Stubbs Alderton & Markiles, LLP (SAM) announced today that its client, AOP Ventures, Inc. (AOP), a leading provider of electronic cigarette liquid, prevailed in its motion for summary judgment filed in the United States District Court for the Central District Of California against defendants Steam Distribution, LLC; One Hit Wonder, Inc., Havz, LLC d/b/a Steam Wholesale, and Anthony Tellez III.
At issue in the case was whether the Defendants had acquired sufficient common law rights to their mark MILK MAN based on local sales by Tellez in Whittier, California, sufficient to gain priority over AOP, who launched its popular THE MILKMAN e-liquid nationwide in January 2015.
In her order granting summary judgment to AOP on its claims for trademark infringement, false designation of origin, and unfair competition, the Hon. Virginia A. Phillips, Chief United States District Judge, permanently enjoined Defendants from distributing e-liquid under their infringing MILK MAN mark, ordered the cancellation of Defendants’ California state trademark registration for MILK MAN for e-liquid, and awarded AOP $6,487,861.00 in damages. In so holding, the Court stated:
The Court enjoins Defendants, their officers, agents, servants, employees, attorneys, parents, subsidiaries and related companies, and all persons acting for, with, by, through or under them [“Defendants’ Affiliates”] having notice of this Order by personal service, electronic mail, or otherwise, and each of them, from marketing, advertising, distributing, offering to sell, or selling any product, packaging, or any other item that was named or labeled with the marks MILK MAN, MILKMAN, THE MILK MAN, or THE MILKMAN, or otherwise using said marks in commerce. The Court orders Defendant’s California MILK MAN trademark cancelled and awards Plaintiff damages in the amount of $6,487,861.00.
Although Defendants had filed counterclaims against AOP and claimed priority based on Tellez’s local sales, the Court rejected Defendants’ arguments and dismissed Defendants’ counterclaims with prejudice. In doing so, the Court held that Tellez’s sale of eight bottles of e-liquid to two local vape shops were token use, de minimis, and insufficiently public to create trademark rights at common law. In addition, the Court found that six of the eight Sleekcraft factors for a likelihood of confusion supported a finding of infringement by Defendants. Most notably, the Court found that the marks MILK MAN and THE MILKMAN were legally identical, and that the goods being sold by direct competitors were legally identical. Finally, the Court found that Tellez’s sales were unlawful, because the bottles of e-liquid contained nicotine, but did not provide a public warning. Nicotine is a controlled substance that the State of California has listed as triggering a Proposition 65 warning since 1990. Because the sales were unlawful, Tellez’s sales could not create trademark rights.
“We are pleased with the Court’s decision, which has vindicated our long-standing position that One Hit Wonder, Inc., Steam Distribution, LLC and Steam Wholesale infringed our well-known THE MILKMAN mark in order to profit from the goodwill we have built up in the mark since its launch in 2015,” states AOP’s CEO, Mike Zhang. “Aggressively enforcing our trademarks is critical to ensuring that our customers receive the exceptional quality they have come to expect from AOP and our brands. As a global consumer products company that sells to customers across North and South America, Europe, the Middle East, and Asia, AOP is committed to protecting and preserving its rights to its trademarks worldwide.”
“The issues decided in this case are critical to any business relying on common law rights in the absence of a federal trademark registration,” stated AOP’s attorney, Konrad Gatien. “Not only in the e-liquid space, but also in the growing market for medical marijuana, because that market is regulated from state to state and the United States Patent and Trademark Office is not granting federal registrations for marks used in connection with those goods.”
About AOP Ventures, Inc.
California-based AOP Ventures, Inc. does business as THE DRIP CLUB, and is the creator of THE MILKMAN brand of e-liquid as well as its popular ANML VAPORS, ANML UNLEASHED, and MODUS VAPORS brands of e-liquid. The Drip Club aims to significantly reduce the six million preventable deaths that take place each year around the world due to tobacco and cigarette-related illnesses. AOP is a leader in sales of e-liquid worldwide. The company is led by serial entrepreneur Mike Zhang, and has a diverse and experienced management team comprised of senior managers who have held roles at Goldman Sachs & Co., Facebook, U.S. Bank, and PricewaterhouseCoopers. For more information about AOP and its brands, visit http://www.thedripclub.com/.
About Stubbs Alderton & Markiles, LLP
Stubbs Alderton & Markiles, LLP (SAM) is a California law firm with robust intellectual property, litigation, corporate, public securities, mergers and acquisitions, and entertainment practice groups. SAM focuses on the representation of emerging growth companies, middle market public companies, large technology companies, celebrities and entertainment companies. SAM’s mission is to provide technically excellent legal services and outstanding results in a highly-responsive, service-oriented, and cost-effective manner. These principles are the hallmarks of our firm. For more information about SAM and its attorneys, visit https://stubbsalderton.com/
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