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Mni Management, Inc. v. Wine King

March 10, 2008

MNI MANAGEMENT, INC., PLAINTIFF,
v.
WINE KING, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Cooper, District Judge

FOR PUBLICATION

MEMORANDUM OPINION

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 2

BACKGROUND AND FACTUAL FINDINGS. . . . . . . . . . . . . . . . 4

CONCLUSIONS OF LAW . . . . . . . . . . . . . . . . . . . . . .9

I. LEGAL STANDARDS . . . . . . . . . . . . . . . . . . . . . 11

A. Preliminary Injunctions . . . . . . . . . . . . . . 11

1. Reasonable Likelihood of Success on the Merits 12

2. Irreparable Injury . . . . . . . . . . . . . . 13

3. Harm to Nonmoving Party . . . . . . . . . . . . 13

4. The Public Interest . . . . . . . . . . . . . . 14

B. Trademark Infringement. . . . . . . . . . . . . . . . . . 14

1. Validity . . . . . . . . . . . . . . . . . . . 16

2. Ownership . . . . . . . . . . . . . . . . . . . 18

a. Market Penetration . . . . . . . . . . . . 20

b. Reputation . . . . . . . . . . . . . . . . 21

c. Zone of Natural Expansion. . . . . . . . . 21

d. Good Faith . . . . . . . . . . . . . . . . 23

3. Likelihood of Confusion . . . . . . . . . . . . 24

II. LEGAL STANDARDS APPLIED HERE. . . . . . . . . . . . . . . 27

A. Reasonable Likelihood of Success on the Merits . . . 27

1. The First Mark is Valid and Legally Protectable 27

2. Plaintiff Has Not Established a Likelihood of Direct Confusion in Defendants' Geographic Market . . . . . . . . . . . . . . . . . . . . 29

a. Plaintiff Has Not Penetrated Defendants' Geographic Market . . . . . . . . . . . . 31

i. Volume of Sales . . . . . . . . . . . 31

ii. Growth Trends . . . . . . . . . . . . 31

iii. Actual Customers and Potential Customers . . . . . . . . . . . . . . 32

iv. Amount of Advertising in Area . . . . 33

b. Plaintiff's Reputation Does Not Extend Into Defendants' Geographic Market . . . . 33

c. Plaintiff's "Zone of Natural Expansion" Does Not Extend Into Defendants' Geographic Market . . . . . . . . . . . . 34

d. Plaintiff Has Not Established that Defendant Did Not Act in Good Faith . . . 36

e. Summary of Findings . . . . . . . . . . . 38

3. Plaintiff Has Not Established a Likelihood of Reverse Confusion in Plaintiff's Geographic Market . . . . . . . . . . . . . . . . . . . . 39

a. Degree of Similarity . . . . . . . . . . . 39

b. Strength . . . . . . . . . . . . . . . . . 40

c. Expected Care and Attention of Customers . 43

d. Channels of Trade, Advertisements, and Targets of Sales Efforts . . . . . . . . . 44

e. Length of Time & Actual Confusion . . . . 45

f. Defendants' Intent . . . . . . . . . . . . 46

g. Relationship of Services in Consumers' Minds . . . . . . . . . . . . . . . . . . 47

h. Other Factors. . . . . . . . . . . . . . . 48

i. Balancing the Factors. . . . . . . . . . . 48

B. Irreparable Injury . . . . . . . . . . . . . . . . . 49

C. Harm to Defendants . . . . . . . . . . . . . . . . . 50

D. The Public Interest . . . . . . . . . . . . . . . . 52

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 53

INTRODUCTION

Plaintiff, MNI Management, Inc., moves to preliminarily enjoin defendants, Wine King, LLC and Venkata G.R. Indukuri (collectively, "defendants"), from infringing on its mark, "WINE KING", in violation of the Lanham Act, 15 U.S.C. § ("Section") 1051, et seq., and New Jersey common law. (Dkt. entry no. 1.) Plaintiff contends that defendants' use of the mark, "WINE KING", infringes upon its rights because (1) plaintiff owns the mark, "WINE KING", (2) it is valid and protectable, and (3) defendants' use of the mark "WINE KING" is likely to create confusion in the marketplace. (Dkt. entry no. 1, Pl. Br., at 7-13.) Thus, plaintiff contends that defendants should be preliminarily enjoined, pending a trial on the merits, from continuing to use the mark because plaintiff will suffer irreparable harm if the injunction is not granted. (Id. at 13-15.) Defendants oppose the motion. (Dkt. entry no. 8.) The Court has considered the papers submitted by the parties and heard oral argument on February 13, 2008. The Court issues its findings of fact and conclusions of law as required by Federal Rule of Civil Procedure ("Rule") 52. For the reasons stated herein, the Court will deny the motion.*fn1

