By Dr. Robert J. Romano, JD, LLM, St. John’s University, Senior Writer
On January 20, 2023, Greensboro, North Carolina tobacco company, ITG Brands LLC, filed a civil lawsuit against the Winston Cup Museum, LLC, JKS Motorsports, Inc., and an individual by the name of Will Spencer, in the General Court of Justice, District Court Division, Guilford County, North Carolina. The tobacco company’s claim: the defendants have been engaged in trademark infringement by using intellectual property rights legally owned by ITG and that the profiting from this infringement amounts to an unfair trade violation.[1]
Specifically, ITG asserts that the defendants have been selling merchandise with registered word marks, fonts, images, and logos (the flying eagle) to associate themselves with the Winston Cup Series era of NASCAR in violation of both federal trademark law and North Carolina law on unfair competition.[2] Because its initial lawsuit filed in January did not deter the defendants from continuing to sell its ‘unlicensed’ merchandise, on June 1, 2023, ITG amended its complaint to include a request for a preliminary injunction to enjoin the defendants from the following: (1) Using the Winston Brand and Winston Marks in connection with any commercial activity; (2) Advertising themselves in a manner that falsely suggests an affiliation with Winston Brand and Winston Marks; and (3) marketing or branding its merchandise using Winston Brand or Winston Marks during the pendency of this litigation.[3]
For ITG to prevail on its preliminary injunction in the state of North Carolina it will need to show the court the following:
(1) That it will likely succeed on the merits of the underlying case, and
(2) That it is likely to sustain irreparable loss unless the injunction is issued, or
(3) It is necessary for the protection of ITG’s rights during the course of litigation.[4]
For ITG to show that it will likely win on the merits, to establish a case for trademark infringement it needs to prove that it is the rightful owner of a valid, protectible trademark and that the Defendants’ use of such caused confusion in the marketplace among consumers. As for its unfair competition claim, ITG must show that “the public is being misled and deceived” and because of such the Defendants are “taking the advantage of the good will and business reputation” built up over the last half-century in the Winston Marks.[5]
To prove the second element of irreparably injury, ITG must show ‘actual consumer confusion’ from the defendants’ alleged infringing activity and that because of the confusion, a ‘possible risk to reputation appears.’[6] Factors used by courts to analyze ‘actual confusion’ are as follows: (1) the strength or distinctiveness of the mark; (2) the similarity of the two marks; (3) the similarity of the goods/services the marks identify; (4) the similarity of the facilities the two parties use in their businesses; (5) the similarity of the advertising used by the two parties; (6) the defendant’s intent; and (7) actual confusion.[7] In addition, similar to federal law, North Carolina law allows courts to issue preliminary injunctions regarding the use of tradenames and trademarks as a way “to prevent reasonably intelligent and careful persons from being misled,”[8] or if there is “an intent to acquire the existing company’s good will and reputation.”[9]
As for protecting ITG’s rights during the period of litigation, ITG will rely on the decision in Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc wherein the court found that “an injunction is the preferred remedy to ensure that future violations will not occur”[10] since the
defendants are benefiting financially from the perceived association with the Winston Brand and the nostalgia surrounding that brand.
ITG took control of Winston cigarettes after purchasing it from Reynolds American Inc. (RJR) and Lorillard, Inc. in June 2015 and believe that the sale included not only the cigarette brand but also any and all Winston Cup trademarked artifacts.[11] The defendants, on the other hand, are of the opinion that any terms or restrictions included in the sales agreement between ITG and RJR are not, nor should they be attributable to them because they have never sold tobacco products. I guess the parties will just have to wait and see whose position is correct after the smoke clears.
[1] Said case was then transferred to the North Carolina Business Court in February 2023.
[2] 23 CVS 2481, Brief in Support of Plaintiff’s Motion for Preliminary Injunction, p. 1-2.
[3] Id. at p. 2.
[4] A.E.P. Industries, Inc. v. McClure, 308 N.C. 393, 401, 302 S.E.2d 754, 759–60 (1983).
[5] 23 CVS 2481, Brief in Support of Plaintiff’s Motion for Preliminary Injunction, p. 12.
[6] Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 939 (1995).
[7] Pizzeria Uno v. Temple, 747 F.2d 1522, 1527 (4th Cir. 1984).
[8] Charcoal Steak House of Charlotte, Inc. v. Staley, 263 N.C. 199, 203, 139 S.E.2d 185, 188 (1964).
[9] SCI N. Carolina Funeral Servs., LLC v. McEwen Ellington Funeral Servs., Inc., No. 13 CVS 558, 2013 WL 785036, at 9 (N.C. Super. Mar. 1, 2013).
[10] Lonestar 43 F.3d at 939.
[11] Winton brands were divested by Reynolds and Lorillard in order to gain federal regulatory approval for Reynolds’ $29.25 billion purchase of its rival, essentially to acquire top-selling menthol brand Newport.
