United States District Court, E.D. New York
MEMORANDUM & ORDER
Donnelly United States District Judge
plaintiff, Threeline Imports, Inc., initiated this action
against defendants Grigoriy Vernikov and Interpage
International Inc. d/b/a Interpage Co. for trademark
infringement and counterfeiting pursuant to 15. U.S.C.
§1114 on April 23, 2015. The defendants then asserted
federal and state law counterclaims against the plaintiff,
including for trademark infringement. The core of this action
is the parties' dispute as to ownership of a trademarked
chicken-and-egg logo that is used on certain imported pasta
a bench trial as to liability on the parties' claims in
January 2017. For the reasons set forth below, I find that
the plaintiff did not prove at trial that it had valid rights
to the chicken-and-egg logo, and therefore has not proved its
Lanham Act infringement and counterfeiting claims against the
defendants. On the other hand, I find that the defendants
have established common law rights in the chicken-and-egg
logo, and have shown that the plaintiff is liable to them for
Lanham Act unfair competition, infringement and false
designation of origin, as well as common law unfair
competition and unjust enrichment. The Court will consider
damages in the next phase of this case.
same day that it filed its complaint, the plaintiff moved for
a preliminary injunction preventing the defendants from using
its registered trademark, this chicken-and-egg logo:
holding an evidentiary hearing, the Honorable Brian M. Cogan
granted the injunction on May 21, 2015. The parlies
engaged in extensive discovery, and then cross-moved for
summary judgment on all claims in the case.
issued my decision on the parties' motions for summary
judgment on October 28, 2016. In that decision, I found that
there were genuine issues of material fact as to the
plaintiffs trademark infringement and counterfeiting claims
and as to the defendants' cross-claims for trademark
infringement, unjust enrichment, and unfair competition. I
dismissed the defendants' claims for copyright
infringement and tortious interference with business
relations, as well as their claims pursuant to New York
General Business law.
trial as to liability on the parties' remaining claims
began on January 17, 2017.The key question is whether two
containers of pasta product bearing the chicken-and-egg logo
that arrived at Threeline's warehouse in December of 2012
inured to the benefit of Grigory Vernikov, as owner of
Interpage Co., or to Threeline.
Imports Inc., the plaintiff in this action, is an importer
and distributor of food products, including confectionary
products, candy, pasta, and grain products, from Europe and
the former Soviet Union. (Tr. 32:15-17.) Malvina Kerzhner
is its president, and her husband, Leonid Kerzhner, is its
general manager. (Tr. 31:21-23; 34:13-14, 34:23-24,
203:22-24.) After importing products into the country,
Threeline, which was started in 2006, sells them to retailers
and distributors across the United States. (Tr.
204:17-205:3.) In 1993, the defendant, Grigory Vernikov,
started a corporation called Interpage International, an
import/export company that imports confectionary products
from the Ukraine, Russia, and the Baltic states. (Tr. 307:18-
308:2; 308:18-22; 310:15-17.) He initially ran the company out
of a warehouse space in Brooklyn. (Tr. 310:5-7, 311:8-16.)
trial, witnesses for the plaintiff included Malvina Kerzhner,
Leonid Kerzhner, their son, Alexander Kerznher, and Roman
Katsnelson. Grigory Vernikov, along with two representatives
from third-party companies, Rafail Levin and Kristaps
Koskins, testified for the defendants. I did not find
Ms. Kerzhner's trial testimony to be credible on any
issue; as I will explain in more detail below, her testimony
was plagued by internal inconsistencies, and sometimes
changed from minute to minute. Further, her testimony has
changed throughout the course of this litigation, apparently
depending on what she thought would be most favorable to the
plaintiffs position at that time. Moreover, in an effort to
distort the record, she tampered with a spreadsheet that
undercut the plaintiffs position, by deleting references to
certain entities. While Leonid Kerzhner's testimony did
not suffer from the same glaring inconsistencies as Ms.
Kerzhner's did, it did little to advance the plaintiffs
case. By contrast, I found Vernikov a credible witness. His
testimony was consistent and credible, and he was able to
provide details that were missing from the testimony of both
Leonid and Malvina Kerzhner. His testimony was also supported
by the record evidence.
first met Leonid Kerzhner in 2002, when Kerzhner came to
Interpage's warehouse to purchase food products on behalf
of his employer at the time, a company called MegaFood. (Tr.
