Best Cellars Inc. v. Grape Finds at Dupont, Inc.

Citations: 90 F. Supp. 2d 431; 90 F. Supp. 431; 54 U.S.P.Q. 2d (BNA) 1594; 2000 U.S. Dist. LEXIS 4092; 2000 WL 343083Docket: 99CIV12254(RWS)

Court: District Court, S.D. New York; March 31, 2000; Federal District Court

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Best Cellars, Inc. filed a motion for a preliminary injunction against defendants Grape Finds at Dupont, Inc., Grape Finds, Inc., and several individuals, claiming infringement of its intellectual property rights under the Lanham Act, the Copyright Act, and New York common law of unfair competition. The defendants countered with a motion to dismiss for lack of personal jurisdiction. The case involves complex issues of trade dress protection related to Best Cellars' unique retail concept of selling wine by taste. After a three-day hearing, the court found sufficient evidence to grant preliminary injunctive relief based on the defendants' copying of Best Cellars' trade dress, engaging in unfair competition, and infringing on its copyrighted materials. However, the court denied injunctive relief for claims of trade dress dilution and breach of confidentiality. Best Cellars operates retail locations in New York, Massachusetts, and Washington, while Grape Finds operates in the Washington, D.C. area. The initial complaint was filed in December 1999, shortly followed by the defendants’ jurisdictional motion.

Best Cellars submitted its First Amended Complaint on December 27, 1999, followed by a Second Amended Complaint on January 11, 2000. On the same day as the first complaint, Judge Richard M. Berman granted jurisdictional and limited merits discovery. Green filed a motion to dismiss for lack of personal jurisdiction on January 13, 2000, while Grape Finds, Campbell, and Mazur moved to strike the Second Amended Complaint on January 19. Best Cellars indicated its intent to withdraw this complaint on January 20, 2000. An evidentiary hearing regarding a preliminary injunction took place on January 26, 27, and 28, 2000, with concluding oral arguments on February 14, 2000, after which the motions were fully briefed.

Best Cellars operates retail wine stores in New York, Brookline, and Seattle and was founded by Joshua Wesson, Green, and Richard Marmet. Wesson, a prominent wine expert since 1979, has earned numerous accolades and has experience in both high-end restaurants and wine consulting, as well as co-authoring the influential book "Red Wine With Fish." Wesson conceptualized Best Cellars in the early 1990s to create a welcoming environment for novice wine buyers, implementing the "wine by style" approach he developed, which categorizes wines into eight taste categories: sparkling, light-bodied white, medium-bodied white, full-bodied white, light-bodied red, medium-bodied red, full-bodied red, and dessert wines. Each category is represented by a primary descriptor, simplifying wine selection for casual consumers. To further demystify the experience, Best Cellars limits its wine selection to approximately one hundred wines, priced at ten dollars or less, with additional offerings for special occasions.

Co-founders consulted intellectual property attorney John Alison from Finnegan Henderson to secure protections for their venture. In April 1996, they engaged the Rockwell Group to design an innovative retail space, termed an "anti-wine store," aimed at transforming wine retailing. They selected Hornall Anderson for graphic design after completing most of Trimble's work, and Hornall Anderson signed a confidentiality agreement with Best Cellars. The team researched existing wine stores for design inspiration and produced multiple architectural drafts based on input from Wesson, Marmet, and Green. Regular meetings with Rockwell culminated in a final design that included numerous rejected sketches.

The first Best Cellars store on Manhattan's Upper East Side featured distinct design elements for eight taste categories, each represented by a specific color and icon to enhance sensory associations. For instance, the "fizzy" category used ice-blue with a bubble icon, while the "fresh" category employed lime-green with a citrus slice icon. Icon-identifiers were computer-generated, with photographic images reserved for special promotions.

The Rockwell design was characterized by simplicity and elegance, showcasing wines along perimeter walls. Each wine was displayed on a stainless-steel wire pedestal, accompanied by a "shelf-talker" detailing the wine's attributes, including its name, vintage, tasting notes, grape type, origin, food pairings, and price. The shelf-talker featured a color strip corresponding to its taste category. Below each display bottle, additional bottles were stored in a patented vertical racking system, illuminated from behind to create a glowing effect without damaging the wine. This racking system, integrated with the store's design, gave the illusion of bottles stored within the walls.

