“Use in Commerce”: Look Before You Leap

Order Granting Motion to Dismiss, With Leave to Amend, Stag’s Leap Wine Cellars, LLC, et al. v. Treasury Wine Estates Americas Co., 16-cv-04922-RS (Judge Richard Seeborg)

Plaintiffs in trademark cases may be tempted to file suit as early as possible to head off any potential consumer confusion. But as a recent order explains, plaintiffs need to keep in mind that the Lanham Act requires a “use in commerce” to maintain a complaint. Plaintiffs who fail to plead an adequate “use in commerce” could find themselves fighting (and losing) a motion to dismiss.

The plaintiffs in Stag’s Leap Wine Cellars sell wines under names including S.L.V. (Stag’s Leap Vineyards). This wine comes from the Stag’s Leap District, a well-known Napa Valley wine-growing region recognized as an American Viticultural Area. California law restricts the circumstances under which a wine seller may use “Stag’s Leap” or a confusingly similar term.

The defendant owns and operates Stag’s Leap Winery. Plaintiffs allege that Defendant has been preparing to market wine under a label of “The Stag,” and that Defendant’s marketing materials would include images of leaping stags. Plaintiffs claimed that “The Stag” wine would be made with grapes not from the Stag’s Leap District, thereby confusing consumers.

The Court dismissed the Complaint because Plaintiffs failed to allege facts showing that Defendant had engaged in any use in commerce of “The Stag” mark or the leaping stag imagery. The Court explained that a “use in commerce” does not have to be an actual sale. For example, a claim exists where a defendant begins marketing the mark. And a plaintiff may seek an injunction where a defendant’s threatened use is “imminent and impending.”

But even though the “use in commerce” rule may be a flexible one, it is still a requirement that plaintiffs have to satisfy. And in this case, Plaintiffs’ Complaint failed to allege any sales, marketing, or “imminent and impending” use by Defendant. Plaintiffs pointed out that Defendant had sought three Certificates of Label Approval from the U.S. Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau.  But the Court took judicial notice of the fact that Defendant had surrendered those Certificates. Those Certificates were not enough, by themselves, to prove “use in commerce.” The Court therefore granted a motion to dismiss, with leave to amend.