312:13-313:11.) Kerzhner continued to purchase food products
from Interpage when he started working for a company called
Trilini Imports in around 2004, and in late 2004, he
offered Vernikov space in Trilini Imports' warehouse.
(314:5-17; 314:19-315:3; 316:5-13.) Although Mr. Vernikov was
initially uninterested, he agreed to move Interpage to
Trilini Import's warehouse when the rent on his warehouse
went up in 2005. (Tr. 315:12-21 .)According to Vernikov, the
terms of this arrangement were that Interpage would occupy
space in the warehouse rent-free. (Tr. 315:22-316:18.) In
return, Vernikov sold goods that he imported through
Interpage to Trilini, and then Threeline, at cost. (Tr.
322:19-323:12.) Vernikov also sold goods to other customers
during this time period. (Tr. 317:20-23; 323:13-19; see
also Def. Ex. W (reflecting sales by Interpage Co.).) It
is undisputed that when Vernikov moved into Threeline's
warehouse, Threeline was aware that Vernikov was running his
own business under the name "Interpage."
(Stipulated Statements of Fact ("Stip."), ECF 104,
became an employee of Threeline in late 2008 or 2009, when he
was going through some financial difficulties and needed the
money. (Tr. 318:2-319:15; 206:1 -8.) According to Vernikov,
when he spoke to Malvina and Leonid Kerzhner about working at
Threeline, he "told them my terms, that I wanted to
maintain my own business. I said that I agree to work for you
but I want to also keep my business. They said, 'okay, no
problem.'" (Tr. 319:5-20.) His title at Threeline
was exporter/buyer, and his responsibilities included
handling logistics, transportation of containers, making sure
that labels were filled out, and working with customs and the
FDA. (Tr. 320:11-12; 206:12.) When he was doing this work for
Threeline, he also continued to sell goods to Threeline and
his other customers through Interpage. (Tr. 319:24-320:2;
320:13-16; 323:25-324:4; Def. Ex. D (sales by Interpage Co.
and Interpage International to other customers from
2011, Vernikov received a call from Claus Dorner, the
commercial manager of a German pasta manufacturer called
ALB-Gold. (Tr. 332:17-20.) Dorner explained that he had seen
a pasta product at a food exhibition that had Vernikov's
contact information on it, and proposed that Vernikov
purchase pasta from ALB-Gold. (Tr. 332:20-23; see
also Def. Ex. X at IPV00335 (email from Vernikov to
Dorner stating, "I would like to remind you a few points
from our cooperation. It was your idea back in 2011 and you
have offered me to be your distributor, despite you [k]new
that I was working with 'Tress' [another pasta
manufacturer]"). Dorner sent Vernikov a catalog of
ALB-Gold products, and invited him to attend the Amiga food
exhibition in Paris. (Tr. 333:1-7; Def. Ex. BB.)
and Leonid Kerzhner attended the Amiga exhibition in Paris
that year, where they met with ALB-Gold representatives,
including Dorner. (Tr. 333:8-10.) Vernikov spoke to Dorner,
but Leonid "did not say a word." (Tr. 333:11-12.)
Vernikov told Dorner that he would purchase from ALB-Gold
certain types of pasta that the other company he worked with,
Franz Tress, did not produce, and that he would be in touch.
(Tr. 333:12-14.) After the meeting, Leonid advised Vernikov
not to do business with ALB-Gold, and described Dorner as a
"con artist" (Tr.333:20-334:15.)
summer of 2012, Leonid Kerzhner asked Vernikov for the
ALB-Gold catalog. (Tr. 334:23-335:5.) Leonid said that he was
interested in purchasing some ALB-Gold products, so Vernikov
began negotiating with Dorner, who sent samples of the pasta.
(Tr. 335:6-10.) Vernikov also began working on an exclusive
contract with ALB-Gold for the distribution of its pastas in
the United States, Canada, Israel, and the former USSR. (PL
Ex. 16.) The contract was drafted by the Kerzhner's son,
Alexander Kerzhner, a lawyer. (Tr. 338:10-16.)
contract, which was effective as of January 1, 2013, was
between ALB-Gold and a company called "Interpage Co.
Inc., " which is described as the distributor. (PL Ex.