Both display methods are used in the store, with the bottom method being more common. The visual effect features rows of illuminated wine bottles integrated into the walls, serving both decorative and functional purposes. Beneath the wall racks, drawers provide storage and enhance the aesthetic, acting like baseboards to prevent excessive bending for lower bottles, addressing ergonomic concerns. The store's street-facing wall is glass to attract foot traffic, while the back wall contains traditional shelving for upright non-display bottles. The cash wrap is recessed, with a placard explaining the Best Cellars system using primary and secondary descriptors for eight wine categories, which are displayed in a clockwise arrangement from the entrance: fizzy, fresh, soft, luscious, juicy, smooth, big, and sweet. Each wine bottle features a label with the Best Cellars branding and category identifiers.

The store's design incorporates a plaster ceiling with track lighting and a poured concrete floor, while the cash wrap wall is burgundy plaster with copper powder. There are no fixed aisles; instead, a wooden table with benches for tastings and a mobile cart for food prep are present. Light wood dominates the architectural materials, with stainless steel accents in the display pedestals and racking system.

Differences from the New York store include deliberate improvements, such as larger, rectangular category signs with a three-dimensional effect, modified typography and colors, and an adjusted category order placing "fizzy" wines last. The layout was reversed to align with consumer behavior, and a refrigerator was added for chilled wines, with signage modifications occurring over time.

The Seattle store features a unique cook's table and a centrally located cash wrap, differing from the Brookline store, which has distinct architectural elements such as a trellis or curved awning and poured concrete floors. Both stores exhibit variations in ceiling design and display methods, with the Seattle store not replicating the poured concrete floors typical of many retail wine stores in the U.S. Typically, these stores stock around 500 wine varieties, using freestanding or built-in shelving for display. Unique to Best Cellars, its shelf-talkers are uniformly displayed at eye level, unlike those at Nancy's in New York, which are handwritten and inconsistently formatted. Best Cellars categorizes wine by taste and style—a method not previously used in retail but discussed in wine literature by various authors, each employing different categorization systems. Best Cellars, which opened in Manhattan in November 1996, has garnered extensive media attention and accolades for its innovative design and retail approach, with Rockwell and Hornall Anderson receiving multiple awards. Co-founder Green, an integral part of the New York store's management, was terminated in February 1997. As Best Cellars sought expansion, it learned of a competing store, Grape Finds, opening in Washington, D.C., shortly after licensing agreements were made to utilize its classification system in Xando's stores. Best Cellars' relationship with Hornall Anderson ended before the Brookline store's opening due to disagreements over trade dress improvements.

Mazur, an M.B.A. graduate from Columbia Business School in May 1998, aimed to establish his own wine retail business influenced by Best Cellars, which he had frequented and researched extensively. He drafted a business plan for "Grape Finds," directly incorporating elements from Best Cellars' concept and design, substituting the name in the process. After moving to the Washington, D.C. area, Mazur, with assistance from his father Jack Mazur—a former attorney with a history of fraud—incorporated GFI on March 15, 1999, and contracted to purchase a liquor store in Dupont Circle shortly thereafter.

Mazur engaged Theodore Adamstein of the architectural firm Adamstein and Demietrou to design the store. During their initial meeting, Adamstein noted the similarity between Grape Finds and Best Cellars, acknowledging that it was "an easy leap" to associate Mazur's concept with Best Cellars based on his prior exposure to its design. Adamstein was subsequently hired to design the store and traveled to New York on April 20, 1999, to visit Best Cellars as part of his research, although he only visited that store and did not document other visits. Despite discrepancies regarding the initiation of this trip, it was inferred that Grape Finds intended to replicate elements of Best Cellars' trade dress, demonstrating a clear agreement among Mazur, his father, and Adamstein to appropriate Best Cellars' store design. Adamstein also became an investor in Grape Finds.

Currently, an individual holds a five percent ownership stake, with plans to increase this to ten percent through options. During the architectural design development for the Grape Finds store, brainstorming sessions were purportedly conducted, resulting in sketches similar to those of Rockwell; however, no A. D sketches were presented as evidence, unlike Rockwell’s. Adamstein's credibility as a witness was questioned, suggesting that the brainstorming may not have occurred and that A. D's design, particularly the wall display, likely copied Best Cellars’ design. A. D submitted its design to Grape Finds on May 12, 1999, featuring wine-related imagery.

