Grocery Outlet Inc. v. Albertson's, Inc. et al, No. 3:2006cv02173 - Document 382 (N.D. Cal. 2008)

Court Description: Amended ORDER Granting Summary Judgment (with Proper Defendants Named). Signed by Judge Jeffrey S. White on December 17, 2008. (jswlc2, COURT STAFF) (Filed on 12/17/2008)
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Grocery Outlet Inc. v. Albertson's, Inc. et al Doc. 382 NOT FOR PUBLICATION 1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 GROCERY OUTLET INC., Plaintiff, 9 11 For the Northern District of California United States District Court 10 12 No. C 06-02173 JSW v. AMENDED ORDER GRANTING ALBERTSONS’ MOTION FOR SUMMARY JUDGMENT ALBERTSONS, INC., AMERICAN STORES COMPANY, LLC, and LUCKY STORES, INC., Defendants. 13 14 / 15 16 17 Now before the Court is the motion for summary judgment filed by Defendants 18 American Stores Company, LLC, New Albertsons, Inc., and Albertson’s LLC, (collectively 19 “Albertsons”). The Court finds that this matter is appropriate for disposition without oral 20 argument and it is hereby deemed submitted. See Civ. L.R. 7-1(b). Accordingly, the hearing 21 set for December 12, 2008 is HEREBY VACATED. Having considered the parties pleadings, 22 the relevant legal authority, the Court hereby GRANTS Albertsons’ motion for summary 23 judgment.1 24 BACKGROUND 25 Defendant Albertsons owns the rights to the trademark Lucky on grocery stores. 26 Plaintiff, Grocery Outlet Inc. (“Grocery Outlet”), contends that it has the right to open a number 27 of grocery outlets by the name Lucky because Albertsons has abandoned the mark. 28 The motion by the Albertsons’ defendants is joined by defendant Save Mart Supermarkets. The joinder is HEREBY GRANTED and summary judgment shall be entered for all current defendants. 1 Dockets.Justia.com For the Northern District of California United States District Court 1 Abandonment of the mark requires both that the trademark owner has ceased to use the mark 2 and that it has done so with an intent not to resume. 3 Albertsons moved for a preliminary injunction to halt the efforts of Grocery Outlet to 4 continue to utilize the mark in their grocery services and products, and, on July 7, 2006, this 5 Court issued a preliminary injunction. In granting the motion, the Court found that Albertsons 6 was likely to succeed on the merits of its claim and that there was a possibility of irreparable 7 injury. The Court found that although there was some evidence of use after the change of the 8 name of the Lucky stores to adopt the Albertsons’ name, it was merely in the sell-off of existing 9 inventory. The Court concluded on that basis that there was a cessation of bona fide 10 commercial use. However, the Court did find that there was sufficient evidence in the record to 11 demonstrate that Albertsons was likely to prevail on the issue of intent not to resume. That is, 12 the Court held that, although it found there was a cessation of use, Albertsons had offered 13 sufficient evidence of its intent to resume use of the Lucky mark within the reasonably 14 foreseeable future during the period of alleged nonuse. On appeal, the Ninth Circuit affirmed 15 this Court’s preliminary injunction order on the same basis. See Grocery Outlet Inc. v. 16 Albertson’s Inc., 497 F.3d 949, 951 (9th Cir. 2007). 17 Now, Albertsons brings this motion for summary judgment on the basis both that the 18 law has changed, rendering the sell-off of inventory to comprise bona fide commercial use, and 19 on the basis that the undisputed facts in the record indicate that Albertsons intended to resume 20 use of the mark within the relatively short period of nonuse. Grocery Outlet continues to 21 maintain that Albertsons has abandoned the Lucky mark and that there exist disputes regarding 22 material issues of fact precluding summary judgment. 