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CURTIS v. NATIONAL WHOLESALE LIQUIDATORS

March 13, 1995

HELENE CURTIS, Plaintiff, against NATIONAL WHOLESALE LIQUIDATORS, INC., Defendant.


The opinion of the court was delivered by: DENIS R. HURLEY

 HURLEY, District Judge

 In the above-referenced action, Plaintiff Helene Curtis, Inc. alleges that Defendant National Wholesale Liquidators, Inc. has violated certain provisions of the Lanham and Tariff Acts by offering for sale certain "gray market goods." Gray market goods are "goods made by a foreign manufacturer, 'legitimately sold abroad under a particular trademark[,] . . . imported into the United States and sold in competition with goods of the owner of [the United States] trademark rights in the identical mark.'" Dial Corp. v. Encina Corp., 643 F. Supp. 951, 952 (S.D. Fla. 1986) (quoting Vivitar Corp. v. United States, 761 F.2d 1552, 1555 (Fed. Cir. 1985), cert. denied, 474 U.S. 1055, 88 L. Ed. 2d 769, 106 S. Ct. 791 (1986)). Currently before this Court is Plaintiff's motion for a preliminary injunction enjoining Defendant from the distribution or sale of such goods through its retail stores in the United States. For the reasons set forth below, Plaintiff's motion is granted.

 Background

 Plaintiff Helene Curtis, Inc. is the exclusive owner of the United States trademark for certain "Finesse" hair-care products. (Wentz Decl. at P 3; Not. Mot. Ex. C1.) Plaintiff has manufactured, distributed, and sold Finesse products in the United States since 1982. (Pl. Mem. at 2.) In March, 1984, Plaintiff licensed Helene Curtis, Ltd., a Canadian corporation (hereinafter "Helene Curtis Canada"), to manufacture, distribute, and sell in Canada hair-care products bearing the Finesse trademark. (License Agmt. at P 1.)

 Since May, 1990, Defendant National Wholesale Liquidators, Inc., a wholesale distributor and operator of retail stores, purchased Finesse products from Plaintiff and sold such products in its retail stores in the United States. (Pl. Mem. at 5.) In January, 1995, however, Plaintiff learned that Defendant would no longer purchase Finesse products from Plaintiff, for Defendant had acquired Finesse products manufactured by Helene Curtis Canada (hereinafter "Canadian products" *fn1" ) for sale in its retail stores in the United States. (Id.) On February 21, 1995, Plaintiff brought on by order to show cause a motion seeking to enjoin Defendant from distributing the Canadian products in the United States. On February 23, 1995, this Court entered a temporary restraining order against Defendant, enjoining Defendant from distributing or selling in the United States any aerosol products manufactured by Helene Curtis Canada. On March 3, 1995, the Court conducted a hearing with regard to Plaintiff's motion for a preliminary injunction. *fn2"

 Discussion

 I. Findings of Fact

 The following constitutes the Court's findings of fact with regard to the testimony and exhibits that were received in evidence at the preliminary injunction hearing.

 A. Product Design and Development

 Dr. Norman Meltzer, Plaintiff's Corporate Director of Product Integrity, began his testimony with a description of the general process of product design and development. Dr. Meltzer explained that prior to the acceptance of a particular formula for each of its products, Plaintiff spends millions of dollars to determine whether the product will be satisfactory to the intended consumer.

 Specifications are developed for all products, and during the manufacturing process, the products are subjected to a rigorous system of quality control "so that when [Plaintiff] make[s] batches of that formula, they will be reproducible and [Plaintiff] will make the same product every time." (Tr. at 6.)

 Dr. Meltzer and his staff are also responsible for approval of product labeling, including, for example, graphics and ingredient lists. His department also reviews product labels to ensure that they are in compliance with all applicable legal requirements.

 Having reviewed the Canadian products offered for sale by Defendant, Dr. Meltzer testified that none of the products would be approved for sale in the United States by his quality control staff.

 B. Labeling

 Although the characteristics of each of the Canadian products will be discussed separately below, all of the Canadian product labels differ from their United States counterparts in certain respects. First, all of the Canadian products are labeled in French as well as English, while the U.S. products are labeled only in English. Secondly, the quantity of the Canadian products are measured in milliliters, while the U.S. products are measured in ounces. Thirdly, the Canadian product labels, unlike the labels on the U.S. products, do not contain a list of ingredients, as required by federal law.

 C. Shampoo

 Defendant offered for sale a Canadian shampoo that is labeled as "Daily Treatment Shampoo For Dull or Overstyled Hair." (Pl. Ex. 1a.) Dr. Meltzer identified the two U.S. products that are most similar by way of description: "Regular Shampoo for Normal Hair" (Pl. Ex. 1b), and "Extra Moisturizing Shampoo For Dry Or Overstyled Hair." (Pl. Ex. 1c.) Dr. Meltzer testified that the chemical formulas for these products are not identical. He explained that although all of the products contain conditioners that enable hair to be combed and styled easily, the Canadian product is not as "highly conditioning" as the U.S. products. (See Tr. at 13.) The three shampoos are also dissimilar in their physical appearance: the Canadian shampoo is milky white in appearance; the "Regular Shampoo" is clear with a "blue tinge"; ...


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