16.) The agreement was signed by Claus Dorner on behalf of
ALB-Gold, and by Gregory Vernikov as "President."
(Id.) Atop Vernikov's signature is the corporate
seal for "Interpage Co. New York State 1993."
(Id., at 10.) In several places throughout its text,
the contract refers to a brand called "Delicious
Wonders." (Id., at 2, 3.)
parties dispute whether Vernikov entered the ALB-Gold
contract on behalf of his own company, Interpage Co., or on
behalf of a company with an almost identical name, Interpage
Co., Inc ("ICI"). Roman Katsnelson, the Vice
President of Trilini International, incorporated ICI in 2009
at Malvina Kerzhner's request. (Tr. 263:20-25,
267:8-268:3, 268:9- 11.) Leonid Kerzhner testified that he
was aware of Vernikov's company, Interpage Co.,
but that he and his wife decided to name their new company
"Interpage Co., International" because "cans
everywhere had the name Interpage, " and "we ha[d]
to protect it somehow and secure" these product lines.
(210:4-20.) Similarly, Ms. Kerzhner testified that she
decided to give the company a name that was very similar to
Mr. Vernikov's company because "our products and
cans had the name 'Interpage' on them and they were
already in line." (Tr. 52:20-22.) Mr. Katsnelson also
testified that Ms. Kerzhner asked him to form ICI "to
protect the line of products." (Tr. 268:1-3.) Mr.
Katsnelson believed that Ms. Kerzhner came up with the name
of the company, and explained that "[i]t's the same
business as Threeline ... It's nothing special."
(Tr. 269:6-7; 269:8-10.)
Kerzhner testified that in the normal course of business, the
parties "did not distinguish between the Interpage Co.
and Interpage Co. Inc" because "we did business as
Interpage and Threeline at the same time." (Tr.
125:2-11.) Similarly, Leonid Kerzhner testified
that "[t]here was no difference at the time between
Interpage or Interpage Co;" Vernikov would
"sometimes use our company and we would sometimes use
his company. And for many years, there were no issues."
(Tr. 225:1-4; see also 209:10-210:7) Indeed, when
asked why the last page of the ALB-Gold contract says
"Interpage Co., " Leonid Kerzhner testified that
this was because "they were all companies that worked
for Threeline, " and "we never paid much attention;
there were no issues raised whether it was Interpage or
Interpage Co., Inc. or Threeline." (Tr. 226:21-227:18;
see also Tr. 209:14-210:3.)
contrast, Vernikov testified that the use of "Interpage
Co. Inc." on the first page of the ALB-Gold contract was
a mistake that he had not noticed at the time, as Alexander
Kerzhner, the Kerzhner's son, was its primary drafter.
(Tr. 338:14-19; 283:7-10.) Vernikov testified that he
signed the contract on behalf of his own company, Interpage
Co., not ICI, and said that it was Interpage Co.'s
company seal that he stamped atop his signature. (Tr.
338:21-339:2.) The parties have stipulated that Vernikov was
not a director, officer, shareholder, or employee of ICI
(Stip. ¶ 15; see also 332:2-8); he was,
however, the President of Interpage Co. (Tr. 331:23-24.)
only plausible inference from the Kerzhners' decision to
create a company with a name almost identical to Mr.
Vernikov's company is that they knew that products that
they purchased through Vernikov's company and were
selling to their customers included the "Interpage
Co." name and label, and they wanted to claim ownership
of those products. Further, although the Kerzhners both
testified that none of the parties paid attention to which
company name was used when entering into contracts, the
evidence shows that the Kerzhners did enforce corporate
distinctions when it was useful to them to do so. For
example, when the Department of Human and Health Services was
investigating a shipment of canned fish, Ms. Kerzhner signed
an affidavit stating that,
Mr. Gregory Vernikov of Interpage is responsible for this
shipment and I am only renting him office and goods space in
the warehouse. It is true that the invoice and customs form
have my firm's name as the cosignee and importer and the
customs bond is my company's name. But I allowed him to
use my bond because his bond is expired.