23 24 25 The Court sets out briefly the relevant factual history. A. Trademark Registrations and Albertsons Acquisition. The Lucky mark is the subject of approximately sixteen federal trademark registrations 26 covering a variety of grocery products and supermarket and grocery store services, including 27 U.S. Registration 1,543,066, which was registered on June 6, 1989, and has now become 28 “incontestable.” (Order dated July 7, 2006 (“Order”) at 2.) 2 For the Northern District of California United States District Court 1 The Lucky mark is the subject of several California and Nevada state registrations, 2 including California Trademark Renewal Registration No. 05255 for the Lucky mark for retail 3 grocery services, granted on November 27, 1967, based upon first use in October, 1935. (Id.) 4 In 1988, Lucky Stores, Inc. was acquired by American Stores Company, Inc. The 5 Lucky stores at that time continued to operate under the Lucky banner, and continued to sell 6 Lucky-brand private label goods. 7 In 1998, Albertsons entered into a merger agreement with American Stores. The 8 acquisition closed in June 1999. By November 1999, the former Lucky stores were converted 9 to “Albertsons” stores. (Declaration of Gary D. Michael (“Michael Decl.”), ¶¶ 6-10.) 10 Following the merger, Albertsons decided to rebrand all of the existing Lucky stores 11 with the Albertsons name. (Id., ¶¶ 6-7.) However, before the decision was made to rebrand 12 the stores, Albertsons management was already discussing use of the Lucky mark on different 13 format grocery stores. (Id., ¶¶ 8-10.) To publicize the merger, Albertsons developed a 14 “Wedding of the Century” theme for its advertising campaign, indicating that the two stores 15 were being combined into one, with the new name of Albertsons. (Declaration of Peter W. 16 Craigie (“Craigie Decl.”), ¶¶ 5-7, Exs. D-F.) Although Albertsons never unequivocally 17 announced that it would never again use the Lucky mark, it was clear that the new brand name 18 under the merger for the store and its products was to be Albertsons. (Michael Decl., ¶ 9.) 19 B. 20 Evidence of Post-Conversion Use by Albertsons. After the name change, Albertsons continued to sell Lucky brand private label 21 merchandise in their stores for several years after the conversion from existing inventory, 22 including newly-manufactured products to fill remaining Lucky labels and packaging. (See 23 Order at 2-3, with record cites.) The Albertsons stores sold more than 72 million units of 24 Lucky-branded items in 2002; they sold an excess of 290,000 units in 2001; 45,000 units in 25 2002. Sales continued to decline, with sale in 2003 of 39 units, 1 item in 2004, and 13 items 26 sold in 2005. (Declaration of Mark Tate in support of Motion for PI, ¶¶ 3-9, Exs. A-C; 27 Declaration of Mark Tate in reply for Motion for PI, ¶ 7; and Declaration of Dennis Clark in 28 support of Motion for PI, ¶¶ 2-3, Ex. A.) 3 1 Also, apparently at the request of counsel, during the period from conversion to the 2 present, Albertsons created a few signs with the Lucky mark in connection with the renewal of 3 their trademark registrations. (Declaration of John A. Chatowski in support of Motion for PI 4 (“Chatowski Decl.”), Ex. C (deposition of Jeff Weidauer) at 21:21-23:22; 31:17-33:7; 38:8- 5 20.) 6 7 domain name which redirects to the Albertsons.com web site. Albertsons has also made 8 general efforts to police the Lucky mark. (Id., Ex. HH.) 9 C. For the Northern District of California 10 United States District Court After the store conversion, Albertsons maintained registration of the luckystores.com Evidence of Albertsons’ Intent to Resume Use. From early April 2001 when Albertsons hired Larry Johnston as the company’s new 11 CEO, there were discussions to resume use of the Lucky mark. (Declaration of Pamela Powell 12 in support of Motion for PI (“Powell Decl.”), ¶ 5; Declaration of Peter W. Craigie in 13 opposition to Motion for PI (“Craigie Opp. Decl.”), Ex. M (Romeo Cefalo deposition) at 73:4- 14 74:25, 90:14-91:9; Declaration of Donna Robbins in support of opposition to Cross-Motion for 15 PI (“Robbins Decl.”), ¶ 4; Declaration of Romeo Cefalo in support of Motion for PI (“Cefalo 16 Decl.”), ¶ 10.) 