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USHODAYA ENTERPRISES, LTD. v. V.R.S. INTERNATIONAL

August 13, 1999

USHODAYA ENTERPRISES, LTD., PLAINTIFF,
v.
V.R.S. INTERNATIONAL, INC. AND A. VASUDEVAN, DEFENDANTS.



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

OPINION

From June 7 through June 10, 1999, a bench trial was held. Plaintiff called as witnesses Shankar Melkote, managing director of Margadarsi Marketing Private Limited, Ushodaya's former exporter and marketing firm, Ananta Mangalampalli, a manager in Ushodaya's export division, Bharat Joshi of Indian Groceries & Spices, Inc., Ushodaya's former U.S. distributor, and Cherukuri Kiron, the managing director of Ushodaya. Defendants presented the testimony of Vel Vasan, Vasudevan's brother-in-law, Bargavi Sundararajan, one of Vasudevan's daughters, Satinder Sharma, a former owner of an Indian grocery store in Chicago, and Aramudh Vasudevan, the individual defendant who is the president and sole employee of the corporate defendant.

After considering all the evidence, observing the demeanor of the witnesses, and considering the plausibility and credibility of the testimony, I conclude that plaintiff has proven its claim of fraudulent procurement of the trademark registrations and a portion of its copyright claim by a preponderance of the credible evidence, but that plaintiff and defendants have both failed to bear their burdens of proving their other claims by a preponderance of the credible evidence. I make the following findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).

THE EVIDENCE

This case concerns what the parties call Indian pickles. Indian pickles consist of pieces of vegetables or fruit, such as mango, garlic or chili peppers, which are steeped in oil, salt and various spices. Pickles are used for flavoring rice in southern Indian cuisine.

I. Ushodaya's Pickle Sales Prior to 1988

Ushodaya is a company in southern India that was previously incorporated under the name of "Priya Foods Private Limited." It has manufactured pickles with the "Priya" name in India since approximately 1980. (Tr. 30). From 1981 to 1984, Ushodaya sold "Priya" pickles to Margadarsi Marketing Private Limited which in turn exported and marketed the product to the United States and the Arabian Gulf states. (Tr. 22-24). From 1985 to 1987, Ushodaya exported its pickles to the United States through Eswar International, Inc. (Tr. 74). The evidence produced on the volume of sales in the United States comprised (1) receipts dated May 25, 1983 and December 12, 1983 for two shipments of "Priya" pickles from Margadarsi to its agent in the United States, with a total price of $24,510 each, and (2) various invoices and canceled checks dated 1985 and thereafter showing sales of "Priya" pickles by Eswar to Indian Groceries & Spices, Inc., an American wholesale distributor. (Pl.Exs. 77A & 4A).

II. Vasudevan Family Pickle Production

"Priya" was the nickname of Vasudevan's youngest daughter. (Tr. 317-18, 335). It is a commonly used nickname in India. (Tr. 318). VRS represented to the PTO that the word "priya" means "beauty."*fn1 (Pl.Ex.89). At trial, Vel Vasan testified that it means "I like it," and derives from the Sanskrit word "priya." (Tr. 316-7).

Sales in Chicago stopped in 1982 when Bargavi, another of Vasudevan's daughters who had been involved in preparing pickles, moved to Altamonte Springs, Florida, where she continued to prepare pickles in her house. (Tr. 319, 326, 331). Vasudevan moved to Florida in approximately 1984, and Bargavi and her father sold the pickles "in small quantities" to "a couple of stores" in the Altamonte Springs area, within a five- to ten-mile radius of their house. (Tr. 397-402, 337). In 1985, Bargavi, Vasudevan and their families moved to Edison, New Jersey, where Vasudevan continued his practice of selling Bargavi's homemade pickles to local stores. (Tr. 397-402). In approximately 1987, Bargavi stopped making pickles. (Tr. 338-39, 401-02).

III. The contract Between VRS and Ushodaya

Vasudevan testified that he hoped to continue selling pickles after his daughter stopped preparing them, and to that end he incorporated VRS in New Jersey in February 1988. (Tr. 403). Vasudevan met with Ushodaya in India in March of 1988. (Tr. 415-16). In approximately September 1988, Ushodaya entered into an agreement with VRS. (Tr. 72-77; Pl.Ex. 2). The agreement provided that "[Ushodaya] agrees to appoint VRS as their exclusive dealer/distributor for U.S.A. market only to market PRIYA pickles and chutneys. Further, [Ushodaya] will give first priority to VRS for selling their other products in U.S.A." The agreement also provided that "VRS will keep [Ushodaya] informed of product sales, feedback on competition, market opportunities etc. on quarterly basis," and that Ushodaya "will inform VRS on a continuous basis [of] any changes in the products, packing, etc."

