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`TTAB
`IlllllllllllllllllllllIlllllllllllllllllllllllllll
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`1 1-05-2002
`, US. Patent & TMOtcITM Mail Rcpt D1. #30
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`I I
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`EXPRESS MAIL MAILING LABEL
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`NUMBER EL 8?>l’75‘iS"’l‘5 U3
`I
`DATE OF DEPOSIT [
`oz
`United States Postal Service "EXPRESS MAIL POST OFFICE TO
`i hereby certify that this paper or fee is being deposited with
`ADDRESSEE" service under 37 C.F.R. § 1.10 on Novembe _, 2002 and is addressed to: Commissioner for Trademarks, 2900
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`
`
`
`Crystal Drive, Arlington, VA22202-3
`\
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`€5(
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`Signature
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`
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`UNITED STATES PATENT AND TRADEMARK :OFFICE
`TRADEMARK TRIAL AND APPEAL BOARD
`1
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`Registration No. 1,702,261
`Mark: VILLA D’ESTE and design.
`Registered: July 21,- 1992
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`li
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`i iII I
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` VILLA D’ESTE CONDOMINIUM
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`Petitioner,
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`V.
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`OWNERS ASSOCIATION, INC.,
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`.
`Cancellation No. 40924
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`5
`li
`I
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`VILLA D’ESTE, S.p.A.,
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`Registrant. iI
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`iI4
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`REPLY IN FURTHER SUPPORT OF REGISTRANT’S MOTION TO SUSPEND
`PROCEEDINGS PENDING OUTCOME OF FEDERAL COURT LITIGATION
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`Registrant Villa d’Este S.p.A. (“Registrant”) hereby respectfully submits this reply
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`in further support of its motion, pursuant to 37 C..F.R. § 2.117(a):~iand TBMP § 510.02, to
`i
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`suspend this cancellation proceeding, pending resolution of ongoing Federal court
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`litigation between the parties concerning the registration at issue.‘ in this proceeding.
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`H: 5o5695(@"/..73oi !.DOC)
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`

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`
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`ARGUMENT
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`Petitioner’s Opposition Brief does not attempt to argue that the federal trademark
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`action will not “have a bearing on '[this] case.” See 37 C.F.R. § 2.1l7(a). Nor could
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`Petitioner do so, in light of Petitioner’s failure to even attempt to refute any of the
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`following facts:
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`(1) that Petitioner is involved in a trademark infringement lawsuit with Registrant
`in Federal District Court;
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`(2) that in the Federal trademark action Registrant claims that Petitioner infringes
`and dilutes the ’261 Registration;
`‘
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`(3) that in its Answer to Registrant’s Counterclaims in the Federal trademark action,
`Petitioner has specifically asserted an affirmative defense that Registrant’s U.S.
`trademarks and service marks (including the ’261 Registration) are void and
`unenforceable, and not otherwise protected by law; or
`f
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`(4) that in the Joint Discovery/Case Management Plan Under Rule 26(1) Federal
`Rules of'Civil Procedure filed by the parties in the Federal trademark action,
`Petitioner specifically told the Court that it anticipated filing dispositive
`motions “that the federally—registered trademarks of [Registrant] are subject to
`cancellation .
`.
`. because [Registrant] has not offered or} sold goods and/or
`services in the United States under the alleged marks, as' required by U.S.
`trademark law’’;
`I
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`E
`Even more significantly, Petitioner fails to disclose to the Board that it has taken
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`additional steps to have the Federal District Court address the sajme alleged invalidity
`issue Petitioner asserts in thisproceeding. Specifically, Petitioner has recently filed a
`motion to “bifurcate” discovery in the Federal trademark action.
`jln that motion,
`Petitioner represented to the District Court that it plans to file a ‘dispositive motion” on
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`its alleged non-use/validity defense——the same issue in this cancellation proceeding——
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`before the end ofthis year (see Exh. A, Pl. Motion to Bifurcate Discovery at p. [11]), in
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`H: 50569S(@%7301!.DOC)
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`2
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`5
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`order to seek a “speedy resolution of [the federal trademark] suit.”
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`at [9].) Instead of
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`forthrightly disclosing this recent additional step to have the Federal: District Court rule
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`on Petitioner’s alleged invalidity argument early in the case, Petitioner misleadingly
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`suggests to the Board that the District Court will not address the issue of alleged
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`invalidity and cancellation until sometime after November 2003. (riee Pet. Opp. at ‘[1] 10-
`IIv
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`12.)
