Lagunitas restraining order request

8/10/2019 Lagunitas restraining order request

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NOTICE OF MOTION FOR TEMPORARY RETRAINING ORDERAND/OR PRELIMINARY INJUNCTION

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ROBERT K. CARROL, State Bar No. [email protected] E. COPELAND, State Bar No. [email protected] E. JOULANI, State Bar No. [email protected] PEABODY LLPOne Embarcadero Center, 18th FloorSan Francisco, CA 94111-3600Tel: 415-984-8200Fax: 415-984-8300

DEANNA R. KUNZE (ne Swits) IL #6287513(pro hac vice pending)[email protected] PEABODY LLP300 S. Riverside Plaza, 16th FloorChicago, IL 60606Tel: 312-425-3900

Fax: 312-425-3909

Attorneys for PlaintiffTHE LAGUNITAS BREWING CO.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

THE LAGUNITAS BREWING CO.,

Plaintiff,

vs.

SIERRA NEVADA BREWING CO.,

Defendant.

Case No. 15-cv-153

LAGUNITAS NOTICEOF EX PARTEMOTION FOR TEMPORARYRESTRAINING ORDER AND ORDER TOSHOWCAUSE FOR PRELIMINARYINJUNCTION

Date: TBDTime: TBD

Dept: TBD

Judge: TBD

Case4:15-cv-00153-JSW Document12 Filed01/12/15 Page1 of 31


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2NOTICE OF EX PARTEMOTION FOR TEMPORARY RESTRAINING ORDER

AND ORDER TO SHOW CAUSE FOR PRELIMINARY INJUNCTION

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TODEFENDANT SIERRANEVADABREWING COMPANY AND ITS COUNSEL:

PLEASE TAKE NOTICE that, at a time to be set by the Court, in the courtroom of an

Article III Judge of the United States District Court for the Northern District of California as yet

to be determined, Plaintiff The Lagunitas Brewing Company (Lagunitas) shall and hereby does

apply to this Court pursuant to Rule 65 of the Federal Rules of Civil Procedure and Local Rule

65-1 for (1) a temporary restraining order and (2) an order to show cause why a preliminary

injunction should not issue against Defendant Sierra Nevada Brewing Company (Defendant or

Sierra Nevada).

This application and motion is made on the grounds that (1) Lagunitas is likely to succeed

on the merits in establishing that Defendants proposed Hop Hunter IPA label and packaging

designs infringe the Lagunitas IPA Family of Trademarks, that (2) Lagunitas will suffer

immediate and irreparable harm unless Defendant Sierra Nevada is enjoined from using its

proposed Hop Hunter IPA label and packaging designs (or any colorable imitation thereof), that

(3) the balance of hardships tips in favor of Lagunitas, and that (4) the public interest supports the

issuance of a temporary restraining order and order to show cause why a preliminary injunction

should not be entered.

This application and motion is based on the accompanying Memorandum of Points and

Authorities; the supporting declarations and exhibits of Tony Magee, Todd Stevenson, and Sarah

Harris-John; and such other written or oral argument as may be presented at or before the time

this motion is taken under submission by the Court.

Notice of this application and motion has been given to counsel for Defendants by Robert

Carrol on January 12, 2015, via telephone and email. (Carrol Decl. 2.) In addition, pursuant to

Local Rule 65-1, a copy of the Complaint is attached as Exhibit A to Carrols Declaration in

Support of This Motion. Notice of the hearing location, date, and time will be given to Defendant

when that information is set. Delivery of this application and motion, and all supporting papers,

to Defendants counsel will be made on January 12, 2015 immediately upon the filing of this

application.



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3NOTICE OF EX PARTEMOTION FOR TEMPORARY RESTRAINING ORDER

AND ORDER TO SHOW CAUSE FOR PRELIMINARY INJUNCTION

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DATED: January 12, 2015 NIXON PEABODY LLP

By: /s/ Robert K. CarrolROBERT K. CARROLBRUCE E. COPELANDSHADY E. JOULANIDEANNA R. KUNZEAttorneys for PlaintiffLAGUNITAS BREWING CO.



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iMEMORANDUM IN SUPPORT OF EX PARTEMOTION FOR TEMPORARY RESTRAINING ORDER AND

ORDER TO SHOW CAUSE FOR PRELIMINARY INJUNCTION

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MEMORANDUM IN SUPPORT OFMOTIONFOREX PARTETEMPORARY

RESTRAINING ORDER AND ORDER TO SHOWCAUSE

FORPRELIMINARY INJUNCTION

TABLE OFCONTENTS

Page

I. INTRODUCTION ............................................................................................................... 1

II. FACTUAL BACKGROUND.............................................................................................. 2

A. The Lagunitas IPA and Its Iconic IPA Family of Trademarks............................. 2

B. The Growth of Lagunitas and Its Flagship Lagunitas IPA ...................................... 4C. Sierra Nevadas Infringing Hop Hunter IPA ........................................................... 6

III. ARGUMENT ....................................................................................................................... 9

A. Legal Standard ....................................................................................................... 10

B. Lagunitas is Likely to Succeed on Its Trademark Infringement Claims................ 11

i. Lagunitas Owns a Valid, Protectable Interest in Its IPA Family of

Trademarks................................................................................................. 11ii. Sierra Nevadas Use of the Hop Hunter IPA Design is Likely to Cause

Confusion With the Lagunitas IPA Family of Trademarks.................... 12

1) The Lagunitas IPA Family of Trademarks Is Comprised of

Strong Marks Worthy of Protection............................................... 132) The Products at Issue Are Directly Competing Products in Close

Proximity........................................................................................ 14

3) Sierra Nevadas Hop Hunter IPA Design Closely Mimics theLagunitas IPA Design and Trademarks...................................... 15

4) Actual Confusion is Likely Based Upon the Product Identity and

the Potential Customer Base. ......................................................... 165) The Products Use Similar Marketing Channels and the Same

Distribution Channels. ................................................................... 17

6) The Products Are the Same Style of Craft Beer, and Degree of CareExercised by Purchasers is Low..................................................... 18

