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BEAR U.S.A., INC. v. KIM

September 17, 1999

BEAR U.S.A., INC., PLAINTIFFS,
v.
WILLIAM KIM, DURA-TEX, INC., THEODORE HELD, SHELDON HELD, BEST VALUES STYLES, INC., INNER CITY JEANS & SPORTSWEAR, LTD., A.J. SHEEPSKIN & LEATHER OUTERWEAR, INC., B.J. MYERSON, INC., FAMILY OFF PRICE SHOP, INC., ILL JOO LEE, BEAR MOUNTAIN, INC., SUK J. KONG, MIDWEST INTERNATIONAL TRADING, AND SHOW TREE, INC., DEFENDANTS. BEAR U.S.A., INC., PLAINTIFFS, V. BING CHUAN GROUP U.S.A. CORP., WILLIAM KIM, JOHN DOE D/B/A JUST FOR YOU, MOMO ST. NICHOLAS, INC. D/B/A NEW YORK SPORTS, AND JOHN DOE D/B/A HEADQUARTERS, DEFENDANTS.



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

  OPINION

Last winter, for the third holiday season, Bear U.S.A., Inc. ("Bear U.S.A.") alleged that the trademarks on its popular "Bear" parkas were being infringed. The Court now decides two separate but related motions: one for contempt of an earlier judgment and the other for a preliminary injunction in a new case. The accused parkas have been seized, and the Court has issued a temporary restraining order in the new case.*fn1

Facts

The Parties

Bear U.S.A.

The Hong family,*fn2 which now owns Bear U.S.A., started out in the retail clothing and footwear business in approximately 1987.*fn3 After some years, they began selling parkas made to their order under the trademark "Bear Mountain." Their first line of clothing was a great success and the business grew rapidly.*fn4 In 1994, they incorporated the company as Bear U.S.A., which succeeded to the family's rights in the marks. Members of the Hong family continue to run the new corporation.*fn5

As the company grew, Bear U.S.A. developed a group of trademarks to identify its products to consumers. As noted, "Bear Mountain" was its first mark. The second generation included two marks, one with the word "Bear," the other with the words "Bear U.S.A.," each next to a line drawing of a polar bear. The third generation of marks added two new marks which combined the words and the drawing by enclosing the word "Bear" or words "Bear U.S.A." within the outline of the polar bear. Eventually, Bear U.S.A. added a final "Bear Max" mark. In all, there now are six Bear U.S.A. marks. "Bear Mountain" is not a registered mark, "Bear-Max" is federally registered and the four remaining marks have federal trademark applications pending.*fn6

Bear U.S.A. invests tens of thousands of dollars in advertising and promotion of its goods and its marks.*fn7 In addition to the company's own efforts, national publications such as GQ, Seventeen, and Details have featured its products.*fn8 Mary J. Blige, Junior M.A.F.I.A., Dr. Dre and others who, the Court is informed, are recording artists and celebrities, request Bear U.S.A. merchandise. Television shows such as "New York Undercover" and "The Fresh Prince of Bel Air" use Bear U.S.A. products on their shows.*fn9

William Kim

William Kim is the principal of Dura-Tex, Inc. ("Dura-Tex"), a company which commissions the manufacture of and distributes down parkas. Kim is a defendant in both of the cases addressed in this opinion and is subject to a permanent injunction in the earlier case. Kim designed, ordered, and sold many of the accused "Bear Mountain" parkas at issue in this case.

Bing Chuan

Defendant Bing Chuan Group U.S.A. Corporation is the United States subsidiary of a large conglomerate based in the People's Republic of China. The parent company manufactures and sells men's and women's clothing. Bing Chuan U.S.A. imports merchandise produced by the parent company into the United States.*fn10 In this opinion, the entire Bing Chuan operation in the United States and abroad is referred to collectively as "Bing Chuan." Bing Chuan manufactured the "Bear Mountain" parkas at issue here.

The Litigation Before this Court

This opinion addresses distinct issues in two separate, though related, cases: a charge of contempt of the judgment in Bear U.S.A., Inc. v. William Kim, 97 Civ. 0574, and alleged trademark infringement in Bear U.S.A., Inc. v. Bing Chuan Group, Inc., 71 F. Supp.2d 237 (S.D.N.Y. 1999). In analyzing each claim, the Court has taken care to consider only the facts of record in that claim. It nonetheless is helpful to refer first to the overall background in order to set the case in context.

