Opinion
MEMORANDUM & ORDER RE: PLAINTIFF'S MOTION FOR PRELIMINARY INDUNCTION
MARILYN PATEL, Chief District Judge.
On February 9, 2005, plaintiff Sutter Home Winery, Inc. brought this trademark infringement action against defendant Madroña Vineyards, L.P. In its complaint, plaintiff asserts that defendant's use of the mark "Melange de Trois" in connection with the sale of wine violates section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Now before the court are plaintiff's motion for a preliminary injunction and defendant's motion to stay or dismiss the instant action pursuant to Colorado River Water Conservation District v. United States , 424 U.S. 800 (1976). Having considered the parties' arguments and for the reasons stated below, the court enters the following memorandum and order.
BACKGROUND
Plaintiff Sutter Home Winery, Inc. is a California winery that sells and distributes multiple brands of wine throughout the United States. Torkelson Decl. ¶ 2. Plaintiff currently uses the mark "Menage à Trois" to sell white, red, and rose wines under the "Folie à Deux" label, a brand that it acquired from Winery Asset Management, Inc. in June 2004. Id. ¶ 2; Gerien Decl. ¶ 2. "Menage à Trois" wines have been continuously sold in the United States since 1997 and are now available for purchase in forty-seven states at a retail price of approximately $12 per bottle. Torkelson Decl. ¶¶ 3, 15. The wines are sold at retail outlets (known in the trade as "off-premises" sales) and at restaurants and bars (i.e., "on premises") and are also distributed directly to consumers via plaintiff's tasting room and website. Id. ¶ 3. To promote the "Menage à Trois" brand, plaintiff relies on a number of advertising methods, including direct mail to restaurants and bars, in-store advertising, and the distribution of promotional items such as t-shirts, pens, and corkscrews. Id. ¶¶ 4-6, 8-10. In addition, plaintiff promotes its wines through professional wine-tasting competitions and consumer wine-tasting events. Id. ¶ ¶ 7, 11. To date, sales of "Menage à Trois" wine have exceeded 80, 000 cases, with a total retail dollar sales volume of approximately $12 million. Id. ¶ 15.
Defendant operates a small winery located in El Dorado County, California. Among defendant's products is a white wine sold under the label "Melange de Trois" and retailing at approximately $16 per bottle. Gerien Decl. ¶ 15. The first bottling of "Melange de Trois" wine took place in 2001, and in Spring 2003, both the 2001 and 2002 vintages were released for sale. M. Bush Decl. ¶ 3. The 2003 vintage was released in 2004. Id. To date, defendant has produced a total of 1, 711 cases of "Melange de Trois, " and 323 cases remain unsold. Id. ¶ 4.
The primary distribution channels through which defendant sells "Melange de Trois" wine are its Camino, California tasting room and mail order sales to "wine club" members. P. Bush Decl. ¶ 13; M. Bush Decl. ¶¶ 8-10. Defendant also sells "Melange de Trois" to wholesalers in Southern California and outside the state of California and sells a small quantity of wine directly to consumers via mail and telephone. M. Bush Decl. ¶¶ 9-10. In addition, there is evidence "Melange de Trois" is sold "on premises, " Gerien Decl., Exh. 16, although nothing in the record indicates that defendant directly distributes or markets its wine to bars or restaurants. In marketing its wines, defendant relies primarily on professional wine-tasting competitions and on consumer wine-tasting events that it sponsors in California and a number of other states. Id. ¶¶ 18-19. Defendant also maintains a website on which its wines are advertised. Id. Although defendant does not sell wine online, its website enables consumers to purchase "Melange de Trois" by downloading a printed order form and returning it to defendant via mail or facsimile. M. Bush Decl. ¶ 8.
Prior to the release of the first vintage of "Melange de Trois, " on August 26, 2002, Winery Asset Management sought to register the mark "Menage à Trois" with United States Patent and Trademark Office ("PTO"). Gerien Decl. ¶ 3. The processing of this application is currently suspended pending the outcome of an application by Chatham International, Inc. to register "Menage à Trois" for use in connection with the sale of a prepared alcoholic cocktail. Id. Chatham's "intent to use" application for the mark was filed on April 18, 2002. Id.; see 15 U.S.C. § 1051(b). Through what appear to be the inadvertent error of counsel, Winery Asset Management failed to oppose Chatham's application based on its prior rights in the mark. Gerien Decl. ¶ 3. While its application remains pending before the PTO, nothing in the record suggests that Chatham has ever used the "Menage à Trois" mark in commerce. See id.
Meanwhile, in April 2004, Winery Asset Management became aware of defendant's use of the "Melange de Trois" mark during a routine search of "certificates of label approval" issued by the United States Alcohol Tax and Trade Bureau. Gerien Decl. ¶ 4. Upon making this discovery, Winery Asset Management sent defendant a letter asserting its right to use the "Menage à Trois" mark for wine and requesting that defendant suspends sales of wine under "Melange de Trois" label. Id., Exh. 3. A similar "demand letter" was sent by plaintiff on January 14, 2005, after it had acquired the rights to the "Menage à Trois" mark. Id., Exh. 6. After receiving the January 2005 letter, defendant initiated a state court action seeking a declaration that its use of the phrase "Melange de Trois" does not infringe on plaintiff's trademark rights. Id., Exh. 7. That action was filed on January 21, 2005 and is currently pending in El Dorado County Superior Court.
On February 9, 2005, plaintiff filed the instant trademark infringement action in this court. In its complaint, plaintiff asserts that defendant's sale of "Melange de Trois" wine infringes upon its rights in the "Menage à Trois" mark, thereby giving rise to a claim for unfair competition and trademark infringement under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). On February 11, 2005, plaintiff filed a motion seeking to preliminarily enjoin defendant from using the phrase "Melange de Trois" in connection with the sale of wine. Defendant opposes that motion and also moves to stay or dismiss the instant action under the Colorado River doctrine. Both of the parties' motions are now before the court.
