KONOWITZ & GREENBERG

Attorneys at Law

 

110 CEDER STREE – SUITE 250

WELLLESLEY HILLS MA 02481-3527

 

STEVEN S. KONOW1TZ

KAREN K. GREENBERG

 

MICHAEL K. TERRY

ARLENE L. KASARJ1AN

TELEPHONE: (781)237-0033

FACSIMILE:  (781)235-2755

EMAIL:  mkt@kongreen.com

 

 

February 22, 2002

 

 

 

Debra Bertone

Zurich of North America

P.O. Box ZZ

Jamaica, NY11410-OOZZ

Re:   Starbucks Corporation, et al.

Vs.   Wolfe's Borough Coffee, Inc.

       No. Ol-CV-5981

 

 

 

Dear Ms. Bertone:

        In connection with the above-captioned action, I enclose a copy of the Plaintiffs' First Amended Complaint. Notwithstanding Attorney Rawls' assertion that they were waiving recovery of damages, the Complaint does in fact seek costs and attorneys' fees. It appears therefore, that Zurich's obligation to defend this action remains intact.

      

 Please review enclosed and advise me whether you agree with my conclusion.

 

 

 

Very truly yours,

 

Michael K. Terry

 

 

MKT/prs

Enclosure

cc:     James Clark

 

 

 

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

STARBUCKS CORPORATION, a

Washington corporation; and STARBUCKS

U.S. BRANDSCORPORATION, a

California corporation,

Plaintiffs,

v.

WOLFE'S BOROUGH COFFEE, INC., a

New Hampshire corporation d/b/a BLACKBEAR MICRO ROASTERY,

Defendant.

No. Ol-CV-5981 (LTS)(THK)

 

FIRST AMENDED COMPLAINT FOR

TRADEMARK DILUTION, TRADEMARK

INFRINGEMENT, VIOLATION OF SECTION

43(a) OF THE LANHAM ACT, VIOLATION OF

NEW YORK GENERAL BUSINESS LAW §§ 349

AND 350 AND UNFAIR COMPETITION UNDER

NEW YORK COMMON LAW

 

1.       This is an action by plaintiffs Starbucks Corporation and Starbucks U.S. Brands Corporation ("Plaintiffs"), for injunctive relief, attorneys' fees and costs for defendant's willful misappropriation of Plaintiffs' registered trademark, "Starbucks®."

2.      Plaintiff Starbucks Corporation ("Starbucks") is the largest and best-known purveyor of specialty coffees in North America. Starbucks distinctive trademarks instantly identify Starbucks highly successful coffee based beverages and other products to millions of consumers.  Defendant Wolfe's Borough Coffee, Inc., dba Black Bear Micro Roastery ("Black Bear") is improperly seeking to benefit from Plaintiffs' substantial investment in the Starbucks® mark by selling coffee under the offensive variation of that mark, "Charbucks." Black Bear seeks simultaneously to trade off of the premium reputation the Starbucks® mark has come to enjoy among consumers, and to tarnish that reputation by associating Starbucks' trademark with coffee that is overroasted, and thus unappealing. As a result of defendant's actions, Starbucks reputation for premium quality is being diluted, the value of its trademark is being diminished, and consumers are being misled and confused. This action seeks injunctive relief for the harm defendant has caused.

 

JURISDICTION AND VENUE

 

3.       Subject matter jurisdiction over the claims asserted in this Complaint is based upon: (i) 28 U.S.C. §§ 1331 and 1338(a) as an action arising under the Lanham Act, 15 U.S.C. §§ 1051 et. seq.; and the Trademark Dilution Act, 15 U.S.C. §§ 1125(c) and 1127; and (ii) 28 U.S.C. § 1332(a) as an action between citizens of different states where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs. Subject matter jurisdiction over those of Plaintiffs' claims that arise under state law is based upon the principles of supplemental jurisdiction set forth in 28 U.S.C. § 1367, and the provisions of 28 U.S.C. § 1338(b) as an action asserting a claim for unfair competition joined with a substantial and related claim under the trademark laws.

