Opinion
CASE NO. CV-02-5321 NM (RZx)
October 31, 2002
For Plaintiffs, William A. Finkelstein, Jonathan R. Goldblatt, ALSCHULER GROSSMAN STEIN KAHAN, LLP, Santa Monica, CA
David C. Hilliard, Jonathan S. Jennings, Phillip Barengolts, PATTISHALL, MCAULIFFE, NEWBURY, HILLIARD GERALDSON, Chicago, Illinois
Margaret A. Meenaham, pro se, individually and as a partner in California Security Cans, Hermosa Beach, CA
Bruce Karl, Menendez, pro se, individually and as a partner in California Security Cans, San Pedro, CA
FINAL JUDGMENT AGAINST DEFENDANTS CALIFORNIA SECURITY CANS, MARGARET A. MEENAHAN, AND BRUCE CARL MENENDEZ
I. INTRODUCTION
Plaintiffs, PepsiCo, Inc. ("PepsiCo"), and PepsiCo's wholly-owned subsidiaries Recot, Inc. ("Recot") and Frito-Lay, Inc. ("Frito-Lay"), brought this action on July 11, 2002, against Defendants, California Security Cans, Margaret A. Meenahan, an individual and partner in California Security Cans, Bruce Carl Menendez, an individual and partner in California Security Cans (hereinafter collectively "C SC"), John Randall Cook and Does 1-10, to prevent the manufacture and sale of products created from original containers converted to contain a secret compartment that bore counterfeit and infringing marks.
In particular, CSC sold converted bottles bearing counterfeit PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks that contained simulated PepsiCo beverages, converted cans bearing the PEPSI, DIET PEPSI and MOUNTAIN DEW trademarks that had sharp edges, and converted canisters bearing infringing DORITOS, CHEETOS and FRITOS trademarks that contained stale products. PepsiCo, Recot, Frito-Lay, and CSC now stipulate to the following findings of fact and conclusions of law, and consent to entry of a permanent injunction and other relief, as set forth below. Accordingly, the Court enters the following:
II. FINDINGS OF FACT A. PepsiCo's Famous PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA Trademarks and Products
PepsiCo is engaged in the manufacture and marketing of beverage products throughout the United States and the world. PepsiCo has adopted and made continuous use of the trademarks PEPSI, DIET PEPSI and MOUNTAIN DEW, on their own, or with designs or other variations, in connection with the manufacture, sale and advertising of soft drinks, and PepsiCo also has adopted and made continuous use of the trademark AQUAFINA, on its own, or with designs or other variations, in connection with the manufacture, sale and advertising of purified drinking water.
PepsiCo, through its licensees, sells a wide variety of novelty and promotional merchandise under the PEPSI, DIET PEPSI and MOUNTAIN DEW trademarks, including bottles and cans used as banks.
PepsiCo is the owner, inter alia of the following federal trademark registrations issued by the United States Patent and Trademark Office for the aforesaid PEPSI, DIET PEPSI, MOUNTAIN DEW, and AQUAFINA trademarks used in connection with its products:
MARK REG. NO. REG. DATE GOODS PEPSI- 349,886 Sept. 14, 1937 Beverages and syrups for the COLA manufacture of such beverages PEPSI 824,150 Feb. 14, 1967 Soft Drinks and syrups and concentrates for the preparation thereof PEPSI- 824,151 Feb. 14, 1967 Soft Drinks and syrups and COLA concentrates for the preparation thereof Design mark 824,153 Feb. 14, 1967 Soft Drinks PEPSI 1,317,551 Feb. 5, 1985 Candles, key chains, radios, can shaped telephones, electric lamps and charcoal burning barbecue grills, clocks, pencil cases and pens, umbrellas, mirrors and bean bag chairs, drinking glasses, polyurethane beverage holders, waste-baskets for domestic use, insulated bags for food, beverages and ice, beach towels, t-shirts, sweatshirts, knit hat jackets, aprons and belts, baseball