LEGAL STANDARD
"A preliminary injunction is a provisional remedy, the purpose of which is to preserve status quo and to prevent irreparable loss of rights prior to final disposition of the litigation." Napa Valley Publ'g Co. v. City of Calistoga , 225 F.Supp.2d 1176, 1180 (N.D. Cal. 2002) (Chen, Mag. J.) (citing Sierra On Line, Inc. v. Phoenix Software, Inc. , 739 F.2d 1415, 1422 (9th Cir. 1984)). In light of these considerations, a plaintiff seeking preliminary injunctive relief must demonstrate either: "(1) a likelihood of success on the merits and the possibility of irreparable injury; or (2) that serious questions going to the merits [have been] raised and the balance of hardships tips sharply in [the plaintiff's] favor." Southwest Voter Registration Educ. Project v. Shelley , 344 F.3d 914, 917 (9th Cir. 2003) (en banc) (per curiam) (citing Clear Channel Outdoor, Inc. v. City of Los Angeles , 340 F.3d 810, 813 (9th Cir. 2003)); see also Sun Microsystems, Inc. v. Microsoft Corp. , 188 F.3d 1115, 1119 (9th Cir. 1999). The components of these two tests, together with the added consideration of the public interest, operate on a sliding scale or "continuum." Southwest Voter , 344 F.3d at 918. Consequently, "the less certain the district court is of the likelihood of success on the merits, the more plaintiffs must convince the district court that the public interest and balance of hardships tip in their favor." Id. (citation omitted); see also Miller v. California Pac. Med. Ctr. , 19 F.3d 449, 456 (9th Cir. 1994) (en banc) (citations omitted).
As in any other civil proceeding, the likelihood of success on the merits and the balance of hardships are the critical considerations in determining whether a preliminary injunction should issue in a trademark infringement action. See, e.g., Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc. , 109 F.3d 1394, 1406 (9th Cir.), cert. dismissed, 521 U.S. 1146 (1997). To prevail on the merits of a trademark infringement claim, a plaintiff must establish "that the defendant's use of its mark gives rise to a likelihood of confusion' in the consuming public." Metro Publ'g, Ltd. v. San Jose Mercury News , 987 F.2d 637, 640 (9th Cir. 1993) (quoting E. & J. Gallo Winery v. Gallo Cattle Co. , 967 F.2d 1280, 1290 (9th Cir. 1992)). "Once the plaintiff has demonstrated a likelihood of confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive relief is not granted." Brookfield Communications, Inc. v. West Coast Entm't Corp. , 174 F.3d 1036, 1066 (9th Cir. 1999) (quoting Metro Publ'g , 987 F.2d at 640). Such an injunction may issue even if the plaintiff's mark has not been registered with the PTO. Metro Publ'g , 987 F.2d at 640 (citing New West Corp. v. NYM Co. , 595 F.2d 1194, 1198 (9th Cir. 1979)) ("It is not necessary that a trademark be registered in order for it to qualify for protection under the Lanham Act.").
DISCUSSION
Plaintiff's motion calls upon the court to determine whether it should preliminary enjoin defendant from using the "Melange de Trois" mark in connection with the sale of wine. As noted above, plaintiff's entitlement to equitable relief depends on the likelihood that it will succeed on the merits of its trademark infringement claim, which, if established, gives rise to a presumption of irreparable injury. See Brookfield , 174 F.3d at 1046, 1066. Alternatively, the court may grant plaintiff's request for injunctive relief if its motion raises serious questions going to the merits and the balance of hardships tips sharply in plaintiff's favor. See Mattel, Inc. v. Greiner & Hausser GmbH , 354 F.3d 857, 869 (9th Cir. 2003) (citing Meredith v. Oregon , 321 F.3d 807, 815 n. 8 (9th Cir. 2003)). However, as a preliminary matter, the court must address defendant's motion to stay or dismiss the instant action in deference to the declaratory judgment action that defendant has filed in El Dorado County Superior Court.
Defendant asserts that the phrase "Melange de Trois" is merely descriptive of the composition of its wine and thus is not being used as a trademark. However, even a descriptive phrase may function as trademark to the extent that it is "used by a source of a product to identify itself to the public as the source of its product and to create in the public consciousness an awareness of the uniqueness of the source." Sands, Taylor & Wood Co. v. Quaker Oats Co. , 978 F.2d 947, 953 (7th Cir. 1992) (citation and original alterations omitted), cert. denied, 507 U.S. 1042 (2003). Although the court need not decide whether defendant employs the phrase "Melange de Trois" in such a fashion for purposes of adjudicating the instant motion, it nonetheless refers to the phrase as a mark or a trademark for the sake of clarity and convenience. Furthermore, because it does not reach the issue of whether "Melange de Trois" is being used as a trademark, the court need not address the objections to evidence that defendant has raised in response to plaintiff's submissions concerning the subject.
I. Defendant's Motion to Stay or Dismiss
In addition to opposing plaintiff's motion for a preliminary injunction of the merits, defendant urges the court to stay or dismiss the instant action under the "Colorado River doctrine." In Colorado River, the Supreme Court recognized that considerations of judicial economy may warrant the stay or dismissal of a federal lawsuit pending the resolution of concurrent state court proceedings. 424 U.S. at 813-14 , 817-18. However, because federal courts have "a virtually unflagging obligation... to exercise the jurisdiction given them, " id. at 817 (citations omitted), the Court cautioned that only "exceptional circumstances" can justify departure from this general rule. Id. at 813 (quoting County of Allegheny v. Frank Mashuda Co. , 360 U.S. 185, 188-89 (1959)). In determining whether such exceptional circumstances are present, courts have considered a number of factors, including: (1) whether the state or federal court has assumed jurisdiction over a res; (2) the relative convenience of the forums; (3) the desirability of avoiding piecemeal litigation; (4) the order in which the forums obtained jurisdiction; (5) whether state or federal law controls; and (6) whether the state proceeding is adequate to protect the parties' rights. Nakash v. Marciano , 882 F.2d 1411, 1415 (9th Cir. 1989) (citations omitted). In all cases, the party seeking stay or dismissal carries a "heavy burden" of establishing the propriety of such an order. See, e.g., Midkiff v. Tom , 702 F.2d 788, 801 (9th Cir. 1983), rev'd on other grounds, Hawaii Hous. Auth. v. Midkiff , 467 U.S. 229 (1984).
Relying on Colorado River, defendant argues that stay or dismissal of the instant action is warranted in light of the pending state court proceedings in which defendant seeks a declaration of its right to use the "Melange de Trois" mark in connection with the sale of wine. Certainly, at least one of the aforementioned factors that would support a stay, the desirability of avoiding piecemeal litigation, is present here. However, if the mere fact that proceedings between the parties to a federal suit were pending in state court were sufficient to justify the stay or dismissal of a federal action, abstention under Colorado River would be the rule rather than the exception to the general principle that a district court is obligated to exercise the jurisdiction that has been conferred upon it. See Colorado River , 424 U.S. at 813; Holder v. Holder , 305 F.3d 854, 863 (9th Cir. 2002). If anything, the "exceptional circumstances" present here counsel against application of the Colorado River doctrine. Indeed, defendant chose to file its state court complaint only after the threat of litigation involving questions of federal trademark law became readily apparent. Such a preemptive declaratory action is little more than an attempt to deprive plaintiff of the opportunity to seek redress for violations of federal law in a federal forum. Under such circumstances, the court must heed the Supreme Court's counsel and recognize its "virtually unflagging obligation" to exercise its jurisdiction. See Colorado River , 424 U.S. at 821. Accordingly, the court must deny defendant's motion to stay or dismiss.