        4.       Plaintiffs are informed and believe and thereupon allege that venue of this action is proper in the district pursuant to:  (i) 28 U.S.C. § 1391 (b) in that a substantial part of the events given to the claims herein occurred in this judicial district; and/or (ii) 28 U.S.C. § 1400, in that defendant has committed acts of infringement and regularly sells the product that is the subject of this action in this district.

THE PARTIES

 

5.       Plaintiff Starbucks is a corporation organized and existing under the laws of  the  State of Washington, with its principal place of business located in Seattle, Washington. Since 1971, it has done business under the trade names "Starbucks", "Starbucks Coffee Company" and "Starbucks Coffee."

6.      Plaintiff Starbucks U.S. BrandsCorporation ("U.S. Brands") is a corporation organized and existing under the laws of the State of California, with its principal place of business located in Burlingame, California. U.S. Brands is a wholly owned subsidiary of Starbucks. Ownership of the trademarks described in this complaint is vested in U.S. Brands.  Starbucks is a licensee of such trademarks.

7.       Plaintiffs are informed and believe and thereupon allege that defendant Black Bear is a corporation organized and existing under the laws of the State of New Hampshire with its principal place of business located in Tuftonborough, New Hampshire. Plaintiffs are informed and believe that Black Bear manufactures and sells to the general public, including to consumers who reside in the State of New York and the Southern District of New York, roasted coffee beans and related goods.

 

ALLEGATIONS COMMON TO ALL CLAIMS FOR RELIEF

 

Starbucks and its Business

 

8.            Starbucks is the best-known vendor of specialty coffees in America today.  Beginning in 1971 as a single, Seattle-based coffee shop, Starbucks has grown to operate more than 5,100 retail locations throughout North America and in 21 foreign countries. Starbucks also supplies premium, fresh-roasted coffees to thousands of restaurants and other accounts throughout the world. Starbucks revenues in 2001 exceeded $2.5 billion - an increase of more than 21% over the previous year. Starbucks achievements have generated tremendous attention in the media - hundreds of articles have been written about the company over the last few years - and growing, widespread awareness of Starbucks and its products among consumers worldwide.

9.       The key to Starbucks' phenomenal success is the consistent high quality and reputation of its fresh roasted specialty coffees, brewed coffee and espresso beverages and the other products and services it provides. Starbucks has a reputation for excellence, particularly in the area of roasted coffees and coffee beverages, and is widely recognized for its knowledgeable staff and superior service.

 

The Starbucks® Trademark

 

10.     For more than 25 years, Starbucks has used the trademark "Starbucks®" (the "Starbucks Mark") both to identify its goods and services and as the name of the company. The Starbucks Mark is the subject of more than 56 trademark registrations issued by the United States Patent and Trademark Office, and has been registered in more than 105 foreign countries.

11.     Starbucks has spent substantial time, effort and money advertising and promoting the Starbucks Mark throughout the United States and elsewhere:

               (a)     Starbucks owns, or operates through affiliates and licensees, more than 4,100 retail stores in North America. These stores - which are visited by more than 10.9 (total) million customers per week - carry a full line of coffee, cappuccino, espresso-based beverages and teas brewed and served on premises; blended beverages, up to 30 different varieties of Starbucks® brand roasted coffees; baked goods and confections; and other branded merchandise.  Each store prominently displays the Starbucks Mark on exterior signage and at multiple locations within the store.

               (b)     Starbucks has licensed Host Marriott Services Corporation to operate more than 152 coffee kiosks ("Starbucks Kiosks") in major airports in the U.S. and Canada. The Starbucks Kiosks sell Starbucks® brand coffees and other beverages prepared on site in accordance with strict beverage preparation and quality control procedures established by Starbucks, which are intended to maintain the high and consistent standards imposed by Starbucks on its own stores. The Starbucks Kiosks utilize the Starbucks Mark in a manner similar to that employed in Starbucks-owned retail outlets.

               (c)     Starbucks coffees are served from dedicated retail areas located in 431 Bames & Noble Bookstores ("B&N Cafes"). B&N Cafes serve Starbucks® brand coffee and espresso beverages brewed on site in accordance with procedures established by Starbucks, and prominently display the Starbucks Mark.