7) Sierra Nevada is Intentionally Altering Its Design to Encroach on

Lagunitas Design .......................................................................... 198) The Products Already Address the Same Market. ......................... 20

C. Lagunitas Will Suffer Irreparable Injury Should Sierra Nevada Not be Enjoined

from Using the Infringing Hop Hunter IPA Label and Packaging Designs. ......... 20D. The Balance of Hardships Decidedly Favors Lagunitas ........................................ 22E. Granting the Requested Injunctive Relief Would Advance the Public Interest..... 23

IV. CONCLUSION.................................................................................................................. 23



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iMEMORANDUM IN SUPPORT OF MOTION FOR TEMPORARY RESTRAINING ORDER AND/OR

PRELIMINARY INJUNCTION

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TABLE OF AUTHORITIES

Page(s)

FEDERAL CASES

Acad. of Motion Picture Arts & Sciences v. Creative House Promotions, Inc.

944 F.2d 1446 (9th Cir. 1991)........................................................................................... 17, 19

Alliance for the Wild Rockies v. Cottrell

632 F.3d 1127 (9th Cir. 2011)................................................................................................... 9

AMF, Inc. v. Sleekcraft

599 F.2d 341 (9th Cir.1979)........................................................................................ 12, 15, 18

Banff, Ltd. v. Federated Dept Stores, Inc.

638 F. Supp. 652 (S.D.N.Y. 1986).......................................................................................... 17

Beer Nuts, Inc. v. Clover Club Foods Co.805 F.2d 920 (10th Cir. 1986)............................................................................................. 8, 17

Brookfield Commcns, Inc. v. West Coast Entmt Corp.174 F.3d 1036 (9th Cir .1999)..................................................................................... 10 ,18, 20

Classic Foods Intl Corp. v. Kettle Foods, Inc.

2006 WL 5187497 (C.D. Cal. 2006)....................................................................................... 17

CSC Brands LP v. Herdez Corp.

191 F. Supp. 2d 1145 (E.D. Cal. 2001)................................................................................... 19

CytoSport, Inc. v. Vital Pharmaceuticals, Inc.617 F. Supp.2d 1051 (C.D. Cal. 2009) ........................................................................ 14,15, 18

Dunhill of London, Inc. v. Kasser Distillers Prods. Corp.350 F. Supp. 1341, 175 U.S.P.Q 586 (E.D. Pa. 1972) ............................................................ 19

E. & J. Gallo Winery v. Consorzio del Gallo Nero

782 F. Supp. 457 (N.D. Cal.1991) .......................................................................................... 19

Genesee Brewing Co. v. Stroh Brewing Co.

124 F.3d 137 (2d Cir. 1997).................................................................................................... 20

Groupe SEB USA, Inc. v. Euro-Pro Operating LLC,No. 14-2767, ___F.3d___, 2014 WL 7172253 (3rd Cir., Dec. 17, 2014) .............................. 20

i4i Ltd. Partnership v. Microsoft Corp.

598 F.3d 831 (Fed. Cir. 2010)affd on other grounds by Microsoft Corp. v. i4i Ltd.Partnership, 131 S. Ct. 2238 (2011)....................................................................................... 22



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Internet Specialties West, Inc. v. MilonDiGiorgio Enters., Inc.,

559 F.3d 985, 993994 (9th Cir. 2009) .................................................................................. 23

J & J Snack Foods Corp. v. McDonalds Corp.

932 F.2d 1460 (Fed. Cir. 1991)......................................................................................... 10, 11

KP Permanent MakeUp, Inc. v. Lasting Impression I, Inc.408 F.3d 596 (9th Cir.2005).................................................................................................... 10

La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V.

762 F.3d 867 (9th Cir. 2014)................................................................................................... 14

M2 Software, Inc. v. Madacy Entmt421 F.3d 1073 (9th Cir.2005).................................................................................................. 15

Napa Valley Publg Co. v. City of Calistoga225 F. Supp. 2d 1176 (N.D. Cal. 2002) .................................................................................. 22

Nautilus Grp., Inc. v. ICON Health & Fitness, Inc.

372 F.3d 1330 (Fed. Cir. 2004)......................................................................................... 15, 16

Network Automation, Inc. v. Advanced Sys. Concepts, Inc.

638 F.3d 1137 (9th Cir. 2011)......................................................................... 12, 13, 14, 17, 21

NML Capital, Ltd. v. Spaceport Sys. Intl, L.P.

788 F. Supp. 2d 1111 (C.D. Cal. 2011) .................................................................................... 9

Patsys Brand, Inc. v. I.O.B. Realty, Inc.

317 F.3d 209 (2d. Cir. 2003)............................................................................................. 11, 13

Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc.944 F.2d 597 (9th Cir. 1991)................................................................................................... 21

Stormans, Inc. v. Selecky

586 F.3d 1109 (9th Cir. 2009)................................................................................................... 9

Stuhlbarg Intl Sales Co., Inc. v. John D. Brush & Co.

240 F.3d 832 (9th Cir. 2001)..................................................................................................... 9

Thoip v. Walt Disney Co.

736 F. Supp.2d 689 (S.D.N.Y. 2010).......................................................................... 11, 13, 14

Warner Bros. Entmt v. Global Asylum, Inc.2012 WL 6951315 (C.D. Cal. 2012)....................................................................................... 22

Winter v. Natural Res. Def. Council555 U.S. 7 (2008)...................................................................................................................... 9



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OTHER CASES

Rovio Ent. v. Royal Plush Toys, Inc.No. C 12-5543 SBA, 2012 WL 5936214 (N.D. Cal. 2012).................................................... 21

OTHER AUTHORITIES

Federal Rule of Civil Procedure 65................................................................................................. 1

Local Rule 65 .................................................................................................................................. 1



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I. INTRODUCTION

Pursuant to Federal Rule of Civil Procedure 65 and Local Rule 65, Plaintiff The Lagunitas

Brewing Co. (Lagunitas) moves this Court for an emergency temporary restraining order, and

also requests that the Court issue an Order to Show Cause setting a schedule for briefing and a

hearing on a preliminary injunction against Defendant Sierra Nevada Brewing Co., (Sierra

Nevada). Lagunitas, the fifth largest craft beer brewery in the nation and headquartered in

nearby Petaluma, seeks to prevent Sierra Nevada, the second largest craft brewery in the nation

and also based in nearby Chico, from using a proposed design to market and sell a not-yet-

released India Pale Ale that, on information and belief, will be released as early as mid-January

2015 under the name Hop Hunter IPA. These proposed designs for this Hop Hunter IPA beer

bottle label, along with the associated six-pack and twelve pack carrier cartons, make a radical

departure from Sierra Nevadas traditional branding, which featured a colorful nature scene

crowned by the Sierra Nevada banner with the specific beers name in a sans serif font

underlining the design.

