TM complainant fails to sink its teeth into unrelated false advertising claims

Vampire Family Brands, LLC v. MPL Brands, Inc., No. CV
20-9482-DMG (ASx), 2021 WL 4134841 (C.D. Cal. Aug. 6, 2021)

VFB sued MPL for Lanham Act, UCL, and FAL violations based
on MPL’s “vampiro” cocktail. Unsurprisingly, the trademark claims survive a
motion to dismiss, but associated false advertising claims don’t.

VFB owns several trademark registrations including
“Vampire,” specifically for wine and pre-mixed alcoholic beverages other than
beer, and “Vampyre,” specifically for spirits. “VFB’s marks are visible to the
public in many places, including on VFB’s website, in the public records of the
USPTO, and in various national media due to VFB’s continuous marketing of its
products.” [Seriously? It seems more like a concession of lack of market
penetration if you have to rely on your own website and the PTO’s records to
show public recognition!] In 2017, VFB began selling a pre-mixed canned Bloody
Mary cocktail as “Vampire Gourmet Bloody Mary Cocktail,” allegedly made with
actual tomatoes and vodka. But it isn’t actually being made/distributed right
now, though VFB argued that it was coming back.

MPL sells a pre-mixed alcoholic cocktail labeled “Vampiro.” The
label asserts that it is “a fizzy grapefruit cocktail” made with “100% Blue
Agave,” although the ingredients list does not contain grapefruit. It is made
of agave wine, not from distilled spirits. Likewise, MPL also sells a
ready-to-drink “margarita wine cocktail” that doesn’t contain tequila or any
distilled spirit and is also made with agave wine.

VFB alleged trademark infringement, and that the Vampiro
Cocktail label’s claims that it is made from 100% agave and with grapefruit were
false advertising that would tarnish and dilute VFB’s marks. Similarly, VFB
alleged that a real “margarita” is made with tequila and, therefore, the
absence of tequila from MPL’s Margarita Cocktail constituted false advertising.
“Because the alcohol tax is approximately ten times that of the tax on wine,
VFB argues that Defendants gain an unfair competitive advantage against it and
other makers of alcoholic cocktails that use distilled spirits, rather than wine,
in their cocktail recipes.”

As I noted above, claims that “vampiro” was the generic name
of a Mexican cocktail or constituted descriptive fair use didn’t suffice to
grant a motion to dismiss. As to use as a mark, the court reasoned that the use
of “Vampiro” on MPL’s product as pictured in the images submitted by both
parties “shows that the word is in stylized, large font across the center of
the beverage can, in white font against a red background.” The description
“Vampiro,” “giving the impression that the smaller text is a descriptor and
Vampiro is a mark for the product.”

False advertising: Article III standing existed, but not
Lanham Act standing. VFB could establish injury in fact through “a chain of
inferences showing how defendant’s false advertising could harm plaintiff’s
business.” MPL argued that there was no concrete injury because VFB does not
currently sell any pre-mixed cocktail products. However, VFB’s CEO and counsel
[um] attested that “VFB has arrangements with another manufacturer to produce
more of the Vampire Bloody Mary and with experienced industry salespeople to sell
the product, and that VFB will resume sales after the current pandemic
subsides. VFB also submitted a new Certificate of Label Approval to the TTB for
the Vampire Bloody Mary in January 2020. “This evidence that VFB is prepared to
sell the Vampire Bloody Mary indicates that VFB could suffer non-speculative,
imminent harm from Defendants’ actions.” The relative cheapness of defendants’
“cocktails” could give them a competitive advantage. This was enough for
Article III standing.

Statutory standing, however, was more demanding:

Because VFB does not currently sell
the Vampire Bloody Mary and its previous sales were limited distributions at
beer festivals or a handful of liquor stores, VFB does not identify any
economic injury flowing from Defendants’ current advertising of the Margarita
Cocktail and Vampiro Cocktail. VFB does not allege prior economic injury, and
any future economic injury VFB may suffer when it restarts distribution of the
Vampire Bloody Mary is too attenuated to be considered proximately caused by
Defendants’ advertising.

And it was even more attenuated to argue that defendants’
allegedly false advertising of the Margarita Cocktail and Vampiro Cocktail harmed
VFB’s sales of other types of alcohol, specifically Vampire wine and Vampyre
vodka. The alleged falsity of the grapefruit/cocktail/margarita claims couldn’t
plausibly “directly cause consumers to purchase less of VFB’s red wine or
vodka, considering the differences between the types of beverages.” Even if
consumers were misled into thinking that the products contained distilled
spirits or natural ingredients, “it is not clear why those consumers seeking to
purchase a pre-mixed cocktail would instead reach for wine or vodka.
Characterizing VFB and Defendants as direct competitors because both make
alcoholic beverages would dramatically expand the ‘zone of interest’ in which a
plaintiff may sue for false advertising under the Lanham Act.”

UCL/FAL claims: Only survived to the extent they were
congruent with the trademark claims.


from Blogger

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