In its opposition to plaintiff's motion, defendant also suggests that venue in this court is improper under 28 U.S.C. § 1391(b) because only a small percentage of the allegedly infringing wine sales were shipped to this district. Under section 1391(b), venue in a federal question action is proper, inter alia, in any district "in which a substantial part of the events or omissions giving rise to the claim occurred." 28 U.S.C. § 1391(b)(2). In a trademark infringement action, "the actionable wrong takes place both where infringing labels are affixed to the goods and where confusion of purchasers is likely to occur." Make Up For Ever, S.A. v. SOHO Forever, LLC 198 F.R.D. 56 , 61 (S.D.N.Y. 2000) (citation omitted); see also Sykes Lab., Inc. v. Kalvin , 610 F.Supp. 849, 860 n.8 (C.D. Cal. 1985) (observing that trademark infringement occurs in the district "where the passing off occurs, i.e., where the deceived customer buys the defendant's product in the belief that he is buying the plaintiff's") (citation omitted). While it is true that defendant's wine is produced in the Eastern District of California and its sales in this district appear to be relatively modest, neither of these facts eliminates the possibility that some potential purchasers of plaintiff's wine who reside in this district may be confused by defendant's use of the "Melange de Trois" mark. See Radical Prods., Inc. v. Sundays Distrib. , 821 F.Supp. 648, 649-50 (W.D. Wash. 1992) (finding venue over a trademark infringement claim to be proper on the ground that the defendant had mailed brochures describing its product to the district in which action was filed); Sidco Indus., Inc. v. Wimar Tahoe Corp. , 768 F.Supp. 1343, 1346-47 (D. Or. 1991) (finding venue proper in Oregon based on the fact any impact on the plaintiff's business that would result from an out-of-state defendant's advertising directed at Oregon consumers was likely to occur in that state). Consequently, the fact that a substantial number of consumers of plaintiff's wine who reside in this district may be confused by defendant's use of the "Melange de Trois" mark is sufficient to establish the this jurisdiction is a proper venue for the adjudication of plaintiff's claim. Although the court does not foreclose the possibility that a different conclusion might be warranted upon consideration of a more complete record, it is enough to note for purposes of the instant motion that defendant's improper venue argument does not appear sufficient to prevent the court from reaching the merits of plaintiff's request for preliminary injunctive relief.
II. Likelihood of Success on the Merits
Having found it appropriate to exercise jurisdiction over plaintiff's request for a preliminary injunction, the court must consider whether plaintiff is likely to prevail on the merits of its trademark infringement claim. For the purpose of determining whether preliminary injunctive relief is warranted, the court assumes without deciding that plaintiff's mark is valid and focuses on whether defendant's use of the "Melange de Trois" mark is likely to cause consumer confusion. See Brookfield , 174 F.3d at 1053 (quoting Official Airline Guides, Inc. v. Goss , 6 F.3d 1385, 1391 (9th Cir. 1993)) (characterizing the likelihood of confusion inquiry as "[t]he core element of trademark infringement"). A likelihood of confusion exists "when consumers are likely to assume that a product or service is associated with a source other than its actual source because of similarities between the two sources' marks or marketing techniques." Nutri/System, Inc. v. Con-Stan Indus., Inc. , 809 F.2d 601, 604 (9th Cir. 1987) (quoting Shakey's Inc. v. Covalt , 704 F.2d 426, 431 (9th Cir. 1983)). In AMF, Inc. v. Sleekcraft Boats , 599 F.2d 341 (9th Cir. 1979), the Ninth Circuit listed eight factors to be considered as part of the consumer confusion inquiry. Id. at 348-49. These "Sleekcraft factors" include: (1) the similarity of the marks; (2) the strength of the plaintiff's mark; (3) the relatedness or proximity of the goods; (4) the marketing channels used by each party; (5) the degree of care likely to be exercised by the purchaser; (6) the defendant's intent in selecting the mark; (7) evidence of actual confusion; and (8) the likelihood of expansion of the parties' product lines. Id.; see also Brookfield , 174 F.3d at 1053-54. The following discussion applies these factors to the case at bar.
For reasons that will become apparent in the discussion that follows, defendant's argument that the "Menage à Trois" mark is not protectable under the Lanham Act because it is comprised of "immoral" or "scandalous" matter need not be addressed at this time. See 15 U.S.C. § 1052(a).
A. Application of the Sleekcraft Factors
1. Similarity of the Marks
The first Sleekcraft factor, the similarity of the parties' marks, is "the most crucial factor in determining the likelihood of confusion." Newsguy, Inc. v. Yomtobian, No. C 04-0811 CRB, 2004 WL 2944051, at *4 (N.D. Cal. Dec. 20, 2004) (Breyer, J.) (quoting Golden West Fin. v. WMA Mortgage Servs., Inc., No. C 02-5727 CRB , 2003 WL 1343019, at *4 (N.D. Cal. Mar. 13, 2003) (Breyer, J.)); see also Go To.com, Inc. v. Walt Disney Co. , 202 F.3d 1199, 1205 (9th Cir. 2000) (noting that "the similarity of the marks [] has always been considered a critical question in the likelihood-of-confusion analysis"). In comparing the parties' marks, the court must focus on how each of the marks are perceived by the ordinary consumer in the marketplace, taking into account similarities in the marks' appearance and pronunciation as well as their respective definitions. See Brookfield , 174 F.3d at 1054; Dreamwerks Prod. Group, Inc. v. SKG Studio , 142 F.3d 1127, 1131 (9th Cir. 1998). The "greater the similarity between the two marks at issue, the greater the likelihood of confusion." Go To.com , 202 F.3d at 1206.
Here, the court's attempt to evaluate the similarity of the relevant marks from the perspective of the average American wine purchaser is complicated by the fact that both marks are comprised of French words. Literally translated, plaintiff's "Menage à Trois" mark refers to a household ("menage") of three ("trois"), although it commonly connotes a sexual relationship involving three persons. By way of comparison, defendant's "Melange de Trois" means a "blend of three, " a name that is intended both to reflect the fact that the wine is a blend of three grape varietals and to evoke the French origin of the Rhône varietals from which the wine is made. These definitions are distinctly different and would be perceived as such by anyone with even a passing familiarity with the French language.
