Teeter-Totter Sues Palm Bay International/Wine Over Mouse, Elephant & Seesaw

Au Contraire says these labels are not similar.

Teeter-Totter says, “Au contraire!”

And a federal court case ensues

In one corner, the plaintiff: Teeter-Totter LLC, small Napa Valley winery owned by vintner Benoit Touquette whose wines have received outstanding 90+ ratings from Parker, Galloni, Cellar Tracker and other fine wine critics since his first vintage — 2011 Cabernet Sauvignon was released in 2013.

The Teeter-Totter court filing asserts that the defendant copied its label and infringed its trademarks. As a result, Teeter-Totter contends that consumers are likely to confuse its products with those from Au Contraire. That confusion, according to Teeter-Totter could harm its reputation for producing top-scoring wines.

Finally, Teeter-Totter’s complaint alleges that the defendant improperly tried to block Teeter-Totter’s trademark registration.

Teeter-Totter Cabernet Sauvignon sells for an average of $70 according to Wine-Searcher, whose data indicates that Teeter-Totter wines are readily available online and in retail stores.

In the other corner, the Defendent: Au Contraire, a brand owned by Palm Bay International LLC and Palm Wine Holdings LLC. Co-defendants J. Vineyards & Winery LLC,  and RB Wine Associates LLC (Rack and Riddle) have been caught up in the lawsuit for their roles in producing the wine.

Defendant Palm Bay International, Inc. et al contends that the labels are not similar, not widely available, and that the wines reach entirely different buyers due to vast differences in availability and retail prices. Palm Bay International said they conducted a search and could not find any evidence of a Teeter-Totter label and, thus, were completely unaware of its wine or labels.

Au Contraire’s Pinot Noir sells for an average of $55 according to Wine Searcher. whose data indicates that Au Contraire wines are widely available online and in retail stores.

Both companies also produce wines at similar, lower price points. See charts, below.

Original graphic by Wine Industry Insight using data from Wine-Searcher. Right-click charts to view a larger image.

The Timeline Summary

Teeter-Totter filed a complaint against Palm Bay International on Nov. 16, 2017 in the U.S. District Court for the Northern District of California charging trademark and copyright infringement, as well as unfair competition. Teeter-Totter’s complaint stated that that Palm Bay International’s Au Contraire labels were too similar to their own and were attempting — by confusion — to trade on Teeter-Totter’s established reputation. Teeter-Totter’s complaint also contended that the plaintiffs had taken action to cancel Teeter-Totter’s trademark.

Palm Bay International responded that there was no substantial similarity. They also contended that no consumer confusion could exist because the Teeter-Totter wines were not widely available and were sold in vastly different channels than Au Contraire. They also responded that Teeter-Totter’s wines appealed to different consumer groups because Teeter-Totter’s selling prices were dramatically higher

After nearly a year of procedural delays and unsuccessful efforts at mediation, Palm Bay International filed a counterclaim on Oct. 9, 2018 requesting declarative relief — essentially asking the judge to declare that all of Teeter-Totter’s complaints were unfounded.

Since that date, the sparring parties have continued discussions. On Jan. 30, 2019 the parties filed a jointly agreed-upon Case Management Statement (excerpted below) that lays out  each side of the case.

A Case Management Conference has been set for May 1, 2019 in the San Jose Federal Court.

Both sides of the case described in Joint Case Management Statement

The text below is excerpted from a jointly agreed-upon Case Management Statement filed by both the plaintiff (Teeter-Totter) and defendant (Palm Bay International, Inc. et al).

The text is complete and unedited as filed.

Additional paragraph marks have been added for readability.

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Plaintiff’s Statement.

Plaintiff is a wine company founded by Napa Valley winemaker Benoit Touquette, a native of France, who has enjoyed much critical success, including numerous wines receiving 100-point scores from world-renowned critics. As a result, his wine has earned millions of dollars in consumer sales revenue.

As early as October 25, 2013, Plaintiff sold both red and white wine under the distinctive trademark and name, TEETER-TOTTER.

