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 Case No. 18-cv-0331-BEN-JMA PLAINTIFF’S AMENDED NOTICE OF MOTION AND MOTION TO DISMISS COUNTERCLAIMS UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA STONE BREWING CO., LLC, Plaintiff / Counterclaim Defendant, v. MILLERCOORS LLC, Defendant / Counterclaim Plaintiff. Case No. 18-cv-0331-BEN-JMA PLAINTIFF STONE BREWING CO., LLC’S AMENDED NOTICE OF MOTION AND MOTION TO DISMISS DEFENDANT MILLERCOORS LLC’S COUNTERCLAIMS Date: June 18, 2018 Time: 10:30 a.m. Judge: Hon. Roger T. Benitez Complaint filed: February 12, 2018 J. Noah Hagey, Esq. (SBN: 262331) [email protected]J. Tobias Rowe, Esq. (SBN: 305596) [email protected]Rebecca B. Horton, Esq. (SBN: 308052) [email protected]BRAUNHAGEY & BORDEN LLP 220 Sansome Street, 2nd Floor San Francisco, CA 94104 Telephone: (415) 599-0210 Facsimile: (415) 276-1808 ATTORNEYS FOR PLAINTIFF STONE BREWING CO., LLC Case 3:18-cv-00331-BEN-LL Document 28 Filed 05/09/18 PageID.243 Page 1 of 3
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Case No. 18-cv-0331-BEN-JMA
PLAINTIFF’S AMENDED NOTICE OF MOTION AND MOTION TO DISMISS COUNTERCLAIMS
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
STONE BREWING CO., LLC,
Plaintiff / Counterclaim Defendant,
v.
MILLERCOORS LLC,
Defendant / Counterclaim Plaintiff.
Case No. 18-cv-0331-BEN-JMA PLAINTIFF STONE BREWING CO., LLC’S AMENDED NOTICE OF MOTION AND MOTION TO DISMISS DEFENDANT MILLERCOORS LLC’S COUNTERCLAIMS Date: June 18, 2018 Time: 10:30 a.m. Judge: Hon. Roger T. Benitez Complaint filed: February 12, 2018
PLAINTIFF’S AMENDED NOTICE OF MOTION AND MOTION TO DISMISS COUNTERCLAIMS
TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
YOU ARE HEREBY NOTIFIED THAT on June 18, 2018 at 10:30 a.m. in
Courtroom 5A of the U.S. District Court, Southern District of California, located at
221 West Broadway, Suite 5135, San Diego, CA 92101, 5th Floor, Plaintiff Stone
Brewing Co., LLC (“Plaintiff” or “Stone”), will and hereby does move the Court to
dismiss and/or strike Defendant MillerCoors LLC’s Counterclaims pursuant to Fed.
R. Civ. P. 12(b)(6) and 12(f).
The motion is based upon the accompanying Memorandum of Points and
Authorities, Declaration of J. Noah Hagey, Request for Judicial Notice, the files and
records in this action, and any further evidence and argument that the Court may
receive at or before the hearing.
Dated: May 9, 2018 Respectfully Submitted,
BRAUNHAGEY & BORDEN LLP
By: s/J. Noah Hagey
J. Noah Hagey
Attorneys for Plaintiff
Stone Brewing Co., LLC
Case 3:18-cv-00331-BEN-LL Document 28 Filed 05/09/18 PageID.244 Page 2 of 3
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2 Case No. 18-cv-0331-BEN-JMA
PLAINTIFF’S AMENDED NOTICE OF MOTION AND MOTION TO DISMISS COUNTERCLAIMS
CERTIFICATE OF SERVICE
I hereby certify that on this 9th day of May, 2018, I electronically transmitted
the foregoing AMENDED NOTICE OF MOTION AND MOTION TO DISMISS
DEFENDANT MILLERCOORS LLC’S COUNTERCLAIMS to the Clerk’s office
using the CM/ECF system, which will send a notice of filing to all counsel of record.
s/J. Noah Hagey
J. Noah Hagey
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Case No. 18-cv-0331-BEN-JMA
AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
STONE BREWING CO., LLC,
Plaintiff / Counterclaim Defendant,
v.
MILLERCOORS LLC,
Defendant / Counterclaim Plaintiff.
Case No. 18-cv-0331-BEN-JMA AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF STONE BREWING CO., LLC’S MOTION TO DISMISS AND/OR STRIKE DEFENDANT MILLERCOORS LLC’S COUNTERCLAIMS Date: June 18, 2018 Time: 10:30 a.m. Judge: Hon. Roger T. Benitez Complaint filed: February 12, 2018
MillerCoors’ 2017 Campaign to Rebrand and Co-Opt the STONE® Mark ..................................................................................... 6
Procedural History ................................................................................ 7
I. THE FIRST, SECOND AND THIRD COUNTERCLAIMS SERVE NO USEFUL PURPOSE AND SHOULD BE DISMISSED OR STRICKEN ..... 8
The Court Need Not Allow Declaratory Relief Counterclaims that Are Entirely Duplicative of Existing Claims and Defenses ................. 9
The First Counterclaim is Redundant of MillerCoors’ Second Affirmative Defense and of Stone’s Claims ....................................... 10
The Second Counterclaim is Redundant of the Third Affirmative Defense ................................................................................................ 11
The Third Counterclaim is Entirely Redundant .................................. 12
II. DEFENDANT’S FOURTH COUNTERCLAIM SHOULD BE DISMISSED .................................................................................................. 14
MillerCoors Has Not Alleged All the Elements Necessary to Challenge an Incontestable Federal Mark ........................................... 14
1. MillerCoors Fails to Allege That It Began Using the STONE Mark Prior to Its Registration by Stone ...................... 15
2. MillerCoors Fails to Allege Continuous Use ........................... 17
3. MillerCoors Fails to Allege, and in Fact, Affirmatively Denies, Likelihood of Confusion .............................................. 18
MillerCoors’ Delay in Bringing its 21-Year-Old “Common Law” Counterclaim is Fatal .......................................................................... 19
III. LEAVE TO AMEND SHOULD BE DENIED ............................................ 20
5 McCarthy on Trademarks and Unfair Competition § 19:52 ................................... 15
5 McCarthy on Trademarks and Unfair Competition § 23:41 ................................... 16
5 McCarthy on Trademarks and Unfair Competition § 26:53 ................................... 15
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1 Case No. 18-cv-0331-BEN-JMA
AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
Pursuant to Rule 12(b)(6) and 12(f), Plaintiff Stone Brewing Co., LLC
(“Plaintiff” or “Stone”) respectfully moves to dismiss and/or strike Defendant
MillerCoors LLC’s superfluous and otherwise infirm Counterclaims.
