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Wine Industry Insight
NOTE: In many hotly contested cases such as this one, Wine Industry Insight prefers not to rely upon exhibits in legal filings because attorneys — correctly — are advocates for their clients.
In this case, we conducted our own first-hand research for this article regarding any possible confusion, the standards for “owning” a trademark, and the minimum standards for conducting a trademark search.
Links to 90 pages of the full complaints and exhibits filed at the Federal District Court by both parties are available at the bottom of this article and available to premium subscribers.
Attorneys for both sides were contacted. Neither had any comment.
This is the first of a Two-Part Series
The opening bell of the Six Degrees of Napa trademark grudge match should sound at a case management conference March 9 when cult Cabernet Sauvignon maker JC Waugh is scheduled to meet budget brand giant Bronco Wine Company (and several associated companies) in U.S. District Court in San Francisco.
The case may well turn on Common Law, a botched trademark search, and the ability of a company to own a trademark without actually filing for one at the U.S. Patent and Trademark Office (USPTO).
Depending on the outcome of the upcoming trial later this year,¬† some — or all — of those may be a game changers for JC Waugh.
Bronco and associated companies Classic Wines,¬† Barrel Ten Quarter Circle and Panther Rock are being sued for trademark infringement, unfair competition and four related complaints.
Panther Rock , whose name is identified as the vintner on the 6 Degrees label, is described in Bronco’s latest court filing,¬† as “a small, family-owned company founded in 2009 by younger members of the family that owns Bronco.” The Panther Rock web site identifies the company as “A Division of Bronco Wine Company.”
The Panther Rock Wine Company web site indicated on Feb 28, that the web site is copyrighted by another entity, CottonWood Creek Cellars and is promoting four brands, including Six Degrees.
Two of the Panther Rock/CottonWood brands have their own web sites. Six Degrees does not have its own web site, nor does it have a web presence other than what appears on the Bronco Wine Company site.
According to its court documents and its trademark application, JC Waugh Wine company has been selling wine under the Six Degrees brand since August 3, 2007. It produces about 150 cases a year of¬† Cabernet Sauvignon with a listed retail price of $150.
For its part, Bronco et. al. court documents indicate that the Panther Rock brand has been sold as a selection of varietal wines since January 2013. Bronco’s court filing indicates that the wines sell in the $10 to $15 range. No production figures are publicly available.
At first glance, the dueling Six Degrees labels are so widely differing that they are unlikely to be confused if they sat side-by-side on a retail shelf.
However, the likelihood of a side-by-side comparison on a retail store shelf is unlikely given that the JC Waugh Six Degrees is available only by allocation from the winery and not available¬† in stores.
… nobody knows you’re a dog:
And the same visual identity obfuscation applies to search engines.
Of the top 10 search hits, one concerned the current lawsuit (#10). Of the remaining nine, six were from Bronco and associated companies:
Similarly, Google’s image search had trouble distinguishing between the two, Six Degrees:
The court filings by Bronco et. al. repeatedly and forcefully deny that any confusion exists or could possibly exist.
However, on May 27, 2016 JC Waugh¬† filed its own USPTO registration request for Six Degrees. The Trademark Office refused that registration, according to the JC Waugh court complaint, “on the basis of a likelihood of confusion.”
A graphically explicit¬† journey of confusion can be found at this link: Six Degrees of Confusion: Waugh, Bronco, Wine-Searcher, CellarTracker.
A lot of small businesses concerned about expenses and cash flow fail to register their trademarks at the USPTO.
Doing that may have spared JC Waugh the expense and disruption it says it suffered from the actions of Bronco et. al. However, JC Waugh still has strong legal backing to assert its rights to Six Degrees because it is the original.
According to the Cornell Legal Information Institute: “Both at common law and under traditional Lanham Act registration procedures, exclusive rights to a trademark are awarded to the first to use it in commerce.” [bold added for emphasis].
Decades of legal precedent have upheld the superiority of whoever has used the trademark first.