caps, embroidered patches for clothing, toy can banks, toy trucks, toy railroad cars, toy soda dispensers and kaleidoscopes PEPSI and 2,100,417 Sept.23, 1997 Soft Drinks Design PEPSI and 2,104,304 Oct. 7, 1997 Soft Drinks Design PEPSI and 2,321,907 Feb. 22, 2000 Soft Drinks Design DIET PEPSI- 824,149 Feb. 14, 1967 Soft Drinks and syrups and COLA concentrates for the preparation thereof DIET PEPSI 824,152 Feb. 14, 1967 Soft Drinks and syrups for the preparation thereof DIET PEPSI 2,161,008 May 26, 1998 Soft Drinks and Design MOUNTAIN 820,362 Dec. 13, 1966 Soft Drinks, and concentrates used in DEW the preparation thereof MOUNTAIN 2,509,558 Nov. 20, 2001 Soft Drinks DEW and Design MOUNTAIN 2,509,700 Nov. 20, 2001 Soft Drinks DEW and Design AQUAIFINA 1,917,411 Sept. 5, 1995 Soft Drinks, aerated water, mineral water, soda water, carbonated water, non-carbonated water, table water AQUAFINA 2,506,189 Nov. 13, 2001 Drinking water and Design AQUAFINA 2,509,365 Nov. 20, 2001 Drinking water and Design AQUAFINA 2,509,701 Nov. 20, 2001 Drinking water and Design PEPSI 2,048,009 Mar. 25, 1997 Sports equipment, namely, footballs, STUFF basketballs, soccer balls and kick sacks PEPSI 2,049,301 Apr. 1, 1997 Watches STUFF PEPSI 2,049,302 Apr. 1, 1997 Furniture, namely, beach chairs STUFF PEPSI 2,049,300 Apr. 1, 1997 Sunglasses STUFF PEPSI 2,049,299 Apr. 1, 1997 Bicycles STUFF PEPSI 2,052,910 Apr. 15, 1997 Towels STUFF PEPSI 2,081,370 July 22, 1997 Clothing, namely, sweatshirts, STUFF shirts, jackets, shorts, sandals, ball caps All of these registrations are valid and subsisting and registration Nos. 349, 886, 824, 149, 824, 150, 824, 151, 824, 152, 824, 153, 820, 362, and 1,917,411 are incontestable in accordance with 15 U.S.C. § 1065 and 1115(b).PepsiCo, including its authorized bottlers and licensees, has sold many billions of dollars worth of beverages and merchandise under the aforesaid PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks throughout the United States and has expended many hundreds of millions of dollars to advertise and promote these products and said PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks.
As a result of PepsiCo's extensive sales, promotion and advertising, the aforesaid PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks have become famous, represent extraordinarily valuable goodwill owned by PepsiCo and are among the most well-known and famous trademarks in the world.
PepsiCo's beverages sold under the aforesaid PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks are subject to a strict quality control program implemented by PepsiCo and its authorized bottlers that protects and preserves all aspects of the beverages including their ingredients, nutritional content, taste, aroma, appearance and packaging.
PepsiCo also employs a strict and rigorous quality control program in determining when and how to license the use of the PEPSI, DIET PEPSI and MOUNTAIN DEW trademarks for novelty and promotional merchandise to ensure safety and good taste.
B. The Famous DORITOS, CHEETOS and FRITOS Trademarks and Products
Frito-Lay is engaged in the manufacture and marketing throughout the United States and the world of snack food products under a license from Recot. Frito-Lay has adopted and made continuous use of the trademarks FRITO-LAY, DORITOS, CHEETOS, FRITOS, DANGEROUSLY CHEESY, CHESTER CHEETAH, SCOOPS and NACHO CHEESIER, on their own, or with designs or other variations, in connection with the manufacture, sale and advertising of snack foods (hereinafter collectively "DORITOS, CHEETOS and FRITOS trademarks").
Frito-Lay, through its authorized licensees, also sells a wide variety of novelty and promotional merchandise under the DORITOS, CHEETOS and FRITOS trademarks.