INTRODUCTION
Plaintiff Stone is a San Diego-based craft brewer that has sold its artisanal
STONE® beers nationwide for over two decades. Stone filed this action to protect
its incontestable federally-registered tradename against Defendant MillerCoors, who
recently rebranded its “Keystone” beer as “STONE.”
Defendant’s 82-page response to the Complaint (Dkt. 19, the “Answer/CC”) is
a blunderbuss attempt to turn supposed affirmative defenses into mirror-image
counterclaims that needlessly multiply these proceedings and fail to satisfy the
Declaratory Judgment Act, 28 U.S.C. § 2201 (“DJA”). See, e.g., Riot Games
Merchandise, Inc. v. Tri-Force Sales, LLC, No. 2:15-cv-05817-ODW(Ex), 2015 WL
13344626, at *2 (C.D. Cal. Dec. 1, 2015) (striking DJA counterclaim where
“Defendant’s counterclaim for a judicial declaration … simply restates its defense to
Plaintiff’s claim in affirmative language.”)
Defendant’s first three counterclaims (Answer/CC at 24-27) should be stricken
and/or dismissed as infirm under the DJA because they add nothing to the case and
waste judicial and party resources on multiplied proceedings. The First
Counterclaim seeks a declaration of Defendant’s “prior use” and right to use
“STONE and STONES to advertise Keystone Beer”. However, this is duplicative of
Defendant’s Second Affirmative Defense of “Prior Use”, which Defendant explicates
in seven paragraphs in its Answer/CC. It also is duplicative of Defendant’s Fourth
Affirmative Defense of “Non-Infringement”. Similarly, the Second Counterclaim
seeks declaratory relief that Stone’s trademark is “unenforceable” due to “laches.”
The claim and allegations are redundant of the Third Affirmative Defense of
“Laches” and Fourth Affirmative Defense of “Non-Infringement”. And, the Third
Counterclaim seeks declaratory relief of “non-infringement” based on Defendant’s
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AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
“prior use” of “STONE or STONES in its Keystone advertising.” Again, the
allegations and requested relief are duplicative of Defendant’s Second and Fourth
Affirmative Defenses for “Prior Use” and “Non-Infringement”, respectively.
Finally, Defendant’s Fourth Counterclaim also should be dismissed as a matter
of law. The claim seeks declaratory relief from Stone’s incontestable STONE®
trademark based on Defendant’s supposed common law “exclusive right to use the
Stone Mark.” (Answer/CC at 7:20-21). Not only is the claim decades stale, i.e., just
like Defendant’s marketing of “smooth” light beer, but also fails to satisfy basic
pleading requirements to state a cause of action.
As an initial matter, the claim fails because it does not plead a necessary
element for enjoyment of an “exclusive” trademark right. Namely, Defendant
neglects to allege (or admit) that the parties’ competing uses are incompatible. This
is fatal because, as a matter of law, there can be no right to exclusivity unless
Defendant also alleges that the marks would cause consumer confusion. Defendant
fails to do so and elsewhere contends that no such confusion exists. It either must
dismiss the claim or make the allegation.
The counterclaim also must be dismissed because it woefully violates any
reasonable application of the statute of limitations or laches. Stone successfully
applied for, and has been using, its incontestable STONE® mark on beer products
since 1996, which Defendant concedes. Defendant also has long known that its use
of “STONES” was inferior to Stone’s mark when it attempted to register the term
over a decade ago in 2007. The U.S. Patent and Trademark Office (“PTO”) rejected
Defendant’s application “because the applicant’s [Defendant’s] mark, when used on
or in connection with the identified goods, so resembles the mark in U.S.
Registration No. 2168093 [Plaintiff’s STONE® mark] as to be likely to cause
confusion, to cause mistake, or to deceive.” In re. Trademark Application No.
77284994 – STONES, PTO Dkt. No. 4060KE-1027 (Dec. 3, 2007) (Declaration of J.
Noah Hagey In Support of Request for Judicial Notice (Hagey Decl.) at Ex. 6).
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AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
While not strictly res judicata, the PTO’s findings put Defendant on notice,
particularly after the examining officer concluded that Stone had priority in the field.
Id. Defendant later abandoned its PTO application which, in any event, also
admitted that Defendant’s “first use” date of “STONES” was on or about 2004,
almost a decade after Stone’s launch and federal registration. (Hagey Decl. at Exs. 4
and 5). Accordingly, the Fourth Counterclaim, which seeks wholly implausible and
time barred relief, should be dismissed.
For the foregoing reasons and those which follow, the Court should dismiss
and/or strike each of Defendant’s infirm counterclaims.
STATEMENT OF FACTS
The indisputable and/or admitted facts supporting this Motion are found in
Defendant’s Answer and Counterclaims, together with the indisputable evidence
appended to Stone’s Request for Judicial Notice (“RJN”).
Stone Registers the Mark STONE® with the USPTO in 1996
Stone was founded in the mid-1990s by Steve Wagner and Greg Koch amidst a
beer market dominated by big beer companies such as Defendant MillerCoors.
(Answer/CC at 2:7; 10:3, 8-9; 14:16-17).
As the business plans of Stone began to solidify, Stone recognized that the
creation of a brand required vigilance. Accordingly, on April 4, 1996, Stone filed its
trademark application for “STONE” with the PTO, which was granted on June 23,
1998. (Hagey Decl. at Ex. 1; Answer/CC at 14:16-17; 31:4-6; 41:19-20). On June
28, 2008, the PTO accepted Stone’s Combined Declaration of Use and
Incontestability for STONE®, rendering the mark incontestable as a matter of law.
