Churchill Cellars, Inc.v.Brian Graham

Trademark Trial and Appeal Board

Oct 19, 2012

No. 91193930 (T.T.A.B. Oct. 19, 2012)

THIS OPINION IS NOT A
PRECEDENT OF
THE T.T.A.B.

Mailed: October 19, 2012

UNITED STATES PATENT AND TRADEMARK OFFICE
_____

Trademark Trial and Appeal Board
______

Churchill Cellars, Inc.
v.
Brian Graham
_____

Opposition No. 91193930
to application Serial No. 77787019
_____

Richard J. Codding of Akin Gump Strauss Haure & Feld LLP for
Churchill Cellars, Inc.

David P. Miranda of Heslin Rothenberg Farley & Mesiti PC for
Brian Graham.
______

Before Holtzman, Cataldo and Mermelstein,
Administrative Trademark Judges.

Opinion by Cataldo, Administrative Trademark Judge:

On July 22, 2009 applicant, Brian Graham, applied to
register in standard characters on the Principal Register
the mark PARLAY, based upon his allegation of February 13,
2009 as a date of first use of the mark anywhere and in
commerce under Section 1(a) of the Trademark Act for “wine”
in International Class 33.1

1 Application Serial No. 77787019.
Opposition No. 91193930
2
Registration has been opposed by opposer, Churchill
Cellars, Inc. The allegations in the notice of opposition
are set forth below:

1. Churchill Cellars, Inc. ("Opposer") distributes and sells
wines under the trademark PARLAY.

2. The distribution and sale of wine is subject to a federal
regulatory scheme. That scheme is set forth, in part, in
Title 27 of the Code of Federal Regulations ("C.F.R."),
Chapter I, Part 4, Labeling and Advertising of Wine. 27
C.F.R. § 4.30 provides in pertinent part:

(a) Application. No person engaged in business as
a producer, rectifier, blender, importer, or
wholesaler, directly or indirectly or through an
affiliate, shall sell or ship or deliver for sale
or shipment, or otherwise introduce in interstate
or foreign commerce, or receive therein, or remove
from customs custody, any wine in containers
unless such wine is packaged, and such packages
are marked, branded, and labeled in conformity
with this subpart.

3. 27 C.F.R. § 4.50 provides:

(a) No person shall bottle or pack wine, other
than wine bottled or packed in U.S. customs
custody, or remove such wine from the plant where
bottled or packed, unless an approved certificate
of label approval, TTB Form 5100.31 is issued by
the appropriate TTB officer.

4. In accordance with the applicable regulatory requirements
set forth above, on or about March 6, 2009, Owl Ridge Wine
Services, Greg & Greg, Inc., on behalf of Opposer Churchill
Cellars, Inc., filed an application with the Department of
Treasury Alcohol and Tobacco Tax and Trade Bureau ("TTB")
for approval of the Churchill Cellars, Inc. PARLAY wine
label.

5. On or about March 10, 2009, the TTB issued its TTB Form
5100.31 certificate of label approval of Churchill Cellars,
Inc.'s PARLAY wine label.

6. Following receipt of the required TTB approval of its
PARLAY label, Churchill Cellars, Inc. began bottling,
Opposition No. 91193930
3
distributing and selling wine under the PARLAY trademark
making its first shipment of wine on or about April 21,
2009. Since that time, Churchill Cellars Inc. has used the
PARLAY mark continuously.

7. Applicant Brian Graham ("Applicant") seeks to register
the mark PARLAY in international class 33 (Alcoholic
beverages (except beers)) (former U.S. classes 47 (wines)
and 49 (Distilled alcoholic liquors)).

8. Applicant filed its application for registration of its
mark on July 22, 2009, well after Opposer obtained its TTB
label approval on March 10, 2009 and well after Opposer
began using the PARLAY mark in interstate commerce on Apri1
21, 2009.

9. In its application for registration of its mark,
Applicant has alleged February 13, 2009 as its first use of
the mark and its first use of the mark in interstate
commerce.