Recot is the owner inter alia of the following federal trademark registrations issued by the United States Patent and Trademark Office for the aforesaid DORITOS, CHEETOS and FRITOS trademarks used by Frito-Lay:
MARK REG. REG. GOODS NO. DATE FRITO-LAY 841,324 Dec. 26, Corn chips, potato chips, cheese 1967 flavored puffed corn snack, pretzels, fried pork skins, canned chicken liver dip; dehydrated dip mixes, specifically, onion, green onion, caesar, bleu cheese, horseradish, kosher dill, chili con queso, and bacon and cheese; cracker sandwiches, canned and packaged nut meats, popped popcorn, canned bean dip, canned beans, canned beans and franks, canned lima beans and ham, canned rice, canned corned beef hash, bottled chili powder, canned enchiladas, canned chili (with and without beans), canned tamales, canned barbecued beef, canned spaghetti and meat balls, canned gravy and beef, and canned beef stew FRITO-LAY 1,501,004 Aug. 23, Clothing, namely shirts, shorts, 1998 sweaters, jackets, wristbands, headbands, sweatshirts, sweatpants, windbreakers and caps, non-metallic lapel pins and embroidered patches for clothing, umbrellas, leather key rings, and tote bags, housewares, namely plastic drinking cups, ceramic drinking mugs, clips for sealing plastic bags, insulated coolers for food and beverages, and coasters, utility knives, playing cards, pencils, pens, cardholders, and stationery type folios, golf balls, tees, ball markers, dominoes, balloons, and plastic flyers, plastic luggage tags CHEETOS and 2,312,008 Jan. 25, Cheese flavored puffed corn snacks Design 2000 DANGEROUSLY 2,179,482 Aug. 4, Cheese flavored puffed corn snacks CHEESY 1998 CHESTER 1,439,396 May 12, Cheese-flavored corn-based snack CHEETAH 1987 food FRITOS (Stylized) 502,325 Sept. 21, Corn chips 1948 SCOOPS! 2,169,771 June 30, Corn chips 1998 DORITOS 792,667 July 13, Corn chips, potato chips, tortilla 1965 chips, pretzels, and nut meats DORITOS and 2,428,495 Feb. 13, Corn-based snack foods, namely, Design 2001 tortilla chips NACHO 1,843,101 July 5, Tortilla chips CHEESIER 1994 All of these registrations are valid and subsisting and registration Nos. 841, 324, 1,501,004, 1,439,396, 502,325, 1,529,786, 792,667, 1,528,348, and 1,843,101 are incontestable in accordance with 15 U.S.C. § 1065 and 1115(b).Frito-Lay and its licensees have sold billions of dollars worth of snack foods and merchandise under the aforesaid DORITOS, CHEETOS and FRITOS trademarks throughout the United States. Frito-Lay has expended many millions of dollars to advertise and promote its DORITOS, CHEETOS and FRITOS trademarks and products.
As a result of these extensive sales, promotional efforts and advertising, the aforesaid DORITOS, CHEETOS and FRITOS trademarks have become famous, represent extraordinarily valuable goodwill owned by Recot and are among the most well-known and famous marks in the world.
Frito-Lay's snack foods sold under the DORITOS, CHEETOS and FRITOS trademarks are subject to a strict quality control program, including through Frito-Lay's unique store delivery system and freshness standards, which use Frito-Lay's own dating system, a stringent stock rotation policy, and a freshness guarantee, implemented by Frito-Lay that protects and preserves all aspects of the snack foods including their freshness, ingredients, nutritional content, taste, aroma, appearance and packaging. Frito-Lay prohibits the sale of snack foods under the DORITOS, CHEETOS and FRITOS trademarks that do not meet these aforesaid quality control standards.
Frito-Lay employs a strict and rigorous quality control program in determining when and how to license the use of the DORITOS, CHEETOS and FRITOS trademarks for novelty and promotional merchandise that permits only the manufacture and sale of merchandise under these marks that meet the highest standards of safety and good taste and that are consistent with Frito-Lay's marketing programs, objectives and brand image.
C. CSC's Actions 1) CSC's Counterfeit Products
CSC manufactures, advertises and sells altered, genuine PepsiCo plastic bottles labeled with PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks and filled with liquids that look like PepsiCo's PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA products, but in fact are not PepsiCo's beverages (hereinafter "Counterfeit Products"). CSC sells the Counterfeit Products with twist-off tops, some of which have broken seals so that the liquids inside are easily accessible. CSC's Counterfeit Products contain labels listing wholly inaccurate ingredient and nutritional content information for the liquid contents of CSC's Counterfeit Products. Overall, CSC's Counterfeit Products are identical to PepsiCo's authorized products in appearance and weight, even when handled.