The inquiry into the similarity of the two marks does not end there, however. As plaintiff points out, the sound and appearance of the two marks differ only in the substitution of two consonants in "Melange" vis-à-vis "Menage" and in the replacement of the preposition "de" with the word "à" as the second word of the marks. Plaintiff argues that these phonetic and orthographic parallels are sufficient to induce confusion in the average American consumer, who, being stubbornly monolingual, is unlikely to perceive the marks as anything more than "French-sounding" words.
In addressing the merits of plaintiff's argument, the court is guided by the so-called "doctrine of foreign equivalents." Under the doctrine, foreign words from common languages are translated into English before undertaking the confusing similarity analysis. Palm Bay Imps., Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772 , 396 F.3d 1369, 1377 (Fed Cir. 2005) (citing In re Sarkli, Ltd. , 721 F.2d 353 (Fed. Cir. 1983) and In re American Safety Razor Co. , 2 U.S.P.Q.2d 1459, 1460 (T.T.A.B. 1987)). However, the doctrine does not apply to every foreign word that appears in a trade- or service mark. Indeed, the Federal Circuit has characterized the doctrine as a "guideline" rather than an "absolute rule, " observing that "it should be applied only when it is likely that the ordinary American purchaser would stop and translate the [foreign] word into its English equivalent." Id. (quoting In re Pan Tex Hotel Corp. , 190 U.S.P.Q. 109, 110 (T.T.A.B. 1976)) (internal quotation marks and original alterations omitted).
The Ninth Circuit has yet to opine on the applicability of the doctrine of foreign equivalents. However, the doctrine is well-established in trademark registration proceedings. See, e.g., Palm Bay Imps. , 396 F.3d at 1377; In re Consolidated Cigar Corp. , 13 U.S.P.Q.2d 1481, 1484 (T.T.A.B. 1989); In re American Safety Razor Co. , 2 U.S.P.Q.2d at 1460. In addition, a number of courts, including the Second, Fourth, and Fifth Circuits, have applied the doctrine in the context of trademark infringement actions. See Enrique Bernat F., S.A. v. Guadalajara, Inc. , 210 F.3d 439, 443-44 (5th Cir.), reh'g and reh'g en banc denied, 218 F.3d 745 (5th Cir. 2000); Otokoyama Co. Ltd. v. Wine of Japan Imp., Inc. 175 F.3d 266 , 271 (2d Cir. 1999); Pizzeria Uno Corp. v. Temple , 747 F.2d 1522, 1531 (4th Cir. 1984). This court sees no reason to depart from the weight of precedent and thus follows the rules that these courts have developed in applying the doctrine.
That said, there is no authoritative guidance on the question of whether the doctrine of foreign equivalents applies where, as here, both of the relevant marks are of foreign origin. The typical doctrine of foreign equivalents case involves the comparison of one foreign-word mark to a mark written in English, and there is some authority to suggest that the doctrine is operative only under those circumstances. See, e.g., Safeway Stores, Inc. v. Bel Canto Fancy Foods, Ltd. , 5 U.S.P.Q.2d 1980, 1982 (T.T.A.B. 1987) (quoting 2 J. Thomas McCarthy, Trademarks and Unfair Competition, § 23:14, at 80 (2d ed. 1984)) ("If the two marks alleged to be confusingly similar are both foreign words, it may be that the doctrine of foreign equivalents is not applicable.") (original alteration omitted). However, another view would hold the doctrine to apply with equal force to the instant action despite the fact that the likelihood of confusion inquiry here entails the comparison of two foreign-word marks. As the Trademark Trial and Appeal Board observed in In re Lar Mor International, Inc. , 221 U.S.P.Q. 180 (T.T.A.B. 1983), "the fact that both marks may be comprised of foreign words should not mean that [a court] can disregard their meanings." Id. at 181. The court went onto compare the English-language equivalent of the mark "Tres Jolie"-roughly speaking, "exceptionally beautiful"-with that of the mark "Bien Jolie, which the court translated as "quite pretty, " and concluded that the two marks were not confusingly similar. Id. at 181-83. In reaching this conclusion, the court relied on the fact that "many members of the American public, even those who have only a rudimentary acquaintance with the French language, are likely to understand the significance of the respective terms." Id. at 181. Again, the question is whether the consumer is likely to translate the foreign words. "When it is unlikely that an American buyer will translate the foreign mark and will take it as is, then the doctrine of foreign equivalents will not be applied." Palm Bay Imps. , 396 F.3d at 1377.
The court finds this analysis to be conceptually sound. Indeed, as the above-cited passage demonstrates, La Mor's reliance on the doctrine of foreign equivalents to compare two foreign-word marks is merely an application of the general rule that two marks are confusingly similar only when their use "would cause confusion of any appreciable number of ordinary prudent purchasers as to source of the goods." See Plough, Inc. v. Kreis Labs. , 314 F.2d 635, 641 (9th Cir. 1963). This inquiry in turn depends on whether an "appreciable number of purchasers in the United States, " who courts presume to speak English as well as the pertinent foreign language, will understand the meaning of the foreign-word mark at issue and translate that mark into its English equivalent. See Palm Bay Imps. , 396 F.3d at 1377; (citation omitted); see also In re Oriental Daily News, Inc. , 230 U.S.P.Q. 637, 638 (T.T.A.B. 1986) (refusing registration of a Chinese-language mark on the ground that a "sizable number" of American consumers who are familiar with both the Chinese and English languages would be likely to perceive the mark as merely descriptive). The court finds this standard applicable to the instant action and thus must consider whether an appreciable number of United States consumers of the parties' products would understand the meaning of the phrases "menage à trois" and "melange de trois."
As noted above, plaintiff argues that this precondition to applying the doctrine of foreign equivalents is not met here, asserting that the typical wine purchaser perceives the parties' marks as little more than "French-sounding" words. However, plaintiff's "Menage à Trois" mark is so commonly used and understood that it could just as aptly be characterized as part of the lexicon of American English as it could be considered a foreign-language expression. The French words that comprise defendant's mark are almost as widely understood, particularly if one focuses on likely purchasers of the parties' wines. As defendant points out, the word "melange" is commonly used to describe wines such as defendant's "Melange de Trois" that are comprised of a blend of more than one grape varietal. Maguire Decl., Exh. C. And of course, anyone with even a passing familiarity with the French language would understanding the meaning of "de trois." Thus, the English-language definitions of the parties' marks are both familiar to an appreciable number of likely purchasers of the parties' products. The court therefore concludes that the dissimilar meaning of the parties' marks reduces the likelihood that consumers will be confused by defendant's use of the phrase "Melange de Trois" in connection with the sale of wine.