10. On its face, it appears that Applicant's alleged date of
first use of February 13, 2009 precedes Opposer's date of
first use on April 21, 2009. However, at the time of
Applicant's alleged first use of the PARLAY mark, it had
neither applied for nor obtained a TTB Form 5100.31
certificate of label approval. Applicant, through an
affiliated entity, Ramian Estate, LLC., did not obtain a TTB
Form 5100.31 certificate of label approval until July 9,
2009, well after Opposer obtained its TTB label approval and
began using the mark in commerce.

11. Section 907, Compliance with Other Statutes, of the
Trademark Manual of Examining Procedure provides that the
use of a mark in commerce must be a lawful use to be the
basis for federal registration of the mark.

12. 37 C.F.R. § 269, Compliance with other laws, provides:

When the sale or transportation of any product for
which registration of a trademark is sought is
regulated under an Act of Congress, the Patent and
Trademark Office may make appropriate inquiry as
to compliance with such Act for the sole purpose
of determining lawfulness of the commerce recited
in the application.

13. Here, as noted above, 27 C.F.R. § 4.50 provides that no
person shall bottle or pack wine or remove such wine from
the plant where bottled or packed unless an approved
Opposition No. 91193930
4
certificate of label approval, TTB Form 5100.31, has been
issued by the appropriate TTB officer. Because Applicant
did not receive its TTB Form 5100.31 certificate of label
approval until July 9, 2009, any wine bearing the PARLAY
mark sold or distributed by Applicant or pursuant to its
authorization prior to July 9, 2009 was sold or distributed
in violation of the explicit requirements of 27 C.F.R.
§ 4.50 and does not constitute a lawful use of the mark for
the purpose of obtaining a federal registration of the mark
based on that use.

14. Because the requirement of 27 C.F.R. § 4.50 for an
approved TTB Form 5100.31 certificate of label approval
prior to the distribution of any bottled or packaged wine is
clear and unambiguous and because it is equally clear that
Applicant did not have the required certificate of label
approval prior to its sales or shipments of wine bearing the
PARLAY mark prior to July 9, 2009, the date it obtained its
TTB certificate of approval, Applicant's distribution and/or
sale of wine bearing the PARLAY mark prior to July 9, 2009
constitutes a per se violation of 27 C.F.R. § 4.50.
Consequently, any such distributions and sales do not
constitute lawful uses of the PARLAY mark and cannot be
relied on as the basis for obtaining a trademark
registration. Kellogg Co. v. New Generation Foods Inc., 6
USPQ 2d 2045 (TTAB 1988); Medtronic, Inc. v. Pacesetter
Systems, Inc., 222 USPQ 80 (TTAB 1984).

15. This is not a case where there has been a technical
violation of the requirements of the content of the label.
Here, there is a clear statutory requirement for a label
approved by the TTB and a clear and total failure to obtain
the required label approval for the relevant period of time.

16. Because Applicant's alleged uses of the PARLAY mark
prior to July 9, 2009 were not lawful and cannot be the
basis for Applicant's registration of the mark, Opposer's
lawful uses of the mark in commerce beginning on April 21,
2009 in compliance with the requirements of 27 C.F.R. § 4.50
are prior to any lawful uses of the mark in commerce by
Applicant and Opposer has priority as to the use of the
mark.

17. Applicant's PARLAY mark is identical to Opposer's PARLAY
mark. Indeed, the stylized version of the mark used by
Applicant on its bottles of wine is identical to the
stylized version of the mark used by Opposer on its bottles
of wine.

Opposition No. 91193930
5
18. The fact that Applicant's mark is identical to Opposer's
and that both marks are used on wines sold through the same
or similar channels of distribution virtually assures that
there will be confusion among potential customers as to the
source or origin of Applicant's wine.

19. Applicant will unfairly benefit from the good will
developed by Opposer through the distribution and sale of
Opposer's wine.

20. Similarly, any defect in or objection to Applicant's
wine will necessarily reflect adversely on Opposer and
Opposer's wine and will damage the reputation that Opposer
has developed with respect to its PARLAY wine. If Applicant
were granted a registration for the PARLAY mark as
requested, it would obtain at least a prima facie exclusive
right to use the mark for Applicant's wines. Such
registration would be a source of damage and injury to
Opposer, as set forth above.

