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JIVE Commerce, LLC v. Wine Racks America, Inc.

United States District Court, D. Utah

August 15, 2018

JIVE COMMERCE, LLC D/B/A VINO GROTTO, a Utah limited liability company, Plaintiff,
v.
WINE RACKS AMERICA, INC. D/B/A PREMIER WINE CELLARS, a Utah corporation; and JEFFREY OGZEWALLA, an individual, Defendants.

          MEMORANDUM DECISION AND ORDER DENYING PLAINTIFF'S VERIFIED MOTION FOR PRELIMINARY INJUNCTION

          Ted Stewart United States District Judge

         This matter is before the Court on Plaintiff's Verified Motion for Preliminary Injunction. After reviewing the materials, the Court has concluded that a hearing on the Motion is not necessary. For the reasons discussed below, the Court will deny the Motion.

         I. BACKGROUND

         Plaintiff JIVE Commerce, LLC d/b/a Vino Grotto (“Plaintiff” or “Vino Grotto”) and Defendant Wine Racks America, Inc. (“WRA”) d/b/a Premier Wine Cellars (“Premier”) are competitors in the wine rack and wine cellar industry. Plaintiff's principal, Jason Miller, was formerly employed by WRA. After a falling out with WRA's owner, Defendant Jeffery Ogzewalla, Mr. Miller founded Vino Grotto.

         Plaintiff alleges that Defendants have taken a variety of actions to harm its business. Specifically, Plaintiff alleges that Defendants have used Plaintiff's Vino Grotto and Home Collector Series marks in cost-per-click advertisements on Google and other search engines to redirect consumers to Defendants' websites. Plaintiff further alleges that Defendants have created a website that copies content, images, trade dress, and look and feel from Plaintiff's website. Plaintiff also alleges that Defendants have contacted Plaintiff's vendors in an attempt to persuade those vendors not to work with Plaintiff and, in the course of so doing, have made defamatory comments about Plaintiff and its principal, Mr. Miller. In addition, Plaintiff asserts that Defendants have posted false and deceptive positive reviews on the Internet, which Plaintiff contends was done to increase Defendants' market share and dilute the effect of negative reviews. Plaintiff also claims that Defendants have forged photographs and address information on their website to create the illusion of legitimacy and to hide the geographic origin of their goods.

         Plaintiff brings a variety of claims, including claims for unfair competition under the Lanham Act, common law unfair competition, unfair competition under Utah law, trade libel, defamation, common law trademark infringement, false advertising in violation of the Lanham Act, a claim for corrective advertising damages, and tortious interference with economic relations.[1] Plaintiff now seeks a preliminary injunction.

         II. DISCUSSION

         To obtain a preliminary injunction, the moving party must demonstrate: “(1) a likelihood of success on the merits; (2) a likelihood that the movant will suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in the movant's favor; and (4) that the injunction is in the public interest.”[2] “A preliminary injunction is an extraordinary remedy; it is the exception rather than the rule.”[3]

         A. LIKELIHOOD OF SUCCESS ON THE MERITS

         Plaintiff argues that it has shown a likelihood of success on the following claims: Lanham Act unfair competition, Utah Unfair Competition Act, tortious interference with economic relations, and common law trademark infringement. The Court will discuss each claim in turn.

         1. Unfair Competition

         a. False Advertising

         Plaintiff seeks injunctive relief under its Lanham Act claim for unfair competition (Section 43 of the Lanham Act, 15 U.S.C. § 1125(a)). Section 43 of the Lanham Act provides:

Any person who, on or in connection with any goods or services . . . uses in commerce any . . . false or misleading description of fact, or false or misleading representation of fact, which--
. . .
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.[4]

         In order to prevail on a false advertising claim under § 43 of the Lanham Act, Plaintiff must demonstrate: “(1) that defendant made material false or misleading representations of fact in connection with the commercial advertising or promotion of its product; (2) in commerce; (3) that are either likely to cause confusion or mistake as to (a) the origin, association or approval of the product with or by another, or (b) the characteristics of the goods or services; and (4) injure the plaintiff.”[5]

