A Real Lesson In The Result of a Battle Between Unregistered Trademarks – Having to Disgorge Your Profits

The merits of a spiced autumn harvest wine weren’t up for
debate in a recent Wisconsin case,  C&N Corp. d/b/a Door County Winery v. Illinois
River Winery
.  Just the issue of which
one of these Illinois/Wisconsin wineries had the better claim to sell theirs by
the name Hallowine and whether priority rights in an unregistered trademark
could force a competing winery to disgorge its profits… yes, it can.

After Illinois
River Winery
filed an application to the USPTO to trademark the word
Hallowine.  When Door County Winery learned of the
application, they filed an opposition that ultimately resulted in this decision
from the trademark office finding in favor of Door County.  The problem was that both companies made
something called Hallowine.  Their
respective labels and bottles were:

The PTO Trademark Trial and Appeal Board issued this opinion
sustaining Door County’s opposition to Illinois River’s
application to register
the Hallowine mark and also found that Door County had priority in an
unregistered Hallowine word mark and that there was a likelihood of confusion
between the two wineries’ use of the Hallowine Mark.  That opinion was issued on October 21, 2008,
and for some reason, Illinois River apparently didn’t stop using the mark and
Door County sued to stop it.  Door County
brought a motion arguing that the TTAB had already determined that Door County
had priority and that the only issue left was what the damages against Illinois
River would amount to – they amounted to quite a bit, the total revenue from Illinois
River’s infringing sales during the known infringing period – the October 21,
2008 date of the decision through December 2012 – $508,864.26.

Now, under the Lanham Act the measure of damages could have
been reduced if Illinois River would have put forth evidence that of the
$508,864.26, some was the cost of production which could have been deducted
from the revenue… but it didn’t, so it has to disgorge the whole revenue
stream.  You can read the whole court opinion here.

The little lesson here is to scrutinize the entire marketplace when you
think you’ve got a new name or a new mark, not just the trademarks on file with
the USPTO.