There is a strong likelihood that consumers, either those who buy CSC's Counterfeit Products themselves or those who encounter these products post-sale, mistakenly will drink the liquids in the Counterfeit Products believing they are PepsiCo's PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA products or are authorized for sale by PepsiCo. These consumers will become alarmed by the foul taste and smell of these liquids.
CSC's Counterfeit Products also contain a hidden interior compartment created from the molding of two pieces of plastic that stop the liquids inside from entering the center of the bottle. This compartment can be accessed by pulling the bottle apart. CSC markets these products as bottle safes. These Counterfeit Products are commonly referred to as "stash bottles" because of their use in concealing illegal narcotics or even weapons. Consequently, this use has become a concern to law enforcement.
2) CSC's Infringing Cans
CSC also manufactures, advertises and sells actual PepsiCo cans labeled with the PEPSI, DIET PEPSI and MOUNTAIN DEW trademarks (hereinafter "Infringing Cans").
CSC's Infringing Cans contain information about PepsiCo, including PepsiCo's website address, street address and a telephone number at which to contact PepsiCo. To those consumers who encounter these Infringing Cans post-sale, they are indistinguishable from authentic PEPSI, DIET PEPSI and MOUNTAIN DEW cans in appearance, and there are no references on them to CSC or to the fact that CSC's Infringing Cans are not legitimate PepsiCo products. CSC's Infringing Cans have been converted into "stash" cans, and have sharp interior edges that can cut people who use the products. Such stash cans are a concern to law enforcement because they are used to conceal illicit narcotics or even weapons.
3) CSC's Infringing Canisters
CSC also manufactures, advertises and sells canisters labeled with the DORITOS, CHEETOS and FRITOS trademarks, but filled with snack foods that are stale, contaminated and unwholesome (hereinafter "Infringing Canisters"). CSC's Infringing Canisters bearing the DORITOS, CHEETOS and FRITOS trademarks are made from Frito-Lay's original cardboard canisters by removing a portion of the snack foods inside, converting the bottom to a screw-type lid, and fitting a plastic divider inside to create a hidden compartment in the bottom portion of the canister. Products of this type also are a concern to law enforcement authorities because they are used to conceal illicit narcotics or even weapons.
CSC's products have had their freshness seals broken leading to the contamination and deterioration of the snack products inside and making the snack foods stale. CSC's Infringing Canisters are made from materials that are not safe for food contact and there is a high probability that one or more of these materials will transfer a chemical component into the snack food, causing a foul taste or potentially an illness in the consumer eating the product. CSC's Infringing Canisters contain information about Frito-Lay, including Frito-Lay's website address, street address and a telephone number at which to contact Frito-Lay.
To consumers who encounter the Infringing Canisters post-sale, they are indistinguishable from authentic DORITOS, CHEETOS and FRITOS canisters in appearance and contain no references on them to CSC or to the fact that the Infringing Canisters are not legitimate Frito-Lay products.
There is a strong likelihood that consumers, either those who buy CSC's Infringing Canisters themselves or those who encounter these products post-sale, will mistakenly eat the snack foods in the Infringing Canisters and become alarmed by the foul taste of the stale product and will become angry with Frito-Lay and dissatisfied with Frito-Lay's DORITOS, CHEETOS and FRITOS products.
4) CSC's Disclaimers
CSC places disclaimers on some but not all of its Counterfeit Bottles, Infringing Cans and Infringing Canisters. These disclaimers state: "This can was converted into a can safe by California Security Cans and not by the original manufacturer. The original manufacturer has not sponsored, approved or endorsed this can safe."
III. CONCLUSIONS OF LAW
Plaintiffs' incontestable United States trademark registrations in the PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS and FRITOS trademarks conclusively establish their exclusive right to use these marks. 15 U.S.C. § 1065 and 1115(b); Park `N Fly v. Dollar Park and Fly Inc., 469 U.S. 189, 194 (1985). Plaintiffs' other registrations constitute prima facie evidence of their exclusive right to use the marks they cover. See 15 U.S.C. § 1057(b). Plaintiffs' long use, extensive advertising and promotion of the PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS and FRITOS trademarks have made them among the most famous marks in the world. Such marks are entitled a wide scope of protection. James Burrough Ltd. v. Sign of the Beefeater, Inc., 540 F.2d 266, 276 (7th Cir. 1976).
