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CONSOLIDATED CIGAR v. MONTE CRISTI DE TABACOS

July 19, 1999

CONSOLIDATED CIGAR CORPORATION, A DELAWARE CORPORATION; AND CUBAN CIGAR BRANDS, N.V., A CORPORATION OF THE NETHERLANDS ANTILLES, PLAINTIFFS,
v.
MONTE CRISTI DE TABACOS, C.X.A., A CORPORATION OF THE DOMINICAN REPUBLIC; JULIO PEREZ GONZALEZ; WD DISTRIBUTORS, INC., A PROPRIETORSHIP OR OTHER LEGAL ENTITY; PAMELA VARGAS, INDIVIDUALLY AND DOING BUSINESS AS WD DISTRIBUTORS INC.; FRANCISCO FIORINELLI; AND JOSEPH BALAEZ, JR., DEFENDANTS.



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

  OPINION

Plaintiffs Consolidated Cigar Corporation ("Consolidated") and Cuban Cigar Brands, N.V. ("CCB") move pursuant to Fed.R.Civ.P. 56 for summary judgment against defendants Monte Cristi de Tabacos, c.x.a. ("MCdT") and Julio Perez Gonzalez ("Perez") (collectively "MCdT Defendants") on plaintiffs' trademark counterfeiting, dilution, and infringement claims. The claims arise out of the MCdT Defendants' alleged sale of counterfeit Montecristo cigars ("MCdT cigars") to U.S. importers and distributors for distribution in the United States, and out of the MCdT Defendants' alleged use of infringing trade names "Montecristi," "Monte Cristi," "Monte Cristi de Tabacos, c.x.a." and "Monte Cristi, R.D." For the reasons stated below, the Court grants plaintiffs' motion for summary judgment on all claims.*fn1

BACKGROUND

This action seeks damages and injunctive relief under the Trademark Act of 1946, as amended (The Lanham Act, 15 U.S.C. § 1051 et. seq.), and under New York General Business Law and common law.*fn2

Plaintiffs filed their complaint on June 7, 1996, and obtained a permanent injunction against defendant WD Distributors on June 27, 1996. The instant motion was filed on August 4, 1998. Plaintiffs have not moved for summary judgment against defendants Francisco Fiorinelli or Joseph Baleaz, Jr., who have not been served, or defendant Pamela Vargas.

On January 29, 1998, the Court granted permission for the MCdT Defendants' counsel to withdraw. The Court granted the MCdT Defendants until March 6, 1998 to retain new counsel and directed that if new counsel had not appeared by that date, plaintiffs could proceed to litigate the case. By letter dated February 11, 1998, the MCdT Defendants informed the Court that for financial reasons they were unable to retain new counsel. On May 7, 1999, the Court ordered MCdT to appear by an attorney on or before June 7, 1999. No attorney has appeared for MCdT to date. Because corporations may not proceed without an attorney, see Rowland v. California Men's Colony, 506 U.S. 194, 201-02, 113 S.Ct. 716, 121 L.Ed.2d 656 (1993), the Court directs the entry of a default against defendant MCdT.

I. Facts*fn3

A. Parties

Consolidated, a Delaware corporation with its principal place of business in Florida, manufactures, distributes, and sells cigars under numerous well-known trademarks. Consolidated owns a majority interest in CCB, a corporation which has a Florida office and which is organized and existing under the laws of the Netherlands Antilles. CCB manufactures, distributes, and sells cigars in the United States and abroad, directly and/or through its licensees. In addition, CCB owns several famous premier cigar brands, including the flagship MONTECRISTO cigar. MONTECRISTO cigars are imported and distributed in the United States exclusively by Consolidated. At all times relevant to this litigation, MONTECRISTO cigars have been manufactured by a subsidiary of Consolidated in the Dominican Republic.