The Teeter-Totter wine label incorporates a drawing of a mouse and elephant on opposite ends of a teeter-totter (the “Teeter-Totter Design Mark”). Plaintiff owns federal TM Reg. No. 4,557,117 for TEETER-TOTTER (Word) in Class 33, filed on April 11, 2013 as an ITU.

Plaintiff also owns CA TM Reg. No. 122,196 and federal TM Reg. No. 5,428,362, both for the Teeter-Totter Design Mark. On August 31, 2017, the U.S. Copyright Office issued Plaintiff’s U.S. Copyright Registration No. VA-0002096166 for the image embodied in the Teeter-Totter Design Mark as a creative work of authorship pursuant to 17 U.S.C. § 408.

In 2014, Defendants hired Popcorn Design, LLC dba Prospect Brands to develop and produce a new wine brand, bearing the French moniker “AU CONTRAIRE”. Popcorn Design introduced Defendants to Lisa Hobro Design, a design firm specializing in the creation of wine labels.

Lisa Hobro Design created a label bearing a bird and elephant on opposite ends of a teeter-totter, in a configuration strikingly similar to the Teeter-Totter Design Mark.

In early January, 2014, Marc Taub, principal of Defendant Palm Bay International, Inc. instructed Defendants’ design team to change the bird to a mouse, thus more closely approximating Plaintiff’s Teeter-Totter Design Mark.

Lisa Hobro Design made the change requested; the design approved by Defendants in late January of 2014 had the mouse’s tail hanging off the end of the teeter-totter. The label design with a mouse and elephant on opposite ends of a teeter-totter was submitted to the label printer, Collotype Labels, in or about late February or early March of 2014.The same label design was also submitted to the U.S. Dept. of Treasury, Alcohol and Tobacco Tax and Trade Bureau (“TTB”), in an application for a Certificate of Label Approval (“COLA”), which is required for alcoholic beverages.

On March 5, 2014, at approximately 4:14 pm PST, Lisa Hobro received an email from Collotype with Plaintiff’s label proof bearing the Teeter-Totter Design Mark, and promptly notified Defendants and Popcorn Design, LLC.

Jay Behmke, then a member and manager of Popcorn Design, LLC, and a California lawyer, conducted an investigation confirming: Plaintiff’s pending “TEETER-TOTTER” standard character mark federal trademark application, and its approved TTB COLA bearing the Teeter-Totter Design Mark.

Defendants were provided the results of Mr. Behmke’s investigation. Without apparent further inquiry, Defendants filed with the USPTO their Application, Ser. No. 86/213,179 for the Au Contraire Design, at 11:59 am PST the very next day, March 6, 2014 – that is, less than 18 hours after Lisa Hobro Design had received Plaintiff’s label proof.

Although Defendants’ “final” label had already been submitted to Collotype for printing, Mr. Taub subsequently drew a curlicue tail on top of the tail in Plaintiff’s label proof and instructed that this additional design change be made to Defendants’ mouse. This change also caused the Au Contraire label to more closely approximate Plaintiff’s Teeter-Totter Design.

Due to the timing of these events, the final Au Contraire Design Mark used in commerce appears to be quite different from the mark drawing in Registration No. 4,757,065.

The figure below is a side-by-side comparison (from left-to-right) of:

(1) Plaintiff’s Teeter Totter Design Mark (Reg. No. 5,428,362);

(2) Defendants’ prior Au Contraire Design (Reg. No. 4,757,065);and

(3) Defendants’ “final” Au Contraire Design Mark (with modified mouse) as actually used in commerce.

In its trademark application, Defendant Palm Wine Holdings, LLC claimed first use of the earlier Au Contraire design (which was never actually used in commerce) as of April 24, 2014. Palm Wine Holdings, LLC obtained federal Trademark Registration No. 4,757,065 for the unused design on June 16, 2015.

Plaintiff alleges that the Au Contraire Design Mark is confusingly similar to the Teeter- Totter Design Mark, that Defendants copied the Teeter-Totter Design Mark despite having knowledge of Plaintiff’s trademarks and copyright, and intentionally misled the U.S. Patent and Trademark Office (“USPTO”) in order to obtain Registration No. 4,757,065.