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`Petitioner further advances the novel argument that suspension is “premature”
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`because “Petitioner has not [yet] specifically sought to cancel the registration in the
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`district court and has not [yet] filed any dispositive motions in the :civil litigation.” (See
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`id. at 1] 6) (bracketed material added). Petitioner carefully chooses‘ its words here to avoid
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`revealing to the Board that Petitioner has already announced in the‘ District Court that it
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`will place the cancellation issue squarely before the District Court}: “by the end of this
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`year.” (see Exh. A, P]. Motion to Bifurcate Discovery at p. [1 l]).i
`I
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`It is therefore apparent that what Petitioner wants is to simultaneously pursue
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`cancellation in both the Federal District Court and the TTAB. Essentially, Petitioner
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`seeks to double its chances of a favorable ruling, and to double the litigation costs it can
`impose on Registrant. Such wasteful and expensive tactical ploys are plainly contrary to
`37 C.F.R. § 2.117(a) and the Board’s rules and precedents applying that regulation.
`Indeed, none ofthe purported authorities cited by Petitioner even suggests that the
`Board should permit such gamesmanship. In Harod v. Sage Proiiucts, Inc., 188 F. Supp.
`2d 1369 (S.D. Ga. 2002), the district court mentioned, without elaborating, that the
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`TTAB had previously, in an unpublished opinion, denied a motion to suspend. See id. at
`I
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`H: 50S69S(@%730l LDOC)
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`1373. Neither the decision nor Petitioner explains why the Board denied suspension in
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`that case and what, if anything, that decision has to do with the instant case. And in Sea-
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`Roy Corp. v. Parts R Parts, Inc., No. l:94CV00059,, 1997 WL 1046282 (M.D.N.C. Dec.
`J
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`2, 1997), the Court noted that the Board had in fact suspended the related cancellation
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`proceeding. That case, therefore, provides no support for Petitioner.’
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`CONCLUSION
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`V
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`It is undisputed that the legal basis for suspension———that the_-:Federal trademark
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`action “may have a bearing” on this case—is present in this case.
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`l’etitioner’s efforts to
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`rationalize why it should be allowed to litigate the same issue against the same party in
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`both the Federal District Court and the TTAB amount to a transparent effort on the part
`I
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`of Petitioner to double its odds of winning and double the costs it fcan impose on
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`Registrant. For the reasons set forth above and in Registrant’s original motion, the Board
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`should not countenance such unfair tactics at the expense of the Board’s valuable judicial
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`I1
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`F
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`resources. The motion to suspend should be granted.
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`Petitioner also cites the nonprecedential decision of the Board?in E. & J. Gallo Winery v.
`1
`Kendall-Jackson Winery, Ltd., Cancellation No. 25,965, 2000 TTAB Lexis 150 (March 16,
`2000). Citation of nonprecedential decisions of the Board is improper, even if a copy is
`provided, which Petitioner did not do. See, e. g. , Trademark Board Manual of Procedure
`§ 101.03; General Mills Inc. v. Health Valley Foods, 24 USPQ2d (Bl}lA) 1270, 1275 n.9 (TTAB
`1992). If the Board wishes to consider nonprecedential opinions in this case, Registrant would
`request leave to file a supplemental brief citing unpublished Board decisions ordering suspension
`despite arguments that the issue before the TTAB was not squarely raised in a concurrent Federal
`district court action.
`'
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`H: 505695(@%7301!.DOC)
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`J.
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`Dated: November $2002
`
`& WHITE, LLP ;
`750 Bering Drive
`‘
`Houston, TX 77057 ;
`(713) 787-1400
`E
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`Attorneys for Registraifat Villa d ’Este S.p.A.
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`CERTIFICATE OF SERVICE
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`I
`J
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`I hereby certify that a true and correct copy of the foregoing REPLY IN
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`FURTHER SUPPORT OF REGISTRANT’S MOTION TO SUSPI,-'END PROCEEDINGS
`PENDING OUTCOME OF FEDERAL COURT LITIGATION has been served on
`I
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`November _S,’2002, by first class mail, postage prepaid, on:
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`Martin Wickliff, Jr.
`Epstein Becker Green Wick1iff& Hall, P.C.
