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Daesang Corp. v. Rhee Bros.

May 13, 2005

DAESANG CORPORATION, PLAINTIFF
v.
RHEE BROS., INC., DEFENDANT



The opinion of the court was delivered by: Andre M. Davis United States District Judge

PUBLISHED

MEMORANDUM OPINION SETTING FORTH FINDINGS OF FACT AND CONCLUSIONS OF LAW PURSUANT TO FED.R.CIV.P. 52

In this action arising under the Lanham Act, 15 U.S.C. §§ 1051, et. seq., and state law, plaintiff/counter-defendant Daesang Corporation ("Daesang"), seeks cancellation of a federal trademark registration, consisting in relevant part of a Korean alphabet depiction which transliterates to the term "Soon Chang" (hereinafter "the mark"), and damages under Maryland law for tortious interference with business relations and prospective economic advantage, against defendant/counter-plaintiff Rhee Bros., Inc. ("Rhee Bros."). In particular, Daesang alleges that: (1) registration of the mark should be canceled because Rhee Bros. obtained federal registration of the mark fraudulently; and that, alternatively, (2) the claim to exclusive use of the mark is unenforceable because (a) it is geographically descriptive but lacking in secondary meaning and (b) it is used in a manner that is geographically deceptively misdescriptive. Rhee Bros. has asserted counterclaims for: (1) trademark infringement; (2) unfair competition and false designation of origin in violation of 15 U.S.C. § 1125(a); (3) trademark dilution in violation of 15 U.S.C. § 1125(c); (4) common law trademark infringement; and (5) unfair competition.

I conducted a bench trial over several days between January 18, 2005, and February 14, 2005. After careful consideration of the witness testimony, trial exhibits, and all the evidence presented, and after considering the arguments of counsel, I shall direct the entry of judgment in favor of Daesang as to its federal claims. However, I find and conclude that the state law claim is not proven. Furthermore, I do not find that this case qualifies as an "exceptional case" under section 35(a) of the Lanham Act, and thus I shall deny Daesang's request for costs and attorneys' fees. See 15 U.S.C. § 1117(a). Rhee Bros.' counterclaims shall be rejected. There follows my findings of fact and conclusions of law in accordance with Fed.R.Civ.P. 52(a).

I. FINDINGS OF FACT

1. "Gochujang" (also written as "gochuchang," "go choo chang," "kochujang" or "koch'ujang") is a Korean condiment or sauce commonly known in English as "hot pepper paste" or "hot bean paste." Yu Dec. ¶ 1.

2. Gochujang is a very popular food among Koreans. Kim-Renaud Dep. at 24 ("There is no Korean who would grow up not having eaten it.").

3. By a wide margin, the primary purchasers of gochujang in the United States are persons of Korean origin.*fn1 Cho Dep. at 19; Bae Dep. at 14.

4. The Soon Chang province of South Korea has been well known for and associated with producing high quality gochujang for centuries. Larsen Dec. ¶¶ 9, 15; Plf. Exhs. 125, 143, 147, 148, 155, 157.

5. Most Koreans and Korean Americans are, and have long been, familiar with the goods-place association between Soon Chang and gochujang; Rhee Bros.' contention that knowledge of the goods-place association between Soon Chang and gochujang is a result of recent efforts by, if not an invention of, the Korean government or the local Soon Chang government, is rejected.*fn2

6. During the Chosun Dynasty in Korea (1392-1910), Soon Chang gochujang was sent to Seoul, the capital of Korea, as a tribute to kings. Larsen Dec. ¶¶ 9, 15; Plf. Exhs. 125, 143, 147, 148, 155, 157.

7. Numerous encyclopedias and historical documents confirm that as early as the 18th century, "one of the things that Sunch'ang is well known for is koch'ujang." Larsen Dep. at 16-18, 37; Larsen Dec. ¶ 15.

8. In 1740, a Korean document known as Sumunsasol noted that Soon Chang was a place in Korea famous for high quality gochujang. Larsen Dec. ¶ 15.

9. Another document from the early 1880s, the Kyuhapch'ongso, notes that of the places in Korea known for their gochujang, Soon Chang is the most famous. Id.

10. A May 17, 1959, article in the Chosun Daily Newspaper, a Korean language paper, states in part:

One of the famous products in Soon Chang is gochujang. It is believed that the water here created today's "Soonchang Gochuchang" not to mention the culinary technique . . . . From ancient times high government officials who toured this district received a gochuchang jar as a gift and noble individuals who left this district received a gochuchang jar (as a souvenir).

Plf. Exh. 3.

11. Consequently, numerous companies located in Soon Chang make gochujang and other sauces. Yu Dec. ¶ 18.

12. Additionally, the local community operates a Gochujang Folk Village, which promotes the sale of gochujang made by local businesses. Yu Dec. ¶ 18.

13. Numerous Internet websites promote gochujang made in Soon Chang. Hitt Dec. ¶¶ 7-12.

14. Brochures published by Soon Chang County and various manufacturers of gochujang located in Soon Chang discuss the fame and reputation of that area as a source of gochujang. Plf. Exhs. 112, 112A-F, 113, 114, 115, 115A.

15. Saying "Soon Chang gochujang" to people familiar with Korean culture is similar to saying "Idaho potatoes" or "Maine lobsters" to an American; each such term implies quality and authenticity. Kim-Renaud Dec. ¶ 17.

16. Defendant Rhee Bros. is a closely held Maryland corporation owned by Syng Man Rhee and his relatives. Plf. Exh. 102.

17. Rhee Bros.' principal business address is at 9505 Berger Road, Columbia, Maryland. Plf. Exh. 102.

18. Rhee Bros. is primarily in the business of selling Asian food products, including gochujang, to Korean and other persons in the United States and it operates retail grocery stores in Maryland, Virginia, New York, and California. Rhee Dec. ¶ 11.

