Hokto Kinoko Co. v. Concord Farms, Inc., No. 11-56461 (9th Cir. 2013)
Annotate this CaseHokto USA, a wholly owned subsidiary of Hokuto Co., Ltd., filed suit against Concord Farms for violating its rights to marks under which it markets its Certified Organic Mushrooms, which are produced in the United States. The district court granted summary judgment in favor of Hokto USA and Hokuto Japan on all claims and entered a permanent injunction against Concord Farms. Determining that this was a classic gray-market case, the court concluded that, because Concord Farms offered no other evidence that its imported mushrooms were not "materially different" from Hokto USA's mushrooms, the district court correctly concluded that they were not genuine Hokto USA goods; the district court correctly concluded that there was no genuine dispute of material fact as to whether Concord Farms's importation of Hokuto Japan mushrooms was likely to confuse consumers; and the district court did not err in concluding that Hokuto Japan did not engage in naked licensing where, given the close working relationship, Hokuto Japan was familiar with and reasonably relied upon Hokto USA's efforts to control the quality of the mushrooms it distributed. Accordingly, the court affirmed the district court's grant of Hokto USA's and Hokuto Japan's motion for summary judgment and affirmed the permanent injunction, denying Concord Farms's motion for summary judgment.
Court Description: Trademark. The panel affirmed the district court’s summary judgment and permanent injunction against the defendant in a trademark infringement action brought by a marketer of organic mushrooms. The plaintiff alleged that the defendant wrongly imported and marketed mushrooms under the plaintiff’s marks for Certified Organic Mushrooms even though the imported mushrooms were cultivated in Japan under nonorganic standards by the plaintiff’s parent company. The defendant counterclaimed against the plaintiff and its Japanese parent, challenging the validity of the marks. The panel applied principles of law governing “gray- market goods,” or goods legitimately produced and sold abroad under a particular trademark, and then imported and sold in the United States in competition with the U.S. trademark holder’s products. The panel held that trademark law extended to the imported mushrooms because they materially differed from the plaintiff’s product both in their production and in their packaging and thus were not “genuine goods” of the plaintiff. The panel affirmed the district court’s conclusion that there was no genuine dispute of material fact as to whether the defendant’s marketing in the United States of foreign-produced nonorganic mushrooms under the plaintiff’s marks created a likelihood of consumer confusion. The panel affirmed the district court’s grant of summary judgment in favor of the plaintiff on the defendant’s claim that the plaintiff’s trademark registration should be cancelled for fraud. The panel also held that Japanese parent company did not abandon its right to the exclusive use of the marks by engaging in “naked licensing,” or licensing the marks to the plaintiff without providing for a mechanism to oversee the quality of the mushrooms the plaintiff sold under them.
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