         Plaintiff complains that Defendants have: (1) posted numerous forged reviews of their brand and products online; (2) marketed their products using Plaintiff's marks; (3) misrepresented the geographic origin of their goods; (4) attempted to bribe vendors to keep Plaintiff out of the market and threatened to cut off business with vendors who do business with Plaintiff; and (5) copied images, text, look-and-feel, and descriptions from Plaintiff's website. Plaintiff's second and fourth claims are addressed in relation to Plaintiff's trademark infringement and tortious interference claims. Thus, the Court turns to Plaintiff's complaints related to the alleged forged reviews, misrepresentation of geographic origin, and copied website.

         i. Consumer Reviews

         The alleged forged reviews take two forms. The first type of reviews are reviews from Defendants' employees that are complimentary of Defendants and its products. Plaintiff has provided evidence demonstrating that Defendants' employees have left various online reviews. Plaintiff contends that these reviews contain false representations. However, as will be discussed, the Court has no information that would suggest the reviews are actionable under the Lanham Act.

         Plaintiff provided a review from Jeremy Lesher, a WRA employee, which states that he was looking for a wine rack that would fit under his kitchen counter and that he “found the 24 bottle table top wine rack fit neatly in that space, arrived quickly, and was very sturdy.”[6]Plaintiff has provided no information to suggest that this statement is untrue. Even if he is a WRA employee, Mr. Lesher very well could have obtained a wine rack from WRA that fit his specific needs and was of high quality. Other reviews contain no substantive statements or simply indicate that WRA is a “great” company that provides “great” wine racks and “top quality products.” Such statements constitute sales puffery and are not actionable under the Lanham Act.[7] The only statements of fact contained in these reviews is that WRA is a Utah company and that the racks it sells are made in the United States. Based upon the information provided to the Court, both statements appear to be true.

         The second type of reviews are reviews for WRA that have been changed into reviews for Premier, which is a d/b/a of WRA. Plaintiff has not demonstrated any false statements in these reviews, but complains they are deceptive because they were originally written about one company (WRA) and now appear to be written for another (Premier). However, WRA is doing business as Premier. In all actuality, the two companies are one and the same. Thus, it seems to make no difference who the review was initially written for. Moreover, Plaintiff has failed to demonstrate any injury as a result of these reviews. For example, there is no evidence that a particular customer chose to purchase Defendants' products over Plaintiff's based on the existence of these altered reviews. Plaintiff alleges, generally, that Defendants have used these reviews to increase its market share at Plaintiff's expense and to dilute the effect of legitimate negative reviews. However, there is no evidence to support this allegation.

         ii. Geographic Origin

         Plaintiff also argues that Defendants have made false statements concerning the geographic origin of their goods and services. On Premier's website, Defendants list Premiere's mailing address as being in Bend, Oregon. Defendants also list a Utah address for returns. In the “About Us” section of the website, Defendants display a picture of a building. The building is one that is owned by Defendant Ogzewalla and is located in Utah, not Bend, Oregon. The actual building has signage stating “Wine Racks America.” However, on the Premier website, the image of the building has been altered, changing the signage from “Wine Racks America” to “Premier Wine Cellars.” Plaintiff argues that Defendants are falsely representing that they are an Oregon company doing business out of Bend.

         In response, Mr. Ogzewalla represents that he maintains an office and employees at the Oregon address listed on Premier's website. He further states that he owns the building pictured on Premier's website and changed the signage on Premier's website because Premier is a d/b/a of Wine Racks America.

         Based upon the evidence presented, the Court finds that Plaintiff has failed to demonstrate a likelihood of success on the merits of its false designation of origin claim. Defendants are not attempting to convince consumers that their products are made in Oregon when they actually come from Utah. Rather, Defendants have a presence in both states, with WRA being operated in Utah and its d/b/a Premier operating in Oregon and partially Utah.

         While there is no building in Oregon, as depicted on the Premier website, which is potentially deceiving, Plaintiff has failed to demonstrate any injury as a result of the altered image.

         iii. Copied Website

         Finally, Plaintiff complains that Defendants have copied images, text, and the overall look-and-feel from Plaintiff's website. In response, Defendants argue that any similarity between the website is because Plaintiff copied its content from Defendants.