Mazur sought a wine buyer in April 1999, later inviting Green to Washington, where he accepted a job offer on July 20, 1999, despite still holding shares in Best Cellars, from which he had not been an employee since February 1997. Wesson and Marmet attempted but failed to repurchase Green's shares and refused his request to be released from a confidentiality agreement. On June 6, 1999, Green sent Mazur confidential documents from Best Cellars, including his employment agreement and liquor license application.

Mazur contacted Campbell in late April 1999; they met on May 20, 1999, and agreed to collaborate on Grape Finds, with Campbell officially becoming a partner in July 1999. Hornall Anderson was hired for graphic design, with assurances of no conflict of interest despite prior engagements with Best Cellars, which had signed a confidentiality agreement. In a July 3, 1999 meeting at the Four Seasons Hotel, plans for Grape Finds' national rollout were discussed, with aspirations for a store in New York highlighted, including a noted allocation of $400,000 for the Manhattan location. Green was scheduled to present on the Best Cellars model during this meeting.

Mazur testified that a planned presentation did not occur due to a less formal meeting structure. Green and Campbell developed the Grape Finds website, which shares substantial content with the Best Cellars website and promotional materials. Campbell visited the Best Cellars New York store multiple times after starting with Grape Finds. Mazur was aware of Best Cellars' intention to open a store in Washington, D.C., as informed by real estate agents for Grape Finds. Design work for the Grape Finds store continued until September 1999, with the store opening on December 3, 1999. The store features a narrow, deep layout with a large street-facing window and a curved awning. The Grape Finds logo is distinct from Best Cellars', yet the interior displays closely resemble Best Cellars, organized by the same eight taste categories (CRISPfinds, MELLOWfinds, RICHfinds, FRUITYfinds, SMOOTHfinds, BOLDfinds, BUBBLYfinds, SWEETfinds). Mazur admitted to copying this category system. Descriptors used by Grape Finds were derived from those of Best Cellars, albeit with slight rearrangements. Grape Finds assigned colors and icons to each category, similarly to Best Cellars, and organized products in a systematic manner. Approximately 100 value-priced wines are displayed, with bottles positioned slightly above eye level on stainless steel pedestals. Shelf-talkers beneath the display bottles closely replicate the information found on Best Cellars shelf-talkers. The store's design, including lighting and storage features, mimics the aesthetic of Best Cellars, with large signs indicating categories that resemble Best Cellars' signage despite being presented as a segmented mural.

Each mural section in the Grape Finds store corresponds to one of eight categories in the Grape Finds system, featuring unique, computer-enhanced photographs of wine, category titles (e.g., MELLOWfinds, RICHfinds), and distinct color palettes. The overall design includes color-coded wall signs, single display bottles on stainless-steel pedestals, square shelf talkers, vertical stacks of glowing bottles, and cabinetry between wine racks and the floor. 

Key differences from Best Cellars include a vaulted ceiling designed to resemble a wine cellar, a cork floor, and eleven mobile boxes for seating and storage, arranged variably on the floor. An alcove at the back of the store is designated for wine tastings, featuring a wooden table, chairs, and traditional shelving with smoked glass panels. Unlike Best Cellars, Grape Finds lacks a mobile food preparation cart, though stainless steel is more prevalent, with blades dividing categories that display primary and secondary descriptors.

The cash wrap features a curved design on wheels, with a linoleum top and metal finishes, positioned centrally along one wall. The store's layout resembles a wine bottle, although this was coincidental due to lease space configuration. 

The Grape Finds website and original brochure share many descriptive phrases with the Best Cellars materials, though the order and layout differ. For instance, both brochures introduce the stores as "a completely new kind of wine store," while variations in wording exist throughout. Grape Finds had access to the Best Cellars brochure, yet the new Grape Finds brochure is not substantially similar to it. 

Mazur, a key figure involved, denied intent to copy Best Cellars but was deemed not credible, particularly after discrepancies were revealed during the hearing, including misleading statements about his residence when congratulating Best Cellars on their Seattle store opening.

Mazur acknowledged during the hearing that much of the content on the Grape Finds website was very similar to that on the Best Cellars website and other Best Cellars materials. He denied direct copying, claiming he could reproduce the material from memory due to familiarity. Notably, he admitted that the "Store Design" section of the Grape Finds private placement memorandum was largely created by copying sentences from articles about Best Cellars. Despite knowing this information was not confidential, Mazur labeled it as such during discovery, which hindered Best Cellars' ability to present it to Wesson and Marmet until ordered by the Court. He claimed the confidentiality designation was made under pressure and late at night, a statement deemed not credible, as other parts of the memorandum were not marked confidential, and he recognized the risk of exposure to Wesson and Marmet revealing his plagiarism.