17 In 2001, Albertsons commissioned Leo J. Shapiro & Associates to conduct research to 18 determine residual goodwill in the Lucky mark and to track shopping behavior. (Cefalo Decl., 19 ¶ 11, Exs. A, B.) Albertsons then commissioned ad agency Duncan & Associates to assemble 20 focus groups to determine why they had lost Lucky customers as a result of the name change. 21 (Powell Decl., ¶ 4, Ex. A.) 22 A June 4, 2001 study indicated that there was a great degree of customer loyalty to the 23 Lucky name and proposed the possibility of using the Lucky name for a cost-related program. 24 (Declaration of Philip Johnson: Lucky Brand Equity Study, Ex. B at 7-8.) 25 In December 2001, Donna Robbins of the Albertsons California Division was directed 26 by CEO Johnston to examine the possibility of using the Lucky mark in a new line of stores 27 targeted at specific ethnic markets. (Robbins Decl., ¶¶ 3-4.) In conjunction with this effort, 28 Albertsons hired the Cultural Access Group to conduct a brand equity study to assist 4 1 Albertsons in deciding between use of the Lucky name and the SuperSaver name in primarily 2 Hispanic neighborhoods. (Powell Decl., ¶ 6, Ex. B.) Albertsons chose to use the name 3 SuperSaver. (Powell Decl., ¶ 6, Ex. B.) For the Northern District of California United States District Court 4 Plans to begin work on bringing back the Lucky mark began again in earnest in 2004. 5 Albertsons prepared a series of presentations in conjunction with Extreme, Inc. evidencing 6 plans to convert non-performing Albertsons’ stores into warehouse-type price-impact stores in 7 predominantly Hispanic neighborhoods in California, using the Lucky banner. (Cefalo Decl., 8 ¶¶ 19-22, 24-26, Exs. C, E-H; Declaration of Jim Vaughan in opposition to Cross-Motion for 9 PI, ¶ 3, Exs. B, C; Declaration of Mike Clawson in opposition to Cross-Motion for PI 10 (“Clawson Decl.”), ¶ 4, Ex. A at ALB01210, Ex. B at ALB01153, Ex. C at ALB01170, Ex. D 11 at ALB01282, Ex. F at ALB01259.) 12 In March 2004, Albertsons created a business plan which included the proposed 13 opening of California stores under the Lucky banner. (Cefalo Decl., ¶¶ 22-24, Ex. C, Clawson 14 Decl., ¶ 4, Ex. E.) Starting in mid-2005 and continuing well into 2006, employees at 15 Albertsons were specifically tasked with the plan to convert a number of stores to the Lucky 16 banner in ethnic format in primarily Hispanic neighborhoods. (Craigie Opp. Decl., Ex. T (Van 17 Helden deposition) at 55:19-25; Declaration of Peter Van Helden in support of Motion for PI 18 (“Van Helden Decl.”), ¶ 7; Declaration of John G. Harb in support of opposition to Cross- 19 Motion for PI (“Harb Opp. Decl.”), ¶¶ 4-5, Exs. A, B.) 20 Plans to convert the first five stores under the Lucky banner – three in California 21 (Alhambra, El Centro and San Ysidro) and two in Nevada (Las Vegas) – indicated that the 22 stores were set to open on May 24, 2006. (Van Helden Decl., ¶ 11; Declaration of Peter Van 23 Helden in support of opposition to Grocery Outlet’s motion, ¶ 3; Harb Opp. Decl., Ex. B.) 24 D. Evidence of Intervening Factors Which Caused Delay and Ongoing Efforts. 25 Efforts in earlier years to rebrand or resume use of the Lucky name were halted by the 26 grocery industry strike which lasted from October 2003 through February 2004 and consumed 27 huge amounts of Albertsons’ time and resources. (Powell Decl., ¶¶ 7-8; Cefalo Decl., ¶¶ 15- 28 5 1 18.) Again, in 2005, plans to open California stores under the Lucky banner were delayed as a 2 result of discussions to sell the Albertsons company. (Cefalo Decl., ¶ 28.) 3 However, since the time of the Court’s decision on the preliminary injunction, 4 Albertsons has begun operating and rebranding many stores under the Lucky name, in both 5 California and Nevada. (Declaration of Dennis Bassler, ¶ 7; Declaration of Justin Dye, ¶ 12.) 