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Defendants’ Statement.

Plaintiff commenced this action in November, 2017, with no prior notice to Defendants, by filing a twelve-count Complaint for trademark infringement, copyright infringement and related claims under federal and state law.

The crux of Plaintiff’s Complaint, as amended, alleges that artwork on the label of Defendants’ AU CONTRAIRE brand wine product infringes upon intellectual property rights in artwork on the label of Plaintiff’s TEETER-TOTTER brand wine.

To succeed on its federal Lanham Act claims, Plaintiff must establish that it has priority of enforceable trademark rights as against Defendants, likelihood of confusion under the governing Sleekcraft factors and damages.

Defendants vigorously contest these elements and maintain that they have meritorious defenses to all of Plaintiff’s claims as a matter of law.

In 2013, Defendant Palm Bay, a leading wine importer, decided to enter the California wine market through a newly formed entity, Heritance Vintners, LLC, and using the designation “Taub Family Vineyards” for marketing purposes. Heritance Vineyards formed key relationships necessary to establish the new California wine business, including retaining a renowned winemaker to oversee wine production and supply; retaining a prominent vineyard to produce wine; and retaining a prominent graphic designer to create wine labels.

The brand AU CONTRAIRE was conceived by Palm Bay for the first of the new California product lines as an homage to David Taub, Palm Bay’s founder and former longtime president, who often used the phrase for insights that were contrary to conventional wisdom. When Palm Bay’s President, Marc Taub, met with a graphic designer, Lisa Hobro, on September 23, 2013 to discuss label concepts and names, Mr. Taub indicated that “AU CONTRAIRE” would be the name of one of the new California wines.

On November 18, 2013, Defendant, Palm Wine, a related entity to Palm Bay, filed U.S. Trademark Application Serial No. 86/122,006 for the mark AU CONTRAIRE for use in connection with wines on an intent to use basis, which later matured into U.S. Federal Trademark Reg. No. 4,689,725.

Beginning in the fall of 2013, Palm Bay, d/b/a as Heritance, proceeded to take all necessary steps for the launch of AU CONTRAIRE brand wine, including arranging for production of the wine, the creation of the wine label and securing all necessary permits and regulatory approvals. Lisa Hobro began working with Palm Bay to create a new label design for the AU CONTRAIRE product line.

Ms. Hobro and her team worked for several months to create original artwork for the new AU CONTRAIRE label, completely unaware of the existence of artwork for the TEETER-TOTTER wine label.

Palm Bay approved the label artwork on March 5, 2014, and that same day Ms. Hobro sent the label to a local printing company, Collotype Labels. Within hours, Ms. Hobro received an email back from David Buse of Collotype, attaching a copy of a work order that Collotype had done 6 months prior for Mr. Touquette’s TEETER-TOTTER brand.

Ms. Hobro immediately sent Mr. Buse’s email to Palm Bay. On March 6, 2014, Palm Wine’s representatives conducted an investigation of the U.S wine market and could not locate any sales of wine products featuring the TEETER-TOTTER
label depicted in the TTB COLA application filed by Hartwell Vineyards on October 30 2013.

Based upon this investigation, Palm Bay concluded that TEETER-TOTTER wines were not on sale in the U.S. market and it made the business decision, in good faith, to move forward with its AU CONTRAIRE brand using the label that Ms. Hobro had sent to Collotype, with additional slight modifications.

That same day, on March 6, 2014, Palm Wine filed U.S. Trademark Application Serial No. 86/213,197 for the AU CONTRAIRE Logo Design mark, which later matured into U.S. Federal Trademark Reg. No. 4,757,065. Palm Bay, acting though Heritance Vintners, commenced sales of AU CONTRAIRE wines in the United States on April 24, 2014.

The similarity of the marks is in dispute.

First, while Plaintiff has asserted its federally registered TEETER-TOTTER word mark to support its claims of trademark infringement and unfair competition, there can be no serious question of infringement between this word mark and Palm Wine’s AU CONTRAIRE Logo Design mark.Defendants expect to file a summary judgment motion seeking dismissal as a matter of law for any claim related to infringement of Plaintiff’s TEETER-TOTTER word mark.