Applicant’s answer consists of a general denial of the
allegations in the notice of opposition.2
The record in this case consists of the pleadings and
the file of the involved application. See Trademark Rule
2.122(b); 37 C.F.R. § 2.122(b). In addition, opposer filed
the testimony deposition, with accompanying exhibits, of Ms.
Casey Coyle, a stockholder and employee of opposer. Opposer
further submitted a notice of reliance.
Applicant submitted his testimony deposition with
accompanying exhibits. Applicant further submitted a notice
of reliance.

2 In addition, applicant asserted certain matters as affirmative
defenses but did not pursue them by motion or at trial.
Accordingly, they are deemed waived.

Opposition No. 91193930
6
The parties filed briefs, including opposer’s reply
brief.
Opposer’s Standing
Opposer, through its testimony and related exhibits,
has established that it uses the mark PARLAY in connection
with wine in the context of a plausible claim of priority
and likelihood of confusion. Giersch v. Scripps Networks
Inc., 90 USPQ2d 1020, 1022 (TTAB 2009) (common-law use
sufficient to establish standing). Thus, opposer has
demonstrated it possesses a real interest in this proceeding
beyond that of a mere intermeddler, and a reasonable basis
for its belief of damage. See Ritchie v. Simpson, 170 F.3d
1902, 50 USPQ2d 1023 (Fed. Cir. 1999). See also Lipton
Industries, Inc. v. Ralston Purina Co., 670 F.2d 1024, 213
USPQ 185 (CCPA 1982).
We find, therefore, that opposer has proven its
standing to bring the instant opposition proceeding.
Likelihood of Confusion
Our likelihood of confusion determination under Section
2(d) is based on an analysis of all of the facts in evidence
that are relevant to the factors bearing on the likelihood
of confusion issue. See In re E. I. du Pont de Nemours &
Co., 476 F.2d 1357, 177 USPQ 563 (CCPA 1973). See also Palm
Bay Imports, Inc. v. Veuve Clicquot Ponsardin Maison Fondee
En 1772, 396 F.3d 1369, 73 USPQ2d 1689 (Fed. Cir. 2005); In
Opposition No. 91193930
7
re Majestic Distilling Company, Inc., 315 F.3d 1311, 65
USPQ2d 1201 (Fed. Cir. 2003); and In re Dixie Restaurants
Inc., 105 F.3d 1405, 41 USPQ2d 1531 (Fed. Cir. 1997).
In this case, the parties are using virtually identical
marks, i.e., PARLAY, for identical goods, namely wine.3
Both applicant’s wine and opposer’s wine appear to be
available to all classes of purchasers in all channels of
trade that are customary therefor. Neither party has
presented arguments or evidence to support a finding that
any of the enumerated du Pont factors favor a finding that
confusion is unlikely. Indeed, the parties have not
addressed the du Pont factors touching on likelihood of
confusion in their briefs. Therefore we find, and the
parties appear to agree, that confusion is likely.
Priority
Because opposer does not own a U.S. registration, in
order to prevail on a claim under Trademark Act § 2(d), it
bears the burden of demonstrating a proprietary interest
acquired through use of its mark prior to either the
filing date of applicant’s application or applicant’s proven
date of first use, whichever is earlier. See Herbko Int’l

