked label “Clearly Kombucha.” (Cargle Dep. ¶ 1.) Kombucha is a drink brewed from green tea and then fermented with a symbiotic colony of bacteria and yeast. (Id. ¶ 16.) Mr. Cargle and Ms. Zarrow have developed a unique type of kombucha that is “clear.” (Id. ¶ 7.) That is, due to the filtration process used during brewing, their kombucha is “free from solid ‘floaties’ typically associated with kombucha [that are] . . . caused by the symbiotic colony of bacteria and yeast.” (Id. ¶¶ 6-7.)

The co-founders originally sold their product under the brand “Top Shelf Kombucha.” (Id. ¶ 9.) They marketed Top Shelf Kombuhca as a high-end or “premium” mixer and non-alcoholic substitute, and sold it in a miniature champagne bottle. (Id. ¶ 8.)  (David Lilenfeld: note that no first use date for Top Shelf's use of CLEARLY KOMBUCHA is revealed yet).

Although supplies were limited by their production capabilities, they believed the sales results “showed promise.” (Id. ¶ 10.)  At the end of 2010, the co-founders changed strategies. (Id. ¶ 12; Zarrow Dep. (Dkt. # 57-5) at 9:11-17.) After consulting with brand advisors, they decided to differentiate their product from its competitors based on its “clear” character. (Cargle Decl. ¶ 12; Zarrow Dep. at 12:16-24.) They also decided that they wanted Top Shelf to be recognized as a socially conscious brewer with transparent manufacturing practices.  (Cargle Decl. ¶ 13)

To reflect those goals, they decided to change the name of their product to “Clearly Kombucha.” (Id.) (David Lilenfeld: Top Shelf changed to CLEARLY KOMBUCHA toward end of 2010). The co-founders applied for a federal trademark registration in November 2010, and the “Clearly Kombucha” mark was published for opposition in April 2011. (Req. for Not. Exs. A, B.) After the mark was published (David Lilenfeld: how soon after?), the Clearly Kombucha brand launched in Ralph’s grocery stores throughout California. (Cargle Decl. ¶ 14.) Clearly Kombucha beverages are now sold at various retailers, including, among others, Safeway stores in Northern California and the Pacific Northwest, Ralph’s stores in southern California, a few Whole Foods grocery stores in Northern California, and PCC natural food stores in Washington and Oregon. (Cargle Dep. at 73:3-74-12; Zarrow Dep. at 27:21-28.) Clearly Kombucha is also available for purchase over the Internet. (Cargle Dep. at 83:21-25.)

(David Lilenfeld: the trademarks and goods seem different enough that I would not expect to see a likelihood of confusion, but more facts to come). In September,2013, Clearly Food filed this action against Top Shelf, bringing claims for trademark infringement under the Lanham Act § 32, 15 U.S.C. § 1114, unfair competition under the Lanham Act § 43(a), 15 U.S.C. § 1125(a), trademark dilution under Lanham Act § 43(c), 15 U.S.C. § 1125(c), and trademark infringement and unfair competition under Washington State law. (See generally Compl. (Dkt. # 1).) Top Shelf’s Motion for summary judgment on all claims is now before the court. (See Mot.)

III.      ANALYSIS

A.        Summary Judgment Standard

Federal Rule of Civil Procedure 56 permits a court to grant summary judgment where the moving party demonstrates (1) the absence of a genuine issue of material fact and (2) entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir. 2007). The moving party bears the initial burden of showing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323.  (David M. Lilenfeld: standard MSJ discussion).

If the moving party does not bear the ultimate burden of persuasion at trial, it can show the absence of an issue of material fact in two ways: (1) by producing evidence negating an essential element of the nonmoving party’s case, or (2) by showing that the nonmoving party lacks evidence of an essential element of its claim or defense. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1106 (9th Cir. 2000). If the moving party will bear the ultimate burden of persuasion at trial, it must establish a prima facie showing in support of its position on that issue. UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 (9th Cir. 1994). That is, the moving party must present evidence that, if uncontroverted at trial, would entitle it to prevail on that issue. Id. at 1473.

If the moving party meets its burden of production, the burden then shifts to the nonmoving party to identify specific facts from which a factfinder could reasonably find in the nonmoving party’s favor. Celotex, 477 U.S. at 324; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). In determining whether the factfinder could reasonably find in the nonmoving party’s favor, “the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).  (David Lilenfeld: Court providing a thorough discussion of MSJ standard).

B.        Judicial Notice

Top Shelf requests that the court take judicial notice (David Lilenfeld: why didn't Top Shelf just submit the documents) of the following documents:

(1) Top Shelf’s Trademark Application for the Clearly Kombucha mark, (2) the Notice of Publication of the Clearly Kombucha mark, (3) the Trademark Registration Certificate for the Clearly Kombucha mark, (4) the Combined Declaration of Use and/or Exclusable Nonuse /Application for Renewal of Registration of a Mark under Sections 8 & 9 for the Clearly Canadian mark, (5) the Proposal under the Bankruptcy and Insolvency Act filed in March 2010 by CC Beverage, and (6) the Trustee’s Report to Creditors filed in In the Matter of the Proposal of Clearly Canadian Beverage Corporation, dated March 17,  2010. (See Req. for Not. Exs. A-F.) Top Shelf obtained the trademark documents from the U.S. Patent and Trademark Electronic Search System, and obtained the bankruptcy documents from the Supreme Court of British Columbia (Vancouver Registry). (Id. ¶¶ 6- 7.)

Rule 201 of the Federal Rules of Evidence permits a federal court to take judicial notice of a fact that is not subject to “reasonable dispute” because it is “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably questioned.” Fed. R. Evid. 201(b)(2). (David Lilenfeld: seems like a detour from the main trademark issues). The public records of administrative agencies   and other courts are appropriate matters for judicial notice. Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (taking notice of court filings); see also Dahon N. Am., Inc. v. Hon, No. 2:11-CV-05835-ODW, 2012 WL 1413681, at *8 (C.D. Cal. Apr. 24, 2012) (taking judicial notice of documents filed on the United States trademark website); CDx Diagnostics Inc. v. Histologics LLC, No. CV 13-7909-DOC NBX, 2014 WL 3347525, at *3 (C.D. Cal. July 7, 2014) (collecting cases taking judicial notice of documents from administrative agencies). Clearly Food has not objected to Top Shelf’s request. Accordingly, for the purposes of this motion, the court grants Top Shelf’s request for judicial notice.  (David Lilenfeld: typically courts just do it without explanation; maybe plaintiff challenged it).

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