Explorers Club, Inc. v. Diageo plc

45 Misc. 3d 434, 993 N.Y.S.2d 612
CourtNew York Supreme Court
DecidedAugust 4, 2014
StatusPublished

This text of 45 Misc. 3d 434 (Explorers Club, Inc. v. Diageo plc) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Explorers Club, Inc. v. Diageo plc, 45 Misc. 3d 434, 993 N.Y.S.2d 612 (N.Y. Super. Ct. 2014).

Opinion

OPINION OF THE COURT

Charles E. Ramos, J.

The Explorers Club, Inc. brings a verified petition for a permanent injunction to bar respondents Diageo pic, Diageo Brands B.V, Diageo Americas Supply, Inc., Diageo North America, Inc., and Diageo Americas, Inc. (collectively, Diageo) from the unlawful use of the Club’s name in connection with Diageo’s line of whiskies under its Johnnie Walker brand, the “Johnnie Walker Explorers’ Club Collection,” pursuant to General Business Law § 135.

The Club is a century-old not-for-profit organization dedicated to the advancement of field research and the promotion of exploration, sponsoring expeditions, funding student research, and champions discovery and the wonders of the world (petition ¶ 16). The Club maintains its headquarters in New York and boasts 26 chapters around the world.

To fund its activities, the Club relies on member contributions, fund-raising, and has a history of partnering with like-[437]*437minded corporate sponsors who pay to license the Club’s name and intellectual property (petition ¶ 22).

The Club owns several federally registered trademarks relating to its name (exhibit G, annexed to Raskopf aff).

The Diageo respondents sell and manufacture various collections of alcohol beverages. Diageo launched the Explorers’ Club Collection line of scotch whiskies under its Johnnie Walker brand in 2012 (JWECC). According to the Club, Diageo launched a massive marketing campaign incorporating the Club’s name in an effort to affiliate its products with adventure, travel, exploration and discovery. The JWECC line is targeted specifically at international travelers and sold exclusively through duty-free stores or airport clubs that resemble—both in decor and atmosphere—the Club’s headquarters in New York (petition ¶¶ 27-36; Bernstein aff ¶¶ 4-5, 8; Stromsvag aff ¶¶ 3-4; Schiller affirmation, exhibits E-G).

The Club alleges that by using the name The Explorers’ Club, promoting its products in clubs that resemble the Club’s headquarters, and advertising its products by invoking the spirits of exploration, travel, discovery and adventure, Diageo has succeeded in using the name of a charitable organization to obtain a business advantage in violation of General Business Law § 135. The Club alleges that consumers have purchased JWECC products under the mistaken belief that these products were affiliated with the Club itself.

The Club represents that it sought to avoid litigation by notifying Diageo of the Club’s exclusive rights to its own name, and by opposing Diageo’s attempts to register “Explorers’ Club” trademarks before the United States Patent and Trademark Office (USPTO). The parties engaged in settlement negotiations over a 16-month time period and discussed granting Diageo a license to use the Club’s name before this proceeding was commenced, however, the parties were unable to reach an amicable resolution.

In response to the petition, Diageo denies that it intended to deceive or derive any benefit from a supposed affiliation with the Club in naming its whisky collection JWECC. Diageo moves to dismiss the petition based upon a pending federal trademark infringement action that the Club commenced in the Southern District of New York against Diageo (federal action), or alternatively, a stay pending resolution of the federal action. Diageo also asserts that this action is barred under the doctrine of laches, and that this court lacks jurisdiction over Diageo pic.

[438]*438Discussion

I. Motion to Dismiss

At the outset, the instant petition for a permanent injunction under General Business Law § 135 and the federal action, a plenary action seeking damages for trademark infringement and unfair competition, do not concern the same relief.

The legislature intended General Business Law § 135 to provide a “new and summary proceeding not heretofore available by which an aggrieved party in a proper case, could obtain speedy and drastic relief without the delays incident to a plenary action” (Association of Contr. Plumbers of City of N.Y. v Contracting Plumbers Assn. of Brooklyn & Queens, Inc., 302 NY 495, 498 [1951]). The injunctive relief available in a General Business Law § 135 special proceeding is separate and “not to be confused” with the relief available in a plenary action (Matter of Industrial Plants Corp. v Industrial Liquidating Co., 286 App Div 568, 572 [1st Dept 1955]).

“[S]pecial proceedings in the sense used in the CPLR are unknown in federal courts” (Saregama India, Ltd. v Mosley, 2012 WL 955520, *1, 2012 US Dist LEXIS 39322, *4 [SD NY, Mar. 20, 2012, No. 12-mc-45-P1, 11-mc-84-P1]). Rather, a

“special proceeding is designed to facilitate a ‘summary disposition’ of the issues . . . and has been described as ‘a fast and cheap way to implement a right’ that is ‘as plenary as an action, culminating in a judgment, but is brought on with the ease, speed and inexpensiveness of a mere motion’ ” (Davidson v Capuano, 792 F2d 275, 279-280 [2d Cir 1986]).

For these reasons, federal courts often decline to exercise supplemental jurisdiction over summary proceedings (e.g. Morningside Supermarket Corp. v New York State Dept. of Health, 432 F Supp 2d 334, 346 [SD NY 2006] [CPLR art 78 proceeding]; Lucchese v Carboni, 22 F Supp 2d 256 [SD NY 1998] [CPLR art 78 proceeding]). Additionally, one respondent, Diageo Americas Supply, Inc., is a New York corporation, and thus the parties lack complete diversity.

Furthermore, although the parties are the same and there are undoubtedly overlapping facts, the questions of law are separate and distinct. The Club asserts claims in the federal action for trademark infringement, misuse of the Club’s name, and trademark dilution under the Lanham Act, and state law claims for unfair competition. Unlike a claim under General Business [439]*439Law § 135, the Club’s claims in the federal action require a showing that, amongst others, its mark has acquired distinctiveness or a secondary meaning (Allied Maintenance Corp. v Allied Mech. Trades, 42 NY2d 538 [1977]). A special proceeding under General Business Law § 135 is available only to benevolent, humane or charitable organizations, and intended to be speedy and efficient, does not require a trial and is decided on affidavits alone (in the absence of triable issues), and may streamline the issues, rather than raise the specter of inconsistent rulings. Simply put, this proceeding and the federal action are entirely different.

Therefore, there is no basis for dismissal of this proceeding in favor of the federal action, or a stay pending resolution of that action (CPLR 2201; 952 Assoc., LLC v Palmer, 52 AD3d 236, 236-237 [1st Dept 2008]).

A. Laches

The court also rejects Diageo’s contention that this proceeding is barred by the doctrine of laches. “Laches is an equitable doctrine based on fairness. Courts have invoked the doctrine to prevent stale claims and the prejudice that can result. Whether the doctrine is applicable, however, depends on the facts of the case” (Continental Cas. Co. v Employers Ins. Co. of Wausau, 60 AD3d 128, 137 [1st Dept 2008], lv denied 13 NY3d 710 [2009]; Sirico v F.G.G. Prods., Inc., 71 AD3d 429, 434 [1st Dept 2010]). Mere lapse of time, without showing of prejudice, disadvantage or injury, is insufficient to sustain a claim of laches

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45 Misc. 3d 434, 993 N.Y.S.2d 612, Counsel Stack Legal Research, https://law.counselstack.com/opinion/explorers-club-inc-v-diageo-plc-nysupct-2014.