(Hagey Decl. at Exs. 2 and 3).
Today, STONE® beer is sold in thousands of stores, bars and restaurants
throughout the country and world. (Answer/CC at 6:5-9; 32:28-33:2). Stone also
runs three thriving Stone Brewing World Bistro & Garden™: one in San Diego, one
in Virginia, and one in the international heart of beer, Berlin, Germany. (Answer/CC
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AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
at 2:7-10; 6:5-9). And since its rebellious origins to its international popularity today,
the key identifier of Plaintiff’s beer has, and continues to be, the STONE® Mark.
(Answer/CC at 7:4; 11:1; 41:5-6; 54:11-12; 64:12-13).
Defendant’s Struggle to Promote Its Fizzy Yellow Beer
Since the release of Keystone beer in 1989, the brand was identified by two
features: (i) the word “KEYSTONE” prominently displayed across the can, (ii)
against a backdrop of the Colorado Rockies. (Answer/CC at 48:6; 53:25-26). Yet, as
craft beer grew in popularity into the 2000s, MillerCoors saw its Keystone brand
increasingly losing market share. (Answer/CC at 23:14-17; 49:22-23). Thereafter,
MillerCoors instituted various short-lived advertising measures to try to help its
KEYSTONE brand, none of which involved a permanent departure from the
signature can design – prominent “KEYSTONE” mark with accompanying Colorado
Rockies. (Answer/CC at 11:6-13; 17:5-14; 19:8-19; 20:1-8).
In and around the late 1990s, MillerCoors’ packaging included the number of
beers within a case of KEYSTONE as “30 ‘Stones.”1 (Answer/CC at 12:27-28:17).
This packaging never isolating the word “STONES,” and the cans continued to
feature the two identifiers of the brand – the “KEYSTONE” mark with the Colorado
Rockies image.2 (Answer/CC at 12:27-28:17).
Keystone’s historical conduct came to head when it attempted to register
“STONES” as a standalone mark in 2007 (the “2007 ‘STONES Application”). In a
lengthy opinion published in December 2007, the PTO expressly rejected the
application because it would create substantial consumer confusion with Plaintiff’s
existing STONE® mark:
1 Defendant supplies an image titled, “1995 Keystone Light Outer Packaging (folded flat).” (Answer/CC at 13:3-26). The “folded flat” picture is packaging artwork. The Counterclaim does not allege that such packaging was finalized, much less used in commerce. 2 Defendant’s allegation that it used the word “STONE” in isolation is alleged on information and belief, and only substantiated by a tagline on a “July 1996 Newspaper Ad” which features two cans prominently displaying the primary KEYSTONE mark and the Colorado Rockies imagery, the Ad of which post-dates Plaintiff’s application for the STONE® Mark by three (3) months. (Answer/CC at 13:27-14:14).
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The examining attorney refuses registration under Trademark Act Section 2(d), 15 U.S.C. §1052(d), because [MillerCoors’ “STONE”] mark, when used on or in connection with the identified goods, so resembles [Stone’s] mark in U.S. Registration No. 2168093 as to be likely to cause confusion, to cause mistake, or to deceive. TMEP §§1207.01 et seq. See the enclosed registration.
* * *
Since the respective marks are essentially identical, the only issue before the examining attorney is whether the applicant’s goods are so related to the registrant’s goods that confusion as to source of origin or sponsorship is likely to occur. The examining attorney must conclude that they are so related, for it is foreseeable that customers of the applicant might encounter the registrant’s respective goods and mark in the marketplace given similar channels of trade within which the identified goods travel. Specifically, it is likely that the applicant’s beer and the registrant’s beers and ales will be marketed, advertised and ultimately sold or offered in the same or similar fashions.
Confusion as to source of origin or sponsorship is extremely likely if [MillerCoors’] proposed mark is allowed to register. Registration is therefore refused by the examining attorney.
(Answer/CC at 34:12-14, 63:15-18; Hagey Decl. at Ex. 6.)
Equally relevant to its current claims, Defendant admitted that its first use date
of “STONES” was only around February 2004. (Hagey Decl. at Ex. 4.) Moreover,
the PTO found that Defendant was unable even to provide a genuine specimen of
use. (Hagey Decl. at Ex. 6.)
Although the PTO offered Defendant the opportunity to challenge these
findings, and “submit[] evidence and arguments in support of registration,”
Defendant expressly chose not to in the six month period following. (Hagey Decl. at
Exs. 4-6; Answer/CC at 63:16-18, 19-20; 64:5-6.) Defendant ultimately abandoned
the application on or about June 2008. (Hagey Decl. at Ex. 5.)
Defendant’s Vacillating Marketing Efforts
As the KEYSTONE brand continued to lag in sales, Defendant attempted new
campaigns to attract consumer attention. (Answer/CC at 49:22-23.) One such
campaign was the “Keith Stone” KEYSTONE campaign in and around 2011.
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(Answer/CC at 17:28-18:16.) This short-lived campaign featured a somewhat
dubious 20s-something character, whose name, not surprisingly, sounded very
similar to the beer it was promoting, Keystone. (Answer/CC at 17:28-18:16.)
Throughout the (thankfully) fleeting Keith Stone “era,” the can continued to feature
the two identifiers of the brand – the primary singular “KEYSTONE” mark with the
accompanying Colorado Rockies image. (Answer/CC at 18:5-14.)
During this same time period, Defendant attempted to trademark a “STONE”-
related name, and again, was unsuccessful. Despite full knowledge of the STONE®
Mark, Defendant filed an application for “HOLD MY STONES.” (Answer/CC at
15:9-11; 34:12-14; Hagey Decl. at Ex. 8.) In defense of its STONE® Mark, Plaintiff
promptly notified the PTO and Defendant that this registration would be opposed
unless the parties reached an agreement. (Answer/CC at 15:12-15; Hagey Decl. at
Ex. 8.) Instead, Defendant expressly abandoned the entire application six months
later. (Answer/CC at 17:11-12; Hagey Decl. at Ex. 8.)
The remainder of Defendant’s campaigns were even shorter lived, and none of
which constituted a departure from the brand-identifying features of the can, the
prominent singular “KEYSTONE” Mark against a backdrop of the Colorado
Rockies. (Answer/CC at 19:3-26; 48:6; 53:25-26). That is, until 2017.