19. Syng Man Rhee, founder of Rhee Bros., is a highly-educated Korean-born individual who immigrated to the United States in the 1970s and established one of the first businesses to import and distribute Korean food products in the United States. Rhee Dec. ¶¶ 4,14.

20. Rhee Bros. was one of the first companies to use brand names and labels on the packaging of imported Asian foods. Tr. at 158.*fn3

21. In 1978, Rhee Bros. began selling gochujang using the term "Soon Chang" in its brand name. Tr. at 158.

22. Rhee Bros. purchased its first gochujang products in the late 1970s from a firm known as Tobagi Soon Chang Company located in Soon Chang, South Korea. Rhee Dep. at 84-85; Tr. at 151-52.

23. On July 2, 1986, Rhee Bros. filed Application Serial No. 73/607565 for the mark. Rhee Dec. ¶¶ 31,36.

24. In the 1986 application, Rhee Bros. represented to the Patent and Trademark Office ("PTO") that Soon Chang meant "pure spear." Plf. Exh. 28.

25. Rhee Bros. made no mention in the 1986 application that there is a region of South Korea known as Soon Chang or that the region is famous for high quality gochujang in spite of Rhee Bros.' knowledge of the fact. Id.

26. Mr. Rhee testified that he intended the term "Soon Chang" to transliterate to the term "pure spear" to denote the hot and sharp taste of gochujang, Tr. at 122, but I find this explanation wholly incredible.

27. Mr. Rhee places a picture of a young lady to reinforce the meaning of his brand name ASSI (meaning "young woman" in Korean), yet he never used a picture of a spear to refer to "pure spear" on any of his Soon Chang products. Tr. at 173-74.

28. Soon Chang cannot be understood to mean "pure spear" in the Korean language because of the linguistic structure of the term "Soon Chang" in the Korea alphabet. Kim-Renaud Dec. ¶¶ 3,8.

29. Although the mark literally translates in the Korean alphabet to the separate words "pure" and "spear," there is no association in the Korean alphabet or Korean culture between the words "pure" and "spear" that would make "pure spear" a plausible interpretation of the phrase "Soon Chang" by a person who reads the term in Korean or is familiar with Korean culture, which is essentially the community of consumers to whom gochujang is marketed, in the Korean language, in the United States. See id. at ¶¶ 8-9.*fn4

30. On December 8, 1987, Rhee Bros. obtained registration for the mark, Reg. No. 1,468,524, for the term "Soon Chang" in the Korean alphabet. Rhee Dec. ¶¶ 31,36.

31. In early 1994, the mark was canceled by the PTO for failure of Rhee Bros.' attorney to file a Section 8 affidavit. Id. at ¶ 39.

32. The cancellation was not based on the merits of Rhee Bros.' registration, and Rhee Bros. had continuously used the mark in commerce from 1978 through the date of cancellation in 1994. Id.

33. On April 13, 1994, Rhee Bros.' attorney filed Application Serial No. 74/511883 for the mark ("Amberly application"). Rhee Dec. ¶ 43; Def. Exh. 85.

34. On June 26, 1995, a non-final office action was mailed to Amberly stating that the mark is descriptive and the mark was not categorized as geographic. Def. Exh. 83.

35. On February 23, 1996, the application was deemed abandoned for failure of the applicant to respond to the office action. Rhee Dec. ¶ 45; Def. Exhs. 83, 84.

36. On February 26, 1996, Amberly responded to an oral notice of abandonment by filing a request for reinstatement based on his failure to receive the June 1995 office action. Def. Exh. 4.

37. On July 8, 1996, the PTO requested additional information explaining the reason for non-receipt of the office action. Def. Exhs. 4,83.

38. On August 27, 1996, another Rhee Bros. attorney filed Application Serial No. 75/157052 for the mark ("Ahn application"). Rhee Dec. ¶ 49.

39. A different examiner was assigned by the PTO to the Ahn application. Koh Dep. at 64-65.

40. On August 28, 1996, Amberly filed a response and another change of address, informing the PTO that he was not receiving mail at his previous address. Def. Exh. 81.

41. On September 26, 1996, the PTO dismissed the Amberly application for failure to respond. Def. Exhs. 80, 81.

42. On October 3, 1996, Amberly filed another request for reinstatement. Def. Exhs. 80, 81.

43. On December 13, 1996, Amberly's request for reinstatement was granted. Def. Exhs. 80, 81.

44. On July 30, 1997, Ahn filed a response to an office action which included an affidavit from Rhee Bros. stating that Soon Chang is the name of a town located in South Korea. Rhee Dec. ¶ 51; Def. Exh. 72.

45. On September 19, 1997, Amberly responded to an office action and stated that Soon Chang is a region in Korea that is "famous for sauces," but that there is no goods-place association for the mark in the U.S. Koh Dep. at 59-60; Plf. Exh. 33, Application Serial Number 74/511883.

46. Despite Rhee Bros.' denial (or material omission in the case of the Ahn application) that Soon Chang possesses a goods-place association (in the minds of those in the relevant American consuming community) with gochujang, Rhee Bros. emphasizes the historical connection by displaying a phrase on its labels and advertisements that reads, "Soon Chang, the historical traditional way of the past, the way it was before," and emphasizes the "hometown" taste of Soon Chang gochujang. Plf. Exhs. 99, 100; Kim-Renaud Dec. ¶ 18.

47. The Ahn application was approved for publication on November 7, 1997. Def. Exh. 72.

48. On October 28, 1997, in a non-final office action, the PTO refused to register the mark pursuant to the Amberly application because the mark was found to be primarily geographically deceptively misdescriptive. The PTO requested that Rhee Bros. submit evidence of secondary meaning, ...


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