During a deposition, Mazur had stated he downloaded materials from the Best Cellars website but later retracted this under questioning, attempting to clarify that he "printed out" the materials instead. Furthermore, he claimed the store design was unique and that he had consulted with counsel regarding its uniqueness; however, the legal opinion he cited was dated after the store's design was completed, contradicting his assertion that counsel was consulted from the outset.

Regarding jurisdiction, the document outlines that since no defendants reside in New York, personal jurisdiction over them must be determined by New York law. Best Cellars contends that jurisdiction exists under New York's long-arm statute, which allows for jurisdiction over non-residents transacting business in the state or committing tortious acts within or outside the state that cause injury within New York.

New York's long-arm jurisdiction under CPLR 302(a) requires either (i) regular business conduct or substantial revenue generation from goods or services within the state, or (ii) reasonable expectations that actions will have consequences in the state alongside substantial revenue from interstate or international commerce. The jurisdiction granted by Section 302(a) does not extend to the full constitutional limits. For each cause of action, the jurisdictional test must be satisfied.

Green and Hornall Anderson engaged in business with Best Cellars in New York and signed confidentiality agreements, establishing appropriate jurisdiction for breach of confidentiality claims related to these contracts under CPLR 302(a)(1).

For non-resident defendants, CPLR 302(a)(2) requires a tortious act to have been intentionally committed while the defendant or their agent was physically present in New York. An "articulable nexus" must exist between the act and the claim. The term "agent" is broadly interpreted, including co-conspirators, which can subject an out-of-state defendant to jurisdiction if their co-conspirator commits acts in New York in furtherance of a conspiracy.

To establish jurisdiction based on a co-conspirator's actions, the plaintiff must demonstrate: (1) a prima facie case of conspiracy; (2) specific facts indicating the defendant's involvement; and (3) an overt act in New York related to the conspiracy. A prima facie showing of conspiracy requires a primary tort, a corrupt agreement, an overt act in furtherance, intentional participation, and resulting damages. The relationship between the defendant and New York co-conspirators can be established by proving awareness of the effects of their activities in New York, benefits derived from co-conspirators' actions, and that these actions were taken at the direction or request of the out-of-state defendant.

A plaintiff must establish jurisdiction over a defendant by a preponderance of the evidence. Establishing a civil conspiracy typically relies on circumstantial evidence, as direct proof is often unavailable. While circumstantial evidence can be used to infer the existence of a conspiracy, mere conjecture or suspicion is insufficient. Best Cellars alleges a conspiracy among all defendants related to trade dress infringement, dilution, unfair competition, copyright infringement, and breach of confidentiality. The specific alleged tortious acts supporting this conspiracy include: 

1. Mazur's visits to the Best Cellars store, where he took brochures that were later copied.
2. Mazur sending Adamstein to observe and replicate the store's design.
3. Jack Mazur purchasing wine from the Best Cellars New York store.
4. Campbell's multiple visits to the store, including one after joining Grape Finds, to examine the design.
5. Green faxing confidential information from New York to Grape Finds partners.

There is sufficient circumstantial evidence indicating a conspiracy among Mazur, Jack Mazur, Adamstein, Campbell, Green, GFI, and GFDI concerning the aforementioned causes of action. The evidence suggests a collective intent to replicate the Best Cellars store's appearance, with ongoing work on the trade dress occurring after Campbell and Green joined the Grape Finds team, despite the initial blueprints being delivered on May 12, 1999.