MillerCoors’ 2017 Campaign to Rebrand and Co-Opt the STONE® Mark
By 2017, Defendant had utilized all the tricks in its big beer book against
Stone and other craft brands. Facing knowledge that Keystone’s historic customer
base was decreasingly loyal, Defendant adopted a new plan: it chose to rebrand the
entire design of the Keystone can. (Answer/CC at 21:2-3, 6-7; 22:17; 23:14-19).
Defendant’s new can dropped all of the key brand identifiers that had been
used on its products since 1989: the prominent singular “KEYSTONE” mark and
Colorado Rockies mountain backdrop. (Answer/CC at 4:8-24; 22:22; 53:3-5). In its
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place, Defendant adopted a new brand name featuring a single word, without the
Rockies: “STONE.” (Answer/CC at 59:2-4, 25-27; 60:21-22; 61:15-16; 62:7-8.)
As a result of Keystone’s rebranding and co-opt of Stone’s mark, Defendant
reported a substantial uptick in sales that far outpaced others in the category. (Hagey
Decl. at Ex. 9.)
Procedural History
Stone filed its Complaint on February 12, 2018. (Dkt. 1, Complaint). On
April 10, 2018, MillerCoors filed its 82-page Answer/CC, which included four
counterclaims improperly seeking various forms of declaratory relief. (Dkt. 19).
Stone accordingly is moving to dismiss the four counterclaims as improper,
insufficiently alleged and merely constituting mirror images of Stone’s complaint
and duplicative of MillerCoors’ affirmative defenses.
ARGUMENT
A complaint must be dismissed if it does not contain “enough facts to state a
claim to relief that is plausible on its face.” Davis v. Powell, 901 F. Supp. 2d 1196,
1208 (S.D. Cal. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). After stripping
away the “conclusory statements” in the complaint, the remaining factual allegations
must do more than “‘create[] a suspicion of a legally cognizable right of action[;]’”
they must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at
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555 (citations omitted). In making this “context-specific” determination, the Court
must “draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
Additionally, a court “may strike from a pleading an insufficient defense or
any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f).
“[T]he function of a 12(f) motion to strike is to avoid the expenditure of time and
money that must arise from litigating spurious issues by dispensing with those issues
prior to trial ....” Sidney–Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir.
1983). “Granting a motion to strike may be proper if it will make trial less
complicated or eliminate serious risks of prejudice to the moving party, delay, or
confusion of the issues.” Nguyen v. CTS Elecs. Mfg. Sols. Inc., 301 F.R.D. 337, 340
(N.D. Cal. 2014). A duplicative counterclaim for declaratory judgment causes
prejudice and may be stricken when “Plaintiffs would be forced to incur fees drafting
duplicative pleadings, discovery, and motions regarding that counterclaim.” Riot
Games Merch., Inc. v. Tri-Force Sales, LLC, No. 215CV05817ODWEX, 2015 WL
13344626, at *3 (C.D. Cal. Dec. 1, 2015). “Ultimately, whether to grant a motion to
strike lies within the sound discretion of the district court.” Id. (quoting Whittlestone,
Inc. v. Handi–Craft Co., 618 F.3d 970, 973 (9th Cir. 2010)).
I. THE FIRST, SECOND AND THIRD COUNTERCLAIMS SERVE NO USEFUL PURPOSE AND SHOULD BE DISMISSED OR STRICKEN
In its First, Second and Third Counterclaims, MillerCoors seek declaratory
relief in the form of (1) a judicial declaration of its alleged “right to use STONE and
STONES to advertise Keystone Beer” (Anser/CC at 24-25); (2) a declaratory
judgment that laches precludes Stone from enforcing its STONE® mark against
MillerCoors (id. at 25-26); and (3) a judicial declaration that MillerCoors’ “use of
STONE to advertise Keystone beer does not infringe” Stone’s STONE® mark. (Id.
at 26-27). These “counterclaims” are merely a repackaging of Stone’s claims and
MillerCoors’ affirmative defenses which serve no useful purpose other than to lard
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up the record and increase the burden of adjudicating these proceedings, and they
should therefore be dismissed.
The Court Need Not Allow Declaratory Relief Counterclaims that Are Entirely Duplicative of Existing Claims and Defenses
Although not specifically styled as such, MillerCoors’ declaratory judgment
claims are presumably asserted under the Declaratory Judgment Act, 28 U.S.C. §
2201, which provides that “[i]n a case of actual controversy within its jurisdiction,
…. any court of the United States, upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any interested party seeking such
declaration.” (emphasis added). “The Declaratory Judgment Act gives the Court the
authority to declare the rights and legal relations of interested parties, but not a duty
to do so.” Stickrath v. Globalstar, Inc., No. C07–1941 THE, 2008 WL 2050990, at
*3 (N.D. Cal. May 13, 2008) (citing Leadsinger, Inc. v. BMG Music Pub., 512 F.3d
522, 533 (9th Cir. 2008) (emphasis in original). Where declaratory relief would
serve no useful purpose, “[n]umerous courts have used that discretion to dismiss
counterclaims under Fed. Rule Civ. Pro. 12(f) where they are either the ‘mirror
image’ of claims in the complaint or redundant of affirmative defenses.” Id. at *3.
In determining whether to hear a declaratory judgment claim, the Court should
“look[] to the purpose of the Declaratory Judgment Act,” which is to empower
potential defendants threatened with suit to obtain relief as declaratory judgment
plaintiffs. Englewood Lending, Inc. v. G&G Coachella Investments, LLC, 651
F.Supp.2d 1141, 1145 (C.D. Cal. 2009) (quoting Hal Roach Studios v. Richard
Feiner & Co., 896 F. 2d 1542, 1555 (9th Cir. 1990)) (“the purpose of the Declaratory
Judgment Act” is “to relieve potential defendants from the Damoclean threat of
impending litigation which a harassing adversary might brandish, while initiating suit
at his leisure—or never.”)