Vasudevan testified that in his meetings prior to signing the agreement, he provided Ushodaya with his family's specifications for the pickles. He suggests that the parties agreed that Ushodaya would change the recipe for its "Priya" pickles to conform to Vasudevan's specifications. (Tr. 416-35). I find that Vasudevan was not credible on this issue. I do credit the testimony of Ananta Mangalampalli, who has worked for Ushodaya since 1988 and is currently the manager of export operations of the export division. (Tr. 69). Mangalampalli testified that at the 1988 meetings he attended with Vasudevan, there was no discussion of a recipe, and that the recipe for the pickles exported to the United States through VRS was the same recipe that Ushodaya had been using previously. (Tr. 79).

Vasudevan advertised and sold Ushodaya's "Priya" pickles in Texas, California, Illinois and New York. (Tr. 448-49).

IV. Trademark Applications

In August 1991, Vasudevan met with Ushodaya officials to discuss the possibility of VRS registering the "Priya" mark in the United States. (Tr. 97-98). In accordance with the discussion at this meeting, Ushodaya's managing director signed a consent letter, dated August 19, 1991 and addressed to VRS. (Tr. 98-101). The parties produce two different forms of the letter which are substantially the same. Ushodaya's version reads: "We hereby authorize you to register our PRIYA BRAND PICKLES under the Trade Name Registration as Manufacturers and your Name as Trade Mark Holders." (Pl. Ex.9). The version produced by defendants is the same, except that the word "our" is crossed out. (Pl.Ex.9A).

First Trademark Application. In September 1991, VRS filed a trademark application signed by Vasudevan for the mark "Priya" for the following goods: "pickles, spices, rice, idly, . . . ." (Pl.Ex. 10; Tr. at 463). In that application, and in accordance with the registration requirements of 15 U.S.C. § 1051(a)(1), Vasudevan stated that he "believes [VRS] to be the owner of the mark sought to be registered", and that "to the best of his knowledge and belief no other person, firm, corporation or association has the right to use said mark in commerce." The application stated that first use of the mark and first use in commerce were March 1982.

In an "Office action" dated January 9, 1992 and mailed to VRS's attorney, a PTO examining attorney noted deficiencies in VRS's application, and stated that if the application were not "amended" accordingly the application would be deemed abandoned. Among other things, the examining attorney stated that the description of goods was "indefinite." He also stated that "The record indicates that the goods are manufactured in India. The applicant is located in New Jersey." (Pl.Ex.35). He wrote:

  "If the referenced manufacturer is only a manufacturer
  and does not use the mark anywhere as owner, the
  applicant should state so for the record. That
  response, by itself, will satisfy this inquiry.
  However, if the foreign manufacturer uses the mark
  outside the United States as owner, the applicant must
  do one of the following to establish ownership and the
  right to apply in the United States. (1) The applicant
  must provide a copy of an assignment from the foreign
  owner to the applicant of all rights in the mark in
  the United States. . . . (2) The applicant must
  provide written consent from the foreign owner to the
  applicant's registration of the mark in the United
  States."

In a letter to VRS dated February 4, 1992, Ushodaya objected to VRS registering as owners of the trademark: "When we discussed this matter during your last visit to India, our understanding was that you will apply for registration of the Trade Mark on our behalf at the address of . . . VRS, as the holder of PRIYA Trade Mark. We have issued authorization letter to this effect only. Please be advised that we will be the owners of the Trade Mark and you will be the holder of the Trade Mark as our authorized Sole Distributor for U.S. Market." (Pl.Ex.23). The letter demanded that VRS amend the trademark application accordingly. VRS's attorney responded to the PTO Office action with a letter dated July 9, 1992. (Pl.Ex.89). The attorney submitted the consent letter (the version with "our" crossed out), which he described as "a written consent from the foreign owner to applicant's registration of the mark in the United States." Vasudevan testified that he first sent the letter to his attorney handling the application in November 1991 "[b]ecause originally it slipped somewhere and he said he didn't get it." (Tr. at 463).

However, in the July 9, 1992 submission, VRS's attorney inadvertently failed to amend the description of goods in accordance with the Office action. Therefore, in a letter dated October 18, 1993, the PTO deemed the application abandoned. (Pl. Ex.36). VRS immediately objected, and successfully revived the application.

In the meantime, Ushodaya's U.S. attorneys had sent a letter to the Commissioner of Patents and Trademarks dated June 16, 1992, protesting the trademark application filed by VRS. (Pl.Ex.56). Ultimately, the PTO granted VRS's application and registered the "Priya" ...


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