With respect to a comparison of the TEETER-TOTTER Logo Design mark and Palm Wine’s AU CONTRAIRE Logo Design mark, a detailed description of the differences in the two designs is set forth below, and these differences are relevant to both Plaintiff’s trademark and copyright claims.

With respect to the issue of substantial similarity, a comparison of the two works makes clear that there is no substantial similarity of protectable expression, foreclosing a finding of copyright infringement under the Ninth Circuit’s extrinsic/intrinsic test. Plaintiff’s copyright in its design does not protect against others reproducing the idea of depicting a seesaw with an elephant elevated on one side and a mouse on the ground on the other side (an idea that has been expressed by others well before the creation of the parties’ wine labels), but rather only the original expression of that idea as embodied in its drawing.

Comparing the expressions of this idea as depicted in the two drawings, there is no substantial similarity between their expressive elements. Obvious differences in expression include (but not limited to):

• The mouse in Palm Bay’s drawing is much smaller than the mouse in Teeter-Totter’s drawing.
• The size of the mouse is larger in proportion to the size of the elephant in the Teeter- Totter drawing than the Palm Bay drawing, in which the elephant is significantly larger than the mouse.
• The mouse appears to be standing upright in the Teeter-Totter drawing, but not in the Palm drawing.
• The mouse in the Teeter-Totter drawing has a pointy nose and rounded ear; the mouse in the Palm drawing does not.

• The elephant in Palm’s drawing is broader than the mouse in Teeter-Totter’s drawing (approx. double the width).
• The curve of the elephant’s trunk in each drawing is different (more “J”-shaped in the Palm Bay drawing; more “U”-shaped in the Teeter-Totter drawing).
• The mouse’s tail in the Teeter-Totter drawing is “S”-shaped and pointing up and back; the mouse’s tail in the Palm Bay drawing is “e”-shaped/curlicue, pointing in.
• The elephant in Palm’s drawing shows four well-defined legs, a well-defined ear, and two tusks; the elephant in Teeter-Totter’s drawing shows two “basic” legs, only a white line indicating an ear, and no tusk.
• The mouse and elephant (particularly the elephant) in Palm Bay’s drawing are 3- dimensional life-like renderings with well-defined shading; the mouse and elephant in Teeter-Totter’s drawing are 2-dimensional, cartoon-like pencil renderings.
• The see-saw base in Teeter-Totter’s drawing is a rock-like shape with a straight line underneath; the see-saw base in Palm Bay’s drawing is a three-dimensional polygon shape (a box with a triangular top).
• The main see-saw board in Palm Bay’s drawing is a three-dimensional rectangular shape; the main see-saw board in Teeter-Totter’s drawing is simply a straight line.
• Shading appears beneath the see-saw in Palm Bay’s drawing, but not Teeter-Totter’s drawing.

The proximity of the parties’ goods and sales and marketing channels are also in dispute.

There are vast differences between the types of wine marketed under the parties’ TEETERTOTTER and AU CONTRAIRE brand names in terms of, inter alia, distribution channels, price, varietal and consumer appeal.

AU CONTRAIRE brands are produced in Sonoma, California and are sold at popular price points. The www.wine-searcher.com site lists AU CONTRAIRE Pinot Noir at $ 9.99/bottle and Chardonnay for $15/bottle.

In sharp contrast, TEETER-TOTTER wines, produced in Napa, are expensive wines sold to sophisticated wine purchasers mostly through Mr. Touquette’s private mailing list. Mr. Touquette has an MSRP for his Napa Valley Cabernet Sauvignon at $ 65/bottle, although the product is available on www.wine-searcher.com for $55/bottle.

Plaintiff’s TEETER-TOTTER wines are available at a small number of wine shops in Napa Valley and elsewhere, and the shops typically are for wine collectors and/or carry only expensive wines and do not sell the AU CONTRAIRE brand. Several of the shops in question limit customers to “by appointment only,” confirming that they cater to highly sophisticated wine consumers.