         Neither party has provided the Court with the information necessary to resolve this dispute. Plaintiff provides screenshots of both websites, but there is no information from which the Court can determine which website had what content first. Moreover, with minimal exceptions, the websites are not substantially similar. The similarities that do exist between the websites are to be expected from companies that sell similar products and market them in similar ways. Thus, Plaintiff has failed to demonstrate a likelihood of success as to the websites generally. As to the one picture identified as being on both websites (a cellar design), Defendants state that they have not used that image since 2015.[8] Thus, even assuming Plaintiff had demonstrated a likelihood of success on the merits of this claim, there is no need for injunctive relief.

         b. Trademark Infringement

         “Trademark infringement is a type of unfair competition.”[9] To prevail on its claim, Plaintiff must show: (1) that its mark is protectable; (2) that Defendant used the trademark “in connection with any goods or services”;[10] and (3) that Defendants' use “is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.”[11]

         i. Protectable Interest

         Here, Plaintiff argues that its Vino Grotto and Home Collector Series marks are protectable. Plaintiff does not allege that it has registered these marks. Therefore, Plaintiff has the burden to demonstrate they are protectable.[12] “To be protectable, ‘a mark must be capable of distinguishing the products [or services] it marks from those of others.'”[13] “There are five different categories of terms with respect to the protection of a mark: generic, descriptive, suggestive, arbitrary, and fanciful.”[14]

A mark is generic if it is a common description of products and refers to the genus of which the particular product is a species. A mark is descriptive if it describes the product's features, qualities, or ingredients in ordinary language or describes the use to which the product is put. A mark is suggestive if it merely suggests the features of the product, requiring the purchaser to use imagination, thought, and perception to reach a conclusion as to the nature of the goods. An arbitrary mark applies a common word in an unfamiliar way. A fanciful mark is not a real word at all, but is invented for its use as a mark.[15]

         If a term is generic, it is ineligible for protection.[16] “A descriptive mark may be eligible for protection, but only if it has acquired a ‘secondary meaning' in the minds of the public.”[17]“Fanciful (made-up words expressly coined to serve as trade or service marks), arbitrary (common words applied in unfamiliar ways), and suggestive marks (words that connote, rather than describe, some quality or characteristic of a product or service) are inherently distinctive, and thus receive the greatest protection against infringement.”[18]

         Plaintiff presents no evidence or argument as to which category its marks fall under other than a brief statement in a footnote that its marks are not generic or descriptive.[19] Using the definitions set forth above, the Court concludes that Plaintiff's marks are either descriptive or suggestive. “The determination whether a mark is descriptive or suggestive is difficult, and we have endorsed a helpful test for distinguishing between the two categories: suggestive terms ‘require the buyer to use thought, imagination, or perception to connect the mark with the goods,' whereas descriptive terms ‘directly convey to the buyer the ingredients, qualities, or characteristics of the product.'”[20]

         With this distinction, it appears that Vino Grotto is suggestive. Vino is a word for wine and grotto is a word for cave or cavern. A buyer would have to use thought, imagination, or perception to connect this phrase with wine cellars or wine racks. Thus, Vino Grotto is subject to protection. Home Collector Series, however, is merely descriptive. It directly conveys to the buyer the qualities and characteristics of the product: a series of racks designed for home collectors of wine. As a result, it is only subject to protection if it has taken on secondary meaning.

         “Secondary meaning exists only if most consumers have come to think of the word as not descriptive at all but as the name of the product [or service].”[21] Plaintiff may “establish secondary meaning . . . by presenting circumstantial evidence regarding: (1) the length and manner of its use, (2) the nature and extent of advertising and promotion of the mark and (3) the efforts made in the direction of promoting a conscious connection, in the public's mind, between the name or mark and a particular product or venture.”[22]

         Here, Plaintiff alleges that its marks have established secondary meaning “given the nature and extent of advertising as well as member and public recognition.”[23] However, there is no evidence to support this allegation. Without such evidence, Plaintiff has failed to demonstrate, at this juncture, that its Home Collector Series is protectable.