3 As noted above, applicant seeks registration of its mark in
standard characters. We observe nonetheless that evidence of
record indicates that the parties are using the PARLAY mark in a
nearly identical stylized form. While both parties have
commented upon this high degree of similarity, neither has
directly alleged or introduced evidence that the other copied its
mark.
Opposition No. 91193930
8
Inc. v. Kappa Books Inc., 308 F.3d 1156, 64 USPQ2d 1375,
1378 (Fed. Cir. 2002); Otto Roth & Co., Inc. v. Universal
Corp., 640 F.2d 1317, 209 USPQ 40, 43 (CCPA 1981); and
Miller Brewing Co. v. Anheuser-Busch Inc., 27 USPQ2d 1711,
1714 (TTAB 1993). Opposer’s asserted common-law mark,
PARLAY, must be “distinctive,” in the sense that it is used
as an indicator of source and has at least some inherent or
acquired ability to fulfill that function. See Otto Roth,
209 USPQ at 44; Towers v. Advent Software Inc., 913 F.2d
942, 16 USPQ2d 1039, 1041 (Fed. Cir. 1990). A plaintiff’s
common-law mark is deemed distinctive if it appears to be
inherently distinctive on its face, at least in the absence
of evidence to the contrary. In this case, applicant has
neither argued nor introduced evidence that opposer’s PARLAY
mark is descriptive or otherwise lacks inherent
distinctiveness for purposes of our determination herein.
Nor does the mark, on its face, appear to be anything but
distinctive. We thus find opposer’s PARLAY mark to be
inherently distinctive on the facts and record of this case.
See Otto Roth, 209 USPQ at 44. See also, e.g., Giersch v.
Scripps Networks Inc, 90 USPQ2d 1020, 1023 (TTAB 2009).
We turn then to the evidence of record to determine
whether opposer’s first use of its PARLAY mark is prior to
any date upon which applicant can rely. In that regard, the
following facts are largely undisputed:
Opposition No. 91193930
9
applicant first created its PARLAY wine labels in
October 20084 and first used PARLAY in connection with wine
subsequently in 2008;5
applicant first used the PARLAY mark in connection with
wine in interstate commerce as early as February 13, 2009;6
applicant filed an application for TTB approval of its
PARLAY label for wine on June 1, 2009, and obtained such TTB
approval on July 9, 2009;7
opposer selected PARLAY as a mark for its wine on or
about March 5, 2009;8
opposer filed an application for TTB approval of its
PARLAY label for wine on March 6, 2009, and obtained such
approval on March 10, 2006;9 and
opposer made its first use of PARLAY in connection with
wine on April 16, 2009, and made its first use of such mark
in commerce in connection with wine on April 20, 2009.10
Based upon the foregoing, we find that the testimony
and evidence of record establishes that the earliest date
upon which applicant may rely for purposes of priority is
February 13, 2009. The earliest priority date upon which
opposer may rely is April 20, 2009. Inasmuch as opposer did

4 Graham testimony, p. 88; Exhibits D1-2.
5 Id. at 93; Exhibit P-2.
6 Id. at 92-4; Exhibits P5-10.
7 Id. at 92, 97; Exhibits P13-14.
8 Coyle testimony, p. 61-2; Exhibit P21.
9 Id. at 16-20; Exhibits 25-27.
10 Id. at 29-33; Exhibits 34-36.
Opposition No. 91193930
10
not make use of the PARLAY mark prior to applicant’s
earliest date of use, opposer cannot establish priority for
purposes of our likelihood of confusion determination.
Opposer argues at length that applicant cannot rely on
any use of the PARLAY mark prior to the July 9, 2009 grant
of the Department of Treasury Alcohol and Tobacco Tax and
Trade Bureau (“TTB”) approval for its labels for wine
bearing the PARLAY mark. Essentially, opposer asserts that
TTB regulations require approval by the TTB of wine labels
prior to sale; that a “nexus arises between use of the mark
and the use’s noncompliance when a product was shipped with
the mark but without required government approval;”11 and
that applicant’s non-compliance was a material, per se
violation of the applicable TTB regulation. Opposer thus
argues that applicant’s use prior to July 9, 2009 was
unlawful and did not result in the creation of trademark
rights.
As a general rule, in order to establish trademark
rights, one’s use of a mark must be lawful use in commerce.
Applicant’s “wine,” as well as opposer’s for that matter,
may be lawfully purchased, notwithstanding prohibition of
its sale to minors. That is to say, there is nothing
inherently unlawful about applicant’s goods and opposer does
not so allege. Rather, opposer alleges that applicant

11 Opposer’s brief, p. 6.
Opposition No. 91193930
11
violated a TTB regulation requiring approval of the label
bearing its PARLAY mark prior to sale.
The lawful use doctrine is based on the USPTO’s own
interpretation of the requirement that a mark be used in
commerce, Western Worldwide Enters. Group Inc. v. Qinqdao
Brewery, 17 USPQ2d 1137 (TTAB 1990). Application of this
doctrine has resulted in a number of difficulties for this
tribunal, leading us to observe that we have heard
cases involving the lawfulness of use under such
statutes as the Federal Food, Drug, and Cosmetic
Act, the Federal Meat Inspection Act, the Federal
Insecticide, Fungicide, and Rodenticide Act, and
the Federal Clean Air Act. Due to a proliferation
of federal regulatory acts in recent years, there
is now an almost endless number of such acts which
the Board might in the future be compelled to
interpret in order to determine whether a
particular use in commerce is lawful. Inasmuch as
we have little or no familiarity with most of
these acts, there is a serious question as to the
advisability of our attempting to adjudicate
whether a party's use in commerce is in compliance
with the particular regulatory act or acts which
may be applicable thereto.

