Maltina Corporation and Julio Blanco-Herrera v. Cawy Bottling Co., Inc.

613 F.2d 582, 205 U.S.P.Q. (BNA) 489, 1980 U.S. App. LEXIS 19628
CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 14, 1980
Docket78-1061
StatusPublished
Cited by94 cases

This text of 613 F.2d 582 (Maltina Corporation and Julio Blanco-Herrera v. Cawy Bottling Co., Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Maltina Corporation and Julio Blanco-Herrera v. Cawy Bottling Co., Inc., 613 F.2d 582, 205 U.S.P.Q. (BNA) 489, 1980 U.S. App. LEXIS 19628 (5th Cir. 1980).

Opinion

SAM D. JOHNSON, Circuit Judge:

I. The Facts

Cawy Bottling Company (Cawy)', defendant below, appeals from the judgment of the district court in favor of the plaintiffs Maltina Corporation and Julio Blanco-Herrera in their trademark infringement action. The district court enjoined Cawy from further infringement, awarded the plaintiffs $35,000 actual damages, and ordered the defendant to account for $55,050 of gross profit earned from the sale of infringing products.

Julio Blanco-Herrera fled to this country from Cuba in late 1960 after that country nationalized the company of which he was president and, along with his family, majority stockholder. Before that year, this company was one of the largest breweries and beverage distributors in Cuba. Among its products was malta, a dark, non-alcoholic carbonated beverage brewed similar to beer. The Cuban company distributed malta under the trademarks “Malta Cristal” and “Cristal” in Cuba and in the United States. The Cuban company had registered the marks both in Cuba and the United States. When Blanco-Herrera arrived in the United States, he formed the Maltina Corporation and assigned the “Cristal” trademark to it. He attempted to produce and distribute “Cristal” in this country, but despite his efforts Maltina Corporation was never able to obtain sufficient financial backing to produce more than $356 worth of “Cristal”.

Cawy Bottling, however, had an altogether different experience in producing malta. At the outset, it attempted to register the “Cristal” trademark so that it might be utilized in marketing the product. This attempt was rejected by the Patent Office because of plaintiffs’ prior registration. After this attempted registration and with the knowledge of the plaintiffs’ ownership of the trademark, Cawy began producing and distributing malta under the “Cristal” label in February 1968.

In 1970 the plaintiffs sued Cawy under 15 U.S.C. § 1117 for trademark infringement and unfair competition. They sought an injunction against further use of their mark, damages, and an accounting. The district court dismissed the suit on the ground that Cuba’s confiscation of the assets of Blanco-Herrera’s Cuban corporation made Blanco-Herrera’s assignment of the “Cristal” mark to the Maltina Corporation invalid. This Court reversed, holding Cuba’s confiscation decree did not extend to the “Cristal” mark registered by the United States Patent Office. Maltina Corp. v. Cawy Bottling Co., 462 F.2d 1021 (5th Cir.), cert. denied, 409 U.S. 1060, 93. S.Ct. 555 (1972). On remand, the district court determined that the plaintiffs had a valid trademark. Cawy appealed, and we affirmed. Maltina Corp. v. Cawy Bottling Co., 491 F.2d 1391 (1974) (per curiam).

At trial on the merits, from which this appeal is taken, the district court deter *584 mined that Cawy had infringed the plaintiffs’ mark and assigned the case to a magistrate for determination of what recovery was appropriate under 15 U.S.C. Section 1117. Before holding a hearing the magistrate wrote a memorandum to the district court stating that he thought that the plaintiffs were entitled to an injunction but not to an accounting for defendant’s profits.

