Today, the Business Court denied Plaintiff’s Motion for a Preliminary Injunction in a state law trademark dispute between competing jewelry stores. The Order in Windsor Jewelers, Inc. v. Windsor Fine Jewelers, LLC, 2009 NCBC 2 (N.C. Super. Ct. Feb. 16, 2009) dissolved a Temporary Restraining Order which had previously been entered in the case. I wrote about the entry of the TRO back in November 2008.
Defendant bought two jewelry stores in Charlotte, planning to rename them "Windsor Fine Jewelers." Plaintiff, which operates a single jewelry store in Winston-Salem under the name "Windsor Jewelers," sought to enjoin the use of the Windsor name in the Charlotte area. It argued that it had sold jewelry there and that the use of the Windsor name would infringe on its common law trademark rights and its service mark registered under the North Carolina Trademark Registration Act.
Judge Diaz applied federal Lanham Act principles in deciding whether Windsor Jewelers had a sufficient market presence in the Charlotte area to warrant injunctive relief. He said that "North Carolina’s common law is no different" from federal law in determining the rights of a senior user. Op. n.7.
The established tests for injunctive relief when a senior user sues a junior user are "(1) the ‘market penetration’ test, which applies where the senior user actually uses its mark in the market in which it seeks an injunction; or (2) the ‘zone of natural expansion’ test, which applies where the senior user has not actually penetrated the market, but may be likely to do so." Op. ¶70.
Windsor Jewelers failed the market penetration test. Although it had averaged annual sales in Mecklenburg County of $66,024 over a fifteen year period, the level of sales had fluctuated over that time and the sales were inconsequential when measured against the total sales of jewelry in that area. Mecklenburg County jewelery stores had sold $138,578,260 of jewelry in 2006, for example, much of it undoubtedly available for much less now in area pawnshops.
Further leading to the Plaintiff’s lack of success was that it had completed only 88 transactions in Mecklenburg County in 2006, but the average jewelry store there completed 1,718 transactions. Plaintiff also hadn’t done any advertising targeted at the Charlotte market.
The Winston-Salem jeweler also struck out on the zone of natural expansion test. Although it presented evidence that it had "considered" opening a Charlotte store, Judge Diaz found that Plaintiff had not taken any concrete steps to enter the Charlotte market.
This opinion adds to the precious little bit of law under the North Carolina Trademark Act.