The A.J. Sheepskin Case

Bear U.S.A. first appeared in this Court during the holiday shopping season of 1995, when it sued Theodore Held and Simon Akiva, and their respective companies, A.J. Sheepskin & Leather Outerwear and Inner City Jeans & Sportswear, Ltd.*fn11 Held, Akiva and their companies originally bought Bear U.S.A. parkas and jackets from the Hong family. After seeing the Hongs' success with the Bear marks, this Court found, the defendants in A.J. Sheepskin decided to capitalize on that success by bringing out a line of denim jeans and other items which also used "bear" names:*fn12 "Bear Jeans" on denim jeans, shirts, and light jackets, "Bear Tex by Bear Jeans" on down jackets, and "Bear Tex" with a smaller "Bear Jeans" on boots.*fn13 Nor was this their first experience knocking off others' products. These defendants previously had been enjoined from infringing the marks of two other clothing manufacturers, North Face and Guess?.*fn14

A.J. Sheepskin ended on December 21, 1995, when both sides consented to an injunction. The defendants and those in active concert with them were permanently enjoined from, among other things, infringing Bear U.S.A.'s trademarks or using any colorable or confusingly similar imitation of them.

While the 1995 case spelled the end of the "Bear Tex" and "Bear Jean" infringements, it did not end Bear's problems with these defendants. Within a year, the defendants in A.J. Sheepskin had found a new business partner, William Kim. Held, Akiva, and Kim had known each other for a number of years;*fn15 Held, for example, had worked for several years on prior clothing companies with Kim.*fn16 Even as they were settling Bear U.S.A.'s case against them, Held later would testify, "[they] were looking for other Bear marks to use."*fn17

The First Infringing "Bear Mountain" Mark

Held knew from a trademark search that a corporation called Shoe Tree had registered the trademark "Bear Mountain" for use on footwear.*fn18 Shoe Tree operated a small retail and wholesale shoe store in Millersburg, Pennsylvania,*fn19 where Shoe Tree's owner and manager, Andrew Crawford, sold boots with a "Bear Mountain" mark. The logo on those boots, it should be noted, bore no resemblance to the manner in which Bear U.S.A. used "Bear Mountain" and "Bear." Nor did Crawford sell any parkas under the "Bear Mountain" name.*fn20

Held hoped to license Shoe Tree's "Bear Mountain" mark but did not disclose that fact to Bear U.S.A. during the settlement negotiations.*fn21 He and Akiva met with Crawford and tried to convince him to license the trademark to them,*fn22 but Crawford was not interested because he did not like and was not comfortable with Held.*fn23 Kim, however, had better luck. He too went to Crawford and, when Crawford asked whether he was associated with Held, said that he was not and persuaded Crawford to license the mark to him.*fn24 Kim then had 200,000 parkas produced abroad with the logo "Bear Mountain."*fn25 Kim altered Crawford's mark, however, initially by adding the image of a bear, the same sanimal which appeared on Bear U.S.A.'s parkas.*fn26 He went so far as to employ a manufacturer used by Bear U.S.A. and to instruct it to make the parkas "in the Bear U.S.A. style."*fn27

"Bear Mountain," as described above, was the Hongs' first "bear" trademark. Kim, Held, and Akiva pursued their "Bear Mountain" parka venture despite the fact that Held and Akiva had agreed to a consent decree in the 1995 case which barred them, and anyone in active concert with them, from "infringing, substantially imitating, or making unauthorized use of plaintiff's Bear trademarks; . . . [or] using any simulation, reproduction, counterfeit, copy, colorable imitation or confusingly similar imitation of any of Bear's distinctive Bear trademarks."*fn28 Kim, moreover, knew about the 1995 case, because, Held testified, he had told Kim about the opinion of this Court in that case.*fn29 The trio persisted, however, for two reasons. First, as Held told Crawford, he believed that "anything having to do with Bear at all was working [in the] inner city."*fn30 Second, at the time they were producing their "Bear Mountain" parkas, they knew that Bear U.S.A. was involved in other expensive litigation with Golden Bear, a company associated with the professional golfer, Jack Nicklaus. Crawford later suggested that they did not believe that Bear U.S.A. could afford both to defend the Golden Bear suit and to pursue an additional action against the Kim group.*fn31

The parkas Kim had manufactured bore a mark in which the words "Bear Mountain" appeared under a drawing of a mountain range. The words "Bear Mountain" were printed in both upper and lower case letters in a font apparently identical to that used by Bear U.S.A. in printing "Bear" on its jackets. The word "Bear" was far more prominent on Kim's parkas than the word "Mountain."*fn32

