IP Law Daily, TRADEMARK—N.D. Ill.: Illinois business prohibited from selling alcohol under abandoned TOMMY GUN marks, (Dec 8, 2014)

By Cheryl Beise, J.D.

The federal district court in Chicago has granted a temporary restraining order to Saeilo Enterprises, Inc., the maker of the Thompson submachine gun (colloquially known as the “Tommy Gun”), to prohibit an Illinois company from selling alcoholic beverages under the mark “Tommy Gun” or in Tommy Gun-shaped bottles (Saeilo Enterprises, Inc. v. Alphone Capone Enterprises, Inc., December 5, 2014, Dow, R.). Although the defendant, Alphonse Capone Enterprises, Inc. (“ACE”), had obtained federal registrations for the mark “Tommy Gun” and for submachine-gun shaped bottle designs for selling beer, wine, and spirits, Saeilo was likely to succeed in showing that ACE had abandoned the marks.

Saeilo has been selling “Tommy Gun” submachine guns since 1920. It also sells promotional items, including hats, t-shirts, knives, flasks, lighters, pins, and other collectibles. Saeilo owns three TOMMY GUN trademarks in connection with firearms, two of which are registered with the USPTO and one of which is registered with the State of Illinois for a three-dimensional machine gun design.

ACE sells alcohol-related products and operates “Al Capone’s Hideaway & Steakhouse,” a Prohibition Era gangster-themed restaurant in St. Charles, Illinois. Around 2003, ACE began selling alcohol in Tommy Gun-shaped bottles. ACE owned four registrations for “Tommy Gun” mark and design: (1) Regis. No. 2696412, issued March 11, 2003, for TOMMY GUN for use on “beer” in International Class 32; (2) Regis. No. 2849028, issued June 1, 2004, for TOMMY GUNS for use on “wines and spirits” in Class 33; (3) Regis. No. 2955440, issued May 24, 2005, for a design described as “a Thompson submachine gun bottle design configuration of the packaging for the wines and distilled spirits with a bottle opening at a distal end of a barrel” for use in connection with “distilled spirits” in Class 33; and (4) Regis. No. 3402327, issued March 25, 2008, for a design mark described as “an outline of a submachine gun for use on “distilled spirits” in Class 33.

In March 2013, Saeilo, which claimed to have plans to expand its products into the alcohol industry, filed a complaint against ACE, asserting claims for (1) trademark infringement, trade dress infringement, dilution, false designation of origin or sponsorship, and trademark cancellation under the Lanham Act; (2) trademark infringement and unfair competition under Illinois common law; and (3) violations of The Illinois Trademark Registration and Protection Act and the Illinois Deceptive Trade Practices Act. Before the court was Saeilo’s request for a TRO.

In the Seventh Circuit, a party seeking a TRO must demonstrate as a threshold matter that (1) its case has some likelihood of succeeding on the merits; (2) no adequate remedy at law exists; and (3) it will suffer irreparable harm if preliminary relief is denied. If the moving party meets this burden, then the court considers the harm that the nonmoving party would suffer if a TRO is granted, and whether it would serve the public interest.

Likelihood of Success

A party seeking a TRO or a preliminary injunction in the Seventh Circuit must demonstrate “that it has a ‘better than negligible’ chance of success on the merits of at least one of its claims.” Girl Scouts of Manitou Council, Inc. v. Girl Scouts of U.S.A., 549 F.3d 1079, 1096 (7th Cir. 2008).

Abandonment and infringement. In its motion for partial summary judgment, Saeilo argued that ACE abandoned its marks as a matter of law. It further argued that if ACE sold “Tommy Guns” alcohol post-abandonment, its sales would infringe Saeilo’s marks because the parties’ marks were substantially similar.

A mark is abandoned if its use has been discontinued with intent not to resume such use. The Lanham Act provides that nonuse for three consecutive years is prima facie evidence of abandonment. “Use” of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark, the court explained.

During discovery, William Brooks, ACE’s owner and manager, testified that he last ordered Tommy Gun-shaped bottles three years earlier, that he last received a shipment two years earlier, that he had no pending orders, that he had not updated ACE’s website in at least three years, and that ACE had no bank accounts, employees, or assets, other than the trademarks.

ACE made various general assertions about its recent efforts, both in China and in the United States, to bring its alcohol to market. For the period between 2012 and 2013, ACE offered invoices billing one of its distributors less than $200 for small orders of Tommy Guns replica vodka during this period. With regard to the current sales or distribution of its product, except for a purchase order dated July 2014 (after discovery closed), ACE presented other evidence.

The July 2014 purchase order showed that ACE requested one of its distributors to purchase $444,412.38 worth of “Tommy Guns” vodka by making a wire payment to another ACE distributor. According to Saeilo, Brooks granted both distributors the right to use ACE’s marks in a Distribution Agreement dated August 18, 2014. In addition, ACE assigned its marks to Roaring 20s Marketing, Inc., another company owned by Brooks, on October 7. On December 1, Saeilo’s private investigator discovered that a small quantity of Tommy Guns alcohol had been shipped to retailers in Illinois, Tennessee, and Georgia.

As for infringement, at the TRO hearing, ACE conceded that the parties’ marks were substantially similar, that ACE created its product design to replicate the Tommy Gun firearm, and that the bottle did, in fact, look similar to the firearm. ACE argued that the parties operated in entirely different lines of business. However, Saeilo also sold a variety of promotional items and toys, all trading on the TOMMY GUN marks.

In light of ACE’s admissions and the evidence presented by Saeilo, the court found that Saeilo established a better than negligible chance of succeeding on the merits of its abandonment and infringement claims.

Other Injunction Factors

Irreparable harm. Irreparable harm is generally presumed in trademark infringement cases. ACE offered no evidence to rebut Saeilo’s assertion that ACE’s alcohol sales would irreparably harm its goodwill and impede its planned entry into the alcohol market.

Balance of hardship. The balance of hardships also favored Saeilo, the court found. Because alcohol is neither seasonal nor perishable, a temporary restraining order would have little effect on the value of ACE’s inventory in the short term, the court noted. Although ACE alleged potential harm to its Chinese manufacturer and American distributors from any delay in bringing the liquor products to their final market destinations, ACE offered no affidavits or evidence quantifying the extent of this harm. Moreover, any harm to ACE could be remedied by monetary damages, according to the court.

Bond. The court required Saeilo to post a bond of $50,000, which was well in excess of the amount of product known to have reached market.

The case is No. 13 CV 2306.

Attorneys: Boris Umansky (Ladas & Parry LLP) for Saeilo Enterprises, Inc. Michael J. Davis (Archer Bay) for Alphonse Capone Enterprises, Inc.

Companies: Saeilo Enterprises, Inc.; Alphonse Capone Enterprises, Inc.

Cases: Trademark IllinoisNews