               (d)     Starbucks has entered into similar license agreements with major U.S. supermarkets, such as Safeway, Fred Meyer and Albertson's, through which Starbucks locations are operated within the supermarkets.

                (e)     Starbucks sells its coffee to hundreds of restaurants, airlines (including United Airlines), sport and entertainment venues, motion picture theaters, hotels (including all corporate-owned Sheraton and Westin Hotels in the U.S., which offer Starbucks® coffee in- room) and cruise ship lines. Starbucks permits these customers to use the Starbucks Mark on their menus and in certain promotional materials.

                (f)       Starbucks distributes several exclusive coffee blends, Starbucks® brand ice  cream and bottled Frappuccino® coffee drinks at grocery stores and similar retailers nationwide.  Each of these products prominently bears the Starbucks Mark.

                (g)     Starbucks operates an Internet Web site (<www.starbucks.com>) that  generates on average, 350,000 "hits" from visitors per week. The Starbucks Mark is  incorporated into many of the individual "pages" within this site, and is displayed on much of the  branded merchandise offered for sale on-line.

As a result of the foregoing and similar use and promotion, the Starbucks Mark has  become a famous and highly distinctive trademark.

            

Black Bear's Misappropriation and Misuse of the Starbucks Mark

 

12.     Defendant Black Bear has sought improperly to capitalize on Starbucks investment in the creation and positive reputation of the Starbucks Mark, and the resulting popularity that the Starbucks Mark has attained. Specifically, Black Bear manufactures and sells a blend of roasted coffee under the name "Charbucks Blend." Inclusion of the term "char" as part of the Charbucks name immediately creates, in the minds of many consumers, the image of charred coffee beans, which has obvious negative connotations among potential purchasers of coffee products. Further, "Charbucks" is so similar to "Starbucks" that consumers who hear or read the Charbucks name will instantly think of Starbucks.

13.     After learning of Black Bear's use of the Charbucks name, counsel for Starbucks contacted Black Bear and demanded that it cease and desist from all further use of the Charbucks mark. After extended negotiations. Black Bear and Plaintiffs reached an agreement in principle pursuant to which Black Bear agreed to terminate its use of the Charbucks name. Black Bear, however, refused to finalize this agreement, and continued to sell Charbucks Blend coffee.

14.     Plaintiffs are informed and believe and thereupon allege that, for some period of time following their negotiations with Black Bear, defendant ceased selling Charbucks Blend products. However, Plaintiffs subsequently learned that Black Bear had renewed its sale of Charbucks coffee products, and Plaintiffs therefore renewed their demand that Black Bear terminate its use of this mark. To date, however, Black Bear has failed and refused to comply with this demand. Plaintiffs are informed and believe that Black Bear is continuing to sell Charbucks Blend, including to consumers located in the State of New York and the Southern District of New York, including by means of orders taken via its Web site and by a toll free telephone ordering system.

15.     Plaintiffs are informed and believe and thereupon allege that Black Bear chose to use the Charbucks mark with the intent and purpose of trading off of the goodwill that the Starbucks Mark currently enjoys and/or misleading and confusing consumers. As a result, Plaintiffs' reputation is being tarnished and the value and distinctiveness of Plaintiffs' Starbucks Mark are being diminished. Plaintiffs are informed and believe and thereupon allege that, absent the intervention of this Court, defendant's illegal actions will continue, and Plaintiffs and consumers will continue to be harmed.

 

Count I

 

                    (for Trademark Dilution, 15 U.S.C. §§ 1125(c) and 1127)

 16.     Plaintiffs specifically reallege and incorporate herein by reference each and every allegation set forth above.

17.     Plaintiffs have used and continue to use the Starbucks Mark in interstate commerce. The Starbucks Mark has become and continues to be "famous" within the meaning ofl5U.S.C.§1125(c).

18.     Defendant has made and threatens to continue to make commercial use in commerce of a variation of the Starbucks Mark in a manner that causes dilution of the distinctive quality of such mark, and lessens the capacity of such mark to identify and distinguish Plaintiffs' goods and services.

19.     Plaintiffs are entitled to an order from this Court preliminarily and permanently enjoining defendant, its agents, employees and others acting in concert with them, from directly or indirectly making any further commercial use of the mark "Charbucks," or any other names, marks or logos that are substantially similar to the Starbucks Mark.