The Kim case

When it discovered Kim's "Bear Mountain" parkas in the marketplace, Bear U.S.A. brought the first litigation now before this Court, the Kim case, during the 1997 holiday shopping season. Bear U.S.A. there sued Kim, Dura-Tex, Held, Akiva, their companies, Shoe-Tree, and several of the retail stores selling the parkas.*fn33 Bear U.S.A.'s theory was that Kim's "Bear Mountain" mark infringed its own popular "Bear" and "Bear U.S.A." marks.*fn34 Held, Akiva, and the stores consented to a permanent injunction. Kim, Dura-Tex, and other defendants not relevant here, however, went to trial before a jury. During the trial, Kim revealed that he had produced 200,000 "Bear Mountain" parkas but had sold only 100,000 of them. Another 100,000 therefore remained in inventory.*fn35

On April 17, 1998, the jury found that the Bear U.S.A. trademarks were protectible,*fn36 that consumers were likely to be confused into thinking that the Kim "Bear Mountain" parkas came from the same source as or were approved by Bear U.S.A., and that Kim and Dura-Tex had been willfully deceptive with respect to their use of the Bear U.S.A. marks.*fn37 On the same day, this Court issued an order from the bench directing that "neither Mr. Kim nor Dura-Tex, nor any person in active concert or participation with them who receives actual notice of this order shall sell, assign, transfer, or alienate in any way any claim, right, title or interest that any of them may have or claim in any of the 100,000 parkas that have been referred to in the record of this trial."*fn38 The order referred to the as yet unsold parkas. At the Court's direction, Kim filed an affidavit on April 20, 1998, which identified Bing Chuan as the manufacturer and custodian of the "Bear Mountain" parkas.*fn39

The scope of the judgment in the Kim case was litigated by the parties. Bear U.S.A.'s theory at trial had been that the Kim parkas infringed upon the "Bear" and "Bear U.S.A." marks, but plaintiff sought an injunction which banned also use of the mark "Bear Mountain." On May 7, 1998, the Court issued a memorandum on judgment, explaining its decision to enjoin Kim from using "Bear Mountain" on the basis that he "should be `fenced out' of any territory remotely approaching the line that divides proper from improper conduct with respect to the Bear U.S.A. marks."*fn40

The judgment forbade Kim, his company Dura-Tex, "and all other persons acting in active concert or participation with them who receive actual notice of this judgment by personal service or otherwise"*fn41 from, among other things, engaging in unfair competition with Bear U.S.A. and infringement of its trademarks. The judgment enjoined these parties

  "particularly from, in any manner, directly or
  indirectly:

"i) using the `Bear Mountain' trademark;

  "ii) using the word `Bear' in a type style, size or
  any other manner which duplicates or simulates the
  manner in which Bear U.S.A. uses or has used its Bear
  U.S.A. Trademarks or in any other manner which is
  likely to cause confusion as to the source of their
  products;
  "v) using any false designation of origin or false
  description (including, without limitation, any
  letters or symbols) which can, or is likely to, lead
  the trade or public, or individual members thereof,
  to believe that any product manufactured, advertised,
  distributed and/or sold by Defendants is in any
  manner associated or connected with plaintiff, or is
  sold, licensed, sponsored, approved, or authorized by
  plaintiff;
  "vii) passing Defendants products off as "Bear" or
  "Bear U.S.A." products; or
  "viii) assisting, aiding or abetting any other person
  or business entity in engaging in or performing any
  of the activities referred to in subparagraphs i)
  though vii) above."*fn42

Bear U.S.A.'s Discussions with Bing Chuan

Shortly after Bear U.S.A. learned from Kim's affidavit that Bing Chuan manufactured and then had possession of the remaining 100,000 Kim parkas, its counsel quickly informed Bing Chuan of the Court's April 17 order by a letter dated April 24, 1998 to Bing Chuan president Chuan Bo Xu.*fn43 That letter was followed by another on May 1, 1998, which informed Lucianne Lew, Bing Chuan's legal counsel, of the order.*fn44 Attached to the May 1, 1998 letter was a transcript of the April 17 proceedings. Shortly after the May 1 letter, plaintiff's counsel and Bing Chuan's counsel spoke by phone, and Ms. Lew assured Bear U.S.A.'s counsel that Bing Chuan had no intention of ...


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