Instead, the proposed Hop Hunter IPA designs have adopted the large, all-capital, bold,

black, serif IPA lettering of the best-selling India Pale Ale in Californiathe Lagunitas IPA.

Sierra Nevada also has muted its traditional colorful label and moved its banner from itstraditional position in its proposed Hop Hunter IPA design. But this part of the design change is

not unprecedented for Sierra NevadaSierra Nevada uses this framework to market and sell

beers jointly brewed with other U.S. breweries. Marketed as collaboration brews and initially

sold as a mixed 12-pack called Beer Camp, Sierra Nevada now sells packs of the most

successful of these collaboration brews with this altered design. Lagunitas, founded on a

culture of individuality, does not produce collaboration brews. In sum, Sierra Nevadas use of the

stylized IPA lettering, along with the overall design changes, so closely mimics the

trademarked designs of Lagunitas that consumer confusion is inevitableparticularly in light of

Sierra Nevadas reputation for collaboration brews.



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For nearly twenty years, Lagunitas has devoted its resources into making its flagship

Lagunitas IPA uniquely recognizable among the consuming public and a perennial leader in sales

of India Pale Ales. This Court should not allow Sierra Nevada with its superior market power

and resources, to infringe the Lagunitas IPA trademarks and trade off of the hard-earned

goodwill and reputation of Lagunitas and its flagship Lagunitas IPA product. Lagunitas,

therefore, respectfully requests that the Court issue a temporary restraining order prohibiting this

infringement and grant the other requested relief.

II. FACTUAL BACKGROUND

Founded in 1993, Lagunitas has become one of the fastest growing craft breweries in the

United States. Based in Petaluma, California, Lagunitas began by distributing its products in

California. By 1997, Lagunitas was distributing its flagship Lagunitas IPA in Maryland and

Oregon as well. Today, Lagunitas distributes its craft beers, including its flagship Lagunitas IPA,

in 44 states and three other countries and recently opened a second production facility in Chicago,

Illinois. (Declaration of Tony Magee (Magee Decl.) at 5.)

A. The Lagunitas IPA and Its Iconic IPA Family of Trademarks

Lagunitas consistently produces top-quality, critically-heralded beers, and, while it

produces a variety of beers, Lagunitas is most-recognized for its ales. (Magee Decl. 2.) The

most notable, widely-recognized, and longest-selling of these ales is the Lagunitas IPA, an India

Pale Ale. Id. The Lagunitas IPA is marketed and sold using the large, all-capital, bold, black,

centralized IPA lettering in its labels, packaging, and family of trademarks, as shown below:

Figure 1. Figure 2.



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When Lagunitas began selling its now iconic IPA beer in 1995, there existed only a

handful of other brewers who produced an India Pale Ale, and, on information and belief, no

other company had marketed or sold its India Pale Ale using the acronym IPA. Instead,

brewers focused their brand identities around visual cues involving either sea travel or themes

representative of the culture of India.

The founder and current Chief Executive Officer of Lagunitas, Tony Magee, followed a

different path for the Companys flagship beer and designed the labels to prominently feature the

acronym IPA. Since then, the Lagunitas IPA has become the Companys flagship

beer. (Magee Decl. 8.) It is available year-round and has been the top-selling India Pale Ale in

California for the past decadeand one of the best-selling India Pale Ales in the nation. Id.

While other brewers have adopted the shorthand parlance of IPA to market their India

Pale Ales, only Lagunitas is identified with the large, bold, black, centralized IPA lettering

shown in Figures 1 and 2 above. In addition to its distinguished IPA beer, much of the success of

the Lagunitas IPA can be attributed to its iconic IPA family of trademarks. Id. The Lagunitas

IPA trademarks have become well-known and well-recognized in the craft brew industry

specifically, and in the alcoholic beverage industry, generally. (Magee Decl. 8, 10.)

Consumers of beer and other alcoholic beverages recognize the Lagunitas IPA family of

trademarks as signifying the quality of India Pale Ale that they have come to associate with the

Lagunitas IPA exclusively. (Magee Decl. 9.)

Indeed, Lagunitas has invested substantial amounts of time and millions of dollars in

promoting the Lagunitas IPA with the Lagunitas IPA family of trademarks. (Magee Decl.

9, 11.) Lagunitas is unique among many of its competitors in that the Companys founder, Tony

Magee, still designs the beer labels and strives to instill personality into each of the beer recipes

and the corresponding labels and packaging the Company makesshowcasing the individuality

of each product. (Magee Decl. 9.) As a result of the efforts of Lagunitas over almost 20 years

of continuous use, its trademarks have gained an excellent reputation and a high degree of

recognition among the beer consuming public. (Magee Decl. 9.)



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C. Sierra Nevadas Infringing Hop Hunter IPA

Lagunitas recently learned that Sierra Nevada, its head-to-head competitor in the craft

beer industry, plans to use the following designs and packaging in connection with the sale of an

India Pale Ale it calls Hop Hunter IPA:

Figure 3. Image from Sierra Nevada website, http://www-origin.cdn.sierranevada.com/beer/year-round/hop-hunter-ipa.

(Stevenson Decl. 22.) Sierra Nevada is the nations second largest craft brand by volume of

sales. (Stevenson Decl. 20.) Among all beer brands (including mass domestics), Sierra Nevada

ranks as the 14th largest brand family by dollar sales, posting 17% growth in the last 13 weeks,

according to IRI data. (Stevenson Decl. 12.)

