Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-03125/USCOURTS-cand-5_05-cv-03125-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 1

 This disposition is not designated for publication and may not be cited.

Case No. C-05-3125-JF

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

(JFLC2)

**E-Filed 9/28/05**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

LORILLARD TOBACCO COMPANY,

 Plaintiff,

 v.

BARAH DELI AND GROCERY, et al.,

 Defendants.

Case Number C-05-3125-JF

ORDER1(1) DENYING WITHOUT

PREJUDICE PLAINTIFF’S MOTION

FOR PRELIMINARY INJUNCTION;

(2) DISSOLVING TRO; 

(3) UNSEALING CASE; AND 

(4) ADDRESSING BOND

[Doc. No. 20]

Plaintiff Lorillard Tobacco Company (“Lorillard”) seeks a preliminary injunction

enjoining Defendants from selling or offering to sell cigarettes bearing counterfeits of Lorillard’s

trademarks. The Court has considered the briefing of the parties as well as the oral arguments

presented at the hearing on August 26, 2005. For the reasons discussed below, the motion will

be denied without prejudice. 

I. BACKGROUND

Lorillard is a large manufacturer of cigarettes. Its leading brand is “NEWPORT.” 

Lorillard has obtained federal registration for the marks “NEWPORT,” “Newport” (stylized) and

Case 5:05-cv-03125-JF Document 41 Filed 09/28/05 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Case No. C-05-3125-JF

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

(JFLC2)

“LORILLARD.” Lorillard also has obtained federal registration for a spinaker design that

appears on its NEWPORT cigarette packages, and for a particular combination of the name

“Newport” with the spinaker design.

Lorillard filed the instant action under seal on August 1, 2005, alleging that Defendants,

Barah Deli and Grocery (“Barah Deli”) and its owners, are selling counterfeit Newport cigarettes

bearing Lorillard’s marks. On the same date, Lorillard filed an ex parte application seeking: (1)

a temporary restraining order (“TRO”) enjoining Defendants from selling counterfeit cigarettes

bearing Lorillard’s marks; (2) a seizure order permitting Lorillard and law enforcement officials

to do a surprise search of Barah Deli and seize any counterfeit cigarettes bearing Lorillard’s

marks and related items; (3) an order to show cause why a preliminary injunction should not

issue; and (4) an order permitting accelerated discovery. Lorillard filed a separate application for

leave to proceed without notice to Defendants The Court granted Lorillard’s applications on

August 8, 2005. Specifically, the Court granted Lorillard’s request for leave to proceed without

notice to Defendants, granted the TRO, granted an order permitting the surprise search and

seizure at Barah Deli, granted the request for accelerated discovery and set a hearing on

Lorillard’s motion for preliminary injunction for August 26, 2005. The Court further ordered

that the case be sealed and that Lorillard post a $10,000 bond.

The search of Barah Deli took place on August 9, 2005. No counterfeit cigarettes or

evidence of counterfeiting was found. Lorillard filed an amended complaint on August 22, 2005. 

Defendants filed an opposition to the motion for preliminary injunction on August 23, 2005. 

Lorillard filed a reply on August 25, 2005.

II. DISCUSSION

A party seeking a preliminary injunction must show either (1) a likelihood of success on

the merits and the possibility of irreparable injury, or (2) the existence of serious questions going

to the merits and the balance of hardships tipping in the movant’s favor. Roe v. Anderson, 134

F.3d 1400, 1401-02 (9th Cir. 1998); Apple Computer, Inc. v. Formula Int’l, Inc., 725 F.2d 521,

523 (9th Cir. 1984). These formulations represent two points on a sliding scale in which the

required degree of irreparable harm increases as the probability of success decreases. Roe, 134

Case 5:05-cv-03125-JF Document 41 Filed 09/28/05 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

 Lorillard moves to strike ¶¶ 8-9 of the Ruban declaration on the ground that these

paragraphs contain legal conclusions rather than facts. That motion is granted. 

3

 It is unclear from Mr. Elgelda’s use of the term “purchases” whether he actually bought

the cigarettes as opposed to exchanging old for new in the course of his job. 

3

Case No. C-05-3125-JF

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

(JFLC2)

F.3d at 1402. A showing of likely success on the merits gives rise to a presumption of

irreparable harm in trademark cases. International Jenson, Inc. v. Metrosound U.S.A., Inc., 4

F.3d 819, 827 (9th Cir. 1993).

