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KAISHA v. ALIMENTS LEXUS INC.

June 14, 2004.

TOYOTA JIDOSHA KABUSHIKI KAISHA also doing business as TOYOTA MOTOR CORPORATION, and TOYOTA MOTOR SALES, U.S.A., INC., Plaintiffs,
v.
ALIMENTS LEXUS INC. and HOWELL ASSOCIATES INC., Defendants



The opinion of the court was delivered by: DAVID TRAGER, District Judge

MEMORANDUM & ORDER

Plaintiffs Toyota Jidosha Kabushiki Kaisha, also doing business as Toyota Motor Corporation, and its subsidiary Toyota Motor Sales, U.S.A., Inc. (collectively "Toyota" or "plaintiffs") filed this suit against defendants Aliments Lexus Foods, Inc. ("Aliments") and Howell Associates, Inc. ("Howell") (collectively "defendants") on January 2, 2002, alleging trademark and service mark dilution, trademark and service mark infringement, trade name infringement, and unfair competition, pursuant to 15 U.S.C. § 1125(a)(1), 1125(c) and 1114(c), N.Y. Gen. Bus. Law § 360-1, and at common law. Plaintiffs seek injunctive relief, costs and attorney fees.

Pending before the court is defendants' motion for summary judgment pursuant to Fed.R. Civ. P. 56, on the basis that the action is barred under equitable principles of estoppel by laches and/or acquiescence. For the following reasons, defendants' motion is denied.

  Background

  The following facts are undisputed unless otherwise indicated. Plaintiff Toyota Motor Sales, U.S.A. is a California corporation whose principal offices are in California. Amended Complaint ("Am. Compl.") ¶ 3. Toyota Motor Sales is a wholly-owned subsidiary of co-plaintiff Toyota Jidosha Kabushiki Kaisha ("Toyota Japan") a Japanese corporation doing business as Toyota Motor Corporation. Id. Toyota has manufactured and sold luxury automobiles in the U.S. under the trademark LEXUS since 1989. See Plaintiffs' Rule 56.1 Statement ("Pls.' Rule 56.1 Start.") ¶ 1. Toyota also registered LEXUS as a trademark for automobiles in the United States Patent and Trademark Office ("USPTO") under Registration No. 1,574,718, which was issued on January 2, 1990. Am. Compl. ¶ 12.*fn1

  Defendant Aliments Lexus Foods, Inc. is a Canadian company which has been in the business of bottling, packaging, and packing fruit juice products since 1990. See Memorandum of Law in Support of Defendants' Motion for Summary Judgment ("Defs.' Mem.") Ex. 1, ¶ 3. Fruit juice is Aliments' sole product. See Defs.' Rule 56.1 Stmt. ¶ 28. Defendant Howell Associates, Inc., a U.S. company, is a food broker for sales of LEXUS fruit juices in the U.S. for Aliments. See id. ¶ 1. Aliments was initially incorporated on July 4, 1990 as "173964 CANADA Inc.," a name which was assigned by the company's lawyers in preparation for filing, but was later changed to "Lexus Foods" in 1991 or 1992. Defs.' Mem. Ex. 1, ¶ 3; Groff Decl. Ex. 8 at 3. Although the parties dispute whether the name "Lexus" was selected in good faith, Raoul Landry ("Landry"), the company's president, asserted that he and the company's vice-president, Roger Guglia ("Guglia") decided to use "Lexus" because "it was easy to pronounce and did not require translation." Defs.' Mem. Ex. A, ¶ 5.

  On April 27, 1992, Aliments filed an application with the Canadian Trademarks Office to register the name LEXUS for use with fruit juices in Canada. Guglia testified that he had obtained an oral opinion from Canadian counsel that the mark LEXUS was available for use and registration for fruit juices in Canada. Defs.' Rule 56.1 Stmt. ¶ 2. Toyota contested the application by filing a statement of opposition on February 10, 1993. Id. ¶¶ 1, 3. In the course of the opposition proceeding, Guglia submitted an affidavit dated August 12, 1994, in which he detailed the nature and extent of the use made of LEXUS with fruit juices by Aliments in Canada since 1992. Defs.' Mem. Ex. A, ¶ 9; Ex. 1.