Lagunitas first learned of these proposed designs via an article on brewbound.com

reviewed by Lagunitas CEO, Tony Magee. (Magee Decl. at 16.) Lagunitas, through its counsel,

sent a cease and desist letter to Sierra Nevada on December 5, 2014. (Magee Decl. at 17.) Sierra

Nevada provided a formal response on December 11, 2014, and although the parties discussed the

issue further in an attempt to negotiate an amicable solution, no such resolution was reached, and

when an impasse became apparent, Lagunitas promptly filed this lawsuit. Id.

While those communications continued, the BevMo! website, where both Lagunitas and

Sierra Nevada products are sold, was updated to list the Hop Hunter IPA in 6-pack and 12-pack

offerings (though not currently in stock). BevMo! currently markets the Hop Hunter IPA

alongside the Lagunitas IPA in the same categories, and when the Hop Hunter IPA is released, it



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appears that both beers will be sold alongside each other. (Stevenson Decl. 24.) Figure 4 below

shows the proposed Hop Hunter IPA Six-Pack from the BevMo! Website in comparison with the

Lagunitas IPA Six-Pack. (Stevenson Decl. 24.)

Figure4. Proposed Sierra Nevada Hop HunterIPA Six-Pack Image from BevMo! website.

Figure5. Lagunitas IPA Six-Pack.

The proposed label and packaging designs for the Hop Hunter IPA mimics the large, all-

capital, bold, black IPA lettering in a serif font selection that is not unlike that of, and is in fact

remarkably similar to, the iconic Lagunitas IPA design. The all capital, large, bold IPA

lettering is the most prominent feature of its new design, again remarkably similar to the iconic

Lagunitas design, including the use of bold, black serif lettering and the distinctive kerning

between the P and the A characters. Moreover, in the case of the neck label shown above in

Figures 3 and 4, the proposed Sierra Nevada IPA lettering is also depicted with the distinctive

weathered look that is featured in the iconic Lagunitas design.

Significantly, Sierra Nevada, currently the second largest craft brewery by sales by

volume, now appears to be making a radical departure from its traditional label designs. The

traditional Sierra Nevada design features a colorful nature scene capped by the Sierra Nevada

banner and footed with smaller sans serif lettering (without the short lines across the top and

bottom of the letters) indicating the name and/or type of the beer (i.e., Extra, White,



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Sierra Nevada heavily promoted its Beer Camp Across America tour of festivals and

beer releases to celebrate the opening of its new brewery in North Carolina. On information and

belief, the Hoppy Lager now sold by Sierra Nevada in 6-packs and 12-packs was a

collaboration between Sierra Nevada and Ballast Point Brewing Company located in San Diego,

California; in other words, the Hoppy Lager has been changed from part of the Beer Camp 12-

pack to a free-standing product. (Magee Decl. 21.)

As is evident in Figure 7 above, Sierra Nevada departed from its traditional label design in

its promotion of the collaboration Hoppy Lagerand now, the parts of the Hop Hunter IPA

design that arent mimicking the Lagunitas IPA designs are conformed to this Sierra Nevada

collaboration design. This leads Lagunitas to conclude the obviousthat the proposed design is

an intentional attempt to trade on the brand recognition and equity Lagunitas has established with

its iconic Lagunitas IPA beer.

The Hop Hunter IPA label includes the same overall shape and style of lettering, the same

prominent and centered placement, and the same bold use of black color. The overall visual

impressions of the proposed Hop Hunter IPA label to the beer-drinking consumer, looking across

a bar at a logo on a tap handle, shopping in the beer aisle of a supermarket, or visiting a beer

specialty store, creates confusion as to the source, sponsorship, and/or approval of the Hop Hunter

IPA product with the Lagunitas IPA. (Magee Decl. 22, 23.)

III. ARGUMENT

In this case, irreparable harm to the iconic Lagunitas IPA brand is imminent. Sierra

Nevada, the second largest craft brewer in the United States, intends to release its Hop Hunter

IPA with its infringing labeling and packaging shortly. Once Sierra Nevada floods the

marketplace with its competing product bearing the infringing design, consumer confusion is

highly likely, resulting in a near-certain hit to Lagunitas market share in the India Pale Ale

category of beer and the craft category generally. Even worse, it will be extremely difficult to

quantify or remedy the loss of market share caused by the infringing mark, particularly because

the goods at issue herespecifically, craft beersare low cost items that consumers are less



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likely to complain about, or return, when receiving an unintended product. See, e.g., Beer Nuts,

Inc. v. Clover Club Foods Co., 805 F.2d 920, 928 (10th Cir. 1986) (Purchasers are unlikely to

bother to inform the trademark owner when they are confused about an inexpensive product.)

For the reasons set forth in detail below, a temporary restraining order is necessary to

maintain the status quo in the marketplace and protect Lagunitas established rights in its family

of marks. Furthermore, an Order to Show Cause regarding the issuance of a preliminary

injunction should issue for the same reasons.

A. Legal Standard

The standard for issuance of a preliminary injunction is identical to the standard for

issuance of a temporary restraining order. NML Capital, Ltd. v. Spaceport Sys. Intl, L.P., 788 F.

Supp. 2d 1111, 1117 (C.D. Cal. 2011) (quoting Lockheed Missile & Space Co. v. Hughes Aircraft

Co., 887 F. Supp. 1320, 1323 (N.D. Cal. 1995); see also Stuhlbarg Intl Sales Co., Inc. v. John D.

Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001).

