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Danone Asia Pte. Ltd. v. Happy Dragon Wholesale

March 29, 2006

DANONE ASIA PTE. LTD. AND AMOY FOOD, LTD., PLAINTIFFS,
v.
HAPPY DRAGON WHOLESALE, INC. AND JIMMY WANG, DEFENDANTS.



The opinion of the court was delivered by: Sifton, Senior Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs Danone Asia Pte. Ltd. ("Danone") and Amoy Food Ltd. ("Amoy Food") bring this trademark action against defendants Happy Dragon Wholesale, Inc. ("Happy Dragon") and Jimmy Wang ("Wang"). Specifically, plaintiffs allege the following claims against the defendants: (1) infringement of plaintiffs' registered trademarks in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114 (Count I); (2) counterfeiting of plaintiffs' registered trademarks in violation of Section 34(d) of the Lanham Act, 15 U.S.C. § 1116(d)(Count II); (3) false designation of origin in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(Count III); (4) trademark infringement and unfair competition under common law (Count IV); (5) dilution of the distinctive quality of plaintiffs' marks under Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c)(Count V); and (6) dilution under New York state law. Plaintiffs' claims arise out of defendants' sale of counterfeit soy sauce bearing trademarks that are unauthorized copies of plaintiffs' trademarks.

Plaintiffs move for partial summary judgment*fn1 pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons set forth below, the motion for summary judgment is granted in part and denied in part.

BACKGROUND

The following facts are taken from the parties' depositions, affidavits, and exhibits and plaintiff's Local Rule 56.1 statement of undisputed facts.*fn2

Plaintiff Amoy Food is a Hong Kong-based corporation engaged in the production, advertising, promotion and sale of Asian food products, including soy sauce products. Plaintiff Danone, a Singapore-based company, is the parent company of plaintiff Amoy Food. Defendant Happy Dragon is a corporation organized under the laws of New York, with a place of business in Flushing, New York. Happy Dragon is engaged in the distribution of food products to the restaurant trade. Defendant Jimmy Wang is the president of Happy Dragon and its sole owner and officer.

Amoy Food has used the mark "AMOY" on soy sauce products in the United States since 1954. Danone registered this mark with the United States Patent and Trademark Office ("PTO"), Registration Nos. 1,095,359, 2,178,809, and 2,715,913 (collectively, the "AMOY MARKS"), for several goods, including soy sauce products. Amoy Food has used the mark "GOLD LABEL SOY SAUCE" on soy sauce products in the United States since 1983. Danone has registered this mark with the PTO, Registration No. 3,002,623, for soy sauce products.

Amoy Food sells a version of its GOLD LABEL SOY SAUCE products in 63-ounce metal containers primarily to the restaurant trade. This container, sold only in the United States, has a unique trade dress (hereinafter "Amoy Food Metal Container"). This "trade dress" consists of the following characteristics: (1) AMOY trademark; (2) the GOLD LABEL SOY SAUCE trademark in both English and Chinese characters; (3) orange color lettering for AMOY and GOLD LABEL SOY SAUCE marks; (4) black color for the generic product information; (5) yellow background color. Amoy Food also sells these containers in a corrugated package that holds six cans. The corrugated packaging also bears a unique trade dress (hereinafter "Amoy Food Six-Pack"). The trade dress consists of the following elements: (1) the AMOY trademark, and the GOLD LABEL SOY SAUCE trademark in both English and Chinese characters; (2) a five digit alphanumeric code, printed in a "dot-matrix" format, which identifies that date when the products were packaged. The AMOY MARKS, the GOLD LABEL SOY SAUCE MARK, the Amoy Food Metal Container, and the Amoy Food Six-Pack are collectively referred to as the "AMOY FOOD MARKS." The corrugated packaging that plaintiffs have used in the Washington, D.C. -Boston corridor for the last few years contains five cans of soy sauce and one can of oyster sauce (the "'5 1' package"). The product information on this package appears in green.