20.    Because defendant has willfully intended to cause dilution of the Starbucks Mark, Plaintiffs are further entitled, pursuant to 15 U.S.C. §§1117 and 1125(c)(2), to recover Plaintiffs' costs of suit and reasonable attorneys' fees.

Count II

 

(for Trademark Infringement, 15 U.S.C. § 1114(1))

21.    Plaintiffs specifically reallege and incorporate by reference each and every allegation set forth above.

22.    The United States Patent and Trademark Office has granted federal trademark registrations to the Starbucks Mark. Copies of certain of these registrations are attached hereto as Exhibit "A." U.S. Brands owns the exclusive trademark rights and privileges in and to the Starbucks Mark in the United States. U.S. Brands licenses its trademark rights in the Starbucks Mark to Starbucks, which uses the Starbucks Mark as a designation of source and quality for its goods and services. Starbucks uses the registration symbol"®" on its goods and in advertising associated with the Starbucks Mark.

23.    Defendant is using a copy or colorable imitation of the Starbucks Mark in a manner that is likely to confuse, deceive and/or cause mistake among consumers and therefore is infringing Plaintiffs' rights in the Starbucks Mark in violation of 15 U.S.C. § 1114(1).

24.    Plaintiffs have no adequate remedy at law for defendant's infringement of the Starbucks Mark, in that: (i) the Starbucks Mark is unique and valuable property, injury to which cannot adequately be compensated by monetary damages; (ii) the injury to Plaintiffs resulting from the infringement are not precisely and fully ascertainable; (iii) the infringement injures and threatens to continue to injure Plaintiffs' reputation and goodwill; and (iv) the injury resulting to Plaintiffs from defendant’s wrongful conduct, and the conduct itself, are continuing, and Plaintiffs would be required to bring a multiplicity of suits to achieve full redress for the injuries caused thereby.

25.    Unless restrained, defendant's infringement of the Starbucks Mark will continue to cause irreparable injury to Plaintiffs, both during the pendency of this action and thereafter.  Plaintiffs are therefore entitled to an order from this Court preliminarily and permanently enjoining defendant and its agents, employees and others acting in concert with them, from directly or indirectly infringing the Starbucks Mark in any manner, including by using any name, mark, design or logo that is confusingly similar to the Starbucks Mark in connection with the sale, offer for sale, advertising, or promotion of any goods or services.

26.    Plaintiffs are further entitled to recover their attorneys' fees and other costs herein.

 

Count III

 

(for violation of 15 U.S.C. § 1125(a))

 

27.    Plaintiffs specifically reallege and incorporate herein by reference each and every allegation set forth above.

28.    The acts of defendant alleged herein, including its use of the "Charbucks" mark, are likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of defendant or defendant's product with Plaintiffs, or as to the sponsorship, or approval of defendant's goods, services or commercial activities by Plaintiffs. Defendant's actions further misrepresent the nature, characteristics or qualities of defendant's goods, services or commercial activities.

29.    Plaintiffs have no adequate remedy at law for the foregoing wrongful conduct of defendant, in that: (i) defendant's actions injure and threaten to continue to injure Plaintiffs' unique and valuable property, injury to which cannot adequately be compensated by monetary damages; (ii) the injury to Plaintiffs from defendant's wrongful actions are not precisely and fully ascertainable; (iii) the wrongful acts of defendant injure and threaten to continue to injure Plaintiffs' reputation and goodwill; and (iv) the injury resulting to Plaintiffs from defendant's wrongful conduct, and the conduct itself, are continuing, and Plaintiffs would be required to bring a multiplicity of suits to achieve full redress for the injuries caused thereby.

30.    Unless restrained, the foregoing wrongful acts of defendant will continue to cause irreparable injury to Plaintiffs, both during the pendency of this action and thereafter. Plaintiffs are therefore entitled to an order from this Court preliminarily and permanently enjoining defendant and its agents, employees and others acting in concert with them, from directly or indirectly: (i) manufacturing, producing, distributing, circulating, selling, offering for sale, advertising, promoting or displaying any product which tends to relate or connect such product in any way to Plaintiffs or to any goods or services offered, provided, sold, manufactured, sponsored or approved by, or connected with Plaintiffs; (ii) using any mark that is confusingly similar to the Starbucks Mark; and/or (iii) making any false description or representation of origin concerning any goods offered for sale by defendant.