Generally, a party seeking a preliminary injunction (or temporary restraining order) is

required to make a showing as to each of four elements: (1) a likelihood of success on the merits,

(2) a likelihood of irreparable injury to the plaintiff if injunctive relief is not granted, (3) a balance

of hardships favoring the plaintiff, and (4) an advancement of the public interest. Stormans, Inc.

v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009); see alsoWinter v. Natural Res. Def. Council, 555

U.S. 7, 20 (2008). A preliminary injunction also is appropriate if a plaintiff satisfies the serious

questions test by raising serious questions going to the merits (as opposed to a likelihood of

success), demonstrating that the balance of hardships tips sharply in the plaintiffs favor, and

satisfying the remaining two factors. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127,

1134-35 (9th Cir. 2011) (stating that serious questions going to the merits and a balance ofhardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction,

so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the

injunction is in the public interest). Lagunitas can satisfy each of the four factors entitling it to



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preliminary injunctive relief, and with this framework in mind, Lagunitas will address each factor

of the four factors in turn.

B. Lagunitas is Likely to Succeed on Its Trademark Infringement Claims

To demonstrate a likelihood of success on the merits for its trademark claims,1

Lagunitas

must show: (1) it owns a valid mark, and thus a protectable interest, and (2) the alleged infringers

use of the mark is likely to cause confusion. See KP Permanent MakeUp, Inc. v. Lasting

Impression I, Inc., 408 F.3d 596, 602 (9th Cir.2005). In this case, Lagunitas satisfies both of

these requirements.

i. Lagunitas Owns a Valid, Protectable Interest in Its IPA Family of

Trademarks.

A registration is prima facie evidence of the validity of a registered trademark and of the

registrants exclusive right to use the mark on the specified goods. Brookfield Commcns, Inc. v.

West Coast Entmt Corp., 174 F.3d 1036, 1046 (9th Cir .1999). As detailedsupra, Lagunitas has

been granted registrations by the U.S. Patent and Trademark Office (USPTO) for four of its

IPA designs used in connection with the sale of the Lagunitas IPA. Lagunitas also has

established common law rights under California law in those marks and in its two approved

applications through nearly 20 years of continuous use. Each of these registrations andapplications prominently features the IPA lettering centered in the mark, in large, all-capital

bold, black letters.

Not only does Lagunitas hold protectable interests in each of the registred marks and

applications, but, through the use of these marks together in marketing, advertising, and selling

the Lagunitas IPA and the Lagunitas brand generally, Lagunitas has a protectable right in the core

common element of that group of trademarks, referred to herein as the Lagunitas IPA Family

of Trademarksnamely, the stylized IPA lettering. A group of marks forms a family when

the individual marks have a recognizable common characteristic, wherein the marks are

1 A temporary restraining order and/or a preliminary injunction should be granted if justone asserted cause of action is found likely to succeed where, as here, the causes of action sharecommon elements.See Dr. Suess Ent.,924 F. Supp. 1559, 1576 (S.D. Cal 1996).



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composed and used in such a way that the public associates not only the individual marks, but the

common characteristic of the family, with the trademark owner. J & J Snack Foods Corp. v.

McDonalds Corp., 932 F.2d 1460, 1462 (Fed. Cir. 1991). Whether a family of marks exists can

be determined by considering (1) whether, prior to the junior users entry, the marks in the

alleged family were used and promoted in such a way as to create public perception of the

[common element] as an indication of source; and (2) whether the [the common element] is

distinctive.Thoip v. Walt Disney Co., 736 F. Supp.2d 689, 706-07 (S.D.N.Y. 2010) (Indeed, the

bold, block typefacehelps to tie [Plaintiffs] individual marks together into a family of marks.)

A stylized version of a descriptive mark may be quite distincitive. Patsys Brand, Inc. v. I.O.B.

Realty, Inc., 317 F.3d 209, 217 (2d. Cir. 2003). Finally, the owner of a family of marks need not

prove rights in the common element of the marks alone; rather, the relevant inquiry is into the

distinctiveness of the marks as a whole. J & J Snack Foods Corp. v. McDonalds Corp., 932 F.2d

1460, 1462 (Fed. Cir. 1991).

Lagunitas has established its rights in the Lagunitas IPA Family of Trademarks used in

conjunction with its flagship IPA craft beer that indicate the Laguanitas brand through use of

large, all-capital, bold, black letters centered prominently in the middle of the design mark that

are marketed and advertised together, as shown on the Lagunitas website, www.lagunitas.com. 2

As discussed further below, the Lagunitas IPA Family of Marks is inherently distinctive and

distinguishes itself from other marks, and therefore Lagunitas has protectible rights in its family

of marks.

ii. Sierra Nevadas Use of the Hop Hunter IPA Design is Likely to

Cause Confusion With the Lagunitas IPA Family of Trademarks.

Having established its valid, protectable rights both in its individual IPA trademarks and

in its IPA Family of Trademarks, Lagunitas also can demonstrate that Sierra Nevadas

2 Lagunitas also applies the distinctive style of lettering it developed for its IPA to itsPilsner as PILS and its pale ale as PALE. Lagunitas advertises these marks side-by-side, forexample, in its Petaluma, California tap room as shown in the photo attached to the Affidavit ofTony Magee as Exhibit 1.



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proposed design is likely to cause confusion in the marketplace. The Ninth Circuit uses the eight

factor test described inSleekcraftto evaluate whether there is a likelihood of confusion between

marks and therefore infringement. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir.1979).

The eight factors for determining whether consumers would likely be confused by related goods:

[1] strength of the mark; [2] proximity of the goods; [3] similarity of the marks; [4] evidence of

actual confusion; [5] marketing channels used; [6] type of goods and the degree of care likely to

be exercised by the purchaser; [7] defendants intent in selecting the mark; and [8] likelihood of

expansion of the product lines. Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638

F.3d 1137, 1145 (9th Cir. 2011). However, the list of factors is intended as an adaptable proxy

for consumer confusion, not a rote checklist, and therefore should be applied flexibly. Id.

As discussed in detail below, the overwhelming majority of factors favor Lagunitas, and therefore

success on the merits is likely.

1) The Lagunitas IPA Family of Trademarks Is Comprised of

Strong Marks Worthy of Protection.

The strength of a mark depends on how obvious its connection is to the good or service to

which it refers. Network Automation, 638 F.3d at 1145. Marks may be measured by conceptual

strength and commercial strength, but at the preliminary injunction stage, conceptual strength is

the proper focus; commercial strength is typically not considered because it requires an evidence-

intensive inquiry.Id.