Because no evidence of counterfeit cigarettes was found during the search on August 9,

2005, Lorillard’s showing of likelihood of success on the merits of its claims turns upon the two

counterfeit packages of Newport cigarettes allegedly obtained from Barah Deli by Lorillard’s

employee Jamal Elgelda (“Elgelda”) on June 27, 2005. In his original declaration filed August 1,

2005, Elgelda states that he is one of Lorillard’s sales representatives with responsibility for the

San Francisco, California region. Elgelda Decl. ¶ 1. One of Elgelda’s responsibilities is to

ensure that Lorillard cigarettes offered for sale in retail stores are fresh. Id. at ¶ 2. Elgelda does

not state in his declaration how he ensures freshness, but it appears from the declaration of

Ruban S. Ruban (“Ruban”), the owner of Barah Deli, that Elgelda’s practice was to remove old,

stale cigarettes from retail stores and gives the stores fresh cigarettes in exchange.2 Ruban Decl.

¶¶ 2-3. Elgelda states that on June 27, 2005, he called on Barah Deli and exchanged two packs

of Newport cigarettes which, following inspection, appeared to be counterfeit. Elgelda Decl. ¶ 3.

Elgelda states that “[f]ollowing these purchases,3 the suspected counterfeit cigarettes I

obtained were then turned over to Max Sayij, my Division Manager, for further inspection and

handling.” Id. Max Sayij (“Sayij”) states in his declaration that Elgelda obtained the two packs

of suspect cigarettes on June 25, 2005, rather than on June 27, 2005 as stated by Elgelda. Sayij

Decl. ¶ 3. Sayij states that he passed the cigarettes on to Edward O’Brien (“O’Brien”), a

manager of sales planning, for further inspection. O’Brien opines in his declaration that the two

packs of cigarettes forwarded to him are counterfeits. O’Brien Decl. ¶ 3.

Lorillard argues that this evidence of counterfeit packs found at Barah Deli in June 2005

is sufficient to demonstrate likelihood of succeed on the merits of Lorillard’s trademark and

Case 5:05-cv-03125-JF Document 41 Filed 09/28/05 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

 Lorillard moves to strike Defendants’ opposition brief on the ground that it was not

timely served. See Burg Reply Decl. ¶¶ 4-5. That motion is denied.

5

 Lorillard moves to strike ¶¶ 8-10 of the Blumenfeld declaration on the ground that these

paragraphs contain legal conclusions rather than facts. That motion is granted.

4

Case No. C-05-3125-JF

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

(JFLC2)

related claims, despite the fact that no counterfeit cigarettes or evidence of counterfeiting was

discovered during the subsequent surprise search on August 9, 2005. Defendants argue that

Lorillard’s evidence is insufficient, particularly in light of Ruban’s declaration statements

regarding Elgelda’s conduct. Ruban states that Elgelda made a routine sales and support call on

June 27, 2005, at which time he removed from the Barah Deli display shelves approximately

twenty packs of cigarettes and started to leave the store with them. Ruban Decl. ¶ 3. Elgelda did

not put the cigarette packs in a container, but simply carried them in his arms, and as a result

dropped several packs at the door of the store. Id. Ruban went to Elgelda’s aid, picked up the

dropped packs and walked with Elgelda to Elgelda’s van. Id. Ruban states that there was a pile

of approximately 650 Lorillard cigarette packs on the floor of the van and that Elgelda simply

tossed the packs he had just removed from Barah Deli onto the pile. Id. at ¶ 4. Ruban assumed

that the pile of cigarette packs on the floor of the van consisted of old, stale cigarettes. Id. The

van also contained unopened cartons of cigarettes that Ruban assumed were new cigarettes. Id. 

Elgelda gave Ruban two of the unopened cartons of cigarettes in exchange for the loose packages

he had removed from the store. Id. 