The parties are unaware of a single instance of actual consumer confusion between the parties’ branded products despite the fact that the parties’ wine products have allegedly coexisted in the marketplace for the past five years.

Moreover, the U.S. Patent and Trademark Office found no confusion between the parties’ logo design marks when it approved Plaintiff’s U.S. Trademark Application for the Mouse and Elephant Design Mark despite the existence of Palm Wine’s Trademark Registration for the AU CONTRAIRE Design Mark on the Trademark Registry.

Aside from the issue of likelihood of confusion, Defendants also maintain that Plaintiff cannot establish the essential element of priority of superior and enforceable trademark rights as against Defendants with respect to the Mouse and Elephant Design Mark to support Plaintiff’s claims for federal trademark infringement and unfair competition. Palm Wine asserted Counterclaims against Plaintiff seeking both a Declaration of Non-Infringement related to the issue of priority of trademark rights as between the parties and Cancellation of Plaintiff’s Trademark Registrations and Applications. The Court granted Plaintiff’s motion to dismiss these Counterclaims without prejudice and with leave to re-file on September 25, 2018.

On October 9, 2018, Palm Wine filed a Second Amended Counterclaim seeking a declaration of noninfringement based on Plaintiff’s inability to establish that it has prior and superior enforceable trademark rights in the Mouse and Elephant Design Mark depicted in U.S. Federal Trademark Reg. No. 5,428,362 in interstate commerce as against Palm Wine’s AU CONTRAIRE Design Mark as depicted in U.S. Federal Trademark Reg. No. 4,757,065.

Assuming, arguendo, that Plaintiff ultimately can establish liability for any of its claims at trial, Plaintiff’s potential monetary recovery is limited due to a number of factors. First, Plaintiff cannot prove willful trademark infringement because there was no deliberate intent to deceive consumers on Defendants’ part. Palm Bay discovered the existence of Plaintiff’s label design after the label for AU CONTRAIRE was already conceived. Palm Bay conducted an investigation of the marketplace and concluded that Plaintiff’s TEETER-TOTTER product was not on sale, so it made the business decision to move forward with sales of AU CONTRAIRE wine on this good faith basis.

There certainly is no suggestion that Palm Bay was seeking to trade on the purported rights of Plaintiff at the time it introduced AU CONTRAIRE in the market, nor can there be such a claim now, since Plaintiff’s wine product is virtually nonexistent in the California wine marketplace.

Second, the doctrine of apportionment will substantially limit any damage award because Plaintiff’s sole claim of confusion relates only to artwork on the wine labels. Defendants intend to introduce fact and expert witness testimony that consumers purchase wine because of many factors other than the picture or drawing on the label, including price, varietal and brand name.

The brands here, TEETER-TOTTER and AU CONTRAIRE, are not at issue in this case. Hence, any measure of damages, whether based on Defendants’ profits or plaintiff’s claim of damages, would have to be reduced substantially under the doctrine of apportionment because of the limited nature of the IP rights subject to the claim of confusion.

Third, Mr. Touquette conceded at his deposition that he has no evidence of losing a single sale of TEETER-TOTTER brand wines because of the existence of AU CONTRAIRE in the market. Nor could he, because TEETER-TOTTER has a production capacity of 3,500 cases of wine per year due to supply limitations, and Plaintiff sells out its production run each year. Hence, Plaintiff cannot make a claim for actual damages or lost profits under any trademarkbased claim.

Finally, Plaintiff’s damages claims will be limited for the copyright claims because Plaintiff cannot seek statutory damages or attorney’s fees under the Copyright Act since the claimed acts of infringement occurred many years before Plaintiff registered the copyright in the label artwork.

Notable Court filings

• Docket-image 01/31/19
• Joint Case Management Statement 01/30/19
• Second Amended Counterclaim for Declaration of Non-Infringement-10/09/18
• ExhibitsA-D-Amended-Complaint 07/18/18
• Amended-Complaint-071718
• Plaintiff-AnswerTo Complaint 03/12/18
• Disclosure-InterestedParties 03/12/18
• Complaint-111617