Fundamentally, the less obvious the connection between a mark and the good or service it

refers to, the higher the conceptual strength., as expressed along the spectrum of distinctiveness

that includes generic, descriptive, suggestive, arbitrary, and fanciful marks. Id. Here the stylized

all-capital, bold, black, centralized IPA lettering used in the Lagunitas IPA Family of

Trademarks is not related to the good, i.e. craft beer. Because these stylistic elements are

arbitrary with respect to the product they are associated with, the marks are highly distinctive and

worthy of a high degree of protection. Notably, the Laganitas IPA design is quite distinctive from

the lettering style used in the trademarks of other craft beer companies. (Stevenson Decl. 14.)



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In sum, the products are directly competing for the same purchasers, and from the

consumer perspective, one product could serve as a substitute for the other. Therefore, the risk of

confusion is especially great. See CytoSport, Inc.at 1070 (concluding that, because two beverage

products are in direct competition and compete for the same purchaser, the proximity factor

strongly favors a finding of likelihood of confusion). Because Sierra Nevada is adopting a

highly similar design, on a directly competing India Pale Ale product, the proximity factor

strongly favors Lagunitas.

3) Sierra Nevadas Hop Hunter IPA Design Closely Mimics the

Lagunitas IPA Design and Trademarks

To assess similarity, the marks are to be considered as a whole, as [they] appear in the

marketplace. M2 Software, Inc. v. Madacy Entmt, 421 F.3d 1073, 1082 (9th Cir.2005)

(citations omitted). Similarities between the marks weigh more heavily than differences. AMF

Inc., 599 F.2d at 351.

Additionally, the similarity of the marks and the relation of the goods are often

interdependent, such that the more closely related the goods are, the more likely consumers will

be confused by similar marks. Nautilus Grp., Inc. v. ICON Health & Fitness, Inc., 372 F.3d

1330, 1345 (Fed. Cir. 2004). In other words, if a consumer encounters two related goods or

services within the same market, less similarity between the marks would be required for

confusion of that consumer to be likely. Id. Therefore, a lower standard of similarity is

employed when comparing marks for closely related goods. Id. (affirming district court

acceptance of a lesser showing of similarity where the products bearing the marks were

essentially identical).

Here, the productscraft India Pale Ale beersare essentially identical, so the lowest

standard of similarity is required. Yet exemplifying the old adage a picture is worth a thousand

words, the high degree of similarity between the two designs is apparent as shown in Figures 4

and 5, supraat page 7.



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The high degree of similarity is easily observed between Sierra Nevadas prominent all-

capital, large, bold, black, centralized IPA lettering in its infringing design and the long-

standing Lagunitas IPA design. In each of the photos above, the bold, black, stylized IPA is

the central, dominant portion of the packaging. In fact, on the Sierra Nevada 6-pack, the bold,

black, capital IPA is present infourplaces when viewing the 6-pack from the front: one on the

box, and one of each of the necks of the three bottles. Notably, on the necks of the bottles, the

hop hunter graphic is barely visible, but the bold, black, block-style IPA continues to stand

out. As is clear from viewing the above,the use of the Sierra Nevada IPA design alongside the

Lagunitas IPA design is likely to create substantial confusion among consumers, particularly

given that both designs are used in connection with craft India Pale Ales.

This likelihood of confusion increases when a consumer views the parties respective

marks from those settings in which a consumer would typically view the parties respective

productsat a distance within a bar or sitting on a refrigerated store shelf. (Magee Decl. 15.)

Particularly when viewing Sierra Nevadas IPA designs from a distance, the consumer will

identify the largest part of the design the large, black, bold, centralized IPA lettering and

associate the product with the iconic Lagunitas IPA design. See, e.g., Banff, Ltd. v. Federated

Dept Stores, Inc., 638 F. Supp. 652, 656 (S.D.N.Y. 1986) (the similarity of typefaces must be

considered as aggravating the similar impression generated by the two closely worded labels);

Classic Foods Intl Corp. v. Kettle Foods, Inc., 2006 WL 5187497, at *10 (C.D. Cal. 2006)

(citing McCarthy on Trademarks for the rule that [i]f defendant has used plaintiffs mark in the

same lettering style, color, format, etc., then the likelihood of confusion is increased). Because

the designs at issue are highly similar, this factor also favors Lagunitas.

4) Actual Confusion is Likely Based Upon the Product Identityand the Potential Customer Base.

In the Ninth Circuit, the importance of actual confusion is diminished at the preliminary

injunction stage due to the minimal evidence typically available at this early stage of litigation.

See Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d at 1151 (The district



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court correctly concluded that this factor should be accorded no weight [at the preliminary

injunction stage]). And, although a showing of actual confusion among consumers is a telling

indication of likely confusion, actual confusion is not necessary to a finding of likelihood of

confusion under the Lanham Act. Acad. of Motion Picture Arts & Sciences v. Creative House

Promotions, Inc., 944 F.2d 1446, 1456 (9th Cir. 1991). Courts also recognize that the absence of

evidence of actual confusion is not surprising when the cost of the products at issue is low. Beer

Nuts, Inc. v. Clover Club Foods Co., 805 F.2d 920, 928 (10th Cir. 1986) (absence of such

evidence doesnotnecessarily support a finding ofno likelihood of confusion, especially when the

products involved are inexpensive) (emphasis in original).

While Lagunitas expects to be able show evidence of actual confusion, such evidence is

admittedly limited at this time, primarily because Sierra Nevadas Hop Hunter IPA has not yet

been released in the marketplace with its infringing label and packaging designs. Nonetheless,

Lagunitas already has been informed by at least two distributors who, on information and belief,

also are distributors for Sierra Nevada, as to concerns over consumer confusion between the

Lagunitas IPA and Hop Hunter IPA designs. (Magee Decl. 24.) Because consumer confusion

is highly likely, including initial interest confusion, and at least some potential evidence of

consumer confusion exists regarding the planned similar packaging for the Sierra Nevada

product, as reported by common distributors, this factor favors Lagunitas.