When counterclaims for declaratory judgment “are either the ‘mirror image’ of
claims in the complaint or redundant of affirmative defenses,” the purpose of the
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Declaratory Judgment Act is not furthered by hearing the counterclaims. District
courts have therefore held that dismissing or striking the counterclaims is
appropriate. Stickrath, 2008 WL 2050990, at *3. “[T]he court should focus on
whether the counterclaims ‘serve any useful purpose,’” and should dismiss or strike
as redundant a counterclaim when “‘it is clear that there is a complete identity of
factual and legal issues between the complaint and the counterclaim.’” Riot Games
Merchandise, Inc. v. Tri-Force Sales, LLC, No. 2:15-cv-05817-ODW(Ex), 2015 WL
13344626, at *2 (C.D. Cal. Dec. 1, 2015) (quoting Stickrath, 2008 WL 2050990 at
*4)).
The First Counterclaim is Redundant of MillerCoors’ Second Affirmative Defense and of Stone’s Claims
MillerCoors’ First Counterclaim seeks a “judicial declaration of its right to use
STONE and STONES to advertise Keystone beer” on the grounds that “MillerCoors’
continuous use of STONE and STONES predates [Stone]’s use.” (Answer/CC at
25:12-13, 19-20.) The claim is wholly duplicative of MillerCoors’ Second
Affirmative Defense of “Prior Use”, which MillerCoors explicates in considerably
greater detail in its subsequent Answer (at 76:25-77:27). Both the Second
Affirmative Defense and First Counterclaim assert that MillerCoors and its
predecessors have used “STONE” or “STONES” since a time prior to Stone’s
application to register its STONE® Mark. They also seek the same relief – i.e., a
determination that MillerCoors is entitled to use “STONE” or “STONES”
notwithstanding Stone’s incontestable registration for STONE®. The First
Counterclaim merely re-states MillerCoors’ Second Affirmative Defense in skeletal
form. It thus fails to “raise legal issues or theories apart from those already before
the Court,” Stickrath at *10, weighing in favor of dismissal.
The First Counterclaim is doubly redundant because it is the mirror image of
Stone’s claims for infringement and declaratory judgment. The issue of seniority
will necessarily be decided in adjudicating Stone’s trademark infringement claims,
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including Stone’s ownership of “all right, title, and interest in the registered
trademark STONE®.” (Complaint at 17:22-23.) If that were not enough, Stone’s
Complaint also expressly requests “declaratory judgment that further use by
Defendants of the STONE® mark in connection with the sale, marketing or
distribution of beer would infringe Plaintiff’s rights in the STONE® Mark.”
(Complaint at 22:14-16.)
Further, the litigation of Stone’s claims will necessarily determine whether
MillerCoors has a “right to use STONE and STONES,” by virtue of seniority or
otherwise. (Answer/CC at 25:19-20.) Accordingly, the First Counterclaim serves no
useful purpose and should be dismissed or stricken. Apple, Inc. v. Samsung Elecs.
where it “will necessarily be determined in the course of the litigation, and
[defendant] has raised the issue sufficiently in its Affirmative Defense.”)
The Second Counterclaim is Redundant of the Third Affirmative Defense
In the Second Counterclaim, MillerCoors seeks a declaratory judgment that
“laches precludes [Stone] from enforcing the STONE mark against MillerCoors.”
(Answer/CC at 26:15-17.) This Counterclaim is entirely redundant of MillerCoors’
Third Affirmative Defense (“Laches”), in which MillerCoors asserts that Stone’s
“claims made in the Complaint are barred by laches.” (Answer/CC at 78:3-6.)
Like the First Counterclaim, the Second merely re-states an affirmative
defense as a declaratory judgment claim distinguished only by its paucity of factual
detail. Accordingly, the Second Counterclaim serves no useful purpose and should
be dismissed.
The Second Counterclaim is based on the exact same factual allegations in
Defendant’s Third Affirmative Defense, i.e., that Stone “was aware of MillerCoors’
use of ‘STONES’ in 2010 and sent a letter to MillerCoors” but “failed to bring legal
action against MillerCoors until 2018.” (Answer/CC at 26:5-9; c.f. 13:10-15 (“In
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2010…Stone Brewing’s attorney sent a cease and desist letter to MillerCoors
demanding MillerCoors stop using “STONE, STONES, and HOLD MY STONES”
to sell Keystone beer.”) and 78:16-22 (“Stone Brewing’s attorneys did not voice any
further objection to MillerCoors’ use of STONE and STONES until Stone Brewing
filed this Complaint.”).)
Likewise, both the Second Counterclaim and Third Affirmative Defense are
each based on the same legal theory, laches. MillerCoors asserts that laches apply
because Stone’s delay in filing suit “was unreasonable in light of the analogous
California statute of limitations period of three years” and that because it has
“suffered prejudice” due to this delay because it “heavily invested in Keystone
visuals and marketing after 2010 that used STONE and STONES.” (Answer/CC at
26:10-14; c.f. 79:1-6 (alleging that Stone “unreasonably delayed asserting any claims
it had by waiting eight more years to file a lawsuit” and MillerCoors would be
prejudiced by Stone’s lawsuit because it “heavily invested in multiple marketing
campaigns that center around the Keystone nicknames STONE and STONES”).
There is no material difference in the factual allegations raised or relief sought
by the Second Counterclaim and Third Affirmative Defense. Because the Second
Counterclaim and Third Affirmative Defense are based on identical facts and legal
theories, the Second Counterclaim does not “serve any useful purpose” and should be
dismissed or stricken. Riot Games, 2015 WL 13344626, at *2.
The Third Counterclaim is Entirely Redundant
The Third Counterclaim is nothing more than a denial of Stone’s trademark
infringement claims. MillerCoors seeks “a judicial declaration that its use of STONE
to advertise Keystone beer does not infringe [Stone]’s mark.” (Counterclaims at
27:16-18.) It goes without saying that MillerCoors’ infringing use of the STONE®
mark is already before the Court. Indeed, such infringement forms the basis of
Stone’s affirmative claims for trademark infringement, false designation of origin,
unfair competition, and declaratory judgment. (Complaint, passim.)