Perez, who maintains an office in the Dominican Republic, is an equity owner and managing director of MCdT, supervising and controlling MCdT's activities. MCdT, a cigar manufacturer, is a corporation organized and existing under the laws of the Dominican Republic, with an office located in that country. MCdT's cigar brands include counterfeit "Montecristo" cigars ("MCdT cigars"), some of which are packaged in trade dress virtually identical to CCB's MONTECRISTO trade dress, using counterfeit facsimiles of CCB's MONTECRISTO trademarks. In addition, MCdT uses the trade names "Montecristi," "Monte Cristi," "Monte Cristi de Tabacos, c.x.a.," and "Monte Cristi, R.D." ("Monte Cristi Trade Names").

The Monte Cristi Trade Names have been used in advertisements and media reports that have been published and distributed in the United States and on the internet. MCdT cigars were also listed in the 1998 edition of the Tobacco Retailers' Almanac, a widely distributed tobacco industry publication, as "Montecristi" brand cigars.*fn4

B. Plaintiffs' Trademarks

CCB owns U.S. Trademark Registrations for the trademark MONTECRISTO, the trademark MONTE CRISTO, and the Crossed-Sword Design. Since at least 1935, CCB, through its licensees and its predecessor-in-interest, has used these trademarks in commerce in and with the United States. The MONTECRISTO cigar brand is widely regarded as one of the premium cigars. CCB's MONTECRISTO mark is used on its packaging, in advertisements, and on the internet. The MONTECRISTO brand has also been advertised widely in a variety of national magazines.

CCB packages MONTECRISTO brand cigars in a trade dress which consists of a paper-covered plywood box, with the mark MONTE CRISTO and Crossed-Sword Design appearing in red, black, and gold against a yellow field ("MONTECRISTO Trade Dress"). Each box's side panel contains the mark MONTECRISTO in red and gold lettering, and the inside of the box's top cover bears the mark MONTECRISTO in red and gold lettering, with the mark MONTE CRISTO and Crossed-Sword Design appearing in red, black, and gold against a yellow field. A sheet of paper, visible when the box is open, rests on top of the cigars and contains the mark MONTECRISTO. Each individual MONTECRISTO brand cigar is packaged with a cigar band on which appears the trademark MONTECRISTO. Both the cigar band and the Crossed-Sword Design contain the notation "M & G," referring to CCB's predecessor-in-interest, Menendez Garcia y Compania Limitada ("Menendez Garcia"). As noted above, through its licensees and Menendez Garcia, plaintiff CCB has used the MONTECRISTO Trademarks since at least 1935 in connection with its sale of premium cigars in the United States.

C. MCdT Distributorship

This action stems from the MCdT Defendants' efforts to distribute MCdT cigars in the United States. In 1995, Perez solicited his then-friend Fiorinelli to set up a distribution network in New York for various kinds of cigars, including MCdT cigars. Perez gave Fiorinelli (1) a presentation case labeled "Monte Cristi de Tabacos," containing sample MCdT cigars, for use in presentations to prospective customers in New York; (2) a suitcase full of packages and boxes of MCdT cigars in yellow boxes virtually identical to CCB's MONTECRISTO Trade Dress; and (3) MCdT's sales prices for these products.

When he arrived in New York, Fiorinelli obtained the assistance of his niece, Vargas, in establishing a distribution network in New York for MCdT. During the summer and fall of 1995, Fiorinelli, and eventually Vargas, contacted potential customers in New York and New Jersey, offering to sell them MCdT cigars. After a brief hiatus in these activities, MCdT sent Vargas a new set of price lists for MCdT cigars in March of 1996. Later that month, Perez gave Fiorinelli a written description of the various MCdT cigar brands, with instructions that he fax these descriptions to Vargas for her to use in her New York sales efforts. Upon receipt of the price lists, Vargas wrote a form solicitation letter to send to tobacco retailers.

On or around March 11, 1996, Vargas sent a package from the Bronx, New York to Arnold's Tobacco Shop in New York, New York containing an offer from WD Distributors to supply Arnold's with MCdT cigars. The package contained (1) a box of MCdT cigars which Fiorinelli had received from Perez and brought to New York; (2) a cellophane wrapped package of MCdT cigars which Fiorinelli had received from Perez; and (3) a box of cigars with the trade name "Monte Cristi de Tabacos, c.x.a." printed on it.

