There’s little doubt that STELLA ROSA wines are popular. I’ve never tried them, but I am assured by wine critic Patrick Comiskey that they “resemble wine, they’re reminiscent of wine, but no one who drinks wine regularly would mistake it for wine.” It is, however, “decidedly better than” Arbor Mist. Because their fermentation process had been arrested early, they’re not very alcoholic, but they’re a bit fizzy and very, very sweet.1This description reminds me unpleasantly of “wine coolers.” Those aren’t a thing any longer, right? To Mr. Comiskey, they taste more like soft drinks than wine.
The Fermentation Might Be Arrested, but the Market Share Sure Isn’t
In terms of branding, Stella Rosa’s importer, the San Antonio Winery in Los Angeles, is in an enviable position. When it started selling STELLA ROSA, the kinds of arrested-fermentation wines it sells were all but unknown in the United States. The market turned out to be huge, and San Antonio Winery obtained a dominant share, which it hasn’t relinquished. Consumers probably don’t know how even to find a competitor’s wine, so closely linked are the STELLA ROSA brands and these types of arrested-fermentation wines.
If you want a piece of this market, the temptation to nestle up close to the STELLA ROSA’s brand must be enormous. That’s what happened when Enovation Brands decided to import the same kinds of wine and sell them in the United States as BELLA ROSA. San Antonio Winery sued, and filed an emergency motion, called a Motion for Temporary Restraining Order (better known as a “TRO”), to stop the importation.
Looking at the Merritts
You might think the issue is whether BELLA ROSA is confusingly similar to STELLA ROSA, and you might be wondering about whether ROSA has been disclaimed (it has), and whether STELLA and BELLA are really that similar since they mean different things in Italian. But it’s more complicated than that because there already is a brand of wine called BELLA ROSA, and it’s produced by a winery in upstate New York called Merritt Estate Winery. Now Merritt Estate’s BELLA ROSA wine isn’t anything like STELLA ROSA—it’s proper (if not especially fine) wine (though it does produce a “bubbling” BELLA ROSA).
A while ago, San Antonio Winery and Merritt Estate decided they could co-exist, provided Merritt Estate used MERRITT WINERY on its labels as a dominant element. As you can see, it’s really, really dominant.
The existence of BELLA ROSA as a tolerated brand complicated San Antonio Winery’s path forward. But maybe it’s not just the names that were similar. Maybe the labels were similar, too. Take a look:
Going this route—similarity of the labels—posed its own challenges. San Antonio Winery has registrations for the words STELLA ROSA (in standard characters) and for the crown emblem (which seems irrelevant here), but not for the entire label. This means that San Antonio Winery can’t rely exclusively on its registrations but would have to prove the label as a whole is a valid trademark—er, trade dress.2In this case, there isn’t any practical difference between trademark and trade dress because the trade dress isn’t in the product configuration, just the “packaging.”
Emergency Injunctions: A Primer
OK, I said this was an emergency, right? So let’s talk about temporary restraining orders (TROs)! Despite its name, a TRO is a kind of injunction, and an injunction is a court order that prohibits (and sometimes mandates) some kind of harmful behavior. Because we don’t like it when courts tell citizens what they can and can’t do, we limit all types of injunctions to prohibiting irreparable harms. A harm is irreparable if it can’t be remedied with money. If your harm can be compensated with cold hard cash, it’s not irreparable (regardless of the defendant’s ability to pay!).
Now, most injunctions are issued after the case is all over, which is ideal because then you know who won and you know a lot about whether the harm is irreparable or not. These are known as permanent injunctions. Guess why.
But some injunctions can be issued on an emergency basis while the case is ongoing (“pending”)—indeed, usually at the beginning of the case. Here’s the reasoning. Cases take a long time. But what if, by the time to get to the case’s end, and it’s time to issue the permanent injunction, the plaintiff has suffered so much irreparable harm that there’s no point any longer? The plaintiff might have gone out of business. Or it might have lost so much market share that there’s no way it can be compensated.
So, courts can issue preliminary injunctions, which last only while the case is going on (the “pendency of the case”). The idea is to maintain the status quo until the court can sort everything out.
But preliminary injunctions risk just exchanging one unfairness for another. If the defendant can’t do the thing it was expecting to do, for 18 months or whatever, there may no longer be any point to doing it. The defendant might have timed introduction of a product to maximize market share, or to beat someone else to market, or it just needs the product to sell to stay afloat.
Then there’s the fundamental conundrum: how do you know if the plaintiff deserves the injunction before you’ve decided the plaintiff has won the case? You’d feel pretty dumb if you issued an injunction, only to see the plaintiff’s case completely collapse as soon as it’s challenged.
Preliminary injunctions handle these issues by putting the burden of proof on the plaintiff and insisting on four classic factors, which I’ll describe my own way:
- Is the plaintiff likely to win in the end, and if so, how likely?
- Is the harm irreparable, and can this wait to the end (i.e., is it “immediate”)?
- What about the defendant’s interests?
- Does the public have an interest in all this? (Note: this factor is almost never important.)
There’s one other safeguard. The plaintiff might be required to put up security (e.g., a bond) that would compensate the defendant if the injunction is wrongly issued.3Under the Rules, this requirement is mandatory. Courts, however, often excuse the plaintiff from compliance.
Temporary Restraining Orders: An Emergency Injunction for a Motion for an Emergency Injunction
Here’s the thing about preliminary injunctions. They take time. Maybe not 18 months or whatever, but there has to be briefing, gathering of evidence, some depositions, exchange of documents, etc. Then the court needs time to digest it all. You’re looking at two to six weeks before the preliminary injunction issues.