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The Complaint is replete with allegations concerning MillerCoors’
infringement.3 In sum, it is impossible to litigate Stone’s claims without addressing
whether MillerCoors’ copying of the STONE® mark in connection with its Keystone
beer amounts to infringement. By definition, the Third Counterclaim is a mirror
image that adds nothing to this action. Where a “Defendant’s counterclaim for a
judicial declaration…simply restates its defense to Plaintiff’s claim in affirmative
language,” the counterclaim should be dismissed. Riot Games at *2.
The Third Counterclaim is particularly duplicative because it merely re-states
MillerCoors’ First Counterclaim. The First and Third Counterclaims are factually
identical to one another, both alleging that MillerCoors has “continuously used
STONE or STONES in its Keystone advertising” and “on Keystone’s outer
packaging” since at least 1995 and that its “continuous use of STONE predates”
Stone’s use of the mark. (Id. at 25:1-6; 26:26-27:2, 5-7.) Because Stone began using
the STONE mark on its beer in 1996 and “did not register its STONE mark until June
23, 1998,”4 MillerCoors asserts that it is “the senior user of STONE in connection
with beer relative to” Stone. (Id. at 25:10-11; 27:5-11.) The Third Counterclaim
serves no “useful purpose” even when compared to MillerCoors’ other
Counterclaims, and should be dismissed or stricken as redundant for the same
reasons as the First Counterclaim.
3 See, e.g., Complaint at 1:7-12 (“Plaintiff Stone Brewing brings this trademark action to halt Defendant MillerCoors’ misguided campaign to steal the consumer loyalty and awesome reputation of Stone’s craft brews and iconic STONE® trademark”); at 45:11-12 (“Keystone’s new can design overtly copies and infringes the STONE® trademark”); at 14:15-18 (“MillerCoors has also purchased advertising on major websites, such as ESPN.com, referring to Keystone as “STONE”. Such mass advertising broadcasts the infringing “STONE” name beyond Keystone’s immediate social media audience to the general public at large”); at 15:18-19 (“Now, MillerCoors is willfully infringing the STONE® mark in a calculated attempt to dilute it beyond repair”); at 16:17-18 (“MillerCoors’ deliberate infringement is likely to succeed in causing confusion”); at 17:7-8 (“In recent weeks, Stone has received consumer inquiries showing that MillerCoors’ escalating infringement is indeed brewing confusion in the marketplace”); et cetera. 4 MillerCoors misstates the timeline. Stone filed an application to register the STONE® Marks on April 4, 1996, which was issued on June 23, 1998. (Hagey Decl. at Ex. 2.) MillerCoors made no efforts whatsoever to challenge the STONE® Marks.
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Finally, as a third independent basis for dismissal, the Third Counterclaim is
completely redundant of the Fourth Affirmative Defense for Non-Infringement,
which alleges that Stone’s claims “fail because MillerCoors has not infringed any of
[Stone’s] trademarks under federal or state law.” (Answer/CC at 79:7-11.) The
Third Counterclaim, which seeks a “declaration that its use of STONE to advertise
Keystone beer does not infringe [Stone]’s mark,” merely recasts this defense as a
claim for relief. The Third Counterclaim is redundant three times over and serves no
conceivable purpose, let alone any “useful” one. Accordingly, the First, Second, and
Third Counterclaims should be stricken or dismissed as redundant.
II. DEFENDANT’S FOURTH COUNTERCLAIM SHOULD BE DISMISSED
In its Fourth Counterclaim, MillerCoors seeks a declaratory judgment that it
has an “exclusive common law right to use STONE in connection with the sale of
beer in the United States.” (Answer/CC at 28:18-20.) This counterclaim fails as a
matter of law for at least two reasons. First, MillerCoors fails to allege at least two
elements necessary to state a claim. Second, MillerCoors’ claim based on its
purported common-law rights is plainly time-barred.
MillerCoors Has Not Alleged All the Elements Necessary to Challenge an Incontestable Federal Mark
Stone’s STONE® mark became incontestable as a matter of law on or about
June 28, 2008, when the PTO accepted Stone’s Combined Declaration of Use and
Incontestability. (Hagey Decl. at Exs. 2-3.) An incontestable registration is
“conclusive evidence of the validity of the registered mark and of the registration of
the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive
right to use the registered mark in commerce… subject to [certain] defenses or
defects.” 15 U.S.C. § 1115(b); Clamp Mfg. Co., Inc. v. Enco Mfg. Co., Inc., 870 F. 2d
512, 514 (9th Cir. 1989) (“incontestable status provides the mark with a conclusive
presumption of validity…”).
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MillerCoors is effectively challenging incontestability on the basis that Stone’s
use of the STONE® mark “infringes a valid right acquired under the law of any State
or Territory by use of a mark or trade name continuing from a date prior to the date
of registration.” 15 U.S.C. § 1065. But to establish that MillerCoors has a senior
common-law right in a mark registered by a junior user, a party must plausibly allege
“(1) that his or her ‘use of the mark began before its registration and publication’;
and (2) ‘that there has been continuing use since that time.’” Watec Co., Ltd. v. Liu,
403 F.3d 645, 653 (9th Cir. 2005) (quoting Casual Corner Assocs., Inc. v. Casual
Stores of Nev., Inc., 493 F.2d 709, 712 (9th Cir. 1974)); see also 5 McCarthy on
Trademarks and Unfair Competition § 26:53 (5th ed.). Further, where a party claims
a date of first use which precedes the date that the party disclosed in a PTO
application, evidence of such earlier date must be established by clear and
convincing. Hydro-Dynamics, Inc. v. George Putnam & Co., Inc. 811 F.2d 1470,
1473 (Fed. Cir. 1987); see also, 5 McCarthy on Trademarks and Unfair Competition
§ 19:52 (5th ed.). MillerCoors fails to satisfy these pleading requirements and do not
meet the Rule 8 “plausibility” standard set forth in Twombly and Iqbal.
1. MillerCoors Fails to Allege That It Began Using the STONE Mark Prior to Its Registration by Stone
Stone applied for the registration of the STONE® Mark in April 1996. To
plausibly allege that it has a senior common-law right to the “STONE” marks,
therefore, MillerCoors must demonstrate that it began using the marks prior to that
date. Though MillerCoors alleges in a conclusory way that it has “continuously used
STONE or STONES” in Keystone advertising, on its outer packaging, and in
promotional materials “since at least 1995” (Answer/CC at 27:27-28:4), it fails to
allege facts to support these claims.