Campbell's admission to visiting the Best Cellars New York store to examine the design, along with evidence of Green's and Campbell's involvement in a conspiracy regarding trade dress, indicates that both joined in the conspiracy. Campbell committed an overt act in New York in furtherance of this conspiracy. The evidence suggests that Jack Mazur’s visit to the store was not solely for purchasing wine but also to observe the trade dress, which the defendants intended to discuss incorporating into the Grape Finds store. The timeline indicates that the conspiracy to replicate Best Cellars' trade dress coincides with ongoing efforts to copy its copyrighted brochure involving Green, Campbell, Mazur, and Grape Finds. Their collaboration on the Grape Finds website implies knowledge of their copying activities. It can be inferred that at least one defendant collected a Best Cellars brochure post-conspiracy formation for copying purposes, supporting participation in the conspiracies. Damages from these actions are established in the section addressing trade dress infringement. GFI and GFDI, through their principals, recognized the conspiracies' implications in New York, and their actions were for their benefit and that of GFI and GFDI. Sufficient evidence supports a conspiracy involving Mazur, Campbell, GFI, and GFDI, granting the Court personal jurisdiction under N.Y. C.P.L.R. 302(a)(2) for claims of trade dress infringement, trade dress dilution, unfair competition, and copyright infringement. Conversely, the evidence does not support a conspiracy claim against Hornall Anderson and Green regarding confidentiality agreements, leading to a lack of jurisdiction over them for those claims. Additionally, no evidence suggests a corrupt agreement existed between Hornall Anderson and the other defendants, and the actions taken after Hornall Anderson's engagement with Grape Finds did not benefit or fall under its control. Therefore, jurisdiction under 302(a)(2) is not established for trade dress infringement, trade dress dilution, unfair competition, and copyright infringement claims against Hornall Anderson. C.P.L.R. 302(a)(3) necessitates a tortious act outside New York causing injury within the State.

The defendant must anticipate that their tortious actions will result in consequences within the state and must gain substantial revenue from interstate commerce for personal jurisdiction to be established under Section 302(a)(3). In this case, Grape Finds, Mazur, Campbell, and Green do not meet these criteria, as no substantial revenue from interstate commerce has been demonstrated. Best Cellars only presented evidence of some customers from Virginia and Maryland, but Grape Finds operates primarily on a local basis and holds a license solely for sales in Washington, D.C., prohibiting mail sales to non-D.C. residents. Consequently, jurisdiction under 302(a)(3)(ii) is not applicable.

Regarding constitutional due process, personal jurisdiction is permissible only if the defendant has certain minimum contacts with the forum, ensuring that the lawsuit does not violate principles of fair play and substantial justice. The court concluded that asserting personal jurisdiction over the individual defendants meets due process standards. Therefore, motions to dismiss for lack of personal jurisdiction are partially granted and partially denied.

On the venue issue, the court found no grounds for dismissal or transfer based on the presented legal standards and evidence.

Best Cellars seeks a preliminary injunction related to its claims of trade dress infringement under the Lanham Act, dilution, unfair competition under New York law, copyright infringement, and misuse of confidential information. The standard for a preliminary injunction requires proof of irreparable injury and either a likelihood of success on the merits or serious questions regarding the merits that favor the movant. In trade dress infringement cases, irreparable harm is presumed if a likelihood of success is shown, and a finding of likelihood of confusion often suffices for a preliminary injunction without needing further evidence of actual injury.

Likelihood of confusion regarding source or sponsorship establishes both likelihood of success and risk of irreparable harm in legal claims. In this case, a likelihood of confusion has been demonstrated, indicating a significant risk of irreparable injury. Best Cellars has shown a likelihood of success on its trade dress and unfair competition claims under Section 43(a) of the Lanham Act. This section prohibits the use of any term or symbol in commerce that may cause confusion or deceive consumers about the source or sponsorship of goods or services, allowing for civil action by those who may be harmed.

Trade dress, encompassing the total visual image of a product—including size, shape, color, texture, and graphics—is protected under this section, functioning as a federal law of unfair competition for unregistered goods. The Supreme Court's decision in *Two Pesos, Inc. v. Taco Cabana, Inc.* illustrated this protection by affirming that a Mexican restaurant's festive atmosphere and distinctive decor qualified for trade dress protection. The rationale behind trade dress protection is to secure goodwill for the business owner and help consumers distinguish between competing products, thereby fostering competition and maintaining quality. The *Two Pesos* ruling clarified that inherently distinctive trade dress is entitled to protection under the Lanham Act.

Under Section 43(a) of the Lanham Act, proof of secondary meaning is not necessary for a trade dress claim. The Supreme Court in *Two Pesos* acknowledged that imposing a secondary meaning requirement could hinder competition, particularly for startups, as it might prevent new businesses from entering markets and allow competitors to exploit an originator's trade dress without consequence. However, there are concerns about overextending trade dress protection, which could conflict with copyright and patent laws aimed at preventing monopolization.