This one from the Ninth Circuit Court of Appeals — which oversees the San Francisco Federal District Court — is one of those many decisions: Sengoku and RMC. and states:
“It is axiomatic in trademark law that the standard test of ownership is priority of use. To acquire ownership of a trademark it is not enough to have invented the mark first or even to have registered it first; ‚ÄČthe party claiming ownership must have been the first to actually use the mark in the sale of goods or services.” [bold added for emphasis].
According to the JC Waugh court complaint, the unregistered Six Degrees trademark has been in use since 2005. That statement is confirmed by reviews posted on CellarTracker: (2005 Six Degrees Cabernet Sauvignon).
A thorough discussion of the importance of, and priority granted by first use in commerce, can be found in the following article by reknowned intellectual property law firm Fish & Richardson: Prior User vs. Federal Registrant: Whose Mark Is It, Anyway?
As it turned out, the bureaucratic rules of the USPTO allowed the Bronco Wine Company to file — and obtain — a trademark for Six Degrees despite a botched trademark search. Unlike the USPTO’s strict examiner process for patents, personnel at the Trademark Office do not conduct a search for prior art outside of its own database.
However,¬† the USPTO’s own publication:¬† Basic Facts About Trademarks states:
“Common law rights may be stronger than those based on a registration, if the common law use is earlier than the use that supports the registration.
“Therefore, it is critical to learn whether superior common law rights exist, by searching the Internet for websites and articles that reference similar marks that are related to your goods and services.” [bold added for emphasis]
In its court filing, Bronco, et. al. stated that:
“Before committing to the 6¬į-SIX DEGREES brand, Panther Rock and Bronco conducted due diligence, including searching the USPTO public database for trademarks registered or pending registration at the USPTO, and did not identify any third-party mark for wine that consisted of or incorporated the proposed numerical mark 6¬į or the word mark SIX DEGREES.”
Wine Industry Insight emailed the attorney representing Bronco in this case — Peter M. Brody of Ropes & Gray in Washington, D.C. — and asked if he had any comment on the case or if an Internet search for Six Degrees had been conducted. As of the writing of this article, no response has been received.
However, as the previous Google search screen capture (way up above)¬† indicates, if such a search had been conducted, the presence of JC Waugh’s previous use of the trademark would have been detected.
The use of the Internet to find common law trademark usages is so fundamental that the International Trademark Association (INTA) mentions it prominently in its basic guide to the process,¬† Trademark Searching and Clearance:
“In the United States, a newcomer to the search process might expect that it would suffice to check only the¬† records of the USPTO.¬†
“However, one cannot rely solely on a USPTO search [Bold emphasis added], since registration with the USPTO¬† is not a prerequisite to obtaining trademark rights in the United States.
“In the United States or any other common-law country, the trademark searcher is looking in two different directions at once‚ÄĒtoward the trademark office, where applicants are seeking or have acquired national trademark rights, and toward the marketplace, where businesses and organizations are using unregistered marks entitled to common-law protection.
“An efficient, comprehensive search employs resources that reveal marks in both dimensions. The effort usually begins with a search of national trademark office records (using the USPTO‚Äôs free search database or a pay-as-you-go database provided by a commercial search firm) and a search of the Internet (using search engines such as Bing, Google, and Yahoo!).”
“An Internet search engine is likely to be the most important way of locating unregistered common-law marks, and usually will be the first, and sometimes only, Internet tool used for seeking relevant common-law marks. [Bold emphasis added] However, a Web search will obviously be more useful in searching marks that are coined or are unusual phrases.”
The INTA guide referenced above also noted that:
“Searching common-law marks is easier said than done, however, since there is no single source that lists every unregistered mark in current use in the United States. There are many potential sources of information that could be searched, and it is not economical to try to search them all. Thus, the searcher must select the combination of sources that he or she believes is most likely to contain relevant marks.”
In the wine business, the TTB’s COLA database is one of those searchable and obvious places to look in conducting a due diligence search.
Had that been done in this case, the COLA filed by JC Waugh would have shown the primacy of their Six Degrees date of first use:
While not used as a defense by Bronco in this case, many trademark infringement actions have been erroneously undertaken with the misunderstanding that having a COLA issued implies trademark protection.
The following screen capture from the TTB’s Alcohol FAQs, debunks that notion:
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