6 E. For the Northern District of California United States District Court 7 Grocery Outlet’s Use. Grocery Outlet, an extreme value grocer operating in California, on January 23, 2006, 8 filed with the U.S. Patent and Trademark Office an intent to use application, Serial No. 9 78/797,105 for the Lucky mark for “Retail grocery store services; discount grocery store 10 services; and extreme value grocery store services.” (Declaration of Bob Tiernan in support of 11 Cross-Motion for PI, ¶ 6.) 12 On April 1, 2006, Grocery Outlet opened its first grocery store under the Lucky mark. 13 (Id., ¶ 2.) Grocery Outlet intends to open further stores under the Lucky mark and to continue 14 to sell Lucky-branded private labels. (Chatowski Decl., Ex. T (Jonathan Kirk Wylie 15 deposition) at 302:12-21; Tiernan Opp. Decl., ¶ 9.) 16 The Court will address additional specific facts as required in the analysis. 17 18 19 ANALYSIS A. Standards Applicable to Motions for Summary Judgment. A court may grant summary judgment as to all or a part of a party’s claims. Fed. R. 20 Civ. P. 56(a). Summary judgment is proper when the “pleadings, depositions, answers to 21 interrogatories, and admissions on file, together with the affidavits, if any, show that there is no 22 genuine issue as to any material fact and that the moving party is entitled to judgment as a 23 matter of law.” Fed. R. Civ. P. 56(c). An issue is “genuine” only if there is sufficient evidence 24 for a reasonable fact finder to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 25 477 U.S. 242, 248-49 (1986). A fact is “material” if the fact may affect the outcome of the 26 case. Id. at 248. “In considering a motion for summary judgment, the court may not weigh the 27 evidence or make credibility determinations, and is required to draw all inferences in a light 28 6 1 most favorable to the non-moving party.” Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 2 1997). For the Northern District of California United States District Court 3 A principal purpose of the summary judgment procedure is to identify and dispose of 4 factually unsupported claims. Celotex Corp. v. Cattrett, 477 U.S. 317, 323-24 (1986). The 5 party moving for summary judgment bears the initial burden of identifying those portions of 6 the pleadings, discovery, and affidavits which demonstrate the absence of a genuine issue of 7 material fact. Id. at 323. Where the moving party will have the burden of proof on an issue at 8 trial, it must affirmatively demonstrate that no reasonable trier of fact could find other than for 9 the moving party. Id. Once the moving party meets this initial burden, the non-moving party 10 must go beyond the pleadings and by its own evidence “set forth specific facts showing that 11 there is a genuine issue for trial.” Fed. R. Civ. P. 56(e). The non-moving party must “identify 12 with reasonable particularity the evidence that precludes summary judgment.” Keenan v. 13 Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (quoting Richards v. Combined Ins. Co., 55 F.3d 14 247, 251 (7th Cir. 1995)) (stating that it is not a district court’s task to “scour the record in 15 search of a genuine issue of triable fact”). If the non-moving party fails to make this showing, 16 the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323. 17 B. Law of Abandonment. 18 Grocery Outlet maintains that although Albertsons is the registered trademark holder 19 for the Lucky mark, because of its nonuse of the mark, Albertsons has abandoned the Lucky 20 trademark. Every one of Grocery Outlet’s claims rests upon the premise that Albertson’s 21 abandoned the Lucky mark and therefore retain no rights to it. The essential issue, therefore, 22 before the Court is whether there exists a dispute of material fact that the contention of 23 abandonment may prevail. Although the issue of whether a trademark has been abandoned is 24 generally a fact-intensive one resolved by the jury, courts have granted summary judgment on 25 abandonment where the holder of the mark ceases to use it, but for less than three years, and 26 the party asserting abandonment cannot establish that the markholder intended not to resume 27 use during the nonuse period or where there has been a cessation of use for three or more 28 consecutive years, but the undisputed facts rebut the presumption of abandonment. 