5) The Products Use Similar Marketing Channels and the Same

Distribution Channels.

It is well-settled in this Circuit that [c]onvergent marketing channels increase the

likelihood of confusion. AMF Inc., 599 F.2d at 353. Here, both Sierra Nevada and Lagunitas

offer their products through nearly identical channels, such as retail liquor stores, grocery stores,

and restaurants and bars. Additionally, on information and belief, both companies share at least

some of the same distributors. (Magee Decl. 15, 24).

In sum, because the parties sell the products at issue in the same retail outlets, using

similar or identical methods, while competing for the same consumers, this factor strongly favors



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Lagunitas. See CytoSport, Inc. v. Vital Pharmaceuticals, Inc., 617 F. Supp.2d 1051, 1069 (C.D.

Cal. 2009).

6) The Products Are the Same Style of Craft Beer, and Degree of

Care Exercised by Purchasers is LowWhere products are inexpensive, there is a higher likelihood of confusion because

consumers are likely to use less care while shopping. Brookfield Comm, v. West Coast Ent., 174

F.3d 1036, 1060 (9th Cir. 1999) (when dealing with inexpensive products, customers are likely

to exercise less care, thus making confusion more likely).

Here, the products at issue are inexpensive craft beer products, sold either as individual

drinks in a restaurant or bar setting, or as 6- or 12-packs in an off-premises environment such as a

convenience store. (Magee Decl. 15.) At one such convenience store, the prices for the Sierra

Nevada products and the Lagunitas products were roughly $10.99 for a 6-pack and $21.99 for a

12-pack. (Harris-John Decl. 5, 6, 8.) Typically, a low degree of care can be expected when

consumers purchase a relatively low cost item, such as a bottle of alcohol. Dunhill of London,

Inc. v. Kasser Distillers Prods. Corp., 350 F. Supp. 1341, 175 U.S.P.Q 586, 60102 (E.D. Pa.

1972) (finding a bottle of scotch to be a low-priced item not likely to evoke a high degree of

consumer care);see also E. & J. Gallo Winery v. Consorzio del Gallo Nero , 782 F. Supp. 457,

465 (N.D. Cal.1991) (determining that wines are relatively inexpensive, impulse products to

which the average, unsophisticated consumer does not devote a great deal of care and

consideration in purchasing). A typical consumer purchasing an inexpensive product, given the

similar packaging and same style of product, is not likely to realize that the products originate

from a different source. In fact, the logical assumption for a consumer exercising a low degree of

care may be that Lagunitas is sponsoring or affiliated with the Sierra Nevada offering. SeeCSC

Brands LP v. Herdez Corp., 191 F. Supp. 2d 1145, 1153 (E.D. Cal. 2001) (Given that these

beverages are sold in supermarkets and are low cost, the degree of care likely to be exercised by

purchasers is minimal.) Because consumers will exercise a low degree of care, this factor

plainly favors Lagunitas.



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7) Sierra Nevada is Intentionally Altering Its Design to Encroach

on Lagunitas Design

When a party knowingly adopts a similar mark, courts presume that the party will

accomplish its purpose and therefore deceive the public. Acad. of Motion Picture Arts & Sciences

v. Creative House Promotions, Inc., 944 F.2d 1446, 1456 (9th Cir. 1991). Therefore, where

evidence shows that one company adopted the similar mark to benefit from the senior users

goodwill, a court may infer a likelihood of confusion. As such, this factor favors the plaintiff if

the alleged infringer adopted his mark with knowledge, actual or constructive, that it was

anothers trademark. Brookfield Comm., 174 F.3d at 1059.

In this case, since the parties are direct and long-term competitors in the craft brew

marketplace, it is undeniable that Sierra Nevada is aware of the Lagunitas IPA designs for its

labels and packaging. Sierra Nevada also is no doubt aware that Lagunitas is gaining market

share within the craft beer segment faster than any other company, growing at a 5-year compound

annual growth rate (CAGR) of 54%. (Stevenson Decl. 16.) Lagunitas growth is driven by its

flagship IPA beer, marketed and sold with the Lagunitas IPA design and trademarks, which

currently accounts for over 55% of overall volume. (Stevenson Decl. 16.)

Because of Lagunitas rapid growth and gains in market share, it is not surprising that a

competitor would attempt to create an association with the Lagunitas brand. Discovery will be

required to develop further evidence, but a look at the dramatic change in labeling of the Sierra

Nevada IPA strongly suggests a direct attempt to benefit from Lagunitas goodwill and brand

equity. See, e.g., Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 150-51 (2d Cir.

1997) (if established, facts such as emphasis on Honey Brown on beer label, and marketing

memos to distributors regarding need to compete with plaintiffs product, could potentially

support a finding that there is a likelihood of confusion and that defendant had not taken every

reasonable precaution to prevent confusion or the practice of deception in the sale of its

product).

Because intent can be inferred by Sierra Nevadas adoption of its infringing IPA design on

its Hop Hunter IPA labels and packaging, this factor favors Lagunitas.



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8) The Products Already Address the Same Market.

The expansion of product lines factor is intended to address circumstances in which a

strong possibility exists that either party may expand their business to compete with the other. As

discussed in regard to the proximity of the products in Section II.B.2., supra, these companies

already directly compete in the craft beer industry, and the Hop Hunter IPA likewise will directly

compete with the Lagunitas IPA immediately upon its release. So, as here, where the parties

already are direct competitors, this factor is unimportant and should not be considered. Network

Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1153 (9th Cir. 2011).

C. Lagunitas Will Suffer Irreparable Injury Should Sierra Nevada Not be

Enjoined from Using the Infringing Hop Hunter IPA Label and Packaging

Designs.

A plaintiff may show a likelihood of irreparable harm by demonstrating intangible injuries

that are incapable of measurement, such as those to reputation or goodwill. Rovio Ent. v. Royal

Plush Toys, Inc., No. C 12-5543 SBA, 2012 WL 5936214, at *10 (N.D. Cal. 2012). In the

trademark context, the threatened loss of customers and goodwill constitutes irreparable harm.