Against these clearly different meanings, the court must weigh considerations of sound and appearance. See Horn's, Inc. v. Sanofi Beaute, Inc. , 963 F.Supp. 318, 323 (S.D.N.Y. 1997) (quoting 3 J. Thomas McCarthy, Trademarks and Unfair Competition § 23:37, at 23-84 (4th ed. 1996)) (observing that even where the English translation of a foreign mark is used to determine similarity of meaning, "the foreign mark is used when examining similarity in sight and sound"). Plaintiff notes that the marks are each four syllables long and are consonant in significant respects. It is true that the confusion caused by these similarities in sound and appearance might in certain circumstance be mitigated by the information provided by the parties' trade dress and the use of other trademarks in association with the marks at issue here (e.g., "Madroña Vineyards" or "Folie à Deux"). However, while the "[u]se of differing names or distinctive logos in connection with similar marks can reduce the likelihood of confusion, " it does not always do so. Fuddruckers, Inc. v. Doc's B.R. Others, Inc. , 826 F.2d 837, 846 n.13 (9th Cir. 1987) (citation omitted). Plaintiff correctly points out that differences in trade dress and, to a lesser extent, differences in brand, cannot be relied on to distinguish the parties' products in an "on premises" setting, where consumers may order a glass of wine at a bar or make their purchasing decisions based on a restaurant wine list. Thus, it is certainly possible that some consumers, upon viewing or hearing the two marks, would be confused by their phonetic and orthographic similarity, although it is worth noting that wine lists, even by the glass, usually include the source of the wine.
In short, the court finds that a comparison of the definitions of the parties' marks weighs against a conclusion that consumer confusion is likely, whereas considerations of orthography and phonetics favor plaintiff's claim that the marks are confusingly similar. Balancing these disparate findings, the court concludes that the similarity of the parties' marks does not strongly favor either party. However, in the absence of any evidence in the record as it now stands that would quantify these conflicting inferences, the court finds that on balance this factor tips slightly in defendant's favor.
2. Strength of Plaintiff's Mark
The second Sleekcraft factor is the strength of plaintiff's "Menage à Trois" mark. The strength of protection afforded to a trademark is proportionate to the likelihood that the public will remember the mark and associate it with the source of the trademarked goods. GoTo.com, 202 F.3d at 1207 (citing Kenner Parker Toys, Inc. v. Rose Art Indus., Inc. , 963 F.2d 350, 353 (Fed. Cir. 1992)). Both the "conceptual" and "commercial" strength of the mark must be considered in this analysis. Id. The first of these considerations, the mark's "conceptual strength, " involves the familiar classification of trade- or service marks along a spectrum of increasing distinctiveness, in which marks are categorized as generic, descriptive, suggestive, and arbitrary or fanciful. Id.; see also Brookfield , 174 F.3d at 1058. Where a particular mark falls along this spectrum is determined based on two factors, which the Ninth Circuit has characterized as an "imagination test" and a "need test." Earthquake Sound Corp. v. Bumper Indus. , 352 F.3d 1210, 1221 n.4 (9th Cir. 2003) (quoting Miss World (UK) Ltd. v. Mrs. America Pageants, Inc. , 856 F.2d 1445, 1449 (9th Cir. 1988)). The "imagination test" asks "how much imagination a consumer must use to associate a given mark with the goods or services it identifies, " with greater effort on the consumer's part corresponding to a stronger mark. Id. The "need test" requires the court to consider whether "a mark is actually needed by competitors to identify their goods or services." Id.
Applying these two tests to plaintiff's "Menage à Trois" mark, it is clear that the phrase "menage à trois" is neither obviously associated with wine nor necessary to identify wine as a product sold in the marketplace. As noted above, plaintiff's mark commonly refers to a sexual relationship involving three partners. While it is true that the use of the word "trois" is evocative of the fact "Menage à Trois" wines are comprised of three grape varietals, it takes quite a leap of imagination to associate plaintiff's products (wine) with the connotative meaning of the phrase. For similar reasons, plaintiff's appropriation of "Menage à Trois" for use in connection with the sale of its wines does not meaningfully limit the ability of its competitors to describe their own products. Arguably, plaintiff's use of the word "trois" to refer to the three-varietal composition of its product could limit the ability of other vintners to describe their own three-varietal cuvees. However, it is axiomatic that such "dissection" of a trademark has no place in a likelihood of confusion analysis. See, e.g., Dep Corp. v. Opti-Ray, Inc. , 768 F.Supp. 710, 714 (C.D. Cal. 1991) ("When determining the strength of trademarks, the marks are to be considered as a whole without dissection into individual components.") (citation omitted); see also GoTo.com, 202 F.3d at 1207 (citing California Cooler, Inc. v. Loretto Winery, Ltd. , 774 F.2d 1451, 1455 (9th Cir. 1985)) (observing that in determining the strength of a plaintiff's mark, a court must consider "the mark in its entirety" rather than simply examining "individual elements" of that mark). When viewed as a whole, there is simply no reason to believe that the phrase "menage à trois" has anything to do with wine or is in any way necessary to describe wines made from three grape varietals. Thus, plaintiff's mark is conceptually strong.
As with the confusing similarity analysis, the doctrine of foreign equivalents requires courts to translate foreign words from common languages into English for the purpose of determining the strength of a foreign-word mark. See Palm Bay Imps. , 396 F.3d at 1377.
On the spectrum of distinctiveness, plaintiff's mark is at least suggestive-i.e., suggesting a blend of three grapes. However, considering the mark in its entirety, see Go To.com , 202 F.3d at 1207, the relationship between the phrase "menage à trois" and a wine comprised of three grape varietals is more appropriately viewed as arbitrary. See Interstellar Starship Servs, Ltd. v. Epix, Inc. ("Interstellar Starship II") , 304 F.3d 936, 943 n.6 (9th Cir. 2002) (citing Abercrombie & Fitch Co. v. Hunting World, Inc. , 537 F.2d 4, 9 (2d Cir. 1976) (Friendly, J.)) (defining arbitrary trademarks as "common words used in uncommon or unexpected ways").
Furthermore, even if plaintiff's mark were not conceptually distinctive, it is possible for a mark to acquire "commercial strength" through use in commerce. See GoTo.com, 202 F.3d at 1207; Playmaker, LLC v. ESPN, Inc. , 297 F.Supp.2d 1277, 1281 (W.D. Wash. 2003), aff'd, 376 F.3d 894 (9th Cir. 2004). The "Menage à Trois" mark has been continuously used in connection with the sale of wine since 1997, and plaintiff and its predecessor-in-interest, Winery Asset Management, have sold over 120, 000 cases of wine under the mark during that period. Torkelson Decl. ¶ 15. Together with evidence of substantial "Menage à Trois"-related promotional efforts undertaken by plaintiff and its predecessor-in-interest, see id. ¶¶ 3-10, the extensive sales of "Menage à Trois"-labeled wine support a conclusion that plaintiff's mark is commercially as well as conceptually strong. The court therefore finds that the "strength of mark" factor favors plaintiff.
