Drew Estate Holding Co., LLC v. Fantasia Distribution, Inc.

Under the "natural expansion" doctrine, a trademark owner enjoys protection over related goods that lie within the realm of the natural expansion of its business.

Opinion (Altonaga): Drew Estate Holding Company (“Drew”) filed a complaint alleging unfair competition against Fantasia Distribution, Inc. (“Fantasia”). Drew was the exclusive licensee of the ACID mark acquired under an agreement with Morfiya, Inc. (“Morfiya”), the registered owner of the mark. Drew is involved in the tobacco industry, primarily cigars. Their products branded with the ACID mark received positive recognition in the tobacco industry. Drew granted Starbuzz Tobacco, Inc. (“Starbuzz”), owner of the registered word mark BLUE SURFER, use of ACID mark for hookah tobacco products. Fantasia, also maker of hookah products, filed a U.S. Trademark application for the mark SURFER ON ACID even after their search revealed Drew’s ACID mark and Fantasia’s SURFER ON ACID mark. The dispute centered on Fantasia refusal to terminate use of term “acid.” Drew needed to show that their mark had priority, that Fantasia used their mark in commerce, and that defendant’s mark is likely to cause consumer confusion. Court ruled that the ACID mark had priority over Fantasia’s SURFER ON ACID mark based on documentary evidence, and found “hookah” to be sufficiently related to be covered by the mark. Protection was extended to the hookah industry pursuant to the “natural expansion” doctrine, under which a trademark is protected as to any product the consumer might reasonably think came from the same source. And lastly, the court found that Fantasia’s mark was likely to cause consumer confusion, and GRANTED summary judgment on Drew’s unfair competition claim.