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Cerveceria Modelo, S.A. De C.V. v. USPA Accessories LLC

August 25, 2008

CERVECERIA MODELO, S.A. DE C.V. AND MARCAS MODELO, S.A. DE C.V., PLAINTIFFS,
v.
USPA ACCESSORIES LLC D/B/A CONCEPT ONE ACCESSORIES, DEFENDANT.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge

OPINION & ORDER

Plaintiffs Cerveceria Modelo, S.A. de C.V. ("Cerveceria Modelo") and Marcas Modelo, S.A. de C.V. ("Marcas Modelo") move in limine for an order precluding Defendant USPA Accessories LLC d/b/a Concept One Accessories ("Concept One") from introducing extrinsic evidence, whether written or oral, that expands, varies or alters the products that Concept One was authorized to sell under the license agreement between Marcas Modelo, the exclusive licensor of the Corona trademarks in the United States, and Concept One, effective January 1, 2007 (the "License Agreement"). For the reasons set forth below , Plaintiff's motion is denied in part and granted in part.

Further, Plaintiffs move to preclude Defendant's expert on licensing, Beth Schlansky ("Schlansky"), from testifying. For the reasons set forth below, Plaintiff's motion is granted.

I. BACKGROUND

Plaintiffs allege that Concept One violated the License Agreement by causing to be manufactured and imported numerous products bearing Corona Beer trademarks without Marcas Modelo's authorization and by selling products bearing designs that Marcas Modelo never approved. Compl. ¶¶ 30-31. Plaintiffs indicate that they will seek to prove at trial that Concept One is liable for, inter alia, trademark infringement in violation of the section 32(a) of the Lanham Act, 15 U.S.C. § 1114(1), and breach of the License Agreement.

Plaintiffs claim that Concept One's use of the Corona trademark on bags, in particular, was unauthorized. Section 2.1 of the License Agreement provides that "[n]o License is granted hereunder for the use of the SUBJECT MARKS for any purpose other than upon or in connection with the LICENSED PRODUCTS." Diakos Decl. Ex. 1 (License Agreement). Section 1.2 provides that "'LICENSED PRODUCTS' means any product or part thereof listed in Exhibit B." Id. Exhibit B sets forth the goods that Concept One was authorized to sell bearing the Corona trademark in 2007: "Hats, Headware, Beanies, Umbrellas, Flip Flops, T-Shirts." Id. Bags are not included in that list. The License Agreement is governed by New York law. Id. § 17.1.

Concept One seeks to admit into evidence various communications between the parties and internal documents of Plaintiffs that, according to Concept One, show that Plaintiffs knew of and consented to Concept One's use of the Corona trademark on bags.

II. STANDARD OF REVIEW

A district court "should exclude evidence on a motion in limine only when the evidence is clearly inadmissible on all potential grounds." Loussier v. Universal Music Group, Inc., No. 02 Civ. 2447, 2007 WL 1098687, at *1 (S.D.N.Y. Apr. 11, 2007) (citation omitted).

III. DISCUSSION

A. Plaintiffs' Motion to Exclude Extrinsic Evidence

The extrinsic evidence at issue, which is described below, comprises emails and other communications between the parties relating to the use of the Corona trademark on bags. Plaintiffs argue that such communications that pre-date the License Agreement are barred by the parol evidence rule. Where the parties have reduced their agreement to an integrated writing, the parol evidence rule excludes evidence of all prior or contemporaneous negotiations, agreements or understandings offered to contradict, vary or modify the terms of their writing. See, e.g., Adler & Shaykin v. Wachner, 721 F. Supp. 472, 477 (S.D.N.Y. 1988). The License Agreement is fully integrated pursuant to its merger clause in section 20.1, which provides that the License Agreement "contains the entire agreement between the Parties with regard to the subject matter hereof and supersedes all other statements, representations and agreements pertaining to such subject matter." Diakos Decl. Ex. 1 (License Agreement).

Concept One argues that it seeks to introduce such evidence for other purposes, including in support of its defenses of consent, estoppel, waiver, acquiescence, unclean hands and lack of willfulness. Concept One is correct that even if the parol evidence rule renders certain evidence inadmissible for purposes of Plaintiffs' breach of contract claim, it would not render such evidence inadmissible with respect to other claims and defenses, such as estoppel. See, e.g., 57 N.Y. Jur. 2d Estoppel, Ratification and Waiver § 72 ("[E]stoppel may be established by extrinsic evidence despite the existence of a written contract."); PRL USA Holdings, Inc. v. U.S. Polo Ass'n, Inc., 520 F.3d 109, 114 (2d Cir. 2008) (affirming trial court's admission of otherwise inadmissible evidence for purposes of establishing an estoppel defense to a trademark claim).*fn1

Further, the parol evidence rule does not bar evidence of subsequent negotiations, agreements or understandings offered to contradict, vary or modify the terms of the parties' written contract. See, e.g., Kingsrow Enters., Inc. v. Metromedia, Inc., 1978 WL 952, at *2 n.3 (S.D.N.Y. Aug. 9, 1978) (holding that because the parol evidence rule does not bar evidence of later transactions or agreements, even if ...


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