`1000 Louisiana, Suite 5400
`Houston, TX 77002-5013
`
`’
`
`
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`H: 505695(@%7301!.DOC)
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`TRADEMARK TRIAL AND APPEAL BOARD
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`Registration No. 1, 702,261
`Mark: VILLA D’ESTE and design.
`Registered: July 21, L992
` L
`mmmmumum::::I11I:::n1JJ:n::::JW
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`1
`5
`Cancellation No. 40,924
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`11_05_2002
`U.S. Patent& TMOfc/TM Mail Ficpt m #30
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`VILLA D’ESTE CONDOMINIUM
`
`OWNERS ASSOCIATION, INC.
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`Petitioner,
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`V.
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`VILLA D’ESTE, S.p.A.,
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`Registrant.
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`DECLARATION OF THOMAS L. CASAGRANDE, ESQ.
`I, THOMAS L. CASAGRANDE, pursuant to 28 U.S.C. § ['l746, hereby declare as
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`follows:
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`A
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`1.
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`I am a partner in the law firm of Howrey Simon Arnold & White, LLP, 750 Bering Drive,
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`Houston, TX 77057, and counsel for Defendant/Counterclaimant §Vi11a d’Este S.p.A. in the
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`II
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`above-captioned case.
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`I make this declaration based upon my own {personal knowledge.
`i
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`2. Exhibit A is a true and correct copy of Plaintiffs’ Motion to Bifurcate Discovery filed on
`I
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`August 21, 2002 in Interfin Corp. et al. v. Villa d’Este, S.p.A., div. No. H-01-4130, In the
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`United States District Court for the Southern District of Texas, Houston Division. For the
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`Board’s convenience, it has been modified by the insertion of hancl—written page numbers.
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`I declare under penalty of perjury that
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`the
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`and correct.
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`for a .,.r
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`Dated:
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`SI
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`H: 50S87l(@%BZ0l LDOC)
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF TEXAS I;
`HOUSTON DIVISION
`3‘
`I
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`r~\-M\__‘_55x
`IIII!!!IIIIHJIIIHHNIIIIMINI}IWHIHIII
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`11.
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`u.s. Patents. T05 2002
`“°'°’”" Manncmomo
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`3
`;
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`'3
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`CIVIL ACTION NO. I-I-01-4130
`‘
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`I
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`INTERFIN CORPORATION AND
`VILLA D’ESTE CONDOMINIUM
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`OWNERS ASSOCIATION, INC.,
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`Plaintiffs,
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`V.
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`VILLA D’ESTE S.P.A.,
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`Defendant/Counterclaimant
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`V.
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`INTERFIN CORPORATION, VILLA
`D’ESTE CONDOMINIUM
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`DEVELOPMENT L.P. (f/k/a VILLA
`D’ESTE LIMITED PARTNERSHIP and
`f/k/a VILLA D’ESTE DEVELOPMENT
`
`L.P.), VILLA D’ESTE CONDOMINIUM
`OWNERS ASSOCIATION, INC.,
`GIORGIO M. BORLENGHI, STAN
`DAUGHERTY, BARRY H. MARGOLIS,
`KYLE O. STILES, and JOHN DOES 1-10,
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`Counterclaim Defendants
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`amcaanoadraaoacaawznmamcmcmwacaaconconcoacoanazroanoocoacaacooaonooaroz
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`PLAINTIFFS’ MOTION TO BIFURCATE DISCOVERY
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`Pursuant to Federal Rules 26 and 16, Plaintiffs Interfin Corporaition (“Interfin") and Villa
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`d’Este Condominium Owners Association,
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`Inc. (“Owners AssociaIion," and together with
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`Interfm, “Plaintiffs”) jointly move the Court to bifurcate the issues OI liability and damages in
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`i
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`II
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`this trademark infringement case.
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`
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`I.
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`OVERVIEW
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`A. Nature and Stage of the Proceeding
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`Plaintiffs filed this lawsuit in November 2001 seeking a declaratory judgment that their
`1
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`use of the name “Villa d’Este" in connection with a high-rise residential condominium located in
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`Houston does not infringe any rights that the Defendant may have in the itame “Villa d’Este" in
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`connection with hotel services.
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`In early June, Defendant answered the lawsuit and asserted
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`various counterclaims against
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`the Plaintiffs and several
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`individuals;
`I
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`The Counterclaims
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`included, inter alia, a federal law claim for trademark infringement of} Defendant’s registered
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`trademarks; federal and state law claims of dilution of Defendant’s registered trademarks; federal
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`and state law claims of unfair competition; and a claim of unjust enrichm'ent.
