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JR TOBACCO OF AMERICA, INC. v. DAVIDOFF OF GENEVA

February 11, 1997

JR TOBACCO OF AMERICA, INC., Plaintiff/Counterclaim Defendant, against DAVIDOFF OF GENEVA (CT), Inc. and AVO UVEZIAN CIGARS, LTD., Defendants, and DAVIDOFF & CIE, S.A. and OETTINGER IMEX AG, Additional Counterclaim Plaintiffs, -against- CIGARS BY SANTA CLARA, N.A., INC., JNR GROCERY CORPORATION, 11 EAST 46th ST. CORP., JR TOBACCO (NEW JERSEY) INC., JR TOBACCO OUTLET N.C., INC., UNITED CIGAR INC., and JR TOBACCO OUTLET STATESVILLE, INC., Additional Counterclaim Defendants


The opinion of the court was delivered by: PRESKA

 LORETTA A. PRESKA, District Judge:

 This Lanham Act claim arises out of plaintiff's advertisements for premium cigars. Plaintiff and counterclaim defendant JR TOBACCO of AMERICA, Inc. ("JR") initially sought a declaratory judgment that JR Tobacco's advertisements for JR Alternatives, its line of premium cigars, are neither false advertisements nor likely to confuse consumers with respect to the source of the products. Defendants Davidoff of Geneva (CT), Inc. ("Davidoff Connecticut") and AVO Uvezian Cigars, Ltd. ("AVO") have moved, along with additional counterclaim plaintiffs, related companies Davidoff & Cie, S.A. ("Davidoff Switzerland") and Oettinger Imex AG ("Imex"), for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure and under ยง 43(a) of the Lanham Act, claiming that JR Tobacco's advertisements are literally false.

 Cigar smoking is currently enjoying an unprecedented renaissance in America. The popularity of cigars has surged dramatically over the past five years. According to the Cigar Association of America, sales of premium cigars rose 29 percent between 1991 and 1994. Power Puffing Cigarettes may Be Out But Interest in Gourmet Cigars has Been Rekindled, Jim Reilly, Syracuse Herald-Journal, (Aug. 8, 1995); see also Cigar Sales Catch Fire; Women Among Buyers, Glenn Collins, Tulsa World (Feb. 5, 1995). During the first five months of 1996, sales of premium cigars were up 51 percent over the previous year. Cigar Craze Sparks Stogie 'Smuggling' from Cuba, John Pacenti, AP, San-Antonio Express-News (Nov. 17, 1996). What is more astounding is that these increases come after almost "30 years of consistent decline." Cigars All Around, Robert Nelson, The Omaha-World-Herald (Feb. 27, 1996).

 Various commentators have attributed this resurgence in popularity to different causes. Some have described it as a type of neoprohibitionist rebellion, "a bold puff of smoke . . . in the face of salads and no-fat dressing and marathon runnerlooking people harping about the stink and death of cigarette smoking." Id. The President of the Cigar Association has explained their popularity in similar terms, writing that "'cigars are so politically incorrect it makes them more attractive to those who refuse to go along with the herd in today's militant, neo-prohibitionist environment.'" quoted by Joel B. Obermayer, Cigars Suddenly Hot and Longtime Smokers Are Smoldering, The News & Observer (Aug. 25, 1996). A recent issue of the upscale cigar magazine "Cigar Aficionado" featured an article drawing parallels between the speakeasies of the 1920s as cultural symbols and the cigar lounges of the 1990s. Smokin' USA: In the 1920s There Were Speakeasies; In the 1990s There Are Cigar Lounges, Shandana Durrani, Cigar Aficionado 422 (Winter 1996/97).

 The cigar market also appears to have become popular among a broader cross-section of Americans, including younger people and women. *fn1" Although women account for only 2% of today's 10 million cigar connoisseurs, numerous publications have focused on the significance of the cigar as a feminist symbol. Tobacco Vogue Women Fire Up Cigars, Put "She" in Hedonism, Melanie Wells, USA Today (June 25, 1996). By smoking cigars, some say, women are "crashing one of society's last traditional male bastions." Id. As for many other cigar smokers, smoking a cigar purportedly evokes an image of power for women. Id. ; Nelson, supra.

 Whether the explosion in cigar sales is attributable to "a backlash by '90s voluptuaries . . . shaking a stogie at 'this neo-puritan era of chiseled abs and pinched enjoyments,'" Reilly, supra, or to more traditional associations between cigar smoking and status and wealth, *fn2" the current popularity of cigar smoking is undeniable. In New York alone, several new cigar bars have opened; before long, "every neighborhood will have a cigar lounge with humidors for rent." Another Cigar Lounge Opens, The New York Times, C2 (Jan. 29, 1997). Just last year two new books about cigars appeared, encouraging cigar neophytes to cultivate a more studied appreciation of cigars through the knowledge of the cigar connoisseurs featured in these books. It is amidst this popularity surge in cigar smoking that counterclaim plaintiff Davidoff brings its Lanham Act claim against JR Tobacco's advertisement based on the latter's advertising brochure for its own line of premium cigars, JR Alternatives. Davidoff has moved for summary judgment, and JR Tobacco has opposed this motion. For the reasons explained below, counterclaim plaintiff's motion is granted.

 A. JR Tobacco's Cigars

 Defendant and counterclaim plaintiff Davidoff Connecticut along with additional counterclaim plaintiffs Davidoff Switzerland Avo, and Imex (collectively "Davidoff") are related corporate entities engaged in manufacturing and selling premium cigars. *fn3" Davidoff sells cigars under the registered trademarks of DAVIDOFF, ZINO, AVO, and THE GRIFFIN'S.

