E. & J. Gallo Winery v. Grenade Bev. LLC

To succeed in a trademark infringement claim under 15 U.S.C. § 1125, a plaintiff must meet three basic elements: (1) distinctiveness; (2) nonfunctionality; and (3) likelihood of confusion.

Opinion (Boone): Plaintiff E. & J. Gallo Winery (“Gallo”) and Defendant Grenade Beverage LLC (“Grenade”) filed cross motions for summary judgment; Gallo filed this action in May 2014 asserting a claim for trademark infringement and other related claims due to Grenade’s marketing of an energy drink called “El Gallo” and the potential marketing of another energy drink called “El Gallito.” Plaintiff Gallo claimed that Grenade’s “El Gallo” products violate their “Gallo” trademark for wines. Grenade was aware of the Gallo brand of wine, as it is widely distributed, and Gallo owns all related trademarks to their brand; Plaintiff, however, has never applied to register the “El Gallo” mark with the United States Patent and Trademark Office. Plaintiff Gallo argued that it was entitled to summary judgment because there is no genuine dispute as to any material fact with respect to its trademark claim. 15 U.S.C. § 1125 governs trademark claims; to state a trademark claim, a plaintiff must meet three elements: (1) distinctiveness; (2) nonfunctionality; and (3) likelihood of confusion. “To be valid and protectable, a mark must be ‘distinctive.’ Distinctiveness means ‘the primary significance of the mark to the purchasing public.’ Federal registration of a trademark ‘provides prima facie evidence’ of the mark’s validity and entitles the plaintiff to a ‘strong presumption’ that the mark is a protectable mark.” Plaintiff Gallo properly established that the Gallo mark was properly registered, so the burden shifts to a Defendant to show that the mark is not protectable; Grenade did not challenge this, so Plaintiff Gallo met the first element of a trademark infringement claim. As to nonfunctionality, a “product feature is functional and cannot serve as a trademark if the product feature is essential to the use or the purpose of the article or if it affects the cost or quality of the article, that is, if exclusive use of the feature would put competitors at a significant, non-reputation-related disadvantage.” There was no dispute in this case that the Gallo mark is nonfunctional, as the term “Gallo” does not describe a feature of Plaintiff Gallo’s products; the second element of a trademark infringement claim was met. Finally, “the core element of trademark infringement is the likelihood of confusion, i.e., whether the similarity of the marks is likely to confuse customers about the source of the products.” Despite a lack of evidence from either party on the design of their products or use of the term “Gallo,” the Court held that the two marks are highly similar in appearance because the dominant word in both marks are identical; the products are related, as they are both beverages and Grenade’s energy drink was marketed in bars; Plaintiff Gallo’s mark is strong; the markets may overlap, primarily due to the advertising of El Gallo in bars; and consumers may be confused because the goods at issue are sold in similar places and are relatively inexpensive. Accordingly, Plaintiff’s motion for summary judgment was partially GRANTED and Defendant’s motion for summary judgment was DENIED.