Stark Wine LLC has been granted a preliminary injunction against Diageo Chateau and Estate Wines. The injunction requires Diageo Chateau to immediately cease the sale, promotion, advertisement and distribution of its line of wines named “Stark Raving” within Sonoma County, California.
Stark Wine is based in Healdsburg, California, and hand-crafts their wine with minimal intervention. They use steam cleaning rather than washing their grapes, and rely on reputable local farmers for their stock. They produce Zinfandel, Chardonnay, Grenache Blanc, Grenache and Syrah and package all their wine in recycled glass bottles.
In a statement released by Stark Wine, they stated that the law suit was filed because “both brands start with the word ‘Stark’ and it was worried about consumer confusion. We don’t want consumers to think that Stark Raving wine is made by Stark Wine as Diageo floods the market with its Stark Raving wine.”
The law suit filed in the United States District Court for the Northern District of California explained that the moniker “Stark Raving” is too similar to their own trademarks, one for Stark Wine® and the other for Stark Thirst™. The “Stark Wine®” mark was registered on October 17, 2006 (Registration No. 3,160,031) and achieved “incontestability” status on or about June 2, 2012. A trademark application is still pending at the USPTO for Stark Thirst™. On June 20, 2012, the USPTO found that the “Stark ThirstTM” appeared to be entitled to registration and approved the mark for publication.
A representative of Diageo did acknowledge that they were aware of Stark Wine and Stark Thirst trademarks when they applied for their own trademark for Stark Raving in February, but Diageo claimed that “Stark Wine” only appears on the wine labels in fine print, while the main label merely says “Stark.” They challenge that the phrase “Stark Wine” is used more as a trade name, not as a trademark. Notwithstanding, District Court Judge Yvonne Gonzalez Rogers of the Northern District of California, determined that Stark Wine demonstrated a “likelihood of success on the merits.”
Judge Rogers made the determination that the plaintiff was likely to prevail on the merits after going through each of the Sleekcraft factors, which is the primary test for likelihood of confusion within the Ninth Circuit, where California is located. The Sleekcraft factors used by the Ninth Circuit to guide the likelihood of confusion analysis require consideration of the following: (1) the similarity of the marks; (2) the relatedness of the companies’ goods; (3) the marketing channels used; (4) the strength of mark(s) of the junior holder or senior holder or both; (5) the defendant’s intent in selecting its mark; (6) evidence of actual confusion; (7) the likelihood of expansion into other markets; and (8) the degree of care likely to be exercised by purchasers.
The injunction, approved by Judge Rogers means that Diageo Chateau must stop production and sales within Sonoma County, California, which was the geographical limitation put on the injunction by Judge Gonzalez. The issuance of the preliminary injunction is contingent upon the plaintiff filing proof of issuance of a bond in the amount of $500. That is not a mistake, the bond required was only $500. The defendant had asked for a $5,000,000 bond, but in footnote 19 Judge Rogers wrote:
There is no showing the Diageo will suffer more than negligible harm if enjoined from Sonoma County. There is no evidence that Stark RavingTM wine is being sold in Sonoma County or that Diageo will be harmed if prevented from entering that market. The Court, in its discretion, will require Plaintiffs post $500.00 as security.
With the injunction in place, Stark Wine has said that they are “pleased with this initial victory and is glad to have Diageo’s Stark Raving wine out of its backyard.” Attorney Steven K. Barentzen of Washington, D.C. represented Stark Wine calls the small win a victory in a sorely mismatched case against a wine, alcohol and beverage giant.
But not so fast. Diageo is fighting back, saying that they are confident that they can overturn the injunction. They claim that the Stark Wine argument holds no ground since there are other wines out there that also use the word Stark on the label. Diageo released a statement of their own, saying that, “While we would have preferred that the court not issue this limited preliminary injunction, we are pleased that our Stark Raving wines will continue to be sold nationally except in Sonoma County. We will comply with the court’s order, and we are confident that we will prevail in the end.”
While it is not impossible for Diageo to fight and eventually demonstrate that the district court made an error in issuing the injunction, they face a substantial uphill battle. In a trademark litigation like this pretty much the entire case is laid out for the Court at the preliminary injunction stage. The Court has seen all of the evidence and has made its determination. While not unheard of for a district court to change their minds as the entire case unfolds and more evidence becomes available, it is quite rare. Typically the winner of the preliminary injunction prevails in the case. In fact, in many if not most situations a settlement can be achieved after the relative strengths of the parties arguments have been determined at the preliminary injunction threshold.
Of course, Diageo Chateau and Estate Wines is a part of Diageo, one of the biggest names in premium drinks, so they might just not go away quietly. Some brands made by Diageo Chateau are Sterling Vineyards, Sterling Vintner’s Collection, Acacia Vineyard and Chalone Vineyard. The broader Diageo business incorporates high end alcoholic beverages like Johnnie Walker, Smirnoff, Baileys, Guinness, Cuervo, Captain Morgan, Tanqueray and Crown Royal. Big name liquors from a big name company.
This is also not Diageo’s first big name lawsuit. Back in 2010, Maker’s Mark Distillery filed a law suit against Diageo in the U.S. District Court for the Western District of Kentucky, because Diageo began using a red wax seal on their Cuervo bottles, markedly similar to the one Maker’s Mark has used since 1957. Although the two liquors are dissimilar with Maker’s Mark producing bourbon and Cuervo producing tequila, the use of the dripping red wax was found to infringe on Maker’s Mark’s trademark which was obtained in 1985. For more on this litigation see Two of My Favorite Things: Whiskey and Trade Dress, by IPWatchdog feature contributor Beth Hutchens.
Another law suit involving Diageo was filed in October, between Diageo and Distilleria Serralles Inc, a Puerto Rican company that previously made Captain Morgan rum for 25 years. Distilleria Serralles filed a claim against Diageo stating that they failed to follow through on the terms of the contract. Diageo bought the rum brand in 2001, and ceased the partnership with DSI in 2008. DSI stated that Diageo promised to buy a million proof gallons of rum to guarantee the continuous supply of Captain Morgan while the new distillery in the United States is ready in November 2010. Diageo maintained that there was no such agreement in place and aggressively denied DSI’s claims.
It seems that Diageo, being such a huge name in the wine and alcohol industry, is undeterred and unafraid. It also seems they are not afraid to push the envelope and engage in activities that constitute various forms of trademark infringement. Will they actually overturn the injunction granted to Stark Wines? That remains to be seen, but for the moment, Stark Raving wine cannot be sold and distributed in Sonoma County, California.
Interestingly, in researching this story I came across Stark Wines, which is a vineyard that makes handcrafted Minnesota wines. Stark Wines (MN) held its grand opening in May 2012. It would seem that Stark Wines would absolutely be confusingly similar to Stark Wine®, so maybe we will see additional Stark trademark litigation. The fact that a vineyard and winery would open under a name that is one “s” different from an incontestable trademark speaks to the need for all businesses to do a proper trademark analysis prior to establishing a business. Perhaps Christian Stark will not go after this MN maker of wines, but that is an awful risk to take.
A penny of trademark prevention is worth well more than a pound of cure.