31.    Plaintiffs are further entitled to recover their attorneys' fees and other costs herein.

 

CountIV

 

(For Trademark Dilution, New York General Business Law Section Section 360-1)

 

32.    Plaintiffs specifically reallege and incorporate herein by reference each and every allegation contained in Paragraph 1 through 31 hereof.

33.    By virtue of Starbucks' long and continuous use of the Starbucks Mark, it has become and continues to be "truly distinctive" within the meaning of New York General Business Law Section 360-1.

34.    Defendant has made and continues to make commercial use in commerce of the Starbucks Mark in a manner that causes dilution of the distinctive quality of such mark, and lessens the capacity of such mark to identify and distinguish Starbucks' goods and services.

35.    Plaintiffs are entitled to an order from this Court preliminarily and permanently enjoining defendant, its agents, employees and others acting in concert with them, from directly or indirectly making any further commercial use of the Starbucks Mark, or any other names, marks or logos that are substantially similar thereto.

 

CountV

 

Violation of New York General Business Law S5 349 and 350

 

36.    Plaintiffs specifically reallege and incorporate herein by reference each and every allegation set forth above.

37.    This Count sets forth a claim for deceptive acts and business practices and false advertising in violation of New York General Business Law §§ 349 and 350.

38.    Defendant's commercial use of the Charbucks mark represents a deliberate attempt to mislead consumers because defendant is causing a likelihood of confusion or of misunderstanding as to defendant's goods and services, and those of third parties, having a source in or the sponsorship, approval or certification of Plaintiffs, or as being affiliated, connected or associated with Plaintiffs, and are otherwise engaging in conduct which creates a likelihood of confusion between Plaintiffs' and defendant's products and services, creating misunderstandings of the source of defendant's products and services as being Plaintiffs' products and services.

39.    By engaging in such false and misleading advertising, defendant has engaged in  deceptive acts and business practices in violation of New York General Business Law § 349, and false advertising in violation of New York General Business Law § 350.

40.    By reason of defendant's above-described unlawful activities. Plaintiffs have sustained irreparable harm, and will continue to be irreparably harmed unless this Court enjoins defendant from continuing its unlawful acts. Plaintiffs have no adequate remedy at law.

 

Count VI

 

Unfair Competition Under New York Common Law

 

41.    Plaintiffs specifically reallege and incorporate herein by reference each and every allegation set forth above.

42.    Plaintiffs have widely advertised and used the Starbucks Mark to identify their goods and services. By virtue of such advertising and use, the Starbucks Mark has come to identify Plaintiffs as the source of goods and services marketed under the Starbucks Mark and such mark has come to represent valuable goodwill which is owned by Plaintiffs.

43.    Defendant's deliberate imitation and copying of the Starbucks Mark is without the permission of Plaintiffs, and defendant's use of the Charbucks mark constitutes common law trademark infringement and unfair competition and is unlawful.

44.    By reason of defendant's above-described unlawful activities. Plaintiffs have already suffered irreparable harm, and will continue to be irreparably harmed unless this Court enjoins defendant from continuing its unlawful acts. Plaintiffs have no adequate remedy at law.

WHEREFORE, Plaintiffs pray for judgment as follows:

1.       On each and every Claim for Relief alleged herein, for preliminary and permanent  injunctive relief as hereinabove described;

2.      For their costs of suit herein, including their reasonable attorneys' fees; and

3.       For such other, further or different relief as this Court may deem just and proper.

Dated: New York, New York

       February 8, 2002

 

JONES, DAY, REAVIS & POGUE

By:

   Bonnie L. Hemenway (BH-2246)

   Barbra S. Levy (BL-3306)

599 Lexington Avenue

New York, New York 10022

(212) 326-3939

 

 

Of Counsel:

John C. Rawls

JONES, DAY, REAVIS & POGUE

555 West Fifth Street, Suite 4600

Los Angeles, California 90013

(213) 489-3939