  At an unspecified date in 1993, Aliments made one shipment of LEXUS juice products into the U.S. Defs.' Mem. Ex. A, ¶ 11. Prior to commencing regular shipments into the U.S. in 1995, Guglia, through a business associate, sought and obtained a legal opinion on the availability of LEXUS for use in the U.S. market as a name for fruit juices. Id. By opinion dated June 12, 1995, counsel indicated that LEXUS was available as a trademark for fruit juice.*fn2 According to Aliments, the company never sought to register the LEXUS mark in the U.S. because they believed that Toyota was objecting to Aliments' registration of LEXUS for fruit juices in Canada but did not object to their use of LEXUS as their trade name or mark for fruit juices. Id. ¶ 13. Indeed, throughout the history of the Canadian opposition proceedings, Toyota never issued a cease-and-desist demand upon Aliments with respect to their use of the LEXUS mark. Id. ¶ 10. To avoid "another legal battle" with Toyota, Aliments' president, Raoul Landry, therefore decided not to register LEXUS as a mark for fruit juices in the U.S., Id.

  Accordingly, on June 26, 1995, Aliments began regular shipments of LEXUS branded juices to the U.S. Id. ¶¶ 11-12. Howell Associates handled the distribution of LEXUS juices in the U.S. on behalf of Aliments. Declaration of Allison S. Groff ("Groff Decl."), Ex. 16 at 49. Between 1995 and May 2002, annual sales of LEXUS fruit juices in the U.S. grew to approximately U.S. $180,000. Defs.' Rule 56.1 Stmt. ¶ 17.*fn3 By 2001, the U.S. constituted the largest single market for Aliments' LEXUS fruit juices. Id. ¶ 18. On July 22, 1997, the Trademarks Opposition Board of the Canadian Trademarks Office dismissed Toyota's opposition and found in favor of Aliments. Groff Decl., Ex. 9. Toyota appealed the dismissal of their opposition to the Federal Court of Canada, Trial Division. Id., Ex. 10.

  While the appeal before the Canadian trial court was pending, Howard Duchin ("Duchin"), an employee of Howell Associates, attended a promotional event entitled "A Taste of Lexus" at the Belmont Racetrack in New York in August 1999. Id., Ex. 16 at 49; Defs.' Mem. Ex. C. "A Taste of Lexus" was a professional event sponsored by Lexus dealers to introduce and promote new models of Toyota's Lexus automobiles. Groff Decl., Ex. 16 at 49-50. At the event, Duchin gave a Lexus representative his business card and discussed with him the possibility of using Aliments' Lexus juices to help promote Toyota's Lexus automobiles. Id., Ex. 16 at 50-52. The Lexus representative informed Duchin that he would look into the idea and contact him, but no further communication ensued. Id., Ex. 16 at 51-52. Toyota asserts that this was the first time any Toyota entity became aware of any activity by Aliments Lexus in the U.S. Id., Ex. 15 at 104. As a result of Duchin's conversation with the Lexus representative at the "Taste of Lexus" event, Toyota requested outside counsel to investigate the use of the mark LEXUS for fruit juices in the U.S. Id., Ex. 15 at 111. In the meantime, on August 31, 1999, the Canadian trial court reversed the Opposition Board's decision. Id., Ex. 10. Aliments then appealed the trial court's decision to the Canadian Federal Court of Appeal. Id., Ex. 11. While Aliments' appeal before the Canadian appellate court was pending, Toyota received and reviewed the initial portion of outside counsel's investigation results from January until April 2000. Pls.' Rule 56 Stmt. ¶ 8.

  On November 20, 2000, the Canadian appeals court reversed the trial court's decision and found for Aliments. Groff Decl., Ex. 11. The Canadian Supreme Court ultimately denied Toyota's request for leave to appeal on July 12, 2001. Id., Ex. 12.

  In April 2001, Toyota sent a cease and desist letter to Howell, objecting to the use of the mark LEXUS in the U.S. Pls.' Rule 56 Stmt. ¶ 9. According to Toyota, a primary factor affecting the timing of the April 2001 demand letter was the fact that Toyota had prevailed on the first level of review in the opposition proceeding, which was now on appeal before the Canadian appellate court. Groff Decl. Ex. 15 at 111. After obtaining the advice of counsel, Aliments sent a response letter to Toyota in May 2001 stating that they believed there was no likelihood of confusion and declining to comply with Toyota's demand. See Defs.' Mem., Ex. A ¶ 15. On January 7, 2002, Toyota commenced the instant suit.

  ...


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