3. Relatedness or Proximity of the Goods
The third Sleekcraft factor to be considered is the relatedness or proximity of the parties' goods. This factor reflects the common-sense intuition that the danger of consumer confusion is heightened where goods are related or complimentary. See E. & J. Gallo , 967 F.2d at 1291 (citing AMF , 599 F.2d at 350). The Ninth Circuit defines "relatedness" broadly, typically requiring only that the parties participate in the same general industry. See, e.g., Dreamwerks , 142 F.3d at 1128, 1131 (finding relatedness where the plaintiff's business was organizing Star Trek conventions and the defendant was a film studio that "participates more generally in the entertainment business"); American Int'l Group, Inc. v. American Int'l Bank , 926 F.2d 829, 832-33 (9th Cir. 1991) (finding a potential for consumer confusion where the parties both provided "financial services"). Direct competition between the parties is not required. See American Int'l Group , 926 F.2d at 832.
Here, both plaintiff and defendant sell premium California wines. Moreover, the products at issue directly compete in the same general price range, with defendant's wine priced at $16 per bottle and plaintiff's wines retailing at approximately $12 per bottle. The court therefore finds that the close proximity of the parties' products increases the likelihood of consumer confusion.
4. Marketing Channels Used
The fourth Sleekcraft factor requires the court to examine the marketing channels that each of the parties uses to sell and advertise its goods or services. "Convergent marketing channels increase the likelihood of confusion." Official Airline Guides , 6 F.3d at 1393 (quoting Nutri/System , 809 F.2d at 606). Similarity of the parties' advertising methods is also considered as part of this inquiry. Nutri/System , 809 F.2d at 606 (citing Pizzeria Uno , 747 F.2d at 1535).
While both parties to the instant action sell wine, there are substantial differences in how they go about the task of doing so. These differences largely reflect the fact that plaintiff operates a large winery that sells and distributes multiple brands of wine throughout the United States, whereas defendant is a family winemaker whose marketing literature emphasizes its "commitment to small-batch, high-integrity winemaking." Gerien Decl., Exh. 12. Consequently, while plaintiff sells "Menage à Trois" wine through a variety of wholesale and retails outlets as well selling directly to consumers at its tasting room and via the Internet, see Torkelson Decl. ¶ 3, defendant relies primarily on sales at its Camino, California tasting room and on sales to wine clubs. P. Bush Decl. ¶ 13. Defendant also sells an unspecified quantity of "Melange de Trois" wine to wholesalers in Southern California and outside the state of California. M. Bush Decl. ¶ 10.
Despite the significant differences in how the parties distribute their respective products, plaintiff correctly observes that there is some overlap in the marketing channels that the parties use, noting that both plaintiff and defendant sell their wines via wholesaler distributors and at their tasting rooms. Although the court agrees with plaintiff's contention that the wholesale distribution is a common marketing channel that increases the likelihood of consumer confusion, it finds evidence that both parties sell wine at their tasting rooms to be only marginally relevant to the consumer confusion inquiry. As defendant correctly observes, it will be the rare customer who purchases wine at the Sutter Home or Madroña Vineyards tasting rooms without realizing that the proprietor of the tasting room is the source of the wines offered for sale on the premises. Thus, even if this marketing channel is nominally convergent, that fact does not support an inference that consumer confusion is likely.
Plaintiff also notes that both parties use their websites to market their wines. However, the Ninth Circuit has cautioned that "[s]ome use of the Internet for marketing... does not alone and as a matter of law constitute overlapping marketing channels." Entrepreneur Media, Inc. v. Smith , 279 F.3d 1135, 1151 (9th Cir. 2002) (original emphasis omitted). Rather, the court's examination of the parties use of the Internet must focus on "whether both parties use the Web as a substantial marketing and advertising channel, whether the parties' marks are utilized in conjunction with Web-based products, and whether the parties' marketing channels overlap in any other way." Id. (citations and internal quotation marks omitted). Obviously, wine is not a "Web-based product, " and nothing in the record suggests that online sales account for a substantial percentage of either party's revenues. Indeed, defendant's wines are not even available for online purchase; the prospective customer visiting its website can only place an order by downloading a printed form and returning it to defendant via mail or facsimile. M. Bush Decl. ¶ 8. Thus, while it is true that there is some limited degree of overlap in the parties' non-Internet marketing channels, the court finds that considerations set forth in Entrepreneur Media on balance counsel against assigning the parties' online marketing efforts any great significance in the likelihood of confusion analysis. Accord Playboy Enters., Inc. v. Netscape Communications Corp. , 354 F.3d 1020, 1028 (9th Cir. 2004) (concluding that in light of the "broad use of the Internet today, " the fact both parties maintained websites "merit[ed] little weight" in the consumer confusion analysis).
Although plaintiff cites Interstellar Starship Services, Ltd. v. Epix, Inc. ("Interstellar Starship I") , 184 F.3d 1107 (9th Cir. 1999), cert. denied, 528 U.S. 1155 (2000), for the proposition that maintenance of websites by both parties is by itself sufficient to establish convergence of marketing channels, the Ninth Circuit's conclusory statement concerning the identity of the parties' marketing channels in that case was hardly so sweeping. Indeed, nothing in Interstellar Starship I suggests that the court considered whether either party used any marketing channel other than the Internet. See id. at 1110. It is thus hardly surprising that the court concluded that such an identity of marketing channels supported a finding of consumer confusion. See id. That situation is clearly not present in the instant action, and subsequent Ninth Circuit decisions make clear that a different conclusion is warranted where, as here, there are significant differences in the non-Internet marketing channels used by the parties, neither party is marketing a "Web-based product, " and it is far from clear that either party's online marketing efforts are substantial. See Entrepreneur Media , 279 F.3d at 1151; see also Playboy Enters. , 354 F.3d at 1028. The court thus finds Interstellar Starship I to be inapposite to the case at bar.
