Last week, California District Court Judge Donato denied Union Wine Company’s motion to dismiss a suit launched against the wine company by FN Cellars, LLC. FN Cellars originally brought suit against Union Wine seeking (1) declaratory judgment of validity for FN Cellars’ trademark; (2) a declaration that its mark does not infringe upon Union Cellars’ mark; and (3) cancellation of Union Wine’s mark. See FN Cellars, LLC vs. Union Wine Company, Case No. 15-cv-02301-JD. Union Wine originally moved to dismiss the suit for lack of subject matter jurisdiction on the grounds that the interactions between Union Wine and FN Cellars had not given rise to a justiciable case or controversy. The court last week denied Union Wine’s motion to dismiss. Full opinion can be read here.
FN Cellars is the owner of BELLA UNION mark (registered by the USPTO on October 7, 2014) and Union Wine is the owner of UNION WINE CO. (registered by the USPTO on February 18, 2014). On June 15, 2014, after a Notice of Allowance for BELLA UNION mark was issued, Union Wine sent FN Cellars a letter asserting rights to UNION WINE CO. mark. In the letter, Union Wine mentioned there was a likelihood of confusion between the marks due to the fact that the marks both contain the word UNION, the goods are identical, the goods move in the same channels of trade and will be purchased by the same type of consumers. Thus, Union Wine intended to petition to cancel the BELLA UNION registration if issued. Union also requested that FN Cellars abandon the USPTO application. Id. at 2. A more detailed account of the exchange can be accessed through a read of the Court’s opinion.
Union Wine filed a petition to cancel FN Cellars’ mark in February 2015, arguing that the marks were “highly similar,” and that BELLA UNION was likely to cause confusion, mistake, or misrepresent with respect to the association between FN Cellars and Union Wine Co. The TTAB stayed the petition after the case at hand was filed in the California District Court by FN Cellars.
The Declaratory Judgment Act allows the Court to “‘declare the rights and other legal relations of any interested party’ to a ‘case of actual controversy within its jurisdiction.’” Id. quoting 28 U.S.C.§ 2201(a). Courts in the past have found that a case exists when a dispute is definite and concrete and can be addressed by definitive relief through a conclusive judgment. For jurisdiction to be found, a substantial controversy must exist between the parties. Prior decisions have found trademark disputes to be justiciable under the Declaratory Judgment Act when a plaintiff has both real and reasonable apprehension of, e.g., a threat of litigation. Id. at 3.
The Court noted that its jurisdiction in this Case for FN Cellar’s first and third claims (i.e., the declaratory judgment of validity for BELLA UNION and for cancellation of Union Wine’s mark) was contingent upon there being subject matter jurisdiction over the plaintiff’s second claim, i.e., the claim for declaratory judgment of non-infringement for the BELLA UNION mark (i.e., no independent subject matter jurisdiction for the declaratory judgment of validity and for the cancellation of the mark at issue). Id. at 4. Union Wine argued against a finding of subject matter jurisdiction because Union did not threaten FN Cellars with litigation but instead only mentioned its intention to petition to cancel the BELLA UNION registration if issued. Union further argued that there was no “justiciable controversy here because ‘the filing of a TTAB action . . . without more is insufficient to support a declaratory judgment action for non-infringement.’” Id. at 4 (quoting kt. No. 20 at 8).
The California District Court found that the records between the parties indicated there was, indeed, a “substantial controversy” and such was “definite and concrete” to be addressed by the Court. Id. at 5. In doing, so the Court reviewed and focused on Union’s June 2014 letter to FN Cellars in which Union outlined its intention to pursue a cancellation petition unless FN Cellars abandoned the BELLA UNION mark and provided Union with “an unequivocal undertaking not to use [the BELLA UNION] mark on wine.” Id. at 5 quoting Dkt. No. 17. From its review of the supporting documents, the Court determined that an actual and justiciable controversy was “amply establish[ed].” Id. The Court also looked at evidence that Union Wine filed a cancellation action as additional support for the finding of a controversy.
Union Wine argued that its June 2014 letter contained infringement language, as an attempt to explain the process and grounds for the cancellation action. The Court, however, took the stance that such did not discount or remove the reasonable apprehension that the language used was an infringement threat. “The letter did not need to contain an express threat that defendant would sue, or any other formulaic words, to create an actual controversy.” Id.
Taking into account all the facts, the Court reasoned that a declaratory action was appropriate in this action and thus denied Union Wine’s motion to dismiss.
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DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.