A. CSC's Trademark Counterfeiting
CSC is counterfeiting PepsiCo's famous PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks. A "counterfeit" is defined in the Lanham Act as a "spurious mark which is identical with, or substantially indistinguishable from, a registered mark." 15 U.S.C. § 1127. CSC's use of actual PepsiCo bottles displaying the PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks, but filled with simulated beverages, constitutes the use of "spurious" marks under the Lanham Act. See Rolex Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704, 707 (9th Cir. 1999) (sale of reconditioned watches containing non-ROLEX parts constitutes use of spurious ROLEX trademarks); See also United States of America v. Petrosian, 126 F.3d 1232, 1234 (9th Cir. 1997) (sale of fake soft drinks in actual COCA-COLA bottles constitutes criminal trademark counterfeiting).
B. Likelihood of Confusion Over CSC's Counterfeit and Infringing Uses
To establish trademark counterfeiting, trademark infringement and unfair competition under Federal and California State law, there must be likelihood of confusion over Defendants' use of the PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS and FRITOS trademarks. 15 U.S.C. § 1114, 1125(a); Cal. Bus Prof. Code § 17200 et seq; New West Corp. v. NYM Co. of Cal., Inc., 595 F.2d 1194, 1201 (9th Cir. 1979); see also Malaytex USA, Inc. v. Colonial Surgical Supply, Inc., 44 U.S.P.Q.2d 1291 (C.D. Cal. 1997). In this Circuit, likelihood of confusion depends upon the determination of the following factors: (1) the similarity of the marks; (2) the relatedness of the two companies' goods; (3) the marketing channel used; (4) the strength of plaintiffs marks; (5) defendants' intent in selecting their marks; (6) evidence of actual confusion; (7) the likelihood of expansion into other markets; and (8) the degree of care likely to be exercised by purchasers. GOTO.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000); AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979).
Plaintiffs' licensing programs underscore the likelihood of confusion. Consumers will assume that Plaintiffs have licensed or otherwise authorized CSC's sale of the Counterfeit Products, Infringing Cans and Infringing Canisters. See Gucci America, Inc. v. Action Activewear, Inc., 759 F. Supp. 1060, 1064 (S.D.N.Y. 1991) ("Even though defendants' goods were of an inferior quality, a likelihood of confusion exists because customers could have mistakenly assumed that plaintiffs had begun producing such items, or licensing their marks to the producers of those items.")
In Petrosian, 126 F.3d 1232, the Court of Appeals for the Ninth Circuit upheld the lower court's finding of likelihood of confusion through the defendant's sale of fake soft drinks in actual COCA-COLA bottles "because consumers were likely to assume the mark indicated Coca-Cola was the source of the beverage inside the bottle." Petrosian, 126 F.3d at 1234. Similarly, in Rolex, 179 F.3d 704, the Court of Appeals reversed the district court in part and found that the use of ROLEX on reconstructed ROLEX watches that had been altered with non-authorized parts was likely to cause confusion, even with the inclusion on those watches of defendant's independent mark. Rolex, 179 F.3d at 710. CSC's sale of the Counterfeit Products likewise creates likelihood of confusion.
Courts also have found that CSC's use of other companies' trademarks on converted authentic cans created likelihood of confusion among purchasers of these products. See Anheuser-Busch, Inc. v. Meenahan, Civil Action No. 93-5652 WDK (C.D. Cal. 1994); The Coca-Cola Co. v. Menendez, Civil Action No. 3-93-0989 (M.D. Ten. 1994). Here, the use of the PEPSI, DIET PEPSI, and MOUNTAIN DEW trademarks on converted PepsiCo cans creates likelihood of confusion as well.
Likelihood of confusion also exists among consumers who are likely to blame Frito-Lay mistakenly for CSC's stale and contaminated DORITOS, CHEETOS and FRITOS snack foods. In Warner-Lambert Co. v. Northside Dev. Corp., 86 F.3d 3 (2d Cir. 1996), the court found likelihood of confusion over defendants' sale of HALLS cough drops that were not compliant with the plaintiffs quality control standards for freshness and that were sold after the freshness expiration date. See also Adolph Coors Co. v. A. Genderson Sons, Inc., 486 F. Supp. 131 (D. Colo. 1980) (enjoining the sale of stale beer in finding likelihood of confusion); Shell Oil Co. v. Commercial Petroleum, Inc., 928 F.2d 104 (4th Cir. 1991) (enjoining sale of oil where quality control requirements not observed).