The same is true with respect to the other methods that the parties employ to advertise their respective products. In addition to its aforementioned website, plaintiff relies on a range of media to advertise "Menage à Trois" wine, including in-store advertising in retail establishments, direct mail to bars and restaurants, and the distribution of promotional items such as t-shirts, pens, and corkscrews. Torkelson Decl. ¶¶ 4-10. In contrast, defendant promotes its wines primarily through professional wine-tasting competitions and consumer wine-tasting events. Gerien Decl. ¶¶ 18-19. Plaintiff cites its own participation in wine-tasting competitions and its sponsorship of consumer wine tastings as evidence that the parties use convergent advertising channels, Torkelson Decl. ¶¶ 7, 12, and the court agrees that the parties' promotional efforts do overlap to a certain extent. However, once again, the overall picture suggests that the parties, driven primarily by difference in the scale of their respective enterprises and the consequent difference in resources available to promote their products, have chosen to advertise those products in significantly different ways. The court finds that these differences weigh against finding a likelihood of consumer confusion. Thus, having already concluded that differences in the manner in which the parties distribute their products support a similar inference, the court finds that the "marketing channels" factor favors defendant.
5. Degree of Care Likely to Be Exercised by the Purchaser
The next factor to be considered is the degree of care that a consumer is likely to exercise in purchasing the parties' products. The court views the parties' products from the standpoint of "typical buyer exercising ordinary caution." Sleekcraft , 599 F.2d at 353 (citing HMH Publ'g Co. v. Lambert , 482 F.2d 595, 599 n.6 (9th Cir. 1973)). It is thus assumed that sophisticated consumers and buyers of expensive goods will exercise greater care in their purchases, thereby reducing the likelihood of confusion or mistake as to the origin of the goods. See, e.g., Entrepreneur Media , 279 F.3d at 1152. Conversely, "[c]onfusion between marks is generally more likely where the goods at issue involve relatively inexpensive, impulse" products to which the average, unsophisticated' consumer does not devote a great deal of care and consideration in purchasing." E. & J. Gallo Winery v. Consorzio del Gallo Nero , 782 F.Supp. 457, 464-65 (N.D. Cal. 1991) (Jensen, J.) (citing Grey v. Campbell Soup Co. , 650 F.Supp. 1166, 1175 (C.D. Cal. 1986)). As the court observed in Gallo Nero, there is little doubt that wine purchasers typically fall into the latter category of unsophisticated, "impulse" buyers. Id. at 465; see also Taylor Wine Co. v. Bully Hill Vineyards, Inc. , 569 F.2d 731, 734 (2d Cir. 1978) (observing that "the average American who drinks wine on occasion can hardly pass for a connoisseur of wines" and thus "remains an easy mark for an infringer"). Here, that inference might be attenuated with respect to many of the purchasers of defendant's wine, who, as visitors to a small winery or members of a wine club, are far more likely than the average consumer to have achieved a level of connoisseurship that would allow them to distinguish between the parties' products. The moderate-to-modestly high price of the wines at issue here may also reduce the likelihood that their purchasers can be duped as easily as those in the Gallo case, which involved the eponymous brand best-known for its low-priced wines. See 782 F.Supp. at 459-60. Nonetheless, on balance, the court finds that this factor favors plaintiff.
6. Defendant's Intent in Selecting the Mark
The next Sleekcraft factor directs the court to consider defendant's intent in selecting the "Melange de Trois" mark. Because courts assume that a defendant who intentionally attempts to confuse consumers in fact succeeded in doing so, evidence of such an intent is probative of likelihood of confusion. Playboy Enters. , 354 F.3d at 1028 (citing Sleekcraft , 599 F.2d at 348 n.9). On the other hand, while good faith "may be given considerable weight in fashioning a remedy, " it is only marginally probative of absence of consumer confusion. Sleekcraft , 599 F.2d at 354; see also Golden Door, Inc. v. Odisho , 646 F.2d 347, 351 (9th Cir. 1980).
This case is at its early stages without benefit of final discovery. At this stage, there is no evidence of bad faith in the case at bar. Paul Bush, a partner in Madroña Vineyards, submits that he adopted the "Melange de Trois" mark because it accurately describes a wine comprised of three varietals, because it is evocative of the French origins of the Rhône varietals used in the blend, and because he liked the sound of the phrase. P. Bush Decl. ¶¶ 9-10. Given the frequency with which the word "melange" is used as a description of a multiple-varietal wine, Maguire Decl., Exh. C, and the fact "trois" actually describes the number varietals in defendant's cuvee, the court has no reason to doubt the veracity of Bush's explanation of the genesis of the "Melange de Trois" mark. The court thus finds this factor supports defendant to the extent that it is probative of the absence of consumer confusion.
7. Evidence of Actual Confusion
The seventh Sleekcraft factor considers whether there is any evidence that consumers were actually confused by defendant's mark. Common sense suggests that "if enough people have been actually confused, then a likelihood that people are confused is established." Thane Int'l, Inc. v. Trek Bicycle Corp. , 305 F.3d 894, 902 (9th Cir. 2002) (original emphasis omitted). Consequently, "[e]vidence of actual confusion constitutes persuasive proof that future confusion is likely." Id. (quoting Clicks Billiards, Inc. v. Sixshooters, Inc. , 251 F.3d 1252, 1265 (9th Cir. 2001)) (internal quotation marks omitted). In contrast, the difficulties associated with proving that consumers were in fact confused imply that the absence of evidence of actual confusion is rarely dispositive, although it may be given significant weight "when the particular circumstances indicate such evidence should have been available." Sleekcraft , 599 F.2d at 353.
It may be understandable that at this stage of the proceedings plaintiff has been unable to muster any evidence of actual confusion in support of the instant motion. Nonetheless, based on the record as it presently stands, there is nothing to suggest that consumers actually have been confused by the presence of defendant's allegedly infringing product in the marketplace. Indeed, plaintiff concedes that at present, it "is not aware of any actual consumer confusion." Pl.'s Mem. P. & A. at 18. The court therefore finds that this factor favors defendant.
8. Likelihood of Expansion of Product Lines
The final Sleekcraft factors directs the court to consider the likelihood that one of the parties' product lines will expand to compete with the other. See Sleekcraft , 599 F.2d at 354 (quoting Restatement of Torts § 731(b) & cmt. c)) ("Inasmuch as a trademark owner is afforded greater protection against competing goods, a strong possibility' that either party may expand his business to compete with the other will weigh in favor of finding that the present use is infringing."). Because the parties to the instant action already sell directly competing products, this factor is inapposite to the instant action and thus does not favor either party.
B. Weighing the Sleekcraft Factors
In summary, the court finds the following Sleekcraft factors weigh in favor of plaintiff: the strength of the "Menage à Trois" mark, the relatedness of the parties' goods, and the degree of care likely to be exercised by purchasers of the parties' products. The factors that clearly weigh in defendant's favor include differences in the marketing channel used by the parties, defendant's absence of bad faith in selecting its "Melange de Trois" mark, and the absence of any evidence of actual consumer confusion. The all-important "similarity of the marks" factor also weighs in defendant's favor, but only by the narrowest of margins. The "likelihood of expansion of product lines" factor does not favor either party. In the absence of any mathematical formula for balancing the conflicting inference that can be drawn from these various factors, the court must ultimately conclude that plaintiff has not established by a preponderance of the evidence that it will able to prove a likelihood of consumer confusion at trial. The court therefore finds that plaintiff has not shown that it is likely to prevail on the merits of its trademark infringement claim.