Id. (citingStuhlbarg Intl Sales v. John D. Brush, 240 F.3d 832, 841 (9th Cir. 2001)). Moreover,

a critical aspect for a court, in it is fact-finding capacity when evaluating a request for a

preliminary injunction, is drawing reasonable inferences from facts in the record. Groupe SEB

USA, Inc. v. Euro-Pro Operating LLC, No. 14-2767, ___F.3d___, 2014 WL 7172253 at *11 (3rd

Cir., Dec. 17, 2014 (affirming the issuance of a preliminary injunction, holding that testimony by

the plaintiffs representative of the competitive relationship between the parties and products, of

the likely harm to plaintiffs brand reputation and goodwill, and of the literal falsity of the

comparative advertising was enough to support an inference of irreparable harm).

Here, Lagunitas will be irreparably injured through damage to its goodwill and reputation.

(Magee Decl. 25.) Damage to the goodwill of a business is often difficult to calculate, thus

supporting a finding of irreparable injury. See Rent-A-Center, Inc. v. Canyon Television &

Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991). Lagunitas goodwill is threatened by

the infringing Hop Hunter IPA design, particularly the lettering that mimics the iconic Lagunitas



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IPA lettering used with its best-selling and most widely distributed beer. Indeed, if Sierra

Nevada is not prevented from offering its competing craft beer product with its infringing design,

the resulting confusion among consumers will lead to a loss of control over the perceived quality

of Lagunitas products. As the market is flooded with the beer bottles, tap handles, and other

merchandise bearing the infringing design, there will be immeasurable damage to Lagunitas

goodwill and reputation as a leader in the craft beer industry. Therefore, Lagunitas will be

irreparably harmed if Sierra Nevada is not enjoined.

In addition to the immeasurable blow to Lagunitas reputation as a market leader, as well

as the potential loss of market share, release of the Hop Hunter IPA with its infringing label and

packaging designs is likely to lead to increased exposure to infringing competition and an erosion

of Lagunitas intellectual property rights. Lagunitas also is likely to suffer monetary losses

through, at minimum, lost profits and costs of corrective advertising.

Lagunitas has moved with swiftness in seeking its relief here, by promptly sending a cease

and desist letter, attempting to negotiate with Sierra Nevada, and then rapidly filing this action

when an impasse became apparentbefore the release of the product at issue. (Magee Decl.

17.) The Ninth Circuit has held that a delay of several months that gives the plaintiff an

opportunity to investigate its claim and attempt to resolve the dispute out of court does not

warrant denial of injunctive relief. See Warner Bros. Entmt v. Global Asylum, Inc., 2012 WL

6951315, at *21 (C.D. Cal. 2012);affirmed Warner Bros. Entmt v. Global Asylum, Inc., 544 F.

Appx 683 (9th Cir. 2013) (delay of four months was not unreasonable). Here, the expediency

with which Lagunitas investigated and pursued its claims bolsters its request for injunctive relief.

A preliminary injunction is a provisional remedy, the purpose of which is to preserve

status quo and to prevent irreparable loss of rights prior to final disposition of the litigation.

Napa Valley Publg Co. v. City of Calistoga,225 F. Supp. 2d 1176, 1180 (N.D. Cal. 2002). If

Sierra Nevada is permitted to use its proposed, infringing design in marketing and selling its Hop

Hunter IPA, the status quo will no longer be maintained, and Lagunitas will suffer irreparable

harm that only will compound with time.



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to Sierra Nevada, such risk can be addressed through the posting of a bond, which Lagunitas

offers to post in the amount of $25,000 (or otherwise as determined by the Court).

Because Lagunitas will be greatly harmed by Sierra Nevadas actions, and Sierra Nevada

will suffer minimal to no harm, the balance of hardships strongly favors Lagunitas.

E. Granting the Requested Injunctive Relief Would Advance the Public Interest.

Granting injunctive relief here will advance public interest by avoiding otherwise

inevitable consumer confusion. The primary public interest at stake in trademark cases is the

right of the public to avoid confusion or deception. Internet Specialties West, Inc. v. Milon

DiGiorgio Enters., Inc., 559 F.3d 985, 993994 (9th Cir. 2009). Along the same lines, there is

absolutely no public interest in allowing Sierra Nevada to use its infringing design logo for itscompetitive gain. This is especially true since Sierra Nevada has been, and can continue,

competing in the marketplace for craft brews using its many prior designs, or new alternative

designs, that do not attempt to trade on the goodwill of the Lagunitas IPA Family of

Trademarks. In fact, there are numerous other logo designs and variations on the proposed design

that would not infringe Lagunitas trademarks and still allow consumers to purchase Sierra

Nevadas Hop Hunter IPA products, despite the injunction.

Public policy favors protecting the rights secured by owners of federal trademark

registrations. Further, enjoining Sierra Nevada from infringing activities will not harm the public

Disallowing Sierra Nevada from piggybacking on the commercial success of Lagunitas

distinctive mark promotes the public interest of ensuring companies are not robbed of the fruits of

their labors and innovations. Therefore, the public interest will be advanced if this Court issues

the requested relief.

IV. CONCLUSION

The standard for issuance of a preliminary injunction and a temporary restraining order

are equivalent. Lagunitas has met its burden with respect to the standard. Therefore, in order to

maintain the status quo and prevent Lagunitas from suffering immediate and irreparable harm,

Lagunitas respectfully requests entry of an order temporarily restraining Sierra Nevada from



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infringing on Lagunitas asserted trademarks, including an order restraining them from releasing

for public consumption any and all products using the proposed Hop Hunter IPA design logo.

Additionally, Lagunitas requests that the Court order Sierra Nevada to show cause regarding the

issuance of a preliminary injunction and set a hearing for Lagunitas motion for preliminary

injunction.

DATED: January 12, 2015 NIXON PEABODY LLP

By: /s/Robert K. CarrolROBERT K. CARROLBRUCE E. COPELANDSHADY E. JOULANIDEANNA R. KUNZE

Attorneys for PlaintiffLAGUNITAS BREWING CO.


Documents

Lagunitas restraining order request