7 For the Northern District of California United States District Court 1 To bring a trademark infringement action under the Lanham Act, a plaintiff must hold a 2 valid trademark. Under the Lanham Act, a trademark is deemed abandoned, and thus no 3 longer valid, “[w]hen its use has been discontinued with intent not to resume such use.” 15 4 U.S.C. § 1127; see also Cumulus Media, Inc. v. Clear Channel Comm., Inc., 304 F.3d 1167, 5 1173 (11th Cir. 2002) (“[A] defendant who successfully shows that a trademark plaintiff has 6 abandoned a mark is free to use the mark without liability to the plaintiff.”); Tally-Ho, Inc. v. 7 Coast Community College District, 889 F.2d 1018, 1022-23 (11th Cir. 1989) (per curiam) 8 (“Trademark ownership is always appurtenant to commercial activity. Thus, actual and 9 continuous use is required to acquire and retain a protectible interest in a mark.”) 10 “Abandonment is trademark law’s way of recognizing that trademark rights flow from use.” 11 Cumulus Media, 304 F.3d at 1173 (internal citations omitted). 12 If a mark holder stops using a mark with an intent not to resume its use, the mark is 13 deemed abandoned and “falls into the public domain and is free for all to use ... Abandonment 14 paves the way for future possession and property in any other person.” 3 McCarthy on 15 Trademarks and Unfair Competition § 17:1 (4th ed. 2008). When a mark is abandoned, it 16 returns to the public domain and thus, a party who successfully shows that a trademark owner 17 has abandoned a mark is free to use the mark without liability. Cumulus Media, 304 F.3d at 18 1173. 19 20 21 22 The Lanham Act provides that “a mark shall be deemed to be ‘abandoned’ ... (1) When its use has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of abandonment. “Use” of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark. 23 15 U.S.C. § 1127. 24 This section requires that a putative trademark infringer prove both of two separate 25 elements: that the trademark owner has ceased using the mark in dispute, and that it has done 26 so with an intent not to resume its use. Prudential Ins. Co. of America v. Gibraltar Financial 27 Corp. of California, 694 F.2d 1150, 1156 (9th Cir. 1982) (citing Saratoga Vichy Spring Co. v. 28 Lehman, 625 F.2d 1037, 1043-44 (2d Cir. 1980)). 8 1 2 Act provides both that “[i]ntent may be inferred from the circumstances” and it allows a 3 showing of three years of consecutive nonuse to create a rebuttable presumption of intent not 4 to resume use by stating that “[n]onuse for 3 consecutive years shall be prima facie evidence of 5 abandonment.” 15 U.S.C. § 1127. For the Northern District of California 6 United States District Court Because proving the subjective intent of a trademark holder is burdensome, the Lanham Abandonment of a trademark must be strictly proven. Unuson Corp. v. Built 7 Entertainment Group, Inc., 2006 WL 194052, at *4 (N.D. Cal. Jan. 23, 2006) (citations 8 omitted). “Because a finding of abandonment works an involuntary forfeiture of rights, federal 9 courts uniformly agree that defendants asserting an abandonment defense face a ‘stringent,’ 10 ‘heavy,’ or ‘strict’ burden of proof.” Cumulus Media, 304 F.3d 1175. While the Ninth Circuit 11 has still not defined the “strictly proved” standard further, the majority of courts applying that 12 standard have found that evidence of abandonment must be clear and convincing. See Grocery 13 Outlet, 497 F.3d at 951 (finding that the court “need not resolve the burden of proof issue.”); 14 see also Cash Processing Services v. Ambient Entertainment, Inc., 418 F. Supp. 2d 1227, 1232 15 (D. Nev. 2006) (citing EH Yacht LLC v. Egg Harbor, LLC, 84 F. Supp. 2d 556, 564 (D.N.J. 16 2000) (citing McCarthy at § 17:12); Dial-A-Mattress Operating Corp. v. Mattress Madness, 17 Inc., 841 F. Supp. 1339, 1355 (E.D.N.Y. 1994)). It is not the law that ‘the slightest cessation 18 of use causes a trademark to roll free, like a fumbled football, so that it may be pounced on by 19 any alert opponent.’” McCarthy on Trademarks § 17:14 (citing Continental Distilling Corp. v. 20 Old Charter Distillery Co., 188 F.2d 614, 619 (D.C. Cir. 1950)). Because the Court finds that 21 there was continued use through 2005 and there is undisputed evidence in the record indicating 22 Albertsons’ intent to resume use within the relevant time period, the Court finds that summary 23 judgment is appropriate under either the clear and convincing standard of proof or the 24 preponderance of the evidence standard. Therefore, this Court need not decide the issue of 25 what standard of proof is appropriate. 26 27 28 9 1 1. 2 Albertsons’ use of the mark from the time of its conversion in November 1999 through 3 the present time has been somewhat limited. Albertsons made a concerted effort to remove the 4 vestiges of the old Lucky mark when it converted the Lucky stores to the Albertsons brand. For the Northern District of California United States District Court 5 Use During Relevant Time Period. However, there is evidence in the record that Albertsons continued to sell off inventory 6 with the Lucky label after the conversion. The evidence demonstrates that Albertsons 7 continued to sell Lucky private label products after the conversion. (Declaration of Mark Tate 8 in support of Motion for PI, ¶¶ 3-9, Exs. A-C; Declaration of Mark Tate in reply for Motion for 9 PI, ¶ 7; and Declaration of Dennis Clark in support of Motion for PI, ¶¶ 2-3, Ex. A.) 10 Considering the number of products dropped precipitously over the years following the 1999 11 conversion, the Court deduces that the sales merely marked the sell off of residual inventory, 12 either existing product or new manufacture of product to fill pre-existing remaining labels and 13 packaging. There is also evidence in the record, however, that, following the rebranding 14 efforts, Albertsons ran advertisements for the Lucky-branded products and engaged in efforts 15 to promote the products through, for instance, special store displays. (See Declaration of Carl 16 W. Pennington, ¶ 12.) 17 There is also evidence in the record demonstrating that Albertsons created signage with 18 the Lucky mark on a few stores after the conversion. However, the evidence is persuasive that 19 such signage was erected solely on the advice of counsel for the purpose of maintaining an 20 active registration in the mark. Such usage is not considered active use in the ordinary course 21 of trade. See, e.g., Intrawest Fin. Corp. v. Western Nat’l Bank of Denver, 610 F. Supp. 950, 22 958 (D. Colo. 1985); Exxon Corp. v. Humble Exploration Co., 695 F.2d 96, 101 (5th Cir. 23 1982). 24 Since the time this Court issued its order granting Albertsons’ preliminary injunction 25 motion the Ninth Circuit has held that “the meaning of ‘use’ for the purposes of abandonment 26 necessarily signifies ‘use in commerce’ and thus includes the placement of a mark on goods 27 sold or transported.” Electro Source, LLC v. Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931, 28 936 (9th Cir. 2006) (citing Money Store v. Harriscorp Fin., Inc., 689 F.2d 666, 676 (7th Cir. 10 1 1982)). The court specifically rejected the argument that “attempts to merely ‘rid oneself of 2 inventory,’ were not bona fide uses in the ordinary course of trade.” Id. at 937. 3 “Abandonment requires complete cessation or discontinuance of trademark use.” Electro 4 Source, 458 F.3d at 938. “Even a single instance of use is sufficient against a claim of 5 abandonment of a mark if such use is made in good faith.” Id. at 940 (quoting Carter-Wallace, 6 Inc. v. Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir. 1970)). “Even a single instance of 7 use is sufficient against a claim of abandonment of a mark if such use is made in good faith.” 