To establish a trade dress infringement claim, a plaintiff must show: (1) the trade dress is inherently distinctive or has acquired distinctiveness through secondary meaning; (2) there is a likelihood of confusion between the plaintiff's and defendant's trade dress; and (3) if the trade dress is unregistered, the design is non-functional. 

Inherent distinctiveness is assessed using the Abercrombie test, which categorizes trade dress as generic, descriptive, suggestive, or arbitrary/fanciful. Suggestive and arbitrary/fanciful trade dresses are inherently distinctive, while descriptive trade dresses may gain distinctiveness through secondary meaning. Generic trade dresses receive no protection under the Lanham Act. The distinctiveness inquiry should focus on the overall combination of elements, as a trade dress can be considered distinctive if it is arbitrary, fanciful, or suggestive, despite incorporating generic or functional elements. Conversely, broad ideas or general appearances cannot be protected, though specific expressions of such ideas in trade dress can be.

The purpose of trade dress law is to protect the owner's ability to inform the public about the source of products while preventing the exclusion of competition from similar products. Best Cellars successfully established the inherent distinctiveness of its trade dress, which is characterized as arbitrary under the Abercrombie analysis. This distinctiveness is evident through the unique total visual image presented in its stores, recognized by testimony from Mazur and Adamstein, and supported by numerous articles and awards highlighting the distinctiveness of Best Cellars' design. Key features of its trade dress include: eight words and colors differentiating taste categories, computer-manipulated images, specific display arrangements, a unique materials palette, and the absence of fixed aisles, culminating in a "wall of wine" concept. While defendants argue that Best Cellars' trade dress is not inherently distinctive and claim it is functional—essential to the use or purpose of the product—Best Cellars has countered these assertions effectively, demonstrating that no compelling evidence has been presented to show that its trade dress is functional or would disadvantage competitors.

A trade dress composed solely of commonly used or functional elements may be deemed unprotectable or generic to prevent monopolization of product ideas. Under the relevant legal standard, it is unnecessary to analyze each element of Best Cellars' claimed trade dress for non-functionality in detail. Testimony and exhibits presented during the proceedings showed various viable wine display systems, suggesting that Best Cellars' specific configurations, such as single display bottles on stainless-steel wire pedestals and vertical rows of nine bottles, do not significantly disadvantage competitors. Competitors can equally utilize various materials and arrangements for bottle displays. While ergonomic considerations exist, many alternative arrangements could be equally or more ergonomic. Additionally, numerous wine stores do not follow vertical display arrangements, and Best Cellars' trade dress includes both functional and non-functional components, meeting the legal requirement that some elements must be non-functional. 

Defendants argue that the overall trade dress is functional, citing legal precedents that do not support their claim. Notably, the Jeffrey Milstein case indicates that if a trade dress is arbitrary, fanciful, or suggestive, it can be distinctive despite generic elements. The Walt Disney case identified functionality in purely functional elements, while the Hampton Inns case involved a more generic trade dress than that of Best Cellars. 

Defendants also claim that Best Cellars has not consistently applied its trade dress, which could affect its protection. However, evidence demonstrates that Best Cellars has consistently implemented its trade dress across its three stores, countering the Defendants’ assertions.

The modifications in the cash wrap location, wall signs, and wall refrigerator do not significantly alter the overall aesthetic established by the prototype New York store, where the "wall of wine" remains the prominent visual feature. Best Cellars cannot protect the concept of selling wine by taste under trade dress law, but it can protect the specific expression of that concept through its developed trade dress. The defendants argue that Best Cellars has not demonstrated secondary meaning for its trade dress; however, inherent distinctiveness suffices for protection without needing to show secondary meaning.

A substantial likelihood of confusion exists between the trade dresses of Best Cellars and Grape Finds, as determined by an eight-factor test from Polaroid Corp. v. Polarad Electronics Corp. This test considers factors such as the strength and similarity of trade dress, product proximity, actual confusion, and consumer sophistication, ultimately focusing on whether an ordinary consumer would confuse the two stores. The strength of a trade dress is measured by its distinctiveness and ability to identify goods from a specific source, which influences its protection level. Arbitrary trade dress is inherently strong, but its strength can be undermined by similar dresses in the market. Weak dresses receive limited protection, and generic marks are not protected under the Lanham Act.