(See Def. Ex. PP, at IPV2038.) In other
words, Ms. Kerzhner attempted to enforce corporate
distinctions when it was beneficial to her to do so. In
addition, Ms. Kerzhner's testimony on the distinction
between Interpage Co. and ICI-and whether there was one-was
evasive, at best. The following excerpt from her trial
testimony is illustrative:
Q: Do you dispute that any of the other payments that are in
this Exhibit P were made on behalf of Interpage Co., Gregory
Vernikov's Interpage Co.?
A: Interpage Co. was our company, part of Threeline. Why was
I not supposed to pay? I don't understand:
The Court: Are you saying that the Interpage Co. that is on
these invoices does not belong to Mr. Vernikov? Is that your
A: No, I do not want to say that. These are the documents
that we used and the name Interpage was - the name we used
alongside with Threeline.
The Court: But that's not my question. My question is:
These invoices indicate that this is Interpage Inc., correct?
Interpage Co. Sorry, Interpage Co. Correct?
The Court: And that's not your company; is it? That's
a pretty simple answer. Interpage Co., is that your company
A: Interpage Co.?
The Court: Interpage Co., is that your company?
A: Interpage Co. is our company.
The Court: Correct. And that is not the - I'm talking
about the company that is referred to in these documents,
Interpage Co. Is that or is that not your company? It's
either a "yes" or "no" answer? Is it your
company or is it not?
(Tr. 118:16-119:18.) And, despite his protestations that
there were no distinctions among Threeline, Interpage Co.,
and ICI, Mr. Kerzhner also ultimately admitted that he knew
that Interpage Co. and ICI were two different companies. (Tr.
210:4-10.) Further, Mr. Kerzhner conceded that no QuickBooks
were maintained for ICI, and could not identify any
transactions in which ICI engaged. (Tr. 128:7-22.)
Vernikov noted that the ALB-Gold contract included references
to the Delicious Wonders brand and trademark, which he
claimed to own. (Tr. 339:3-4; 340:17-22; see
also PL Ex. 16.) He testified that he branded
the ALB-Gold pasta with the Delicious Wonders label because
he wanted his company, Interpage, to own the product. (Tr.
339:14-17.) Interpage Co. had sold Delicious Wonders
products in the past. (Tr. 339:18-340:16; Def. Ex II; Def.
Ex. HH.) Finally, the record evidence shows that even while
Vernikov was a Threeline employee, Threeline was writing
checks to "Interpage Co." for products purchased
pursuant to exclusive contracts that Vernikov held with other
companies, including Roshen. (Tr. 121:22-122:15; Def. Ex. R,
I do not find the Kerzhners' claim that the corporate
form did not matter, and that Vernikov signed the ALB-Gold
agreement on behalf of ICI, a Threeline affiliate company, to
be credible. First, the parties stipulated that Vernikov did
not hold any position at ICI; however, he signed the contract
as the "President" of Interpage Co. This suggests
that he signed the contract on behalf of his own company,
Interpage Co., and not on behalf of Threeline. Further, I
find that the Kerzhners created ICI in order to try to claim
ownership of Interpage Co.'s products, and that the use
of ICI on the first page of the ALB-Gold contract, which was
drafted by their son, Alexander Kerzhner, was an attempt to
advance that goal. Finally, I credit Vernikov's testimony
that he signed the ALB-Gold contract on behalf of his own
company over that of Ms. Kerzhner's, whose testimony on
this issue was unreliable and shifting, at best. For these
reasons, I find that Mr. Vernikov signed the contract with
ALB-Gold on behalf of his company, Interpage Co., and not on
behalf of Threeline or its affiliate, ICI.
Creation of the Labels
Vernikov placed the first order of pasta from ALB-Gold on
December 4, 2012, he and Leonid Kerzhner began developing the
label for the pasta's packaging. (Tr. 335:8-14.) Leonid
Kerzhner testified that he wanted to create a "private
label" because ALB-Gold also sold to several other
distributors in the United States. (Tr. 216:11-16; see
also Tr. 64:9-66:1.) He said that he asked Vernikov to
create a label with a chicken on it, and Vernikov proposed
several different versions of the label to him. (Tr.
218:7-15; see also Tr. 66:2-7; PL Ex. 6, PL Ex.
7.)When he became frustrated that it was
taking Vernikov too long to come up with a label that he
liked, Kerzhner claims that he instructed his wife to create
one. (Tr. 219:13-22.) He said that his wife found the logo on
the internet, and that he then ordered Vernikov to ...