Drew Estate Holding Co. v. Fantasia Distribution, Inc.

875 F. Supp. 2d 1360, 104 U.S.P.Q. 2d (BNA) 1758, 2012 WL 2402051, 2012 U.S. Dist. LEXIS 87380
CourtDistrict Court, S.D. Florida
DecidedJune 25, 2012
DocketNo. 11-21900-CIV
StatusPublished
Cited by5 cases

This text of 875 F. Supp. 2d 1360 (Drew Estate Holding Co. v. Fantasia Distribution, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Drew Estate Holding Co. v. Fantasia Distribution, Inc., 875 F. Supp. 2d 1360, 104 U.S.P.Q. 2d (BNA) 1758, 2012 WL 2402051, 2012 U.S. Dist. LEXIS 87380 (S.D. Fla. 2012).

Opinion

ORDER

CECILIA M. ALTONAGA, District Judge.

THIS CAUSE came before the Court upon Plaintiff, Drew Estate Holding Company LLC’s (“Drew[’s]”) Motion for Summary Judgment (“Motion”) [ECF No. 113], filed April 18, 2012. On May 25, 2011, Drew filed a Complaint [ECF No. 1] alleging unfair competition in violation of 15 U.S.C. § 1125(a) against. Defendant, Fantasia Distribution, Inc. (“Fantasia”). Drew now moves for summary judgment on its unfair competition claim. Fantasia filed a Reply in Opposition to Drew Estate’s Motion ... (“Response”) [ECF No. 132] on May 7, 2012, and Drew filed its Reply [ECF No. 146] on May 17, 2012. The Court has carefully reviewed the parties’ written submissions and applicable law.

I. BACKGROUND1

A. Cigars and Hookah Tobacco

Cigars are tightly-rolled bundles of dried and fermented tobacco from which, when ignited, smoke may be drawn into the mouth. (See Pl.’s Statement of Facts ... (“SMF”) [ECF No. 114] ¶ 1). Hookah tobacco (also called shisha, smoking tobacco, molasses tobacco, or simply tobacco) is a type of loose, flavored tobacco placed into a hookah pipe, which is an instrument in which smoke is passed through a water basin, which purifies and cools the smoke before it is drawn into the mouth. (See id. ¶ 22).

Cigar and hookah tobacco products are available for purchase by adults in retail tobacco stores across the country and promoted at the same industry trade shows. (See id. ¶¶ 7, 9). They are often advertised through the same media, including social media such as Facebook or YouTube; in print magazines such as Smoke Shop, Tobacconist, and Tobacco Outlet Business-, and in tobacco retail stores such as Karma Cigar & Retail Ho.okah Lounge and Village Cigar Emporium. (See id. ¶ 8). There is overlap between the classes of consumers, all adults over 18, who buy and smoke cigars, infused cigars, and hookah tobacco. (See id. ¶ 10).

B. Morfiya, Inc.

Morfiya, Inc. (“Morfiya”) is a New York corporation that owns, inter alia, U.S. Trademark Registration Number 2,440,808 for the word mark “ACID” for “cigars” (“'808 Mark”), which registration was issued on April 30, 2001, based on use of the mark in commerce at least as early as July 15, 1999. (Id. ¶ 11). This registration is incontestable under 15 U.S.C. § 1115(b). (See id.). Morfiya also owns U.S. Trademark Registration Number 3,687,647 for the mark “ACID CIGARS ( & Motorcycle Design)” for “cigars, tobacco, and related [1363]*1363products, namely cigar boxes, cigar and cigarette lighters, cigar and cigarette holders, ashtrays, cigar bands, cigar cutters, humidors, and cigar tubes” (“'647 Mark”), which registration was issued on September 22, 2009, based-on use. of the mark in commerce at least as early as August 2000. (Id. ¶ 12). The registration includes a disclaimer of the descriptive wording “CIGARS.” (Id.). Plaintiff refers to the '808 and '647 Marks jointly as the “ACID mark.” (Mot. 4).