Defendant also argues that its use of the phrase "Melange de Trois" is protected by the "classic" fair use doctrine. See Mattel, Inc. v. Walking Mountain Prods. , 353 F.3d 792, 809 (9th Cir. 2003) (distinguishing between "classic" and "nominative" fair use of a trade- or service mark). Because the court finds that plaintiff has not met its burden of establishing a likelihood of consumer confusion, it need not consider whether defendant might be able to avail itself of the protection of the fair use doctrine. However, it should be noted that under Ninth Circuit law, "the classic fair use defense is not available if there is a likelihood of customer confusion as to the origin of the product." Cairns v. Franklin Mint Co. , 292 F.3d 1139, 1151 (9th Cir. 2002) (citing Transgo, Inc. v. Ajac Transmission Parts Corp. , 911 F.2d 363, 365 n. 2 (9th Cir. 1990) and Lindy Pen Co. v. Bic Pen Corp. , 725 F.2d 1240, 1248 (9th Cir. 1984)). Thus, the availability of such as defense necessarily depends on the court's resolution of the likelihood of confusion inquiry.
III. Balance of Hardships
Despite its conclusion that plaintiff has not carried its burden of establishing a likelihood of success on the merits, the court may nonetheless enjoin defendant's use of the "Melange de Trois" mark if plaintiff's motion raises serious questions going to the merits and the balance of hardships tips sharply in plaintiff's favor. Mattel , 354 F.3d at 869. There is little doubt that plaintiff has made a strong showing of its likelihood of success on the merits, albeit one that falls just short of meeting its burden of persuasion under the Lanham Act. However, it seems doubtful that plaintiff will suffer any substantial hardship on account of defendant's continued use of the "Melange de Trois" mark. As noted above, defendant primarily sells "Melange de Trois" wine at its tasting room and through wine clubs. Consumers who purchase wine through these marketing channels are far more likely to be aware that they are purchasing wine produced by Madroña Vineyards than they would be if defendant relied more heavily on retail sales in supermarkets and liquor stores or on sales at bars and restaurants. Moreover, defendant has produced only 1, 711 cases of "Melange de Trois" wine since 2001, only 323 of which remain available for sale. M. Bush Decl. ¶ 4. In contrast, plaintiff has sold an average of approximately 10, 000 cases of "Menage à Trois" wine per year since 1997. Thus, even if every purchaser of "Melange de Trois" mistakenly believed that they were buying plaintiff's product, such consumer confusion would affect only a small percentage of plaintiff's total sales under the "Menage à Trois" mark. Plaintiff suggests that the remaining 323 unsold cases of "Melange de Trois" are not the only consideration that should be weighed in balancing the hardships, speculating that defendant plans to release the 2004 vintage of "Melange de Trois" in April 2005. However, assuming that plaintiff is correct in this assertion, the release of the 2004 vintage of "Melange de Trois" will not change the fact that defendant's production of the wine has been limited, averaging less than 600 cases per year, nor does anything in the record suggests that defendant substantially increased production of "Melange de Trois" last year. Accordingly, in light of the limited volume of defendant's production of the allegedly infringing product, the court finds the potential that plaintiff will lose sales or suffer damage to its brand in the absence of preliminary injunctive relief to be equally limited.
Despite the absence of any evidence that it would suffer serious harm by allowing defendant to continue to use the "Melange de Trois" mark, plaintiff nonetheless argues that the balance of hardships tips in its favor because defendant continued to market and sell its product after it received Winery Asset Management's initial demand letter in April 2004. Gerien Decl. ¶ 9 & Exhs. 3, 5. However, there is no doubt that defendant has a reasonable, good-faith argument that it is entitled to use its "Melange de Trois" mark notwithstanding plaintiff's senior trademark rights. While it is by no means certain that defendant will succeed in convincing the court that its argument is correct, that does not mean that defendant must accede to plaintiff's demands before it has even had the opportunity to make such an argument. Accord King of the Mountain Sports, Inc. v. Chrysler Corp. , 968 F.Supp. 568, 574 (D. Colo. 1997) (concluding that the trademark defendants' refusal to stop using an allegedly infringing mark after receiving notice from the plaintiff was not evidence of bad faith in light of the defendants' good faith belief that they were not committing trademark infringement), aff'd, 185 F.3d 1084 (10th Cir. 1999); Knaack Mfg. Co. v. Rally Accessories, Inc. , 955 F.Supp. 991, 1004 (N.D. Ill. 1997) (observing that the defendant, upon being accused of trademark infringement, "had every right to stand up and fight for what it believed was appropriate conduct on its part"). Consequently, the court must reject plaintiff's attempt to characterize defendant's refusal to capitulate to its demands as evidence of bad faith.
Plaintiff's attempt to portray defendant's decision to file a state court declaratory judgment action as evidence of bad faith is similarly flawed. While defendant's effort to avoid this court's jurisdiction by filing a preemptive declaratory relief action is unlikely to succeed, see supra note 2, such litigation tactics hardly amount to evidence that defendant selected its mark in bad faith.
Against the slim evidence that plaintiff will suffer any substantial hardship under the status quo and the absence of any suggestion that defendant adopted its mark in bad faith, the court must weigh the hardship that defendant would suffer if it were forced to halt all sales of "Melange de Trois" wine. Given that only 323 cases of "Melange de Trois" remain available for sale, M. Bush Decl. ¶¶ 3-4, it is certainly feasible for defendant to recall and relabel the allegedly infringing goods that remain in its possession. Nonetheless, the process of recalling and relabeling 323 cases of wine would require defendant to incur some out-of-pocket expenses and could potentially reduce the value of any accumulated goodwill associated with the "Melange de Trois" mark. Although perhaps not great, such costs would undoubtedly be real. In light of the fact that defendant is a small, family-owned wine producer, even a small financial burden might be sharply felt. In contrast, plaintiff has yet to establish anything more than a theoretical injury to the strength of its brand. Thus, the court finds that on balance, equitable considerations favor denying preliminary injunctive relief. In any event, plaintiff has certainly not established that the balance of hardships tips sharply in its favor. The court therefore denies plaintiff's motion for a preliminary injunction.
CONCLUSION
For the reasons stated above, the court DENIES defendant's motion to stay or dismiss the instant action and DENIES plaintiff's motion for a preliminary injunction.
IT IS SO ORDERED.