Descriptive marks receive legal protection only upon demonstrating a "secondary meaning" in the marketplace, indicating that consumers associate the mark with a specific source rather than the product itself. The determination of whether a mark is suggestive or descriptive hinges on its acquired secondary meaning, which is assessed based on how well it indicates the origin of goods to the purchasing public. Factors influencing this assessment include advertising expenses, consumer studies, unsolicited media coverage, sales performance, attempts to copy the mark, and the duration and exclusivity of its use.

Best Cellars' trade dress is categorized as "arbitrary," indicating a strong mark within this framework, bolstered by the absence of similar trade dress in the wine retail sector. While there is limited evidence of advertising or consumer studies, the dress has garnered significant unsolicited media attention, achieved notable sales success, and has been used exclusively since 1996. Evidence also suggests that the Grape Finds dress intentionally imitates Best Cellars' dress, supporting claims of secondary meaning.

Regarding the similarity of trade dresses, the likelihood of consumer confusion is evaluated based on how strikingly similar the two dresses appear. The visibility of markings that clarify the origin of goods can mitigate confusion, particularly when prominently displayed. However, if trade names lack recognition, the effectiveness of such markings diminishes. The primary visual feature shared by Best Cellars and Grape Finds is a wine wall, while other elements such as ceilings, flooring, and shelving systems do not significantly contribute to their identities.

The visual merchandising of Grape Finds, which displays eight categories of wines primarily along the store's perimeter with uniform presentation elements, likely leads to confusion among customers, who may mistake it for a Best Cellars store. Although the Grape Finds trade name is present, it is not prominently recognizable. The "proximity-of-the-products" analysis indicates that the two stores sell similar value-priced wines to a nearly identical customer base, both targeting non-connoisseurs. While specific advertising strategies were not discussed, both businesses utilize their physical stores and web sales for distribution. Despite geographical separation, Best Cellars has national recognition and is planning a nationwide rollout, which includes a potential store in Washington, D.C., previously influenced by Grape Finds' entry into the market. The likelihood of competition between the two, given their overlapping market strategies and customer bases, suggests a strong possibility of infringement. Additionally, there is no significant market gap as both companies operate within the same product category. Best Cellars has also provided evidence of actual customer confusion regarding the two brands.

Several individuals alerted Wesson and Marmet about a new "copycat" store, Grape Finds, opening in Washington, prompting comments from customers suggesting confusion with existing stores in Brookline and inquiries about sister stores in New York and Boston. However, due to the lack of systematic research, these anecdotal comments hold limited weight. Under the Lanham Act, actual confusion is not required to prove a case, only a likelihood of confusion, as established in legal precedents. Given the short time Grape Finds was operational before the injunction hearing, it is understandable that Best Cellars could not compile extensive evidence of actual confusion, although some evidence does exist, slightly favoring Best Cellars.

The analysis also examines Grape Finds' bad faith, indicating that its trade dress closely mimicked Best Cellars', especially the "wall of wine," suggesting an intention to exploit Best Cellars' reputation and goodwill. Evidence points to Mazur's directive to Adamstein to replicate key elements of Best Cellars’ design, further undermining their credibility. 

Regarding the quality of products, no evidence suggests Grape Finds' offerings are inferior, which favors Grape Finds. However, the sophistication of the purchasers leans toward Best Cellars, as both stores target less sophisticated wine buyers with predominantly lower-priced wines. Overall, seven of the eight Polaroid factors weigh in favor of Best Cellars, with the factors serving as a non-exclusive guideline.

Best Cellars has established a significant likelihood of confusion between its trade dress and that of Grape Finds, warranting a preliminary injunction under the Lanham Act. Best Cellars has shown that its trade dress is distinctive and that confusion with Grape Finds' trade dress is likely. Irreparable harm is presumed due to this likelihood of confusion. Consequently, Grape Finds is ordered to alter its "wall of wine" display to eliminate confusion, specifically by changing the arrangement of single display bottles and other visual elements without altering other aspects of its store.

Under New York law, the common law unfair competition claim parallels the Lanham Act claim, potentially requiring proof of bad faith. Best Cellars has met the elements for its Lanham Act claim, and evidence suggests that Grape Finds acted in bad faith, misappropriating Best Cellars' resources and likely confusing consumers about the source of the goods. Therefore, Best Cellars also qualifies for preliminary injunctive relief on this claim.

