Court Grants Injunction Barring Use of Mark Outside the Borders of the United States

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 By Anandashankar Mazumdar    

Under a test set forth in 1991 federal appeals court decision, a U.S. alfalfa seed distributor sufficiently established facts justifying the issuance of an injunction extending to a defendant's use of a trademark in Saudi Arabia and other countries, the U.S. District Court for the Eastern District of California ruled April 12 (Seed Services Inc. v. Winsor Grain Inc., E.D. Cal., No. 1:10-cv-02185-AWI-GSA, 4/12/12).

Granting a permanent injunction, the court applied a standard set forth in a 1991 decision on application of U.S. trademark law to activities taking place in other countries.

Seed Company Buys Out Distributor.

Seed Services Inc. of Fresno, Calif., produces and distributes alfalfa seed and other grain seeds in the United States and in the Middle East.

Seed Services supplies seeds, such as its “Saltine” and “California Gold”-branded seeds, to distributor Winsor Grain Inc., headquartered in Bonita Springs, Fla., which sold the seed under the names “Winsor Grain” and “Pacific Grain and Seed.” William L. Cook was the principal of Winsor Grain and the primary liaison between Winsor and Seed Services.

In 2010, Seed Services and Winsor executed an asset purchase agreement, in which Seed Services agreed to pay $1 million to acquire Winsor's U.S. trademark rights in the “California Gold,” “Frisco,” “Pacific Grain and Seeds,” and “Red Panic” brand names, several logos, and other assets, such as Winsor's customer list. Winsor also agreed to stop selling grains or otherwise competing with Seed Services in the Middle East market.

However, Seed Services discovered that Winsor had sold alfalfa seeds to Erzam Agricultural Trading Co. in Saudi Arabia, and also used the “California Gold” trademark in selling Australian alfalfa seeds to the Middle East market.

Seed Services also discovered that Cook Land and Cattle Pty. Ltd., an Australian entity owned by the William L. Cook Revocable Trust, of which Cook was a director, had sought to register the “California Gold” mark in Australia.

Seed Services sued Winsor, alleging conversion, breach of fiduciary duty, fraud and deceit, recision of contract, breach of contract, and unjust enrichment. And amended complaint added claims of trademark infringement pursuant to 15 U.S.C. §1114, and unfair competition pursuant to Cal. Prof. & Bus. Code §17200.

Chief Judge Anthony W. Ishii granted Seed Services' motion for a temporary restraining order against Winsor.

Seed Services then moved for a preliminary injunction barring Winsor from using any of the trademarks that it had sold to Seed Services and from selling seeds in the Middle East.

Likelihood of Success on the Merits Shown.

In determining whether Seed Services had established a likelihood of success on the merits of its trademark claim, the court applied an eight-factor test as set forth in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341204 USPQ 808 (9th Cir. 1979).

The court found several factors weighing in Seed Services' favor, including the strength of the California Gold mark, the similarity of the two marks and the goods sold thereunder, the marketing channels, and Winsor's intent.

Regarding the factor addressing the sophistication of the indented clientele, however, the court said, “As the market appears to be wholesale transactions of alfalfa seed across large distances, the buyers are likely to be sophisticated parties who exercise a fair degree of care.”

There was also no evidence of actual confusion in the record. However, taking all the factors into account, the court concluded that Seed Services would prevail on the merits of its trademark infringement claim.

“The fact that Cook used to sell American 'California Gold' brand alfalfa seed in the past adds to the likelihood of confusion notwithstanding the fact that the buyers are assumed to be sophisticated parties,” the court said.

Next, the court found that allowing Cook and Winsor to continue selling seed under the “California Gold” name would create a likelihood of irreparable harm because “Seed Services will have lost control of its business reputation.”

Finally, the court found that the balance of the equities and the public interest favored the granting of a preliminary injunction, especially since Cook had stated that he actually had no intent to use its applied-for California Gold mark in Australia.

“So, preventing him from doing so should not be much of a burden at all,” the court said.

Extraterritoriality Issue Explored.

Additionally, the court found a valid public interest in preventing confusion in the Saudi Arabia market and in enforcing the relevant contractual obligations.

Regarding that interest, however, the court noted that ordinarily American law is not applied overseas. Ocean Garden Inc. v. Marktrade Co., 953 F.2d 500, 21 USPQ2d 1493 (9th Cir. 1991), sets forth a test for an injunction affecting activity outside the United States:  

[T]here are three criteria that must be considered: (1) there must be some effect on American foreign commerce; (2) the effect must be sufficiently great to present a cognizable injury to plaintiffs under the federal statute; (3) the interest of and links to American foreign commerce must be sufficiently strong in relation to those of other nations.  





Ocean Garden further enumerated seven factors to evaluate the third point:  

(1) Degree of conflict with foreign law …. (2) Nationality of the parties …. (3) Extent to which enforcement is expected to achieve compliance …. (4) Relative significance of effects on U.S. as compared to elsewhere …. (5) Explicit purpose is to harm U.S. commerce …. (6) Foreseeability of such effect …. (7) Relative importance of violations within the U.S.  





Applying this standard, the court found that an injunction affecting Winsor's activities outside the United States was appropriate. The court said:  

In this case, [Cook and Winsor] have not shown that any Australian or Saudi Arabian court decision has touched upon the trademarks in question. Further, Cook is an American citizen who resides in Florida and Winsor Grain is an American company. The preliminary injunction should be fully effective as Cook is a party to this case and bound to follow court orders. … The relative impact on the United States and Australia is ambiguous. However, the potential infringement would purposefully harm Seed Services's commerce in a significant manner.  





The court thus issued a preliminary injunction barring Cook and Winsor's use of the names “Winsor Grain,” “California Gold,” “Frisco,” Pacific Grain and Seed,” and the relevant logos and barring importation of seeds into the Middle East using any of those trademarks or confusingly similar marks.

The court also directed Seed Services to post a $25,000 bond.

Seed Services was represented by Thomas Scott of Belden Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, Bakersfield, Calif. Winsor Grain was represented by David Malcolm Gilmore of Gilmore Wood Vinnard & Magness, Fresno, Calif.

By Anandashankar Mazumdar  

Opinion at