TM complainant fails to sink its teeth into unrelated false advertising claims

Vampire Family Brands, LLC v. MPL Brands, Inc., No. CV 20-9482-DMG (ASx), 2021 WL 4134841 (C.D. Cal. Aug. 6, 2021)

VFB sued MPL for Lanham Act, UCL, and FAL violations based on MPL’s “vampiro” cocktail. Unsurprisingly, the trademark claims survive a motion to dismiss, but associated false advertising claims don’t.

VFB owns several trademark registrations including “Vampire,” specifically for wine and pre-mixed alcoholic beverages other than beer, and “Vampyre,” specifically for spirits. “VFB’s marks are visible to the public in many places, including on VFB’s website, in the public records of the USPTO, and in various national media due to VFB’s continuous marketing of its products.” [Seriously? It seems more like a concession of lack of market penetration if you have to rely on your own website and the PTO’s records to show public recognition!] In 2017, VFB began selling a pre-mixed canned Bloody Mary cocktail as “Vampire Gourmet Bloody Mary Cocktail,” allegedly made with actual tomatoes and vodka. But it isn’t actually being made/distributed right now, though VFB argued that it was coming back.

MPL sells a pre-mixed alcoholic cocktail labeled “Vampiro.” The label asserts that it is “a fizzy grapefruit cocktail” made with “100% Blue Agave,” although the ingredients list does not contain grapefruit. It is made of agave wine, not from distilled spirits. Likewise, MPL also sells a ready-to-drink “margarita wine cocktail” that doesn’t contain tequila or any distilled spirit and is also made with agave wine.

VFB alleged trademark infringement, and that the Vampiro Cocktail label’s claims that it is made from 100% agave and with grapefruit were false advertising that would tarnish and dilute VFB’s marks. Similarly, VFB alleged that a real “margarita” is made with tequila and, therefore, the absence of tequila from MPL’s Margarita Cocktail constituted false advertising. “Because the alcohol tax is approximately ten times that of the tax on wine, VFB argues that Defendants gain an unfair competitive advantage against it and other makers of alcoholic cocktails that use distilled spirits, rather than wine, in their cocktail recipes.”

As I noted above, claims that “vampiro” was the generic name of a Mexican cocktail or constituted descriptive fair use didn’t suffice to grant a motion to dismiss. As to use as a mark, the court reasoned that the use of “Vampiro” on MPL’s product as pictured in the images submitted by both parties “shows that the word is in stylized, large font across the center of the beverage can, in white font against a red background.” The description “FIZZY GRAPEFRUIT COCKTAILWITH CITRUS & SPICE” was in smaller font beneath “Vampiro,” “giving the impression that the smaller text is a descriptor and Vampiro is a mark for the product.”

False advertising: Article III standing existed, but not Lanham Act standing. VFB could establish injury in fact through “a chain of inferences showing how defendant’s false advertising could harm plaintiff’s business.” MPL argued that there was no concrete injury because VFB does not currently sell any pre-mixed cocktail products. However, VFB’s CEO and counsel [um] attested that “VFB has arrangements with another manufacturer to produce more of the Vampire Bloody Mary and with experienced industry salespeople to sell the product, and that VFB will resume sales after the current pandemic subsides. VFB also submitted a new Certificate of Label Approval to the TTB for the Vampire Bloody Mary in January 2020. “This evidence that VFB is prepared to sell the Vampire Bloody Mary indicates that VFB could suffer non-speculative, imminent harm from Defendants’ actions.” The relative cheapness of defendants’ “cocktails” could give them a competitive advantage. This was enough for Article III standing.

Statutory standing, however, was more demanding:

Because VFB does not currently sell the Vampire Bloody Mary and its previous sales were limited distributions at beer festivals or a handful of liquor stores, VFB does not identify any economic injury flowing from Defendants’ current advertising of the Margarita Cocktail and Vampiro Cocktail. VFB does not allege prior economic injury, and any future economic injury VFB may suffer when it restarts distribution of the Vampire Bloody Mary is too attenuated to be considered proximately caused by Defendants’ advertising.

And it was even more attenuated to argue that defendants’ allegedly false advertising of the Margarita Cocktail and Vampiro Cocktail harmed VFB’s sales of other types of alcohol, specifically Vampire wine and Vampyre vodka. The alleged falsity of the grapefruit/cocktail/margarita claims couldn’t plausibly “directly cause consumers to purchase less of VFB’s red wine or vodka, considering the differences between the types of beverages.” Even if consumers were misled into thinking that the products contained distilled spirits or natural ingredients, “it is not clear why those consumers seeking to purchase a pre-mixed cocktail would instead reach for wine or vodka. Characterizing VFB and Defendants as direct competitors because both make alcoholic beverages would dramatically expand the ‘zone of interest’ in which a plaintiff may sue for false advertising under the Lanham Act.”

UCL/FAL claims: Only survived to the extent they were congruent with the trademark claims.