8 Id. (quoting Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir. 9 1970)). For the Northern District of California United States District Court 10 In Electro Source, decided after this Court’s ruling on the motion for preliminary 11 injunction, the Ninth Circuit specifically rejected the contention that sell off of inventory does 12 not amount to bona fide commercial use under there standards. Id. at 936-37. The court held 13 that even for a business that is “on its way out, [i]f there is continued use, a prospective intent 14 to abandon the mark or business does not decide the issue of abandonment.” Id. at 937. 15 Abandonment requires the “complete cessation or discontinuance of trademark use.” Id. at 938 16 (emphasis in original) (citing 15 U.S.C. § 1127; Doeblers’ Pennsylvania Hybrids, Inc. v. 17 Doebler, 442 F.3d 812, 823 (3rd Cir. 2006)). 18 Therefore, this Court’s earlier ruling that what it deduced from the evidence as sell off 19 of residual inventory not constituting bona fide use of a trademark can no longer hold. (See 20 Order at 7-8 (finding that the sell-off of existing inventory does not constitute use in the 21 ordinary course of commerce and does not therefore qualify as bona fide use of a trademark in 22 the context of 15 U.S.C. § 1127, citing Unuson, 2006 WL 194052, at *4 (finding that use of the 23 mark in the distribution of leftover concert memorabilia to fans was insufficient use of the 24 mark in the ordinary course of trade); see also Anvil Brand, Inc. v. Consol. Foods Corp., 464 F. 25 Supp. 474, 481 (S.D.N.Y 1978) (holding that depleting label inventory of discontinued brand 26 does not qualify as trademark use); but see Person’s Co., Ltd. v. Christman, 900 F.2d 1565, 27 1571 (Fed. Cir. 1990) (finding that intermittent sales of inventory does not necessarily imply 28 abandonment).) Because binding precedent on the definition of use has changed, the Court 11 1 finds that the same evidence proffered in July 2006 demonstrating the sell off of inventory of 2 Lucky products constitutes bona fide commercial use. Therefore, there is uncontested 3 evidence in the record demonstrating that Albertsons continued to use the Lucky mark through 4 2005.2 5 2. For the Northern District of California United States District Court 6 Intent to Resume Use During Relevant Period. A concrete “intent to use” is required. Unuson Corp., 2006 WL 194052, *6 (citing 7 Imperial Tobacco Ltd. v. Philip, 899 F.2d 1575, 1581 (Fed. Cir. 1990)); Exxon Corp., 695 F.2d 8 at 102-03. “To overcome the presumption arising from lack of use, ‘[t]he registrant must put 9 forth evidence with respect to what activities it engaged in during the nonuse period or what 10 outside events occurred from which an intent to resume use during the nonuse period may 11 reasonably be inferred.’” Id. 12 The issue of intent to resume use only arises at the point of cessation of use. See 13 Electro Source, 458 F.3d at 937-38 (holding that “unless the trademark use is actually 14 terminated, the intent not to resume use prong of abandonment does not come into play.”) In 15 addition, the Lanham Act directs that intent not to resume use may be inferred from the 16 circumstances. Id. However, “[s]uch an intent cannot be far-flung or indefinite; rather there 17 must be an intent ‘to resume use within the reasonably foreseeable future.’” Natural Answers, 18 Inc. v. SmithKline Beecham Corp., 529 F.3d 1325, 1529 (11th Cir. 2008) (citing Silverman v. 19 CBS Inc., 870 F.2d 40, 46 (2d Cir. 1989)). 20 21 The Court has already found that Albertsons’ uncontroverted evidence of intent to resume use within the reasonably foreseeable future and within the relevant time period. (See 22 Grocery Outlet’s argument that the distinction between services and products compels the opposite conclusion is unpersuasive. Where, as here, the goods and services are so closely related, the use of one is sufficient to maintain rights in the other. The intentional advertising of the Lucky-branded goods were clearly designed for customers to associate the brand with the former Lucky-branded stores and to encourage the continued association in consumers. See 3 