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Oct. 26 — A midwestern winemaker who lost a trademark case over use of the term “Hallowine” violated a permanent injunction by labeling its holiday-spiced wine “Hallow Wine,” the U.S. District Court for the Eastern District of Wisconsin ruled Oct. 23.
Finding the defendant in contempt, the court looked askance at the argument that the winemaker couldn't use the term “Halloween Wine” because it might put off consumers who believe that celebrating Halloween violates their religious beliefs.
C&N Corp. d/b/a Door Peninsula Winery of Sturgeon Bay, Wis., and Illinois River Winery Inc. of North Utica, Ill., owned by Gregory Kane, are competing wineries. Each featured a product they called “Hallowine,” a wine flavored with apples and spices.
Door Peninsula began selling Hallowine in 1998, and Illinois River followed suit in 2005. In 2006, Illinois River sought to register “Hallowine” with the Patent and Trademark Office. Door Peninsula opposed the application, and the PTO eventually determined that Door Peninsula's use had priority. C&N Corp. v. Illinois River Winery, No. 91174718 (T.T.A.B. Oct. 21, 2008).
Illinois River, however, continued to use the name. In March 2012, Door Peninsula sued, alleging infringement of an unregistered trademark.
Eventually, the U.S. District Court for the Eastern District of Wisconsin entered summary judgment in favor of Door Peninsula with damages.
The district court said that the TTAB ruling sustaining Door Peninsula's opposition to Illinois River's registration put Illinois River on notice that its continued use of the trademark might constitute infringement. C&N Corp. v. Kane, No. 12-00257 (E.D. Wis. June 14, 2013).
The TTAB ruling favoring Door Peninsula also precluded relitigation of the issues of priority and likelihood of confusion under the collateral estoppel or issue preclusion doctrine, the district court said, awarding Door Peninsula $500,000 in profits for trademark infringement. In November 2013, it issued a permanent injunction barring Illinois River from further use of the “Hallowine” name.
In June 2014, the U.S. Court of Appeals for the Seventh Circuit rejected Illinois River's appeal, after finding that it had not properly preserved any relevant issues. C&N Corp. v. Kane, 111 U.S.P.Q.2d 1319 (7th Cir. 2014).
By that time, Illinois River had filed for bankruptcy and was engaged in a malpractice action against its counsel.
Eventually, Door Peninsula and Illinois River entered into a settlement agreement, under which Illinois River would dismiss the bankruptcy proceeding and Illinois River's former counsel would pay Door Peninsula half of the infringement award.
Under the settlement agreement, Illinois River also said it would stop using orange on its wine labels for autumn or Halloween-themed wine, as well as bats, jack-o-lanterns or black cats.
Early this month, however, Door Peninsula moved the court for a finding of contempt after it found that Illinois River was still using “Hallow” and “Hallow Wine” on its bottles in the fall seasons of 2014 and 2015.
Mr. Kane testified that in 2014, IRW began selling wine under the name “Hallow,” which was a shortened version of the word “Halloween,” which is what IRW had called its wine since some time after this action was commenced. Kane testified that the word “Wine” was then added to the label in 2015 based on concern that customers did not know that the product contained alcohol. Kane testified that the word Wine was smaller than the word Hallow to try to distinguish, from the perspective of a customer viewing the product while holding it in his or her hand, the “Hallow” name from DPW's Hallowine.
Kane said that Illinois River had also moved some text around the label and changed the spice mixture in order to further distinguish Illinois River's “Hallow” wine from Door Peninsula's “Hallowine.”
The court rejected Illinois River's argument that in entering into the settlement agreement, Door Peninsula had given up the right to enforce the original permanent injunction against Illinois River.
The settlement was only about agreeing to collect half of the original damages award and the remaining trade dress claims that had not yet been decided.
“While the settlement agreement resolved some of the disputes between the parties, it did not address the permanent injunction or the consequences of IRW's violating it in the future,” the court said. “Having prevailed in the court of appeals, DPW had no reason to compromise that aspect of the case.”
Turning to the motion for contempt, the court found that the permanent injunction had issued an “unambiguous command” to Illinois River barring use of “Hallowine” or any “colorable variation” thereof. It then said that Illinois River was using a colorable variation of “Hallowine.”
The court rejected the argument that “Hallow” was an abbreviation for “Halloween”—to avoid offending religious consumers who objected to celebrations of Halloween—and that “Wine” was on the label merely to comply with alcoholic beverage laws.
“In fact, the fact that IRW changed the name from ‘Halloween Wine' to ‘Hallow' in 2014 is telling,” the court said. “It seems unlikely, however, that anyone in the market for a Halloween-themed wine would be put off because of the religious connotation of the word Halloween upon encountering a wine [that] was called Halloween Wine.”
It was far more likely that Illinois River simply found that consumers preferred the name “Hallowine” to “Halloween Wine.”
This failure to comply with the injunction was significant, the court said. “Kane endeavored to get as close to the line as possible and, as explained above, he actually clearly crossed it.” Thus, Illinois River had failed to take reasonable or diligent steps to comply with the injunction.
The court found Illinois River in violation of the permanent injunction and enjoined continued violation, ordering a recall of any of its “Hallow Wine” in the hands of distributors and retailers.
The court further ordered Illinois River to hand over all profits for the sale of “Hallow Wine” in 2014 and 2015 to Door Peninsula.
To contact the reporter on this story: Anandashankar Mazumdar in Washington at email@example.com
To contact the editor responsible for this story: Mike Wilczek in Washington at firstname.lastname@example.org
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