Similarly, the Court of Appeals for the Ninth Circuit in Intel Corp. v. Terabyte Int'l, Inc., 6 F.3d 614 (9th Cir. 1993), upheld a finding of trademark infringement based on likelihood of confusion where the defendant relabeled genuine Intel coprocessors that were inferior to the originals. Here, CSC's Infringing Canisters contain rotten snack foods, essentially different products, that create likelihood of confusion with legitimate DORITOS, CHEETOS and FRITOS products.
Likelihood of confusion exists not only among those who directly purchase CSC's Counterfeit Products, Infringing Cans and Infringing Canisters, but also among anyone who encounters the products post-sale. See Rolex, 179 F.3d at 707. In Rolex, 179 F.3d 704, the Court of Appeals for the Ninth Circuit upheld the district court's determination that the use of the ROLEX mark on altered watches was likely to cause confusion to subsequent or downstream purchasers, as well as to persons observing the product." Rolex, 179 F.3d at 707. Similarly, in H-D Michigan, Inc. v. Biker's Dream, Inc., 48 U.S.P.Q.2d 1108 (C.D. Cal. 1998), the court found trademark counterfeiting and noted: "`Once a product is injected into commerce,' however, `there is no bar to confusion, mistake, or deception occurring at some future point in time.'" H-D, 48 U.S.P.Q.2d at 1111 (citation omitted). Here, anyone who encounters the Counterfeit Products, Infringing Cans and Infringing Canisters post-sale in households, schools, businesses, or anywhere else, is likely to believe they are legitimate PepsiCo and Frito-Lay products, or that the Counterfeit Products, Infringing Cans and Infringing Canisters are licensed or otherwise authorized by PepsiCo or Frito-Lay, and are likely to consume them as a result. See Karl Storz, 285 F.3d at 854.
CSC's placement of disclaimers on some of its Counterfeit Products, Infringing Cans and Infringing Canisters does not dispel likelihood of confusion. In general, such disclaimers do not dispel confusion. See E J Gallo Winery v. Gallo Cattle Co., 12 U.S.P.Q.2d 1657, 1676-77, 1989 U.S. Dist. LEXIS 7950 at *77 (E.D. Cal. 1989) (disclaimer not effective at preventing confusion); see also Rolex, 179 F.3d at 710 (written disclosure concerning generic replacement parts deemed inadequate to prevent consumer confusion even if defendant placed its own independent trademark on reconstructed watch). Here, the disclaimers also have no effect on post-sale confusion because they are meant to be removed after they are sold to consumers.
In McNeil-PPC Inc. v. Guardian Drug Co., 984 F. Supp. 1066, 1072 (E.D. Mich. 1997), the Court found that the defendant's disclaimer was "probative of not only defendant's knowledge of possible confusion, but also that defendant intended to confuse the consumer." In this case, the disclaimers demonstrate that CSC is aware of the confusion caused by its Counterfeit Products, Infringing Cans and Infringing Canisters.
Based on the likelihood of confusion noted above, CSC's use of the PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS and FRITOS trademarks constitutes trademark counterfeiting, trademark infringement and unfair competition under the Lanham Act, and trademark infringement and unfair competition under State common and statutory laws. 15 U.S.C. § 1114; 15 U.S.C. § 1125(a); Cal. Bus. and Prof Code § 17200, et seq.; see also Rolex, 179 F.3d 704.
C. Trademark Tarnishment and Dilution
CSC's advertisement and sale of Counterfeit Products, Infringing Cans and Infringing Canisters are tarnishing the business reputations of Plaintiffs and tarnishing the goodwill in, and diluting the distinctiveness of, the famous PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS and FRITOS trademarks under the Lanham Act and California State Law. 15 U.S.C. § 1125(c); Cal. Bus. and Prof Code § 14330; H-D, 48 U.S.P.Q.2d at 1112; Guess? Inc. v. Tres Hermanos, 993 F. Supp. 1277, 1284-1285 (C.D. Cal. 1997). This is the result, in part, of the foul taste and odor of the Counterfeit Products, the sharp edges on the Infringing Cans, and the stale and contaminated snack foods contained in the Infringing Canisters. This also is the result of the use of the Counterfeit Products, Infringing Cans and Infringing Canisters as "stash" bottles and "stash" cans to conceal illicit narcotics and possibly weapons from law enforcement. See Coca-Cola v. Gemini Rising, Inc., 346 F. Supp. 1183 (E.D.N.Y. 1972) (enjoining defendants from using ENJOY COCAINE in famous Coca-Cola script on its posters). Finally, CSC's use of disclaimers has no effect on the dilution and tarnishment caused by its sale of these products.