On December 15, 1999, Morfiya entered into an exclusive trademark license agreement with Plaintiff Drew, pursuant to which Drew-became the exclusive licensee of the ACID mark in the United States. (See SMF ¶ 13). The term “acid” is arbitrary as applied to tobacco products. (Id. ¶ 14). The term “acid” is not used by any other entities within the tobacco industry, except for Drew’s authorized licensee, Third-Party Defendant Starbuzz Tobacco, Inc. (“Starbuzz”) and Defendant Fantasia. (Id. ¶ 15).

C. Drew Estate Holding Company LLC

Drew is a Delaware limited liability company doing business in Miami, Florida. (See id. ¶ 16). Drew manufactures, promotes, and sells tobacco products, and its current brand portfolio includes the brands “DREW ESTATE,” “AMBROSIA,” and “JAVA.” (Id. ¶ 17). Drew distributes, promotes, and sells its products to adults over the age of 18 through brick- and-mortar and online tobacco retail stores, smoke shops, and lounges. (See id. ¶ 18). Drew advertises through social media, print advertisements in magazines, and its website. (See id. ¶ 19). It also makes .promotional items such as t-shirts, ashtrays, cigar cutters, jewelry, paintings, posters, and matches. (See id.). Drew hosts private and public parties and promotional events, at which it provides product samples and promotional items. (See id.). Drew further promotes its products at industry trade shows. (See id. ¶ 20).

Products branded with the ACID mark have received significant positive recognition within the tobacco industry. (See id. ¶ 23). Since 1999, Drew has made, promoted, and sold ACID cigars containing infused tobacco, which come in four packaging designs in red, gold, purple, and blue.' (See id. ¶ 24). The best-selling variety is sold in the blue-colored package. (See id.). Drew’s ACID cigars are sold individually and in packs of varying amounts. (See id. ¶ 25). Individual cigars are sold at retail for prices between $4.45 to $12.45. (See id.).

In the summer of 2010, Drew entered into negotiations with Starbuzz Tobacco, Inc. (“Starbuzz”) about a proposed sub-license agreement, pursuant to which Star-buzz would manufacture, promote, and sell a hookah tobacco product under the ACID mark. (See id. ¶ 28).

D. Starbuzz Tobacco, Inc.

Starbuzz is a California corporation doing business in Anaheim, California. (See id. ¶ 29). Starbuzz was founded in 2005 and purports to be the leading hookah tobacco manufacturer and distributor in the United States. (See id. ¶ 30). Star-buzz distributes and sells all of its hookah tobacco products through brick-and-mortar retail stores, online tobacco retail stores, hookah and smoke lounges, social network, and Starbuzz’s own e-commerce website www.starbuzztobaceo.com. (See id. ¶ 32). Starbuzz’s hookah tobacco products have a suggested retail price from $4.99 for 50 gram cans to over $19.99 for 250 gram cans. (See id. ¶ 33).

Starbuzz owns U.S. Trademark Registration Number 4,004,853 for the word mark “BLUE SURFER” in connection [1364]*1364with tobacco products (“'853 Mark”), based on a claim of use of the mark in commerce since as early as August 16, 2009. (See id. ¶ 34). In September 2010, Drew executed a formal sub-license agreement with Star-buzz pursuant to which Starbuzz would manufacture, promote, and sell ACID hookah tobacco,. which comes in red, gold, purple, and blue packages, of which the best-selling variety is blue. (See id. ¶ 36). Starbuzz’s use of the '647 Mark for AQID CIGARS (& Motorcycle Design) inures to the benefit of Drew as a matter of law. (See id. ¶ 37).

E. Fantasia Distribution, Inc.

Fantasia is a California corporation doing business in Anaheim, California. (See id. ¶ 38). Fantasia makes hookah tobacco, offering its products for sale through brick-and-mortar retail tobacco stores and online retail tobacco stores. (See id. ¶ 39).

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875 F. Supp. 2d 1360, 104 U.S.P.Q. 2d (BNA) 1758, 2012 WL 2402051, 2012 U.S. Dist. LEXIS 87380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/drew-estate-holding-co-v-fantasia-distribution-inc-flsd-2012.