In the United States, Amoy Foods sells these products to its exclusive importer, Mon Chong Loong Trading Corp. ("Mon Chong"). In the last five years, Amoy Foods sold approximately $30 million worth of soy sauce products bearing the AMOY MARKS and the GOLD LABEL SOY SAUCE mark in the United States, and spent approximately $600,000 on advertising and promotional efforts in the United States.

Defendant Happy Dragon sells vegetables, canned foods, seafood, and dry goods to restaurants. Happy Dragon has approximately 15 employees and sales of more than $1 million annually.

Happy Dragon purchases products for resale, normally by check. Defendant Wang testified that prior to the transactions at issue in this litigation, Happy Dragon never gave cash to the driver delivering products from its sellers out of fear that the driver would steal the cash.

Happy Dragon has been selling plaintiffs' GOLD LABEL SOY SAUCE products since 1995. Until 2005, Happy Dragon regularly purchased approximately 80 cases per month from two authorized distributors. For a few years before 2005, Happy Dragon bought and resold the "5 1" package, in place of the six pack.

On February 26, 2005, defendants purchased soy sauce products bearing marks that were counterfeit copies of plaintiffs' AMOY MARKS and GOLD LABEL SOY SAUCE mark (the "counterfeit containers") from a man who identified himself as "Mr. Chan." Wang testified that before that date, he had never met or spoken with Mr. Chan. Wang asked Mr. Chan for his telephone number, but he refused to provide it. Wang also asked him for the name of his company, but he similarly refused to provide it. Wang did not ask Mr. Chan for the location of Mr. Chan's business, its nature, or the source of the products. Happy Dragon purchased 467 cases of the counterfeit soy sauce product, and Wang testified that it would have purchased more had it been available. Happy Dragon offered to purchase the product with a check, but Mr. Chan insisted on cash. Accordingly, Wang paid Mr. Chan $11,441.50 in cash in exchange for the products.

The counterfeit containers were packed in a corrugated container with black printing. Prior to this purchase, Wang testified that he had not seen a six pack with black printing, as opposed to the "5 1" package with green printing, for at least the previous two to three years.

On March 12, 2005, Mr. Chan returned to Happy Dragon, and defendants again purchased all of his inventory. They purchased 173 cases, for which they paid Mr. Chan $4,238.50 in cash, and Wang testified that they would have purchased more had it been available.

Wang testified that before defendants began selling the counterfeit containers, they made a profit of $1 per case; afterwards, they made a profit of $5 per case.

In 2004, Amoy Food's authorized importer, Mon Chong, was alerted to the availability of "supposed" Amoy Food soy sauce products in the 63-ounce container size at lower prices than those for authorized Amoy Food products. Amoy Food assumed that these complaints resulted from an isolated situation of an authorized Amoy Food wholesaler having significantly discounted its prices. However, in February 2005, Mon Chong again received the same complaints.

On two separate occasions, Mon Chong's employees purchased from Happy Dragon purported GOLD LABEL SOY SAUCE containers. Happy Dragon also sold the product to an investigator that plaintiffs had retained.

The soy sauce products sold by defendant Happy Dragon bear a trademark and trade dress which contain features of the Amoy Food Metal Container: the AMOY MARKS and the GOLD LABEL SOY SAUCE marks, orange and black lettering, and a background yellow color. The defendant also uses the six-pack packaging which has the following distinctive features that appear on the Amoy Food Six Pack: the AMOY MARKS and GOLD LABEL SOY SAUCE mark, the legend "MANUFACTURED BY: AMOY FOOD, LTD.," and a 5-digit dot matrix alphanumeric code. There are differences between the products, which would not be easily recognizable to a customer, such as small differences in lettering and punctuation in the words "Percent Daily Values" and the address on the back of the metal containers.

Defendant Happy Dragon is using the AMOY MARKS without plaintiffs' authorization or consent. In the six month period prior to the commencement of this action, sales of Amoy's GOLD LABEL SOY SAUCE products by Mon Chong decreased as compared with the same six-month period in the previous year. In contrast, Mon ...


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