D. False Advertising
CSC's ingredient and nutritional content information on the Counterfeit Products, Infringing Cans and Infringing Canisters is literally false and is likely to lead consumers to consume the contents of CSC's products. Consumers who do consume these beverages or snack foods based on this false and misleading information will blame Plaintiffs for their foul taste. See Coca-Cola v. Tropicana Products, Inc., 690 F.2d 312, 317 (2d Cir. 1982) (superseded on other grounds by statute); see also S.C. Johnson Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir. 2001) (where advertising claim is literally false and mentions plaintiffs product by name, court will presume irreparable harm and may enjoin the use of the claim without reference to its impact on the buying public). As a result, CSC's false advertising will cause people to avoid PepsiCo's and Frito-Lay's legitimate products. CSC's conduct, therefore, constitutes false advertising in violation of both Section 43(a) of the Lanham Act and California law. 15 U.S.C. § 1125(a); Cal. Bus. Prof. Code § 17500, et seq. E. Remedies
Trademark counterfeiting, trademark infringement, unfair competition, dilution and false advertising by their very nature result in irreparable injury since the attendant loss of goodwill, reputation and business cannot adequately be quantified and victims cannot be compensated adequately. Sony Computer, 87 F. Supp.2d at 988; Reebok Int'l, 737 F. Supp. at 1516. For this reason, therefore, Plaintiffs are entitled to permanent injunctive relief.
CSC's intentional use of the PEPSI, DIET PEPSI, MOUNTAIN DEW and AQUAFINA trademarks in connection with the sale of simulated beverages, knowing such trademarks were counterfeit, entitles PepsiCo to elect between (a) an award of either three times CSC's profits or PepsiCo's actual damages, whichever is greater, or (b) an award of statutory damages. 15 U.S.C. § 1117(b) and (c); See H-D, 48 U.S.P.Q.2d at 1115. Plaintiffs also are entitled to an award of treble damages and treble CSC's profits given CSC's intentional use of the PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS and FRITOS trademarks in connection with the sale of the Infringing Cans and Infringing Canisters. 15 U.S.C. § 1117(a).
Because this is a counterfeiting case, PepsiCo is entitled to an award of its attorneys' fees and costs as well as prejudgment interest. 15 U.S.C. § 1117(a) and (b); See H-D, 48 U.S.P.Q.2d at 1116-1117. Plaintiffs also are entitled to an award of their fees and costs based on CSC's sales of the Infringing Cans and Infringing Canisters because under the Lanham Act this is an exceptional case. 15 U.S.C. § 1117(a).
IV. ORDER
It is ORDERED, ADJUDGED and DECREED that:
1. This Court has personal jurisdiction over the parties, including California Security Cans, Margaret A. Meenahan, and Bruce Carl Menendez, as well as subject matter jurisdiction over this action.
2. California Security Cans, Margaret A. Meenahan, and Bruce Carl Menendez, any of their officers, agents, servants, employees, and attorneys, their successors and assigns and all others in active concert or participation with them, are permanently enjoined and restrained from:
a) manufacturing, advertising, promoting or selling products composed of modified PepsiCo bottles, cans or canisters bearing the PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, FRITOS, CHEETOS, DANGEROUSLY CHEESY, CHESTER CHEETAH, SCOOPS or NACHO CHEESIER trademarks or any other marks owned by Plaintiffs or their affiliated companies;
b) using the PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS, FRITOS, DANGEROUSLY CHEESY, CHESTER CHEETAH, SCOOPS and NACHO CHEESIER trademarks, any colorable imitations thereof, or any other marks which are likely to cause confusion with Plaintiffs' business or their PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS, FRITOS, DANGEROUSLY CHEESY, CHESTER CHEETAH, SCOOPS and NACHO CHEESIER trademarks in connection with the manufacture, sale, distribution, advertising or promotion of any products or services;
c) committing acts resulting in unfair competition with Plaintiffs;
d) diluting the distinctiveness of the famous PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS, FRITOS, DANGEROUSLY CHEESY, CHESTER CHEETAH, SCOOPS and NACHO CHEESIER trademarks;
e) tarnishing Plaintiffs' business reputations or their PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, CHEETOS, FRITOS, DANGEROUSLY CHEESY, CHESTER CHEETAH, SCOOPS and NACHO CHEESIER trademarks or products; and
f) falsely advertising their products as emanating from or otherwise associated with Plaintiffs.