In or around March of 1996, Vargas also sent packages to two additional tobacco retailers, one located in New York and the other located in New Jersey. These packages included, among other things, a letter soliciting orders for MCdT's cigars, sample MCdT cigars from the supply that Perez had provided Fiorinelli, and a price list and order form for MCdT cigars.

Shortly after the above events, Vargas traveled to the Dominican Republic. While there, she learned that CCB was trying to serve her in connection with a trademark infringement lawsuit based on her distribution of MCdT cigars. When she informed Perez of this pending lawsuit, he encouraged her to continue distributing MCdT cigars in the United States, and told her that CCB had no basis for asserting that she could not distribute them.

In addition to the above activities, the MCdT Defendants made other deliberate efforts to distribute MCdT cigars in the United States. One such effort involved the sale of MCdT cigars to Rocco Zagarella ("Zagarella") of Boston, Massachusetts, for his company Waterfront Beer & Wine ("Waterfront"). In January, 1996, Perez personally accepted Zagarella's order by telephone for a total of thirty boxes of MCdT cigars, which MCdT shipped directly to the United States from the Dominican Republic. In early February of 1996, one of the MCdT Defendants' shipments to Waterfront was detained by U.S. Customs. MCdT managers assured Zagarella that MCdT was the legitimate owner of the MONTECRISTO brand, and that "many people" were importing MCdT cigars into the United States. MCdT also attempted to assist Zagarella to convince Customs to allow him to import the MCdT cigars, giving Zagarella a letter stating that "the name of Montecristo derives from the name of the factory of cigars Monte Cristi de Tabacos, C.X.A. in the Dominican Republic . . ."

After the February, 1996 detention of MCdT's shipment to Waterfront, Zagarella visited MCdT in the Dominican Republic, and showed MCdT's representatives the U.S. Customs Notice of Detention stating that the detention was based on possible infringement of the MONTECRISTO trademark. MCdT's representatives expressed bewilderment as to why the MCdT cigars had been detained. After this, MCdT sent two additional shipments containing at least seventy boxes of MCdT cigars to Waterfront. Some of these boxes were virtually identical to CCB's MONTECRISTO Trade Dress; others were packaged in wood boxes marked with MONTE CRISTO, MONTECRISTO and the Crossed-Sword Design trademark. All of the boxes were marked, "Monte Cristi de Tabacos."

Another MCdT effort to distribute MCdT cigars in the United States consisted of MCdT's representations to importer James Orth ("Orth") who was in the business of sourcing various products in the Caribbean for the Texas-based Stanford Trading Company ("Stanford Trading") to purchase and distribute. When Orth and Perez first met in December, 1995, Perez told Orth that he was the owner of MCdT. In those and subsequent conversations, Perez and other MCdT agents falsely represented to Orth that MCdT was manufacturing its cigars under contract with Consolidated. When Orth expressed concern about a minor difference in the MCdT cigar band and plaintiffs' MONTECRISTO cigar band, Perez reassured him that the difference existed because the MCdT cigars were manufactured under contract with Consolidated for export and for sale in duty free markets. Perez told Orth that MCdT had the right to sell MCdT cigars in the United States and that it had been doing so for a significant time period. Perez also told Orth that MCdT could provide Stanford Trading with two thousand boxes of cigars per month. Based on these representations by the MCdT Defendants, Stanford Trading and its agents in the United States offered MCdT cigars to over 200 cigar stores in the United States, ultimately delivering over $67,000 worth of MCdT cigars to a Pennsylvania retailer.

In addition to the above-detailed distribution efforts, the MCdT Defendants supplied MCdT cigars to importers in Washington State; Mount Sinai, New York; and Queens, New York, among other locations within the United States. In one case, the MCdT Defendants provided Queens-based cigar distributor Victor ...


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