Satinine Societa in Nome Collettivo di S.A. e M. Usellini v.
P.A.B. Produits et Appareils de Beaute, 209 USPQ 958, 964
(TTAB 1981) (declining to find opposer’s use invalid under
the Trademark Act); see also Id. at 967 (Kera, concurring)
(suggesting that “There must be some nexus between the use
of the mark and the alleged violation before it can be said
that the unlawfulness of the sale or shipment has resulted
in the invalidity of an application or registration.”).
Opposition No. 91193930
12
Subsequently, in Kellogg Co. v. New Generation Foods,
Inc., 6 USPQ2d 2045 (TTAB 1988), and General Mills Inc. v.
Health Valley Foods, 24 USPQ2d 1270 (TTAB 1992), the Board
again considered the unlawful use doctrine, and again
declined to find the allegedly unlawful use to be invalid
under the Trademark Act.
In Kellog, applicant alleged – and opposer admitted –
that the specimens submitted by opposer with the application
underlying its registration that was subject to applicant’s
counterclaim to cancel failed to comply with Food, Drug and
Cosmetic Act labeling requirements. Kellog, 6 USPQ2d at
2046. Similarly, in General Mills, applicant alleged – and
opposer again admitted – that the initial shipment upon
which its date of first use was based did not comply with
FDA labeling regulations. General Mills, 24 USPQ2d at 1273.
In the latter case, the Board summarized an approach to the
issue consistent with Satinine:
[T]he better practice in trying to determine
whether use of a mark is lawful under one or more
of the myriad regulatory acts is to hold a use in
commerce unlawful only when the issue of
compliance has previously been determined (with a
finding of noncompliance) by a court or government
agency having competent jurisdiction under the
statute involved, or where there has been a per se
violation of a statute regulating the sale of a
party's goods. See Satinine Societa v. P.A.B.
Produits, 209 USPQ 958 (TTAB 1981); Kellogg Co. v.
New Generation Foods, Inc., 6 USPQ2d 2045 (TTAB
1988).

. . .

Opposition No. 91193930
13
Where, as here, a party seeks to show that
use by the adverse party was unlawful by virtue of
noncompliance with a labeling statutory provision,
it is incumbent upon the party charging that the
use was unlawful to demonstrate by clear and
convincing evidence more than that the use in
question was not in compliance with applicable
law. Such party must prove also that the non-
compliance was material, that is, was of such
gravity and significance that the usage must be
considered unlawful – so tainted that, as a matter
of law, it could create no trademark rights –
warranting cancellation of the registration of the
mark involved.

General Mills, 24 USPQ2d at 1273-74.
In that case, applicant had presented no evidence of a
final determination of noncompliance by any court or agency.
Further, the Board found that applicant failed to show a
“nexus between the use of the mark and the alleged violation
[such that] the unlawfulness of a shipment can be said to
result in the invalidity of a registration.” General Mills,
24 USPQ2d at 1274 (citing Satinine, 209 USPQ at 967 (Kera,
concurring)). As a result, the Board found that applicant
had not met its burden of proof, despite opposer’s admission
that it failed to comply with the applicable statute. The
Board also made the following observation:
Although opposer acknowledges its inadvertent
failure to comply fully with these regulations, we
agree with opposer that its technical
noncompliance should not result in the Draconian
result of cancellation of its registration.