`I
`The Owners Association and Third-Party Defendant Giorgio Borlenghi (who has not yet
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`-
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`been sewed in this action) filed proceedings in the Trademark Trial and Appeal Board (“TTAB”)
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`to cancel three federal registrations owned by the Defendant. The cancellation proceedings were
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`_instituted because it appears that Defendant only sells its goods anlil services in Italy. To
`I
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`maintain these registrations, there must be “use in commerce.” Defendant merely advertises
`I
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`those goods and services in the United States.
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`I
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`In the parties’ Joint Discovery/Case Management Plan
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`the recent scheduling
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`conference with the Court, Plaintiffs requested that discovery in this case be bifurcated.
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`I i
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`B. Standard of Review
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`The Court has broad discretion over discovery matters. See Scr,'-oggins v. Air Cargo, Inc.,
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`534 F.2d 1124, 1133 (5th Cir. 1976). Rule 26(c) authorizes the Court to stay or limit discovery
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`when justice requires. See Fed. R. Civ. P. 26(c)(4). Further, Rulef16(c)(6) provides that the
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`»|
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`HOUSTON 25998lv4 4l289—000l lUSTP
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`Court maytake appropriate action in “the control and scheduling of discovery, including orders
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`affecting disclosures and discovery pursuant to rule 26. . .” Fed. R. Civ. P.-l6(c)(6).
`«
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`C. Summary of the Argument
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`Plaintiffs and Counterclaim Defendants believe that Defenda.nt:’s federally registered
`marks are subject to cancellation because there has been no use “in cornmerce” of the marks
`required to maintain the registrations. Further, Defendant has no common:-law rights in the name
`“Villa d’Este" because Defendant has not offered or sold goods and/orvlservices in the United
`States or even in Texas under the alleged marks, as required by United States trademark law
`and Texas state trademark law. This case is unique because in most (trademark infringement
`cases, actual use ofthe subject marks by the mark holder in the United States is not disputed.
`In
`this suit, however, the Defendant, an Italian company, has submitted specimens of alleged use to
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`the U.S. Trademark Office that do not show on their face that Defendarit has actually offered for
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`sale or sold hotel services and related goods in the United States. Mbreover, in its pleadings,
`Defendant has stated that it has only one location where it currently offers its hotel services and
`related goods, i.e.,- Lake Como, Italy. IfDefendant has not used its maiks in the United States, it
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`1
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`cannot have any trademark rights in those marks, and, consequently,
`I
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`there can be no
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`infringement, dilution, or unjust enrichment. Accordingly, two-phase iliscovery is appropriate to
`address the threshold issue ofDefendant’s U.S. rights, ifany, in the rrriirks.
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`Many courts bifurcate liability and damages issues in trademark infringement cases.
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`Bifurcation of discovery is appropriate in this case because the dispositive question of actual use
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`in the United States is factually distinct from other trial
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`issues. p-V Not
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`only is bifurcation
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`convenient,
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`it also will conserve judicial and litigant resources by avoiding the expenses
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`associated with damages during both discovery and trial, unless Plaintiffs are found liable (an
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`HOUSTON 259981 V4 41289-0001 l USTP
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`unlikely event considering Defendant’s lack of use of the marks in the United States).
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`in
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`addition, after conducting expeditious and focused discovery on this use issue, Plaintiffs and
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`Counterclaim Defendants anticipate filing dispositive motions on liability.
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`II.
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`f
`THE COURT SHOULD BIFURCATE DISCOVERY
`Because of the unique nature of this case, Plaintiffs propose a limited bifurcation of
`discovery. Plaintiffs maintain that Defendant has not used its alleged marks in the United States
`at all, even though actual use of a mark in the United States is a filndainental requirement for
`ownership of a mark under U.S. trademark law. There is a strong likelihood that this dispute
`should end quickly if the Court determines that Defendant has no righis in its alleged marks.
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`Bifurcation of discovery, as proposed, will help limit time and expenses involved in litigating
`liability.
`It is entirely appropriate for the Court to “limit early discovery to matters necessary to’
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`support a ruling on one or two early motions .
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`.
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`. [and to] for a date for filing a relatively early
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`motion for summary judgement .
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`.
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`." 3 Moore’s Federal Practice § l6.36[3][g][v] '(Matthew
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`Bender 3d ed.).