As it relates to prior use of “STONES,” MillerCoors alleges that “[s]tarting in
at least 1995 […] [a] case of 30 Keystone beers became a case of 30 ‘STONES.”
(Answer/CC at 12:25-13:2.) In supposed support, MillerCoors submits an image of
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“Keystone Light Outer Packaging” from 1995 (hereinafter, the “1995 Packaging
Artwork”) as evidence of use of the “STONES” mark prior to Stone’s April 1996
application date. (Id. at 13:3-17.) This image is insufficient to adequately allege
prior use of “STONES.” MillerCoors represented to the PTO that its first use date of
the “STONES” Mark was February 2004, thus any claim to a preceding first use date
is subject to the heightened standard of clear and convincing.5 (Hagey Decl. at Exs.
4-5). Yet, aside from the bare bone conclusory allegation that it used the mark “in at
least 1995,” MillerCoors only supplies an image of 1995 Packaging Artwork. First,
not only does MillerCoors fail to supply an image of packaging in commerce,
MillerCoors fails to even allege that this packaging was used in commerce.
(Answer/CC at 12:25-13:17.) Second, the 1995 Packaging Artwork only reflects the
phrase “30 ‘STONES,” which is distinct from a claim of use of “STONES.” 6 (Id.).
In fact, MillerCoors concedes that the alleged mark is to the entire phrase “30
‘STONES”—“[a] case of 30 Keystone beers became a case of 30 ‘STONES.” (Id. at
13:1-2.) As such, MillerCoors fails to allege sufficient facts to plausibly establish
prior use of “STONES” Mark so as to survive dismissal.
Similarly, as it relates to “STONE”, MillerCoors only pleads “[u]pon
information and belief” that it used the term “as early as 1992-1993.” (Answer/CC at
14:1.) Yet, in supposed support, MillerCoors can only point to a July 1996
newspaper advertisement which shows “STONE”, and which postdates Stone’s
5 The preface of “[a]t least as early as” to a first use date disclosed in a trademark application “does not mitigate the increased burden upon the applicant if that originally asserted date is too late to prevail against an opposer.” Hydro-Dynamics Inc., 811 F.2d at 1473. MillerCoors’ use of this preface in its 2007 “STONES” Application subjects its prior use argument to the heightened pleading standard of clear and convincing evidence. 6 MillerCoors’ allegation of prior use of the “STONES” Mark by nature of “30 ‘STONES” contravenes the anti-dissection rule—"The commercial impression of a trademark is derived from it as a whole, not from its elements separated and considered in detail. For this reason, it should be considered in its entirety.” Estate of P. D. Beckwith, Inc. v. Commissioner of Patents, 252 U.S. 538, 545–46 (1920); see also, 5 McCarthy on Trademarks and Unfair Competition § 23:41 (5th ed.).
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registration by three (3) months. (Id. at 14:2-14.) As such, it is insufficient to
plausibly allege MillerCoors’ prior use of “STONE.”
2. MillerCoors Fails to Allege Continuous Use
Even if MillerCoors had plausibly alleged prior use of the “STONE” marks, it
fails to satisfy the continuous use requirement. This requirement is “strict,” and in
order to be continuous “the use must be maintained without interruption.” Spin
Master, Ltd. v. Zobmondo Entertainment, LLC, 944 F. Supp. 2d 830, 851 (C.D. Cal.
2012) (internal quotation omitted). “Even short periods of nonuse can break the
chain of continuous use.” Id. (citing Casual Corner, 493 F.2d at 712 (senior user’s
“failure to use the mark for the one-year period prevents it from claiming that it falls
within the exception of section 1065 requiring a continuing use”)).
Though MillerCoors alleges in a conclusory manner that it has “continuously
used STONE or STONES” in Keystone advertising, packaging, and promotional
materials since “at least 1995” (Answer/CC at 27:27-28:4.), it fails to allege facts to
support the claim that the use was continuous. Indeed, following the 1996
newspaper advertisement, MillerCoors does not specifically allege another use of
STONE until a 2011 advertisement using the phrase HOLD MY STONES. (Id. at
18:15-16.) Again, after 2013, MillerCoors does not specifically allege another use of
the “STONE” marks until 2015. (Answer/CC at 19:4-7, 20-21). Because the failure
to use a mark for a period as short as one year is enough to defeat a claim of
continuous use, (Casual Corner, 493 F.2d at 712), MillerCoors must do more than
allege that, between 1996 and 2011, it used one mark or the other “continuously.”
Rather, MillerCoors must allege facts demonstrating its unbroken use of the STONE
mark during that time. MillerCoors fails to do so, and the “continuous use”
requirement is therefore unsatisfied as well.
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3. MillerCoors Fails to Allege, and in Fact, Affirmatively Denies, Likelihood of Confusion
Finally, even if MillerCoors had alleged prior and continuing use of the
“STONE” marks, its claim to an “exclusive common law right” would still fail as a
matter of law because MillerCoors does not specifically plead likelihood of
confusion. In fact, such an allegation would contradict MillerCoors’ repeated
allegation that there is no confusion.
The territory in which a senior user has exclusive rights to use a mark is
limited to those areas in which a junior user’s use of the mark is likely to cause
confusion. Dorpan, S.L. v. Hotel Melia, Inc., 728 F.3d 55, 63-64 (1st Cir. 2013) (“In
this context, the geographic area in which an unregistered trademark is ‘in use’ is
defined as the area in which the use of similar mark would create a likelihood of
ed.) (“The touchstone of the determination of a trade area is likelihood of
confusion.”)); see also Brookfield Comm’ns v. West Coast Entertainment, 174 F. 3d
1036, 1047 (9th Cir. 1999) (senior user “has the right to enjoin ‘junior’ users from
using confusingly similar marks in the same industry and market”). In other words,
the senior user’s area of prior use is defined by likelihood of confusion with the
junior user’s mark. By definition, a senior user cannot allege an exclusive common-
law right to use a trademark without alleging that confusion is likely.