Defendants argue4 that because the cigarette packs taken from Barah Deli on June 27,

2005 were commingled with approximately 650 other loose cigarette packs on the floor of

Elgelda’s van, it is entirely uncertain whether the two alleged counterfeit packs delivered by

Elgelda to Sayij were among those packs taken from Barah Deli. Defendants point out that

Lorillard filed a nearly identical action against another retail store in the same neighborhood as

Barah Deli, Lorillard Tobacco Company v. Tenderloin Grocery, Case No. C-05-3123 (CW), and

that the Tenderloin action is supported by nearly identical declarations from Elgelda, Sayij and

O’Brien. See Blumenfeld Decl. at ¶¶ 2-5 and Exh. A-C thereto.5 Defendants suggest that the

same two cigarette packs that form the basis for the instant lawsuit also form the basis for the

Case 5:05-cv-03125-JF Document 41 Filed 09/28/05 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

Case No. C-05-3125-JF

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

(JFLC2)

Tenderloin lawsuit.

In its reply brief, Lorillard clarifies that two counterfeit cigarette packs were found at

Barah Deli and that two other counterfeit cigarette packs were found at Tenderloin Grocery,

although all four packs bear the same product codes. During oral argument, Lorillard’s counsel

represented that two of the packs are in his possession and the other two packs have been sent out

of state. Elgelda submitted a reply declaration stating he obtained only two suspect packs of

cigarettes on June 27, 2005 and that those two packs were obtained at Barah Deli. Elgelda Reply

Decl. ¶ 4. Elgelda states that the suspect packs obtained from Barah Deli “were not mixed

together with other suspected counterfeit cigarettes from other stores.” Id.

After reviewing all of the parties’ arguments and admissible evidence, the Court

concludes that Lorillard has not demonstrated a likelihood of success on the merits. Defendants

have introduced Ruban’s declaration statements that Elgelda tossed the twenty or so cigarette

packs obtained from Barah Deli onto the floor of his van where hundreds of other loose packs

were piled. Obviously, if Ruban’s version of events is true, Elgelda would have no way of

knowing which of the hundreds of packs on the floor of his van came from Barah Deli. Elgelda’s

declaration statement does not deny Ruban’s description of events, but merely asserts in

conclusory fashion that the suspect packs obtained from Barah Deli were not mixed with other

suspect packs. Even assuming the truth of Elgelda’s statement that only two suspect packs were

obtained on June 27, 2005, it is not clear from the record currently before the Court whether

those two packs came from Barah Deli. An additional problem with Lorillard’s showing is the

fact that Elgelda states that he delivered the packs in question to his supervisor Sayij on June 27,

2005, but Sayij states in his declaration that the packs were obtained on June 25, 2005. Compare

Elgelda Decl. ¶ 3 with Sayij Decl. ¶ 3. Finally, if Barah Deli were indeed selling counterfeit

cigarettes, it seems that some evidence would have been found at the surprise search on August

9, 2005. Accordingly, the Court will deny Lorillard’s motion without prejudice to a renewed

Case 5:05-cv-03125-JF Document 41 Filed 09/28/05 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

 The Court notes that Judge Wilken denied Lorillard’s motion for preliminary injunction

in the Tenderloin case, citing commingling of cigarettes by Lorillard’s representative and

Lorillard’s failure to discover evidence during a surprise search.

6

Case No. C-05-3125-JF

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

(JFLC2)

motion for preliminary injunction in the event that Lorillard obtains additional evidence.6

In light of the Court’s ruling, the Court will dissolve the TRO; the $10,000 bond shall

remain in effect pending release of any business records or other materials seized from Barah

Deli. Without objection from the parties, the case will be unsealed.

III. ORDER

(1) Plaintiff’s motion for preliminary injunction is DENIED;

(2) the TRO is hereby DISSOLVED;

(3) the $10,000 bond shall remain in effect pending release of any business records or

other materials seized from Defendants; and

(4) the Clerk of the Court shall UNSEAL the case.

DATED: 9/26/05

/s/ electronic signature authorized

__________________________________

JEREMY FOGEL

United States District Judge

Case 5:05-cv-03125-JF Document 41 Filed 09/28/05 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

Case No. C-05-3125-JF

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

(JFLC2)

This Order was served on the following persons:

Counsel for Plaintiff:

Thomas A. Burg thomas.burg@dlapiper.com, victoria.sheehan@dlapiper.com

Counsel for Defendants:

Michael J. Blumenfeld mjblaw@ix.netcom.com, mjbclc@yahoo.com

Case 5:05-cv-03125-JF Document 41 Filed 09/28/05 Page 7 of 7