BACKGROUND AND FACTUAL FINDINGS

I. Plaintiff

Plaintiff is a New Jersey corporation with its principal place of business in Franklin Lakes, New Jersey. (Dkt. entry no. 1, Compl., at ¶ 1.) Plaintiff is "engaged in offering retail store services for alcoholic and non-alcoholic beverages and related glassware and bar accessories". (Id. at ¶ 6.)

Plaintiff's predecessor-in-interest, B.L.W. World, Inc. ("B.L.W."), began using the trade name "WINE KING" in 1998 to identify its retail store for alcoholic and non-alcoholic beverages and related glassware and bar accessories. (Dkt. entry no. 1, Decl. of Michael Vekshteyn, at ¶ 2.) In 2001, B.L.W. began using "WINE KING" (the "First Mark") as a service mark. (Id. at ¶ 3.)

Second and third locations of plaintiff's retail store were also opened in 2001. (Id.) Thus, plaintiff has licensed the First Mark to three retail store locations in New Jersey. (Id. at ¶ 5.) A store is located on Bergen Boulevard in Fort Lee, New Jersey, in Bergen County. (Id.) A second store is located on Route 17 in Hackensack, New Jersey, also in Bergen County. (Id.) A third store is located on Route 10 in Randolph, New Jersey, in Morris County. (Id.) The volume of sales at these retail stores has been in excess of $10 million each year. (Decl. of Michael Vekshteyn, at ¶ 6.)

The First Mark was affixed to store signage in 2001, both on the inside and outside of the stores. (Id. at ¶¶ 3, 5.) At that time, B.L.W. also began engaging in advertising for its retail store locations. (Id. at ¶ 4.) This advertising consisted of print media in the form of newspapers advertisements and flier inserts, which were circulated and distributed "throughout the state of New Jersey". (Id.) Plaintiff also operates an Internet webpage; however, it is not yet functional. (2-13-08 Oral Arg.) See http://thewineking.com (last visited March 10, 2008).

Plaintiff's stores also offer customers a "bonus incentive program". (Decl. of Michael Vekshteyn, at ¶ 4.) Over 13,000 customers participate in this program, which offers discounted prices on products to members of the program. (Id.; dkt. entry no. 9, Decl. of Peter J. Sheehan, Ex., Customer Database Lists for Hackensack, N.J. and Randolph, N.J. Stores ("Customer Database").)*fn2 The Customer Database indicates that these customers reside in various states, including New Jersey, New York, Connecticut, and Pennsylvania. (Id.)

Plaintiff applied for a federal servicemark on November 19, 2007, for "retail store services featuring a wide variety of consumer goods of others; retail store services in the field of alcoholic and non-alcoholic beverages, ice, smokers' articles, snack foods, books, cork screws, wine tote bags, and wine accessories, namely, stemware, wine bottle stoppers, decanters, and featuring a bonus incentive program for customers." (Decl. of Michael Vekshteyn, at ¶ 7.) See Record of Plaintiff's Trademark Application, at FEDTM 77333384. The status of this application is "pending". See Record of Plaintiff's Trademark Application, at FEDTM 77333384.

II. Defendants

Defendant Wine King, LLC is a New Jersey limited liability corporation with its principal place of business in Manasquan, New Jersey. (Compl., at ¶ 2.) Defendant Venkata G.R. Indukuri ("Indukuri") is the President of defendant Wine King, LLC. (Id. at ¶ 3.) In March 2006, Indukuri asked his certified public accountant, David J. Kosek ("Kosek"), to "look into the formation of a limited liability company which [Indukuri] had hoped to call 'Wine King, LLC.'" (Dkt. entry no. 8, Decl. of Venkata Indukuri, at ¶ 2.) Indukuri informed Kosek that Wine King, LLC ...


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