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Ritz Hotel, Ltd. v. Shen Manufacturing Co.

June 25, 2009

THE RITZ HOTEL, LTD.
v.
SHEN MANUFACTURING CO., INC.



The opinion of the court was delivered by: Norma L. Shapiro, J.

MEMORANDUM

Plaintiff The Ritz Hotel, Ltd. ("RHL") filed for declaratory relief against Shen Manufacturing Co., Inc. ("Shen") for trademark infringement under the Lanham Trademark Act ("Lanham Act"). Shen filed counterclaims against RHL for trademark infringement and fraud under the Lanham Act together with supplemental state-law claims for fraud and trademark violations. Shen's Motion for Partial Summary Judgment (paper no. 46) as plaintiff on Count IV of its amended counterclaim for trademark infringement, under § 32 of the Lanham Act, 15 U.S.C. § 1114, will be denied.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

In Count IV of its amended counterclaim, Shen accuses RHL of introducing goods bearing RITZ marks*fn1 into United States commerce in direct violation of Shen's RITZ mark, registered with the United States Patent and Trademark Office ("PTO") as trademark registration no. 2,288,326 ("the '326 mark"). Shen seeks an order permanently enjoining RHL from using its RITZ marks on table and bath linens, and an order denying RHL's declaratory judgment claim.

Shen first applied for the '326 mark on March 18, 1994; the PTO issued the registration on October 26, 1999. The '326 mark, a "standard character mark,"*fn2 is registered for use on: laundry bags, dish cloths, kitchen towels, bathroom towels, ironing board pads and covers, toaster covers, place mats, napkins, pot holders, oven mitts, and barbecue mitts. Shen has used its RITZ mark on table linens since 1982 and on bath linens since 1990. (Defendant Shen's Memorandum in Support of its Motion for Partial Summary Judgment (paper no. 47, "Memorandum"), exh. 6, p. 6.)

Many RHL sales in the United States, including bath linens (e.g., bathrobes) and table linens (e.g., tablecloths), are by mail-order to former guests at its Paris hotel. Since 1984, RHL has also had a United States office, sought licensees to manufacture and distribute RITZ goods, and sold goods (crystal, silver, and gourmet food products) through retailers such as Saks Fifth Avenue, Bergdorf Goodman, Marshall Field's, and Nordstrom. Declaration of Carole Francesca, (paper no. 55, "Francesca"), p. 4; see The Ritz Hotel Limited v. Ritz Closet Seat Corp., 17 U.S.P.Q. 2d 1466 (T.T.A.B. 1990). Fabricut, Inc., a different licensee, also markets RITZ marks on luxury design fabrics to interior design specialists in the United States. (Francesca, p. 4.) Shen does not aver that RHL has sold bath and table linens bearing RITZ marks to consumers in the United States by any means other than mail order, nor does it aver more than speculation of any plans by RHL to do so in the future through directly competing channels of trade.

II. SUMMARY JUDGMENT

Before the court is Shen's Motion for Partial Summary Judgment on Count IV of its amended counterclaim for trademark infringement under § 32 of the Lanham Act, 15 U.S.C. § 1114(1). Shen claims that RHL has engaged and will continue to engage in trademark infringement by using its RITZ marks on bath and table linens in United States commerce.*fn3

A motion for summary judgment is grantedif the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party bears the burden of proving no genuine issue of material fact exists. Matsushita v. Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 n. 10 (1986); Ideal Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 743 (3d Cir. 1996). A party opposing summary judgment must do more than rest upon mere allegations, general denials, or vague statements. See Trap Rock Indus. v. Local 825, Int'l Union of Operating Eng'rs, 982 F.2d 889, 890 (3rd Cir. 1992). There must be sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

III. DISCUSSION

To prevail on its counterclaim for trademark infringement under the Lanham Act, Shen must show that: 1) it owns the '326 RITZ mark; 2) the mark is valid and legally protectable; and 3) RHL use of its RITZ marks on bath and table linens is likely to create confusion with Shen's RITZ-branded goods associated with its '326 mark. Checkpoint Systems, Inc. v Check Point Software Technologies, Inc., 269 F.3d 270, 279 (3rd Cir. 2001). RHL does not contest either the ownership or validity of Shen's '326 mark with regard to its associated goods; the issue is whether RHL's use of its RITZ marks on table and bath linens is likely to create confusion with Shen goods associated with the '326 mark.

Shen seeks an order permanently enjoining RHL from using any of its RITZ marks on bath and table linens in United States commerce. The factors to be considered in deciding whether to grant a permanent injunction in Lanham Act trademark cases are: 1) whether Shen prevails on the merits; 2) whether Shen would be irreparably harmed without the injunction; 3) whether granting the injunction would harm RHL less than denying the injunction would harm Shen; and 4) whether the injunction is in the public interest. Shields v. Zuccarini, 254 F.3d 476, 482 (3rd Cir. 2001). If Shen can not prevail on its claim by demonstrating ongoing injury from trademark infringement, it must at least show an imminent likelihood of harm from consumer confusion. Speculation about possible future trademark infringement is not an adequate basis for injunctive relief in an infringement action under the Lanham Act. 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition ("McCarthy") § 30:10 (4th ed. 2009).

Shen pleads "direct confusion" and "reverse confusion."

A. Direct Confusion

Shen alleges that RHL is seeking to cause confusion in the minds of potential Shen consumers by marketing its own RITZ-branded linens in direct competition. According to Shen, consumers who see RHL table and bath linens for sale in the United States and purchase them will be confused and think they were manufactured by Shen or with Shen's permission.

"Direct confusion" (also known as "forward confusion") occurs when a consumer sees a non-registrant's goods and believes that they are goods of the registrant.*fn4 See Freedom Card, Inc. v. JPMorgan Chase & Co., 432 F.3d 463, 470 (3rd Cir. 2005). The non-registrant's goods can be in direct competition with the registrant's goods if they are the same or highly similar, marketed at similar price levels and through similar commercial channels. An issue in any trademark infringement claim is whether the relevant consumer is likely to confuse the goods of the nonregistrant with those of the registrant. A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 212-13 (3rd Cir. 2000).

Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3rd Cir. 1983), lists ten factors for analyzing a direct confusion claim involving non-competing goods. A & H Sportswear applies the Lapp factors to claims involving directly competing goods as well.

A district court should not be foreclosed from using any factors that it deems helpful in analyzing whether a likelihood of confusion exists between given products, whether or not they directly compete. Lapp's suggestion that, for competing goods, the court need rarely look beyond the mark itself may be an exercise in unjustified optimism; cases are often not easy, and courts will frequently need help in sorting out the likelihood of confusion. . . .

. . . . [We] conclude that the Lapp factors should be used for competing and for noncompeting goods.

A & H Sportswear, 237 F.3d at 212-13 (internal quotations and citations omitted).

The Lapp factors are:

1) the degree of similarity between the marks;

2) the strength of the registrant's mark;

3) the price of the goods and other factors indicative of the care and attention expected of the goods' relevant ...


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