General Mills, 24 USPQ2d at 1273.
More recently, in Automedx Inc. v. Artivent Corp., 95
USPQ2d 1976 (TTAB 2010), applicant alleged that opposer’s
Opposition No. 91193930
14
prior sales of its medical ventilators were unlawful because
opposer had neither received approval from the FDA nor
applied for an exemption from the regulation requiring such
approval. Consistent with our narrow application of the
illegal use doctrine in Satinine, Kellogg, and General
Mills, the Board again denied applicant’s counterclaim:
[W]e find that applicant failed to show that there was
a per se violation of any law or FDA regulations. As
previously indicated, we disagree with applicant’s
premise that the products sold by opposer to the
military were required to be FDA approved before the
sales of those products may constitute bona fide use of
the mark in commerce.

Automedx, 95 USPQ2d at 1985.
In the present case, opposer has presented no evidence
of a final determination of applicant’s noncompliance by any
court or agency having competent jurisdiction under the
involved regulation. See General Mills, 24 USPQ2d at 1273-
74. Applicant does not dispute that it sought TTB approval
of the wine labels bearing its PARLAY mark approximately
three and one half months after first using the mark in
commerce, and obtained such approval approximately one month
later. Thus, it appears that applicant may have been in
technical violation of the applicable TTB regulation for a
short time, although it is undisputed that it is now in
compliance.
In arguing that applicant’s asserted non-compliance is
material, opposer argues that the “purpose of this
Opposition No. 91193930
15
requirement is to ensure that wine makers properly inform
consumers about the wine’s brand, geographic origin, grape
type, age and any other relevant information.”12 Opposer
goes on to argue that “Applicant’s shipment of bottles with
non-approved labels is thus not ‘relatively harmless’
because it directly violates the public policy goal of the
wine labeling regulations to prevent consumer deception.”13
However, there is no evidence of record that applicant’s
wine labels bearing its PARLAY mark were deceptive in any
manner or otherwise failed to properly inform consumers
about any information relevant to applicant’s wine. The
labels submitted by applicant were ultimately approved by
the TTB and there is no evidence that they were found to be
deceptive or deficient in any respect. As a result, there
is no evidence that applicant’s asserted non-compliance with
the applicable TTB regulation is material and should result
in denying registration of its mark. Certainly there is no
evidence that applicant’s submission of its wine label for
approval a few months after commencing use of its mark “was
so tainted that, as a matter of law, it could create no
trademark rights.” General Mills, 24 USPQ2d at 1274.
The cases relied upon by opposer do not compel a
different result. CreAgri, Inc. v. Usana Health Sciences,

12 Id. at 9.
13 Id. at 10.

Opposition No. 91193930
16
Inc., 474 F.3d 626, 81 USPQ2d 1592 (9th Cir. 2007) involved
several instances of inaccurate labeling of the
concentration of an ingredient in dietary supplements. Such
mislabeling was found, inter alia, to be a material
violation of the applicable Food, Drug, and Cosmetic Act
requirements. Erva Pharmaceuticals, Inc. v. American
Cyanamid Co., 755 F. Supp. 36, 19 USPQ2d 1460 (D. P.R. 1991)
involved mislabeling of pharmaceuticals. Such mislabeling
also was found to contravene Food, Drug and Cosmetic Act
requirements. In the instant case, however, there is no
evidence that applicant’s wine labels contained inaccurate,
incomplete, or deceptive information regarding applicant’s
wine. Rather, at worst, applicant’s asserted non-compliance
appears confined to seeking TTB approval of such labels
after commencing use in commerce of the mark they display.
As such, we disagree with opposer that applicant’s actions
are analogous to those discussed above. Simply put, there
is no evidence that applicant’s actions misled or otherwise
deceived consumers.
Finally, in cases involving application of the lawful
use doctrine, we are mindful of the draconian and
potentially disproportionate result of denying trademark
rights to a party; in this case, over three and one-half
years after the asserted non-compliance.
Opposition No. 91193930
17
Summary
In view of the foregoing, we find that opposer has
established its standing to bring this proceeding; and that
a likelihood of confusion exists between the parties’
essentially identical marks as applied to identical goods
that appear to move in all customary channels of trade and
be available to all classes of consumers. However, opposer
has failed to establish its priority of use, or that
applicant’s asserted non-compliance with applicable TTB
labeling regulations should result in rendering unlawful
applicant’s prior use.
DECISION: The opposition is dismissed.