McCarthy on Trademarks and Unfair Competition, § 17:23 at 17-44.2 (4th ed. 2008) (“[T]here is no abandonment or break in the chain of priority of use merely because use of the mark is shifted from one line of goods or services to another similar line. Even when it is the user’s clear intention to cease sales of closely related goods under the mark, continuance or commencement of sales of closely related goods under the mark is not abandonment of the mark and the earlier use may be relied upon for priority purposes. The proper criterion is whether the buying public is likely to think that the new line of goods comes from the same source as the old line of goods.”) 2 23 24 25 26 27 28 12 For the Northern District of California United States District Court 1 Order at 3-4.) There is evidence in the record demonstrating that Albertsons had an intent to 2 resume use of the Lucky mark as far back as 2001. There is also sufficient evidence indicating 3 valid reasons for delay in the implementation of those plans. The evidence establishes that 4 Albertsons intended to resume use of the name Lucky within the “reasonably foreseeable 5 future.” See Exxon Corp. v. Humble Exploration Co., 592 F. Supp. 1226, 1227 (D. Tex. 1984); 6 see also Silverman v. CBS, Inc., 870 F.2d 40, 46 (2d Cir. 1989) (holding that abandonment can 7 be found once use has been discontinued “with an intent not to resume within the reasonably 8 foreseeable future.”) There is no evidence that at the time of conversion, Albertsons 9 affirmatively announced its intention formally to abandon the mark for use in the grocery 10 business. But cf. California Cedar Products Co. and Duraflame v. Pine Mountain Corp., 724 11 F.2d 827, 831 (9th Cir. 1984) (finding the trial court did not abuse its discretion in finding 12 abandonment effective as of date company affirmatively announced formal abandonment of 13 mark by alerting the newspaper and by filing documents in the United States Patent and 14 Trademark Office indicating express intention to abandon its registered trademark). 15 There is sufficient evidence in the record to establish that Albertsons did not act with an 16 intent not to resume use after the 2005 sales of inventoried Lucky-branded items. There is 17 undisputed evidence that Albertsons intended to resume use of the LUCKY mark on grocery 18 stores both before and after the conversion. There were internal discussions of using the 19 Lucky mark on Hispanic-themed neighborhood store or a box-type “price impact” store. (See 20 Michael Decl., ¶ 10.) There were significant discussions about rebranding such stores with a 21 Lucky brand storefront as early as 2001. (See, e.g., Robbins Decl., ¶¶ 3-4; Powell Decl., ¶¶ 3- 22 4; Declaration of Larry Johnston, ¶¶ 1-4.) In 2004, Albertsons’ executive vice president 23 decided to convert existing non-performing Albertsons’ stores to warehouse-type, “price 24 impact” stores, and planned to use the Lucky banner on the converted stores in California. 25 (Cefalo Decl., ¶¶ 20-21; Clawson Opp. Decl., ¶ 3; Declaration of Jim Vaughan in support of 26 opposition to Cross-Motion for PI, ¶ 3.) There is sufficient, undisputed and contemporaneous 27 evidence indicating that Albertsons intended to resume use of the name prior to the last bona 28 fide commercial uses in 2005. Therefore, the Court finds that Albertsons has not abandoned its 13 1 rights to use of the Lucky trademark and summary judgment is therefore appropriate on all 2 causes of action. Also, because Grocery Outlet is unable to demonstrate that Albertsons 3 abandoned the Lucky mark, it has by its own admission, infringed Albertsons’ trademark 4 rights. 5 CONCLUSION 6 For the foregoing reasons, the Court GRANTS Albertsons’ motion for summary 7 judgment. A separate judgment shall issue and the Clerk is directed to close the file. 8 9 IT IS SO ORDERED. 11 For the Northern District of California United States District Court 10 Dated: December 17, 2008 JEFFREY S. WHITE UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14