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`A. Legal Standard
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`The Court’s broad discretion over discovery matters are reviewed under an abuse of
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`discretion standard. Scroggins v. Air Cargo, Inc., 534 F.2d 1124, 1133 (5th Cir. 1976). Rule
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`26(c) authorizes this Court to stay or limit discovery when justice requires. The rule provides in
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`part:
`
`. may make any order which justice
`.
`. the court .
`.
`Upon motion by a party .
`requires to protect a party or person from annoyance, embarrassment, oppression,
`or undue burden or expense, including .
`.
`.
`*
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`(4) that certain matters not be inquired into, or that the scope of the
`disclosure or discovery be limited to certain matters .
`.
`.'
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`HOUSTON 25998lv4 4l289—000l lUS'l'P
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`Fed. R. Civ. P. 26(c)(4).
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`In addition, Rule l6(c)(6) states that the Court can take appropriate
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`action in “the control and scheduling of discovery, including orders affecting disclosures and
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`discovery pursuant to rule 26”. Fed. R. Civ. P. 16(c)(6).
`
`B. As it Appears that Defendant Does Not Use its Mark in the United States, this
`Case is Suitable for Bifurcation
`I
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`is unusual because Plaintiffs maintain that Defendant does not
`This trademark suit
`provide goods or services in the United States in connection with its allgézged marks. In order to
`prevail on its trademark infringement claim, Defendant must prove: (I) ownership of a
`protectable mark; and (2) another’s use of the same or similar mark that is likely to confuse
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`consumers. See, e.g., Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185; (5th Cir. 1980).
`It
`is a basic principle that “[o]wnership of a mark requires; a combination of both
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`appropriation and use in trade.” Blue Bell, Inc. v. Farah Mfg. Co., 508.'F.2d 1260, 1264-65 (5th
`l
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`Cir. 1975) (citations omitted) (emphasis added). In this regard, “neither conception of the mark,
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`- nor advertising alone establishes trademark rights at. common. law} Rather, ownership of a
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`trademark accrues when goods bearing the mark are placed on the market.” Id. (internal citations
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`omitted).
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`,5u
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`Perhaps most important to this suit is the concept that a trademark owner provide its
`goods or services in United States commerce before any rights ensue in the particular mark
`under U.S. trademark law. See, e.g., Butt’ v. Perosa, .S'.R.L., 139 F.3d:98, 102-104 (2d Cir. 1998)
`
`(holding that mere advertising of restaurant services in United States under “FASHION CAFE"
`mark did not satisfy “use in commerce” requirement under U.S. law where restaurant services
`were actually performed in Italy and no mark owner provided no services in U.S.). Advertising
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`in the United States of services performed in a foreign country does not confer any trademark
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`rights on the foreign entity providing such services. See id.
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`l
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`HOUSTON 25998lv4 M289-0001 IUSTP
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`Accordingly, the threshold issue of Defendant’s trademark infringement claim is likely
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`completely dispositive of this case: if there is no protectable mark under U.S. trademark law
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`(because Defendant does not use the mark “in commerce" in the U,;S.),
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`there can be no
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`infringement, and the Court will not need to consider the second element of a trademark
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`infringement claim (likelihood of confusion). As such, the proposed twcvji-phase discovery will
`not cause any overlap or waste any time; but,
`in fact, will focus on the critical
`issue of
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`Defendant’s U.S.~based use of the subject marks in connection with Detl'endant’s hotel services
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`and related goods.
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`On the other hand, in order for the Defendant to prove its alleged damages, “the parties
`
`will need testimony on information such as gross sales, returns, net sales, cost of goods, net
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`profits, and overhead from financial experts.” Giro Sport Design. Inc. v. Pro-Tee, Inc., 10'
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`‘
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`U.S.P.Q.2d 1863, 1864 (N.D.Cal. 1989) (copy provided). Accordingly, it would be an undue
`burden on the parties (and perhaps on the Court, as well) to deal with expensive and
`comprehensive discovery when the suit is likely to be resolved on one simple factual issue:
`whether Defendant provides any goods or services “in commerce" in the United States under the
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`alleged marks.
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`Defendant’s other causes of action will also fail if Defendant carmot establish that it owns
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`a protectable mark in the United States. See, e.g., Marathon Mfg. Col v. Enerlite Prods. Corp..