         ii. Likelihood of Confusion

         Assuming both marks are protectable and Defendants are using them in commerce, Plaintiff must demonstrate that there is a likelihood of confusion. The Tenth Circuit has identified six nonexhaustive factors to consider whether there is a likelihood of confusion:

(1) the degree of similarity between the competing marks; (2) the intent of the alleged infringer in adopting the contested mark; (3) evidence of actual confusion; (4) the similarity of the parties' products and the manner in which the parties market them; (5) the degree of care that consumers are likely to exercise in purchasing the parties' products; and (6) the strength of the contesting mark.[24]

         “No one of the six factors is dispositive.”[25] “The factors are interrelated, and the ‘importance of any particular factor in a specific case can depend on a variety of circumstances, including the force of another factor.'”[26] “At all times, however, the key inquiry is whether the consumer is likely to be deceived or confused by the similarity of the marks.”[27]

         Neither party addressed these factors in any meaningful way. To determine whether there is a likelihood of confusion, it is helpful to distill the two different types of infringement claims Plaintiff is making. The first type of claim relates to Defendants' use of Plaintiff's marks in internet advertising, while the second type of claim relates to Defendants' direct use of the Home Collector series mark. The Court will address the likelihood of confusion relative to each claim.

         a. Internet Advertising

         As stated, the first type of infringement claim Plaintiff brings relates to Defendants' use of Plaintiff's marks in internet advertising. Defendants admit that they use Plaintiff's marks in bidding for keyword advertising. Plaintiff argues that consumers searching for their products will be confused into purchasing Defendants' products because of Defendants' use of Plaintiff's marks. This type of potential confusion is called initial interest confusion. “Initial interest confusion results when a consumer seeks a particular trademark holder's product and instead is lured to the product of a competitor by the competitor's use of the same or a similar mark.”[28]

         In 1-800 Contacts, Inc. v. Lens.com, Inc, [29] the Tenth Circuit addressed initial interest confusion in a case where, as here, a competitor was using the plaintiff's marks in its internet advertising. There,

initial-interest confusion would arise as follows: a consumer enters a query for “1- 800 Contacts” on Google; sees a screen with an ad for Lens.com that is generated because of Lens.com's purchase of one of the nine Challenged Keywords; becomes confused about whether Lens.com is the same source as, or is affiliated with, 1- 800; and therefore clicks on the Lens.com ad to view the site. Lens.com has exploited its use of 1-800's mark to lure the confused consumer to its website.[30]

         In that case, the Tenth Circuit warned against applying the likelihood of confusion factors without attention to context. The court stated:

The specific issue before us is the likelihood that a consumer who conducts an Internet search for 1-800 Contacts and then sees an ad for Lens.com on the results page will be confused into thinking that Lens.com has a business association with 1-800. To begin with, even if consumers in general may not much care what retailer supplies their contact lenses, the consumers relevant to this suit are looking for a particular retailer. Presumably they have narrowed their search because they have already selected 1-800 as the preferred retailer and are searching for its website or perhaps commentary on its performance. Given the purpose of the search, the shoppers will be attentive to click on those results that will connect them with sites relating to 1-800. In addition, once the consumers see the results page, the substantial dissimilarity between “1-800 Contacts” and “Lens.com” (or its other websites) can be expected to greatly reduce the chance that the consumers will think that the parties are related enterprises; the similarity of the search term and 1-800's mark is of minor relevance.[31]

         Because of these things, the court concluded that “the factors other than evidence of actual confusion . . . firmly support the unlikelihood of confusion.”[32]

         A similar result is warranted here, at least in regard to Defendants' use of Plaintiff's Vino Grotto mark.[33] A consumer using the search term Vino Grotto is unlikely to be confused by the appearance of an advertisement for Defendants. As is demonstrated by Exhibit Q to the Motion, a consumer will be able to easily distinguish between the advertisement placed by Defendants and Plaintiff's actual website. The advertisement is clearly marked as an ad, while Plaintiff's website is identified directly below the advertisement. Thus, while certain likelihood of ...


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