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CADBURY BEVERAGES, INC. v. COTT CORP.

April 11, 1994

CADBURY BEVERAGES, INC., Plaintiff,
v.
COTT CORPORATION and COTT BEVERAGES USA, INC., Defendants.


DUFFY


The opinion of the court was delivered by: KEVIN THOMAS DUFFY

KEVIN THOMAS DUFFY, D.J.:

 Plaintiff, Cadbury Beverages, Inc. ("Cadbury") instituted this action against defendants Cott Corporation and Cott Beverages USA, Inc. ("Cott USA") for trademark infringement pursuant to § 32(1)(a) of the Lanham Act, 15 U.S.C. § 1114(1)(a). Subsequently, Cadbury moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Cott Corporation and Cott USA responded by cross-moving for summary judgment. For the following reasons, the cross-motion for summary judgment is granted, and Cadbury's motion for summary judgment is denied.

 BACKGROUND

 Cadbury, a Delaware corporation, owns several registered "Cott" trademarks for soft drinks in the United States dating back to 1951. *fn1" Cadbury sells Cott soft drink concentrates, and it also licenses other distributors to bottle and sell finished Cott soft drinks.

 Cott Corporation is a Canadian corporation, and it owns the trademark rights to the "Cott" name in Canada. It first acquired these rights in 1968 from Cadbury's predecessor. In addition, Cott Corporation produces, packages, and distributes private label soft drinks, which it sells principally in the United States and Canada. "Private label" beverages are those labeled with a store's brand name and offered to consumers at prices generally lower than those of leading national brands. In Canada, Cott Corporation sells some soft drink products under the name "Cott," but it does not sell any soft drinks under the name "Cott" in the United States.

 Cott Corporation also sells securities on the NASDAQ stock exchange in the United States. More importantly, as required by law, it makes use of its corporate name in connection with the listing. For instance, it places its corporate name on materials required to be filed with the Securities and Exchange Commission and on materials addressed to shareholders.

 Cott USA is a wholly-owned subsidiary of Cott Corporation. It distributes the Cott Corporation's private label soft drinks in the United States. None of the private label products distributed in the United States by Cott USA use the trademark "Cott," and the company's name does not appear on any consumer packaging in the United States. The only direct purchasers of Cott USA's private label beverages are the purchasing agents for retail stores. Cott USA does use the "Cott" name in connection with its private label soft drink sales in the United States on letterhead, invoices and other communications with retail purchasing agents.

 DISCUSSION

 The facts in this case are not in dispute. The parties disagree only as to the legal conclusions to be drawn from these facts. See Pl. Mem. of Law at 5. Therefore, no need for a fact-finding inquiry exists here, and this case is ripe for determination on summary judgment. Fed. R. Civ. P. 56(c). See Lois Sportswear U.S.A. v. Levi Strauss & Co., 799 F.2d 867, 876 (2d Cir. 1986) ("The only issue the parties dispute is the application of these facts to the Polaroid test and likelihood of confusion analysis. This is a legal issue which was appropriate . . . . for summary judgment."); Roquefort v. William Faehndrich, Inc., 303 F.2d 494, 497-98 (2d Cir. 1962) (where no genuine issue of material fact exists, summary judgment is appropriate as to a Lanham Act dispute). The crucial issue here, as in all Lanham Act trademark infringement actions, is whether the use of the trade name is likely to confuse an appreciable number of ordinary prudent purchasers as to the source of the product. Western Publishing Co. v. Rose Art Indus., Inc., 910 F.2d 57, 59 (2d Cir. 1990); Windsor, Inc. v. Intravco Travel Ctrs., Inc., 799 F. Supp. 1513, 1521 (S.D.N.Y. 1992). In other words, the issue is whether the public is likely to be confused as a result of the defendants' use of Cadbury's "Cott" trademark.

 The issue of "likelihood of confusion" turns on consideration of several factors: (1) the strength of the mark; (2) the degree of similarity between the two marks; (3) the proximity of the products; (4) the likelihood that the prior owner of the mark will bridge the gap; (5) actual confusion; (6) the defendant's good or bad faith in adopting its mark; (7) the quality of defendant's products; and (8) the sophistication of the buyers. Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 7 L. Ed. 2d 25, 82 S. Ct. 36 (1961). "No single Polaroid factor is determinative. Rather each must be considered in the context of all the other factors, and from a balance of these determinations, one is able to reach the ultimate conclusion, whether there is a likelihood of confusion between the two parties' products." Plus Prods. v. Plus Discount Foods, Inc., 722 F.2d 999, 1004 (2d Cir. 1983).

 Based upon a consideration of all the Polaroid factors, defendants are entitled to summary judgment as to the issue of "likelihood of confusion." In particular, the proximity of the products and sophistication of the buyers establishes that there is no likelihood of confusion. Primarily, the fact that defendants' products do not use the "Cott" name, considered in conjunction with the fact that retail purchasing agents are supposedly sophisticated, convince me that the Defendants' use of the "Cott" mark will not confuse an appreciable number of purchasers as to the source of the product.

 In assessing the proximity factor, "the court considers not only the nature of the services themselves, but also the structure of the relevant market in which they are sold, . . . the channels of trade through which they are promoted, and the class of customers for whom they are designed and to whom they are sold." Windsor, 799 F. Supp. at 1523, citing Vitarroz Corp. v Borden, Inc., 644 F.2d 960, 967 (2d Cir. 1981).

 Defendants use the "Cott" name primarily in conjunction with their sales of private label soft drinks to retail chains, where their direct purchasers are not the public, but retail purchasing agents. Cadbury, on the other hand, uses the "Cott" name to sell finished Cott soft drinks to the general public. Thus, the ordinary consumer cannot be confused when he or she purchases the defendants' product because that product is not called "Cott." Although not involving the soft drink industry, other cases have held that even where products are sold in a similar fashion, no violation of the Lanham Act occurs. For example, in Windsor, the plaintiff, a travel services company, sold pre-packaged tours directly to individuals and advertised only in the mass media. The defendant sold reduced price airfares to student exchange organizations and advertised only in trade publications, the court held that the two parties operated in different channels of trade and provided different services to separate classes of customers. As a result, public confusion was not likely. Windsor, 799 F. Supp. at 1523. See also Edison Bros. Stores, Inc. v. Cosmair Inc., 651 ...


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