After holding the hearing, however, the magistrate changed his recommendation. He noted that Cawy designed its “Cristal” label to resemble the label used by Maltina’s predecessor in Cuba. He found that Cawy intended to exploit the reputation and good will of the “Cristal” mark and to deceive and mislead the Latin community into believing that the “Cristal” once sold in Cuba was now being sold in the United States. The magistrate further found that Cawy wilfully infringed the plaintiffs’ mark and had been unjustly enriched to the detriment of plaintiffs’ reputation and good will. He recommended that Cawy account to the plaintiffs for the profit it earned from the infringement, and he directed Cawy to report its sales of “Cristal” and associated costs to the plaintiffs for determination of its profits. The magistrate also found Cawy’s infringement damaged the reputation and good will of the plaintiffs in the amount of $35,000. He recommended that Cawy compensate plaintiffs in that amount.

The district court, after a complete and independent review of the record, adopted the magistrate’s recommendations as its order. As more fully discussed below, the district court eventually found Cawy liable to the plaintiffs for its gross profits from the sale of “Cristal”, $55,050. The court entered judgment against Cawy for $55,050 gross profits plus $35,000 damages and enjoined Cawy from any further infringement of the plaintiffs’ mark.

Cawy presents three arguments on appeal. First, it argues that an accounting was inappropriate. Second, that if an accounting was appropriate, the district court erred in awarding to the plaintiff Cawy’s entire gross profits from the sales of “Cristal”. Third, Cawy argues that the award of $35,000 actual damages cannot stand in the absence of any evidence to support it. We accept this final contention, but reject the first two. Cawy does not complain on appeal of the district court’s enjoining it from further infringement of the plaintiffs’ mark.

II. Was an Accounting Appropriate?

Section 1117, 15 U.S.C., entitles a markholder to recover, subject to the principles of equity, the profits earned by a defendant from infringement of the mark. 1 The courts have expressed two views of the circumstances in which an accounting is proper under 15 U.S.C. Section 1117. Some courts view the award of an accounting as simply a means of compensating a mark-holder for loss or diverted sales. Other courts view an accounting not as compensation for lost or diverted sales, but as redress *585 for the defendant’s unjust enrichment and as a deterrent to further infringement. See Maier Brewing Co. v. Fleisehman Distilling Corp., 390 F.2d 117, 121 (9th Cir.) cert. denied, 391 U.S. 966, 88 S.Ct. 2037, 20 L.Ed.2d 879 (1968). In this case, the plaintiffs never sold any appreciable amount of “Cristal” in the United States so they cannot claim that Cawy diverted any of their sales. Accordingly, we must decide whether diversion of sales is a prerequisite to an award of an accounting. We hold that it is not.

In Maier Brewing the Ninth Circuit awarded an accounting to a plaintiff who was not in direct competition with a defendant and who, accordingly, had not suffered any diversion of sales from the defendant’s infringement. The court noted that the defendant had wilfully and deliberately infringed.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Rolex Watch v. Beckertime
91 F.4th 776 (Fifth Circuit, 2024)
PlayNation Play Systems, Inc. v. Velex Corporation
924 F.3d 1159 (Eleventh Circuit, 2019)
Retractable Techs., Inc. v. Becton Dickinson & Co.
919 F.3d 869 (Fifth Circuit, 2019)
Tiramisu Intertional LLC v. Clever Imports LLC
741 F. Supp. 2d 1279 (S.D. Florida, 2010)
Henry v. PRO 10 ORIGINALS, LLC
698 F. Supp. 2d 1279 (D. Wyoming, 2010)
Fendi Adele S.R.L. v. Burlington Coat Factory Warehouse Corp.
642 F. Supp. 2d 276 (S.D. New York, 2009)
American Rice, Inc. v. Producers Rice Mill, Inc.
518 F.3d 321 (Fifth Circuit, 2008)
Animale Group Inc v. Sunny's Perfume Inc, e
256 F. App'x 707 (Fifth Circuit, 2007)
Qaddura v. Indo-European Foods, Inc.
141 S.W.3d 882 (Court of Appeals of Texas, 2004)

Cite This Page — Counsel Stack

Bluebook (online)
613 F.2d 582, 205 U.S.P.Q. (BNA) 489, 1980 U.S. App. LEXIS 19628, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maltina-corporation-and-julio-blanco-herrera-v-cawy-bottling-co-inc-ca5-1980.