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`767 F.2d 214, 217 (5th Cir. 1985) (generally, same facts that would support
`
`trademark
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`infringement support action for unfair competition); Horseshoe Bay; Resort Sales Co. v. Lake
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`Lyndon B. Johnson Improvement Corp. 53 S.W.3d 799, 806 n.3 (Tex.App.——-Austin 2001, pet.
`
`ref’d), quoting Zapata Corp. v. Zapata Trading Int 7., Inc., 841 SliW.2d 45, 47 (Tex.App.——
`Houston [14th Dist.] 1992, no writ) (“trademark infringement and.‘ unfair competition actions
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`HOUSTON ZS998lv4 4l289-000] l USTP
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`under Texas common law present essentially ‘no difference in issues than those under federal
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`trademark infringement actions.’”). The elements of unfair competition under both federal and
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`Texas law are indistinguishable from the elements necessary to prove trademark infringement
`I
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`under the Lanham Act. Thus, a decision on Defendant's alleged marks will likely also resolve
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`Defendant’s claims of unfair competition under both federal law and state‘-law.
`Regarding its causes of action for trademark dilution under federal and Texas law,
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`Defendant must show: (1) ownership of a famous mark under federal law or a distinctive mark
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`1125(0); Pebble Beach
`under Texas law; and (2) a likelihood of dilution. See, e.g.. 15 U.S.C.
`Co. v. Tour 18 I, Ltd., 942 F. Supp. 1514, 1564 (S.D. Tex. 1996), ajf'd modified, 155 F.3d 526
`(5th Cir. 1998). As noted above, in order to “own” a mark, one ;must use the mark “in
`commerce.” Once again, evidence that Defendant does not use (and
`not used) the subject
`
`In any event,
`suit.
`likely resolve liability in
`marks in United States commerce will
`dernonstration of liability for dilution, under either Texas or federal law, does not involve any
`discovery on damages.
`
`Finally, to establish liability on Defendant’s unjust enrichment cause of action, Defendant
`must demonstrate that Plaintiffs used the goodwill and reputation I-iof the Defendant for the
`Plaintiffs’ own goods or services. See Texas Pig Stands, Inc. v. Harri Rock Café Int'1, Inc., 951
`F.2d 694-95 (5th Cir. 1992). As the factors for unjust enrichment Ealmost completely overlap
`with the test for federal trademark infringement, courts typically find!that non liability on federal
`trademark infringement also disposes of the trademark holder's unjij/1st enrichment claims. See.
`e.g., Cathey Assocs., Inc. v. Beougher, 95 F.Supp.2d 643, 656 (N.l). Tex. 2000) (holding that
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`because plaintiffs could not prove federal or common-law trademark infringement, plaintiffs’
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`unjust enrichment claim also failed).
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`HOUSTON 25998lv4 41289-0001 1 USTP
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`C. This Court has Broad Discretion to Bifurcate Discovery
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`It is well within this Court’s discretion to manage the scope and procedure of discovery
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`pursuant to Fed. R. Civ, P. 16. See Acuna v. Brown & Root Inc., 200 F.3d 335, 340 (5th Cir.
`
`2000). Many courts have bifurcated the issues of liability and damages
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`trademark and trade
`
`dress disputes. See, e.g., Roulo v. Russ Berrie & Co., 886 F.2d 931 (7th Cir. 1989) (bifurcating
`trade dress trial); Hain Pure Food Co. v. Sona Food Products Co., 618 F.;;.d 521 (9th Cir. 1980);
`St. Charles Mfg._Co. v. Mercer, 737 F.2d 891 (11th Cir. 1983); Planet Hollywood (Region IV).
`
`Inc. v. Hollywood Casino Corp., 80 F. Supp. 2d 815 (ND. Ill. 1999);
`Pharmaceutical
`Co. v. Gillette Co., 808 F. Supp. 1013 (S.D.N.Y. 1992); Selchow & Righter Co. v. Decipher.
`Inc., 598 F. Supp. 1489, (E.D. Va. 1984); Raco Car Wash Systems, Inc: v. Smith, 730 F. Supp.
`695 (D.S.C. 1989); Brooks Shoe Mfg. Co. v. Suave Shoe Corp., 533. F. Supp. 75 (S.D. Fla.’
`1981); Waples-Platter Cos. v. GeneralFoods Corp., 439 F. Supp. 551 .D. Tex. l977)._
`As the Filth Circuit has stated, a trial court may properly exeriiise its discretion to stay
`
`- discovery pending a decision on a dispositive motion, particularly when it “would be wasteful to
`
`allow discovery on all issues raised in a broad complaint...” Corwin Marney, Orton Inv., 843
`F.2d 194, 200 (5th Cir. 1988).