What if your emergency can’t wait that long? What if, for example, the defendant is about to disclose your “crown jewel” trade secret to a competitor tomorrow? Is there such a thing as a kind of mini-preliminary injunction: an injunction that maintains the status quo until the court can sort out the preliminary injunction?
Why, yes, yes, there is! That’s the TRO. It’s an order that can be issued on very short notice that has a built-in expiration (usually no longer than two weeks). If it’s enough of an emergency, you can get the TRO issued before the defendant even has a chance to find out (known as an ex parte TRO). The key limitation with TROs is the “T”—they’re very temporary. The Rules say the expire after two weeks (though the court can extend them somewhat). They’re just supposed to give the parties a chance to gear up to fight over the preliminary injunction.
That’s what San Antonio Winery was looking for, a TRO. It must have had some intelligence that Enovation Brands was about to start receiving shipments of BELLA ROSA wine-like beverage any day (more on that in a moment). Just filing suit wouldn’t be enough to stop consumers from being confused because that wouldn’t stop Enovation Brands from importing and selling BELLA ROSA in the U.S. San Antonio Winery needed a court order.
Preliminary injunctions are malleable creatures. Sometimes they are almost like mini-trials, with live witnesses and everything. Sometimes they more like motions for summary judgment, with everything “on the papers.” And sometimes they’re awkwardly in between. The rules of evidence are relaxed but not non-existent, a recognition of how fast everything is moving. It’s just not possible to lay the proper foundation for everything, or to track down every witness you need. But imagine not knowing whether a piece of evidence will be admitted, or how much weight the court will give it. And imagine that the entire case might turn on this single, messy, exhausting motion.
Wine Just Goes to Your Gut (Check)
To return to BELLA ROSA, San Antonio Winery got the TRO that it wanted. First, it found San Antonio Winery was likely to succeed on the merits. I think reasonable minds can disagree about whether the labels are that similar. But the court clearly thought that using the same color scheme—black for STELLA/BELLA and dark red for ROSA—was too suspicious to ignore.4There were other elements that the court thought were similar, but they seem very minor to me. If you think the labels are at least somewhat similar, then it’s hard to avoid the conclusion that BELLA ROSA is likely to be confused with STELLA ROSA. Not only are both marks used in connection with wine, but with the exact same kind of unusual wine. Further, STELLA ROSA is clearly commercially strong, based on sales and advertising, and the fact that even I have heard of it. Some of the other elements of the court’s analysis are less convincing—the actual confusion factor is actually kind of terrible—but they don’t make much of a difference.
More controversially, the court gave San Antonio Winery a pass on the second factor, irreparable harm. In the “old” days, irreparable harm was presumed in trademark cases because, once confusion takes root in consumers’ minds, it’s impossible to reverse. It’s a bell that can’t be unrung. But in recent years, the clear trend has been to ditch the presumption and make trademark owners prove that the harm posed by consumer confusion is irreparable.5If it’s not clear from my tone, I think the “old days” had this one right.
Reading between the lines, it seems to me the court saw a clean opportunity to put the brakes on some real consumer confusion, and its analysis just doesn’t reflect that. BELLA ROSA had yet to be introduced to American consumers, and court thought it wouldn’t hurt to keep it that way for a little while longer.
After all, this is just step one for San Antonio Winery. It would still need to win a preliminary injunction for the TRO to be worth anything. My guess is the parties will settle because it’ll be cheaper for Enovation to re-label BELLA ROSA wines than to fight the lawsuit. (Update: Enovation consented to a preliminary injunction. This could mean a number of things. It could be a major step toward settlement. It could mean Enovation would prefer to direct its resources to fighting the case on the merits. Or it could mean a combination: i.e., Enovation is willing to re-label for the time being but also intends to fight on the merits.)
Betrayal by an Uncleared Trademark Application
One final thought. How did San Antonio Winery find out about Enovation’s plans to import BELLA ROSA? It might be because Enovation applied to register BELLA ROSA with the U.S. Patent and Trademark Office. Enovation wasn’t using BELLA ROSA yet in the United States, so the application was “intent to use.” Many trademark holders maintain “watch services” that monitor trademark applications for marks that might infringe the holder’s mark. This filing might have alerted San Antonio Winery that Enovation was planning on using BELLA ROSA for wine. A little bit of digging might’ve revealed that the wine in question was the exact same type as STELLA ROSA and further that Enovation had yet to import any wine. If San Antonio Winery acted swiftly, it could protect its mark without any harm to its own brand.
If this is the case, it was really unfortunate! The application itself didn’t stand a chance because, as noted above, there already was BELLA ROSA mark being used in the United States for wine. What’s more, there’s also a registration for SUE BELLA ROSA for wine, which has already been cited against it. The application was always going to fail. All it was going to do was alert a large winery that jealously guards it branding about Enovation’s plans.
Thanks for reading!
|↑1||This description reminds me unpleasantly of “wine coolers.” Those aren’t a thing any longer, right?|
|↑2||In this case, there isn’t any practical difference between trademark and trade dress because the trade dress isn’t in the product configuration, just the “packaging.”|
|↑3||Under the Rules, this requirement is mandatory. Courts, however, often excuse the plaintiff from compliance.|
|↑4||There were other elements that the court thought were similar, but they seem very minor to me.|
|↑5||If it’s not clear from my tone, I think the “old days” had this one right.|