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Zip International Group, LLC v. Trilini Imports

May 24, 2011

ZIP INTERNATIONAL GROUP, LLC, PLAINTIFF,
v.
TRILINI IMPORTS, INC., A/K/A TRILINI IMPORTS, AND TGF PRODUCTION, LLC, DEFENDANTS.



The opinion of the court was delivered by: John Gleeson, United States District Judge:

ONLINE PUBLICATION ONLY

MEMORANDUM AND ORDER

Zip International Group, LLC ("Zip"), claiming to be the exclusive U.S. distributor and licensee of a Russian brand of sunflower seeds, brings this suit against a competitor, Trilini Imports, Inc. ("Trilini"). Trilini buys seeds of the same brand intended for sale to consumers outside of the United States and instead resells them in the United States, a practice informally referred to as "gray market" importing. According to Zip, Trilini is infringing Zip's trademark rights and misrepresenting the source of its seeds, in violation of the Lanham Act, 15 U.S.C. § 1051 et seq., and New York law. Zip seeks injunctive relief, compensatory and punitive damages, and attorney's fees. Trilini has moved for summary judgment on Zip's complaint pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons discussed below, the motion is granted.

BACKGROUND*fn1

Since 2007, Zip has sold sunflower seeds processed by OOO Troll Co. ("Troll"), a Russian company. The product is sold in packaging bearing two marks. The larger of the two -- a stylized portrait of an old woman in a flowered head scarf, located on the front of the package -- is owned by Babkiny Semechki LLC ("Babkiny Semechki") and is referred to here as the "BABKINY mark." The second -- a small drawing of a troll located on the back of the package near the nutritional information -- is owned by Troll (the "TROLL mark"). The marks are referred to here collectively as the "Trademarks." Babkiny Semechki and Troll are affiliated companies. The seeds are imported in cartons containing consumer-sized packages, and each package of seeds bears the marks described above.

Zip was the first to market the seeds in the United States, beginning in 2007, and claims common law rights in the Trademarks as a result. In addition, Zip claims, and I assume the claim to be true for the purposes of this opinion, that it subsequently became the exclusive United States licensee of the Trademarks, and is entitled to enforce those marks even to the exclusion of Troll and Babkiny Semechki.*fn2 Zip's sales to date of the sunflower seeds have totaled $3 million, and it spends roughly $150,000 per year to market and advertise the seeds.

Although Trilini knows or should know of Zip's exclusive U.S. license to the Troll mark, Trilini nevertheless buys Troll seeds in Russia and resells them in the United States.

Trilini does not repackage the individual-sized bags of seeds, but sells them in Troll's original packaging. The packages are identical to the packages in which the Zip-imported seeds are sold.

Because the seeds Trilini imports and sells in the United States bear the Trademarks, they allegedly confuse consumers as to the source of Trilini's seeds and damage Zip's goodwill. As a result, Zip is at risk of failing to sell the 100 tons of seeds it is obligated to purchase annually from Troll under their exclusive licensing agreement, and Troll may choose not to renew the agreement when it expires at the end of 2011, leading to losses in the hundreds of thousands or millions of dollars.

Trilini previously moved to dismiss the complaint pursuant to Fed. Rs. Civ. P. 12(b)(1) and 12(b)(6). I denied the motion in a memorandum and order issued on February 22, 2010. Zip Int'l Grp. LLC v. Trilini Imports, Inc., 2010 WL 648696 (E.D.N.Y. Feb. 22, 2010). In the first amended complaint, to which Trilini's motion to dismiss was addressed, Zip alleged that the seeds it sold were "specially seasoned" for the United States market, and that the Trilini seeds were seasoned differently. I determined that "[t]he difference in seasoning that Zip alleges is not immaterial as a matter of law," and therefore held that "Zip ha[d] stated a claim that the seeds Trilini sells are not 'genuine' within the meaning of the Lanham Act and that consumers are therefore likely to be confused or deceived about the 'sponsorship' and 'characteristics' of the seeds." Id. at *5. Zip subsequently filed a second amended complaint in which it withdrew its allegation that its own seeds were uniquely seasoned, and now concedes that its seeds and those sold by Trilini are identical products in identical packaging.

The parties have completed discovery, and Trilini now moves for summary judgment on five grounds: (a) Zip has no trademark rights in either of the Trademarks; (b) Zip does not have standing to bring this lawsuit; (c) Zip's Section 43(a) claims are invalid as to Trilini because the goods imported by Trilini are "genuine goods imported via the gray market";

(d) there is no likelihood of consumer confusion; and (e) Zip has not produced sufficient evidence to prove its claims. I heard oral argument on May 10, 2011. I now grant the motion for summary judgment in its entirety.

DISCUSSION

A. The Summary Judgment Standard

Summary judgment is appropriate where an examination of the record reveals "no genuine issue of material fact and, based on the undisputed facts, the moving party is entitled to judgment as a matter of law." D'Amico v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998); see Fed. R. Civ. P. 56(c). All inferences must be drawn and all ambiguities resolved in favor of the nonmoving party. SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009). If it appears that a reasonable jury could return a verdict for the nonmoving party, the Court may not grant summary judgment. Id. If, however, the moving party demonstrates that there are no genuine issues of material fact, "the nonmoving party must come forth with evidence sufficient to allow a reasonable jury to find in [its] favor." Roe v. City of Waterbury, 542 F.3d 31, 36-37 (2d Cir. 2008) (punctuation omitted). Evidence presented by the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

B. Zip's Claims

1. The Lanham Act ...


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