`In Corwin, the Fifth Circuit affirrned the district court’s order
`restricting discovery on issues relating to a motion to dismiss.
`‘I
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`Similarly, the Fifth Circuit found no abuse of discretion “in {an} order staying general
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`discovery until the court could determine whether the case would be resolved at the summary
`judgement stage." Scroggins, 534 F.2d at 1133 (affirming trial court’s protective order that
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`limited discovery to matters raised in defendant’s motion for suminary judgment). Plaintiffs
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`seek a similar discovery limitation in this suit. Namely, Plaintiffs request a short period of
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`concise discovery directed to protectability of Defendant’s marks and alleged liability in
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`contemplation of a speedy resolution of this suit.
`
`D. Bifurcation Will Conserve Judicial and Litigant Resources and Promote
`Efficiency
`-
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`The Court and the parties can potentially save a tremendous amount of time and expense
`
`through the proposed bifurcation. For example, another court in this District made the following
`
`observation:
`
`The trial of the damages question in such a suit is often difficult and expensive,
`while being easily severed from the trial of the questions of validity and
`infringement of the patent. A preliminary finding on the question of liability may
`well make unnecessary the damages inquiry, and thus result in substantial saving
`of time of the Court and counsel and reduction of expense to the parties.
`Moreover, separate trial of the issue of liability may present counsel
`the
`opportunity to obtain final settlement of that issue on appeal without having
`reached the ofien time-consuming and difficult damages question.
`
`'
`
`Swoflbrd v. B&W, Inc., 34 F.R.D. 15, 20 (S.D. Tex. 1963), afi"d. 336 F.2d 406 (5th Cir. 1964).
`
`‘Although the Swofford case dealt with patent litigation, the issues are similar to this suii.
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`a trademark suit) and
`In either a patent or a trademark case, validity (i.e., use
`infringement are often pointedly distinct from damages. Because of the two-tiered nature of
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`many patent and trademark lawsuits, they are often bifurcated. The bifurcation fits smoothly
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`with the natural flow of the case such that neither the court nor the parties lose anything through
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`bifurcation. Plaintiffs are not requesting that the Court bifurcate the trial, because Plaintiffs
`recognize that this case, while complex, is not as involved as some patent infringement lawsuits.
`In this regard, Plaintiffs only seek a short period during which: limited discovery can be
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`conducted in anticipation of filing a dispositive motion. Any attendant risks associated with
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`bifurcation (Le. , delay) are only a fraction of what they would be in a bifurcated trial.
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`E. ‘Bifurcation Will Eliminate Prejudice Against Plaintiffs and Will Not Cause
`Prejudice Against Defendant
`»
`
`Although Plaintiffs perceive the determination of liability will be straightforward on
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`Defendant’s rights to the subject marks in the United States, the determination of alleged
`
`damages will be more complex and expensive. At this point, it \VOl.lld;' prejudice Plaintiffs to
`divulge financial information about their businesses to a company that has no justifiable interest
`
`in viewing such proprietary information (if, in fact, Defendant has no figlits in its U.S. marks).
`
`Moreover, Defendant will not be prejudiced by two-phase discovery. First, Defendant
`
`has no need of Plaintiffs’ and Counter-Defendants’
`
`financial
`
`information because such
`
`information has no relation to any liability determination. Second, any delay that the bifurcation
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`introduces to this suit will be minimal, if not non-existent. As discussed, Plaintiffs contemplate
`K
`
`0
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`moving for summary judgment on liability after limited discovery. If the Court enters summary
`
`If the Courtdenies Plaintiffs’ dispositive motion,
`judgment for Plaintiffs, the case will end.
`‘Plaintiffs anticipate that full discovery would then be. appropriate. Divan that the Scheduling
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`Order allows the parties to conduct discovery until August 2003, there is ample time to conduct
`initial discovery as Plaintiffs propose, file a dispositive motion ;[on liability, and then,
`if
`necessary, carry out full discovery without deviating from the Court’sE Scheduling Order.
