Classic Liquor Importers, Ltd. v. Spirits International B.V.

151 F. Supp. 3d 451, 117 U.S.P.Q. 2d (BNA) 1310, 2015 WL 9487886, 2015 U.S. Dist. LEXIS 172763
CourtDistrict Court, S.D. New York
DecidedDecember 29, 2015
Docket15 Civ. 6503 (JSR)
StatusPublished
Cited by16 cases

This text of 151 F. Supp. 3d 451 (Classic Liquor Importers, Ltd. v. Spirits International B.V.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Classic Liquor Importers, Ltd. v. Spirits International B.V., 151 F. Supp. 3d 451, 117 U.S.P.Q. 2d (BNA) 1310, 2015 WL 9487886, 2015 U.S. Dist. LEXIS 172763 (S.D.N.Y. 2015).

Opinion

OPINION

JED S. RAKOFF, UNITED STATES DISTRICT JUDGE.

By “bottom-line” order dated December 23, 2015, this Court granted in- part and denied in part defendant’s motion-to dismiss. This Opinion explains the reasons for that ruling.

The declaratory judgment procedure is of critical importance to hew businesses that seek to clarify their rights before expending significant resources on activities that potentially infringe a more established business’s trademarks. This case illustrates why. . ,

Plaintiff Classic Liquor Importers, Ltd. (“Classic Liquor”) is a newcomer-to the liquor distribution business, established about two years, ago “with the aim of becoming a leading developer, manufactura’, importer and seller of high quality spirits and wines.” See Amended Complaint (“Am.Compl.”) ¶ 5, EOF'No. 11. Defendant Spirits International B.V. (“SPI”); by contrast, is a leader in the industry; its vodka brands include STOLICHNAYA, ELIT BY STOLICHNAYA, and* ELIT

Classic Liquor asserts that it has committed millions of dollars to developing its first product, a Vodka that it plans to market under the mark ROYAL ELITE. Id. ¶¶ 6-7, 13. On October 3'0, 2014, Classic Liquor filed a trademark application in the United States Patent and Trademark Office (“USPTO”) for the name ROYAL ELITE. See Am. Compl., Ex. A. In February 2015, .the USPTO approved the ROYAL ELITE mark for publication, subject to -third-party opposition.

In a cease-and-desist letter mailed to Classic Liquor on or about May 5, 2015, SPI alleged that Classic Liquor’s proposed ¡use of the ROYAL ELITE mark in connection with liquor and beverage products would infringe SPI’s United States trademarks of variations of the term ELIT.1 See Am. Compl., Ex. G. The letter requested that SPI withdraw its application for the ROYAL ELITE mark and limit its application for a related mark to exclude wines, spirits, and other beverages. Id. By letter dated May 21, 2015, Classic Liquor responded to SPI’s letter, arguing that its proposed use of its ROYAL ELITE mark would not infringe SPI’s ELIT marks. By letter dated July 10, 2015, SPI sought clarifications from Classic Liquor as to which products it planned to bring to market under the ROYAL ELITE mark. Without apparently responding to this last letter, Classic Liquor, on August 18, 2015, commenced this action.

In its Amended Complaint, filed on October 28, 2015, Classic Liquor seeks (1) a declaratory judgment that its vodka bottles and the trademarks and trade dress used thereon do not infringe SPI’s trademarks, and (2) the cancellation of two of SPI’s registered trademarks “on the grounds that ‘elit’, according to SPI, has the exact same meaning as ‘elite’, a descriptive term that cannot be registered with the PTO, pursuant to 15 U.S.C. § 1052(e).” Am. Compl. ¶ 39.

' Classic Liquor alsb alleged in its original complaint filed August 18, 2015 that it [454]*454was preparing to market and distribute its vodka products in the United States “within a month or so” from the date' of the filing of the complaint. Complaint, f 14, ECF No. 1. Although this language was carried .over verbatim to the Amended Complaint, see Am. Compl. ¶ 14, this may-have been unintentional, since in a declaration filed in- support of plaintiffs opposition papers to the instant motion,’ Classic Liquor’s president, Simon Alishaev, avers that “[s]ales and shipment of the ROYAL ELITE vodka to retailers commenced as early as September 2015, and the public has been purchasing [plaintiffs] ROYAL ELITE vodka[ ] product since then.” Declaration of Simon Alishaev dated Nov. 23,’ 2015 (“Alishaev Deel.”), ¶9, ECF No. 19. Mr. Alishaev further avers that “Royal Elite is currently in approximately 100 retailers in the New York metro area and is expanding to over 10 statés in January 2016 — with further expansion to over 20 states through 2016.” Id.

Mr. Alishaev also avers that, oyer the course of 2015, SPI filed oppositions in many countries against plaintiffs applications to register the ROYAL ELITE mark, including in Panama, South Korea, Hong Kong, and Australia. ’See id. ¶ 15. And the Amended Complaint asserts that on September 28, 2015, SPI filed an opposition to Classic Liquor’s application for the ROYAL ELITE mark with the USP-TO’s Trademark Trial and" Appeal Board (“TTAB”). See Am. Compl. ¶30. However, in á letter to Classic Liquor dated October 28, 2015 (i-e., well after this litigation commenced), SPI represented that it had no present intention to ’sue Classic ’Liquor for trademark infringement and purportedly did not have such an intention when it sent its cease-and-desist letter. on May 5, 2015. Nonetheless, SPI reserved its right to pursue litigation- “if- and when Classic Liquor launches and has any actual sales, and depending on the iteration of the mark used, and if we observe or learn of any actual consumer confusion.” Declaration of Max Moskowitz dated Noy. 23,, 2015 (“Moskowitz Deck”), ECF No. 18,- Ex. 1 at 2.2 On November 9, 2015, the TTAB granted Classic Liquor’s motion to stay the TTAB proceedings, pending disposition of the instant action,- as per . its standard policy. Id., Ex. 4.

■ On November 16, 2015, SPI moved to dismiss Counts One and .Two of the Amended .Complaint. With respect to Count One, SPI argued that the Court lacked subject-matter jurisdiction over Classic Liquor’s declaratory judgment claim for non-infringement.

The Declaratory Judgment Act is properly invoked where “there is a substantial controversy, between parties having adverse legal interests, “of sufficient immediacy and reality to warrant the-issuance of a declaratory "judgment.” Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941). The dispute must "admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (internal quotation marks omitted). While the ‘‘Act confers on federal courts unique and substantial discretion, in deciding whether to: declare, the rights of litigants,” Peconic Baykeeper, Inc. v. Suffolk Cty., 600 F.3d 180, 187 (2d Cir.2010) (internal quotation,, marks omitted), a “declaratory judgment. action should be entertained when the judgment will serve a useful [455]*455purpose in clarifying and settling the legal relations in issue, and ... when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.” Fort Howard Paper Co. v. William D. Witter, Inc., 787 F.2d 784, 790 (2d Cir.1986) (internal quotation marks omitted).

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151 F. Supp. 3d 451, 117 U.S.P.Q. 2d (BNA) 1310, 2015 WL 9487886, 2015 U.S. Dist. LEXIS 172763, Counsel Stack Legal Research, https://law.counselstack.com/opinion/classic-liquor-importers-ltd-v-spirits-international-bv-nysd-2015.