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Bruce Winston Gem Corp. v. Harry Winston

September 16, 2010

BRUCE WINSTON GEM CORP., PLAINTIFF,
v.
HARRY WINSTON, INC. AND HARRY WINSTON S.A., DEFENDANTS.



The opinion of the court was delivered by: John G. Koeltl, District Judge

MEMORANDUM OPINION AND ORDER

The plaintiff Bruce Winston Gem Corp. ("Bruce Winston Gem" or "BWG") seeks a declaratory judgment against the defendants Harry Winston, Inc. and Harry Winston S.A. ("Harry Winston" or "HWI") that Bruce Winston Gem's use of the trademarks BRUCE WINSTON, BRUCE WINSTON GEM, and BW (the "Bruce Winston Trademarks") in connection with the sale of jewelry does not infringe the defendants' trademarks HARRY WINSTON and WINSTON (the "Harry Winston Trademarks"). The defendants move to dismiss the plaintiff's action pursuant to Federal Rule of Civil Procedure 12(b)(1).

The defendants contend that there is no actual controversy to be resolved in this declaratory judgment action. They contend that they do not object to the plaintiff's current and planned uses of its marks. They do however object to the registration of the BRUCE WINSTON mark, a matter that had reached the trial stage at the Trademark Trial and Appeal Board ("TTAB") before BWG brought this declaratory judgment action. The defendants contend that this action is not an action to resolve a real controversy as to the plaintiff's use of its mark, as to which there is no current controversy, but rather an attempt to derail a long-pending TTAB proceeding which had reached the trial phase. The defendants urge that this action should be dismissed and the TTAB should be permitted to complete its long-pending action.

I.

In defending a motion to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Procedure 12(b)(1), the plaintiff bears the burden of proving the Court's jurisdiction by a preponderance of the evidence. Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). In considering such a motion, the Court generally must accept the material factual allegations in the complaint as true. See J.S. ex rel. N.S. v. Attica Cent. Schs., 386 F.3d 107, 110 (2d Cir. 2004). The Court does not, however, draw all reasonable inferences in the plaintiff's favor. Id.; Graubart v. Jazz Images, Inc., No. 02 Civ. 4645, 2006 WL 1140724, at *2 (S.D.N.Y. Apr. 27, 2006). Indeed, where jurisdictional facts are disputed, the Court has the power and the obligation to consider matters outside the pleadings, such as affidavits, documents, and testimony, to determine whether jurisdiction exists. See Anglo-Iberia Underwriting Mgmt. Co. v. P.T. Jamsostek (Persero), 600 F.3d 171, 175 (2d Cir. 2010); APWU v. Potter, 343 F.3d 619, 627 (2d Cir. 2003); Filetech S.A. v. France Telecom S.A., 157 F.3d 922, 932 (2d Cir. 1998); Kamen v. Am. Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986). In so doing, the Court is guided by that body of decisional law that has developed under Federal Rule of Civil Procedure 56. Kamen, 791 F.2d at 1011; see also Leyse v. Bank of Am., No. 09 Civ. 7654, 2010 WL 2382400, at *1 (S.D.N.Y. June 14, 2010).

II.

There is no dispute as to the following facts, except where noted. Bruce Winston is a son of the famous jeweler Harry Winston, the founder of HWI. He and his brother, Ronald Winston, took over running the HWI business following their father's death in 1978. Bruce Winston was employed by HWI until 1991, when Ronald Winston fired him. (Am. Compl. ¶¶ 11-13.)

After his departure from HWI, Bruce Winston began selling jewelry under the name Bruce Winston Gem Corp. BWG does not have retail stores and sells jewelry at wholesale and to retail customers out of its office on the third floor of a building on Fifth Avenue in New York City. (Am. Compl. ¶ 15.) It sells jewelry on a consignment-only basis. (Id.) BWG has an inventory of jewelry in excess of $300,000 and has made sales in excess of $16 million over eight years, or about $2 million per year. (Am. Compl. ¶¶ 15, 17.) BWG currently has three sales representatives. (Y. Nhaissi Decl. ¶¶ 2-3.)

HWI, on the other hand, has a strong international presence, through its many retail stores. The record reflects that in the year ending January 31, 2009, Harry Winston Group had consolidated net sales in excess of $280 million. (True Decl. Ex. B.)

In June 2002, BWG placed an emerald and diamond ring with a BRUCE WINSTON marking with Sotheby's for an auction on June 12, 2002. (Am. Compl. ¶ 18.) HWI, through counsel, sent a letter to Sotheby's asserting that the ring's BRUCE WINSTON trademark infringed HWI's trademark rights and requesting that Sotheby's withdraw the ring from the auction. (Id.) After additional correspondence and HWI threatening to file a temporary restraining order, BWI withdrew the ring from Sotheby's June 2002 auction. (Am. Compl. ¶¶ 19-21.)

Recently, BWI has created plans to expand its business. (Am. Compl. ¶¶ 37-42; E. Nhaissi Decl. ¶ 7.) The plaintiff plans to offer its jewelry at auction houses; has retained an advertising agency to create new promotional materials, advertisements, and a new corporate logo and trade dress; has placed an advertisement in the New York Times and in two industry magazines; and has registered to attend a jewelry trade show. (Am. Compl. ¶¶ 37, 40-42; Y. Nhaissi Decl. ¶¶ 3-7.) The defendants have made clear that they do not consider the activities that the plaintiff has engaged in to date to be infringements of their marks. (Defs.' Reply Mem. at 4; Hr'g Tr. at 57, Sept. 2, 2010.) In short, the defendants do not object to the plaintiff's continued use of Bruce Winston's name in connection with the sale of jewelry during Bruce Winston's lifetime. (Defs.' Reply Mem. at 4; Hr'g Tr. at 58, Sept. 2, 2010.) However, the defendants argue that the registration of BWG's mark would be tantamount to giving BWG a "blank check," and BWG could then assign the mark to an entity with plans radically different from the plaintiff's current practices. (Hr'g Tr. at 28-29, 57-58, Sept. 2, 2010.)

On or about June 27, 2001, BWG filed an "intent-to-use" U.S. Trademark Application for the trademark BRUCE WINSTON for gemstones and fine jewelry. (Am. Compl. ¶ 22.) The United States Patent and Trademark Office ("PTO") issued a Notice of Publication regarding BWG's application in July 2002. (Id.) In September 2002, HWI filed a Notice of Opposition in the Trademark Trial and Appeal Board opposing BWG's application to register the BRUCE WINSTON trademark. (Am. Comp. ¶ 23.) In April 2009, a trial schedule was set to determine whether BWG is entitled to registration of the BRUCE WINSTON trademark. (Am. Compl. ¶ 25.) After extensive depositions had been taken, the TTAB trial phase began, but the proceedings were stayed after BWG filed the declaratory judgment action in this Court. (True Decl. Ex. C.) The parties have engaged in ongoing settlement discussions since 2002, but no agreement has been reached.*fn1 (Am. Compl. ¶ 28.)

BWG filed a Declaratory Judgment Complaint in this action on August 20, 2009. The defendants moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). Thereafter, the plaintiff filed an Amended Complaint on October ...


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