Additionally, Best Cellars seeks injunctive relief under the Federal Trademark Dilution Act (FDTA), which protects famous marks from dilution, defined as the reduction of a mark's ability to identify and distinguish goods. The requirements to establish a dilution claim include proving that the senior mark is famous, distinctive, and that the junior use is a commercial use in commerce.

To establish a dilution claim under the FDTA, the following criteria must be met: (1) the mark must be famous, (2) the use must begin after the mark has gained fame, and (3) the use must dilute the mark's distinctiveness. Factors for assessing a mark's fame include its distinctiveness, duration and extent of use and advertising, geographical trading area, channels of trade, recognition in relevant markets, third-party use of similar marks, and any historical registration under specific acts. 

In the case of Best Cellars, its trade dress is distinctive but has been in use only since late 1996, with limited advertising and recognition primarily within niche circles rather than the general public. The geographical scope of its use is confined to metropolitan areas in New York City, Boston, and Seattle, and it has not registered its trade dress. Consequently, the evidence does not support a strong claim of dilution warranting a preliminary injunction.

Regarding copyright infringement, two elements must be proven: ownership of a valid copyright and copying of original elements. Best Cellars holds a registered copyright for its promotional brochure, which provides prima facie evidence of valid ownership. Grape Finds did not present evidence to contest this ownership. To demonstrate copying, Best Cellars must show either that Grape Finds had access to its work and there is substantial similarity, or that the works are strikingly similar.

An "improper or unlawful appropriation" requires that the copied portion of a work demonstrates substantial similarity. Mazur acknowledged access to Best Cellars' in-store brochure and website, allowing Best Cellars to show a likelihood of success on the merits. The legal framework distinguishes between "comprehensive nonliteral similarity," where the essence of the work is duplicated without word-for-word copying, and "fragmented literal similarity," which involves partial, literal copying. Grape Finds argues that similarities between its materials and Best Cellars' brochure are outweighed by differences. However, the Court found sufficient fragmented literal similarity, particularly that Grape Finds copied extensive descriptions from Best Cellars' brochure. Despite some differences in wording and arrangement, these do not adequately differentiate the works. Grape Finds' claim that the brochure's descriptions are non-protectible clichés was rejected, given the context of retail wine stores. Consequently, Grape Finds is enjoined from using its brochure, website, and private placement memorandum until modifications are made. 

Regarding breach of confidentiality, no evidence supports a claim against Hornall Anderson, while Green appears to have breached his agreement with Best Cellars, but no irreparable harm was shown. Therefore, no preliminary injunctive relief is granted concerning this breach. A preliminary injunction will be issued, with instructions to settle on notice.

A "cash wrap" refers to the area in a retail store where payments and packaging of goods occur. Grape Finds, Inc., originally incorporated as Grape Xpectations, Inc., amended its name on April 20, 1999. The company's promotional materials, website, business plan, and private placement memorandum prominently feature specific categories central to its system. The website is currently being revamped, but details of the changes are not provided. While Green has a New York apartment, his primary residence is in Washington, D.C. There is insufficient evidence to suggest a conspiracy between Jack Anderson and Grape Finds involving the recommendation of copywriter Daveys in relation to Best Cellars' trade dress or copyrights.

The Supreme Court's decision in Wal-Mart clarifies that the Two Pesos ruling does not extend to trade dress cases concerning a product's trade dress rather than its packaging. The 1999 amendment to the Lanham Act shifted the burden of proof regarding non-functionality for unregistered trade dress to the party seeking relief, potentially leading to many trade dresses being deemed inherently distinctive. However, the challenge of proving likelihood of confusion remains, balancing concerns about inherent distinctiveness.

Best Cellars argues that intentional copying can bypass the Polaroid eight-factor test, creating a presumption of likelihood of confusion, although cited cases do not fully support this claim. The court in Mobil Oil applied the Polaroid test and used evidence of intentional copying solely to establish bad faith. Other cases like Harlequin and Perfect Fit do not apply the Polaroid test, and a more recent case, Fun-Damental Too, suggests that intentional copying does not automatically indicate a desire to confuse consumers. A defendant may have legitimate reasons for copying, such as promoting a functionally similar product. However, if there is evidence indicating intent to confuse, the inference of bad faith may be justified.

This ruling is specific to Grape Finds' original in-store brochure, which is no longer in use, and does not apply to the updated brochure or the altered website, which may no longer constitute infringement. The fame of the trade dress must be established rather than prospective.