3. The following relief shall be awarded to Plaintiffs only upon a showing that after September 1, 2002, California Security Cans, their subsidiaries, parent or related companies, the successors or assigns of California Security Cans, Margaret A. Meenahan, Bruce Carl Menendez, or the officers, agents, directors, partners, servants, employees or attorneys of California Security Cans, Margaret A. Meenahan, and Bruce Carl Menendez manufactured, advertised, promoted or sold products composed of modified PepsiCo bottles, cans or canisters bearing the PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, FRITOS, CHEETOS, DANGEROUSLY CHEESY, CHESTER CHEETAH, SCOOPS or NACHO CHEESIER trademarks or any other marks owned by Plaintiffs or their affiliated companies:
California Security Cans, Margaret A. Meenahan, Bruce Carl Menendez, and all others holding by, through or under them, and their successors and assigns, jointly and severally, shall pay to Plaintiffs $250,000, which represents a fair estimate of the reasonable compensation available to Plaintiffs for such a breach, and consists of treble the dollar amount of profits derived by California Security Cans, Margaret A. Meenahan, and Bruce Carl Menendez from the sale of Counterfeit Products, Infringing Cans and Infringing Canisters, the dollar amount of the damage to Plaintiffs' goodwill in their PEPSI, DIET PEPSI, MOUNTAIN DEW, AQUAFINA, DORITOS, FRITOS, CHEETOS, DANGEROUSLY CHEESY, CHESTER CHEETAH, SCOOPS or NACHO CHEESIER trademarks caused by California Security Cans' sale of Counterfeit Products, Infringing Cans and Infringing Canisters, and Plaintiffs' costs and attorneys' fees incurred in bringing the above captioned action, all of which Plaintiffs are entitled to under the Lanham Act, 15 U.S.C. § 1117(a) and (b), and/or the California Business and Professional Code § 17200, et seq.
4. California Security Cans, Margaret A. Meenahan, and Bruce Carl Menendez will continue to conduct a recall of their Counterfeit Products, Infringing Cans and Infringing Canisters by sending letters by U.S. mail to each of their customers to whom they have sold Counterfeit Products, Infringing Cans or Infringing Canisters instructing them not to sell these Counterfeit Products, Infringing Cans and Infringing Canisters, indicating that California Security Cans shall refund to them the cost of these Counterfeit Products, Infringing Cans and Infringing Canisters, requiring such customers to return these Counterfeit Products, Infringing Cans or Infringing Canisters to California Security Cans's location at California Security Cans's expense, and California Security Cans shall continue to receive products under this recall under these terms.
5. All the items collected from the recall will be turned over to Plaintiffs by California Security Cans, Margaret A. Meenahan, and Bruce Carl Menendez and destroyed pursuant to 15 U.S.C. § 1118, with the exception that Plaintiffs may keep one archived copy of these items.
6. Defendants Margaret A. Meenahan and Bruce Carl Menendez shall act as agents for service of any subpoena for trial or deposition testimony, regarding CSC's knowledge of other sources, manufacturers, or sellers of Counterfeit Products, Infringing Cans or Infringing Canisters in any other action, and said subpoena shall be accepted for service at 530 Cypress Avenue, Hermosa Beach, California 90254, and Margaret A. Meenahan and Bruce Carl Menendez shall immediately in writing inform Plaintiffs, care of Jonathan S. Jennings at Pattishall, McAuliffe, Newbury, Hilliard Geraldson, Suite 5000, 311 South Wacker Drive, Chicago, Illinois 60606, if their respective address for this service changes and the new address for such service.
7. This action is dismissed against all remaining Doe Defendants.