`
`Finally, any potential minimal delay, which is clearly outweighed by the potential
`
`benefits, carmot prejudice Defendant because, as mentioned, Defendant has not taken any actions
`that demonstrate that it has been or would be harmed by Plaintiffs’ and Counter-Defendants’
`
`activities. For example, Defendant did not
`
`file a lawsuit against Plaintiffs and Counter-
`
`Defendants when it learned of Plaintiffs’ and Counter-Defendants’ use of the name “Villa
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`d’Este.” After Plaintiffs and Counter-Defendants filed their declaratory judgment
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`lawsuit,
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`Defendant chose to forgo a quick method of local service,‘ instead requiring Plaintiffs to serve
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`the Italian Defendant
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`in Italy, a process which added months to the litigation timetable.
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`Moreover, once it finally answered the lawsuit and alleged counterclaims! against Plaintiffs and
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`Counter-Defendants, Defendant did not seek a temporary restraining order or a preliminary
`I
`.
`injunction against Plaintiffs and Counter-Defendants relating to their use of “Villa d’Este” in
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`connection with a high-rise condominium.
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`«NI
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`III.
`
`CONCLUSION
`
`Because the threshold issue ofDefendants’ alleged use of the suhject marks in the United
`
`States is likely to dispose of this case, Plaintiffs respectfully ask the‘ Court to order that the
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`parties conduct discovery in two phases in this case: (1) initial discovery on liability only; and
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`(2) remaining discovery, only as necessary following the Court’s ruling on Plaintiffs‘ summary’
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`judgment motion on liability. Plaintiffs anticipate that they will likely file a dispositive motion
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`by the end ofthis year.
`
`‘ After requiring Plaintiffs to incur the expensive and timely process of international service. Defendant eventually
`capitulated, and advised Plaintiffs that it had changed its mind and would fwaive official service. Thereafter.
`Defendant filed its countetclaims without formal service of process.
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`Respectfully submitted,
`
`Respectfully submitted, :'
`
`EPSTEIN BECKER GREEN
`WICKLIFF & HALL, P.C.
`
`JENKENS & GILCHRIST,
`A Professional Corporation
`
`/£a_M,g,,,¢4;é
`
`A. Martin Wickliff, Jr.
`Attomey-in-Charge
`Federal ID 3466
`Texas Bar No. 21419900
`
`WICKLIFF & HALL, P.C.
`Wells Fargo Plaza
`1000 Louisiana, Suite 5400
`Houston, Texas 77002
`Telephone: 713/750-3100
`Facsimile: 713/750-3101
`
`#4: /4 4:?4%
`
`Lisa H. Meyerhoff
`Attorney-in-Charge
`,
`Federal ID 18693
`Texas Bar No. 14000255
`
`'
`
`JENKENS & GILCHRIST,
`A Professional Corporation
`1100 Louisiana, Suite 1800
`Houston, Texas 77002‘
`Telephone: 713/951-3300
`Facsimile: 713/951-3,314
`
`I
`
`ATTORNEYS FOR VILLA D'ESTE
`CONDOMINIUM OWNERS
`
`ASSOCIATION, INC.
`
`-
`
`ATTORNEYS FOR INTERFIN
`CORPORATION
`‘
`
`OF COUNSEL:
`
`'
`
`OF COUNSEL:
`
`Ruth M. Willars
`Texas Bar No. 24003175
`EPSTEIN BECKER GREEN
`WICKLIFF & HALL, P.C.
`Wells Fargo Plaza
`1000 Louisiana, Suite 5400
`Houston, Texas 77002
`Telephone: 713/750-3100
`Facsimile: 713/750-3101
`
`Margaret A. Boulware
`Texas Bar No. 06117700
`Joseph M. Beauchaifnp
`Texas Bar No. 24012266
`JENKENS & GILCHRIST,
`A Professional Corporation
`1100 Louisiana, Suite 1800
`Houston, Texas 77002
`Telephone: 713/951-3300
`Facsimile: 71 3/95 -33 1 4
`
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`CERTIFICATE OF SERVICE
`ad:
`correct copy of the
`I day of August 2002, a true
`I hereby certify that, on the
`foregoing “Plaintiffs’ Motion to Bifurcate Discovery” was served by United States Mail, First
`Class, postage prepaid, on:
`I
`
`;'
`
`t
`I
`
`Alessandro Saracino
`Pavia & Harcourt LLP
`
`600 Madison Avenue
`New York, New York 10022
`
`Thomas L. Casagrande
`Howrey, Simon, Arnold & White, LLP
`750 Bering Drive
`Houston, Texas 77057~2l98
`
`.
`='
`
`.
`
`-'
`I
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