 Plaintiff and counterclaim defendant is a mail-order cigar company. JR sells name brand cigars, JR private label cigars as well as JR Alternatives cigars. (Rothman Declaration executed March 11, 1996 ("Rothman Decl.") P 2). The President of JR Tobacco, Lewis Rothman, consulted a variety of prominent cigar manufacturers around the world in developing his line of premium cigars, JR Alternatives. Among the manufacturers he consulted are General Cigar Co., Inc., Matasa, and Villazon. (Rothman Decl. P 6). Although these names may be foreign to those uninitiated to the world of cigars, they figure among the most celebrated of South American cigar manufacturers, producing such world famous cigar brands as Macanudo, Partagas, Punch and Rey del Mundo. (Id.).

 As Mr. Rothman explains, he chose over 175 of what he considered to be the best cigars of the world, organized them into groups of 25, grouping together those similar in size, shape, taste, origin and wrapper color. (Rothman Decl. P 15). According to Mr. Rothman, it is common practice in the cigar business to sell a single cigar under numerous labels at different prices. (Rothman Decl. P 9). After having sorted the cigars into groups, Mr. Rothman requested the manufacturers whom he had consulted to produce, under the JR Alternatives label, a single cigar for each of the 25 groups according to his specifications. (Rothman Decl. P 14).

 Among the cigars imitated were the Macanudo line, purportedly the most popular premium brand of cigar sold in the United States. Mr. Rothman suggests that DAVIDOFF, AVO and THE GRIFFIN'S are simply copies of Macanudo cigars. (Rothman Decl. P 16).

 Mr. Rothman assigned one JR Alternative cigar to each of the 25 groups based on similarity of size, shape, taste, origin and wrapper color. (Rothman Decl. P 15). In JR's promotional material, JR displays photos of the original name brand cigar it has aspired to imitate as well as its own alternative to this brand.

 B. JR Tobacco's Promotional Material

 JR promotes its premium cigars in a color brochure and a catalogue attached to the brochure. These materials are systematically included with mail-order purchases of nonpremium cigars from JR. Upon visiting a JR Tobacco store, one can request a brochure from the store clerk. (Rothman Decl. P 3). One can also obtain a brochure by calling JR and specifically requesting one, although as of December of 1996, because of a sharp increase in demand, JR was not accepting any new orders nor was it sending any brochures to new customers.

 The cover of the brochure displays several well known cigar brands juxtaposed to one JR Alternative cigar. The first two pages of this glossy 31-page brochure feature a description of the current market for premium cigars as well as an explanation of how JR Alternatives are designed and manufactured. Davidoff bases its Lanham Act counterclaim on numerous statements contained in this explanation. Among the statements Davidoff claims are patently false are the underlined portions of the following excerpts from the brochure:

 
(1) As importers and local retailers have intensified their efforts to trade their clientele up to newer and more expensive "labels," we, at J*R have scoured the cigar producing world to bring you those same products at lower prices under our own "labels."
 
(3) J*R has gone to the most respected and reliable cigar manufacturers with impeccable credentials (the very people who produce the majority of the world's most famous cigar brands) and we've ordered MILLIONS of hand-made Jamaican, Dominican, and Honduran cigars.
 
(4) J*R had more than 175 of the most famous cigars in the world duplicated, as closely as possible, in size, shape, taste, origin, and wrapper color. You'll find we have a J*R Alternative to just about anything worth smoking -- at a fraction of the original price!
 
(5) All J*R Alternatives are packed 20 cigars per box regardless of how the original cigar we have duplicated is packed.
 
(6) The pictures shown are the actual size of the real cigars we have copied.

 (Rothman Decl., Ex. A). All these statements appear in the first two pages of the brochure in a narrative explaining the "dramatic escalation of retail cigar prices" followed by a description of how the company went about creating JR Alternatives, subtitled "Here's what we've done." (Id.)

 Davidoff also points to statements made within the body of the brochure to support its claim. Page 26 features JR's "Cuban Alternative Story," as well as four brands of Cuban cigars to which JR markets a series of Alternatives. After an historical preface recalling the trade embargo imposed in 1961 against Cuba and the subsequent scarcity of Cuban cigars in America, the brochure explains:

 
In early 1989, we gathered samples of many of the legendary Cuban brands and sent them to F. Palicio & Co., in Honduras. These samples were then disassembled by a team including Frank Llaneza, a world famous cigar manufacturer, Estello Padron, a Cuban expatriate master cigar maker, and John Oliva of Oliva Tobacco, who is one of the world's foremost authorities on tobacco leaf. These three set about to create tobacco blends which would duplicate the taste of the various famous Havanas, as well as the look of the wrappers characteristic to each brand. On the following pages you will see the results of their work . . . .

 (Rothman Decl., Ex. A). Next to this narrative are photos of seven Cuban cigars manufactured by Bolivar, Cohiba, Davidoff and Diplomaticos. Finally, Davidoff also challenges the statements contained on the packaging label affixed on each fiberboard box of cigars:

 
Custom made for JR Tobacco by the world's oldest, largest and most prestigious manufacturers. Our fine cigars are painstakingly hand made to be comparable in size, shape, taste and blend to the famous brand shown above at a fraction of the original retail price.

 (Rothman Decl., Ex. B). Together with the introductory language of the brochure, these are the statements upon which Davidoff bases its Lanham Act counterclaim. *fn4"

 III. Standard Applicable to Motion for Summary Judgment

 Under rule 56(c), "[a] motion for summary judgment may not be granted unless the court determines that there is no genuine issue of material fact to be tried and that the facts as to which there is no such issue warrant judgment for the moving party as a matter of law." Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 36 (2d Cir. 1994); see Fed. R. Civ. P. 56(c). See generally Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). An issue of fact is genuine when "a reasonable jury could return a verdict for the ...


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