Here, not only does MillerCoors fail to allege that Stone’s use of its STONE®
mark would cause confusion, it affirmatively denies that consumers could be
confused between Stone’s STONE® and Keystone beers. (E.g., Answer/CC at 7:7-8
(“there is no confusion between these very different types of beers and the different
consumers who drink them”); id. at 8:1-15 (“Nor would any beer drinker actually be
confused between these two beers,” listing reasons why there is no likelihood of
confusion); id. at 16:19-21 (MillerCoors’ lawyer “disputed that there was any
confusion between Keystone and Stone Brewing’s beer”); id. at 65:20-21 (denying
that Keystone’s rebrand is “likely to cause confusion of any sort”).)
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Because MillerCoors denies any possibility of confusion caused by Stone’s
use of its STONE® mark, it has failed to allege the vital element of its claim of a
senior common law right to the STONE® Mark. Dorpan, 728 F.3d at 63-64;
Brookfield, 174 F. 3d at 1047. MillerCoors’ counterclaim for a declaration that it has
an exclusive common law right to use the STONE® mark in connection with beer
therefore fails as a matter of law and must be dismissed.
MillerCoors’ Delay in Bringing its 21-Year-Old “Common Law” Counterclaim is Fatal
Even if MillerCoors had sufficiently alleged the necessary facts to plausibly
establish senior common law rights to the STONE® Mark, MillerCoors’ failure to
allege any facts as to excuse its delay in asserting these rights is fatal to this
Counterclaim.7 MillerCoors’ 20-year delay in asserting supposedly senior (but
completely unknown and unrecognized) common law rights to the STONE® Mark is
unreasonable and should be dismissed. See Bridgestone/Firestone Research Inc. v.
Automobile Club De L’Quest De La France 245 F.3d 1359, 1362 (Fed. Cir. 2001)
(the “Trademark Act establishes various events in the life of a registered trademark
which impact upon adverse claimant, from which events action could be taken and
thus from which the period of delay may be measured,” including “registration on
the principal register” and “incontestability of the registrant’s right to use the
trademark.”). See also Baby Trend, Inc. v. Playtex Prod., LLC, No. 5:13-CV-647-
ODW RZX, 2013 WL 4039451, at *1 (C.D. Cal. Aug. 7, 2013) (dismissing
infringement suit for failure to bring claim within statute of limitations); Solow Bldg.
Co., LLC v. Nine W. Grp., Inc., No. 00 CIV. 7685 (DC), 2001 WL 736794, at *1
(S.D.N.Y. June 29, 2001), aff'd sub nom. Solow Bldg. Co., LLC. v. Nine W. Grp., Inc.,
48 F. App'x 15 (2d Cir. 2002) (dismissing infringement claims where plaintiff’s
unreasonable delay in bringing suit was apparent from the face of the complaint).
7 The situation would be different had Defendant registered a federal trademark for the name, or opposed Stone’s notorious and continuous use, i.e., assuming that Defendant ever even attempted to use the term as a trademark before 2017, which it did not.
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MillerCoors was on constructive notice of Stone’s STONE® Mark on June 23,
1998 (registration date). MillerCoors then was on actual notice of Stone’s STONE®
Mark on Dec. 3, 2007, the date the PTO informed MillerCoors that its “STONES”
application was being rejected on the express basis that it was confusingly similar to
Stone’s STONE® Mark. (Hagey Decl. at Ex. 6). Yet, MillerCoors made no effort to
assert senior common law rights. And six (6) months later, the PTO accepted the
STONE® Mark incontestable. (Hagey Decl. at Exs. 2-3). Only now, in 2018, is
MillerCoors claiming exclusive United States-wide rights. Yet, MillerCoors fails to
allege any facts as to combat the facial unreasonableness of this delay. As such, this
counterclaim should be deemed stale and dismissed.
III. LEAVE TO AMEND SHOULD BE DENIED
Where, as here, the claims are defective as a matter of law and cannot be
amended to state a claim, leave to amend is futile and should be denied. See e.g.,
Cook, Perkiss and Liehe, Inc. v. Northern California Collection Service Inc., 911
F.2d 242, 247 (9th Cir. 1990) (where the defects in the complaint could not be cured
by allegations of other facts, dismissal without leave to amend is proper).
CONCLUSION
For the foregoing reasons, Defendant MillerCoors’ Counterclaims should be
dismissed with prejudice.
Dated: May 9, 2018 Respectfully Submitted,
BRAUNHAGEY & BORDEN LLP
By: s/ J. Noah Hagey
J. Noah Hagey
Attorneys for Stone
Stone Brewing Co., LLC
Case 3:18-cv-00331-BEN-LL Document 28-1 Filed 05/09/18 PageID.269 Page 24 of 25
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21 Case No. 18-cv-0331-BEN-JMA
AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
CERTIFICATE OF SERVICE
I hereby certify that on this 9th day of May, 2018, I electronically transmitted
the foregoing AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN
SUPPORT OF PLAINTIFF STONE BREWING CO., LLC’S MOTION TO
DISMISS AND/OR STRIKE DEFENDANT MILLERCOORS LLC’S
COUNTERCLAIMS to the Clerk’s office using the CM/ECF system, which will
send a notice of filing to all counsel of record.
Dated: May 9, 2018 By: /s/ J. Noah Hagey
J. Noah Hagey
Case 3:18-cv-00331-BEN-LL Document 28-1 Filed 05/09/18 PageID.270 Page 25 of 25
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Case No. 18-cv-0331-BEN-JMA
AMENDED REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
STONE BREWING CO., LLC,
Plaintiff / Counterclaim Defendant,
v.
MILLERCOORS LLC,
Defendant / Counterclaim Plaintiff.
Case No. 18-cv-0331-BEN-JMA AMENDED REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF STONE BREWING CO., LLC’S MOTION TO DISMISS DEFENDANT MILLERCOORS LLC’S COUNTERCLAIMS AND SUPPORTING DECLARATION OF J. NOAH HAGEY Date: June 18, 2018 Time: 10:30 a.m. Judge: Hon. Roger T. Benitez Complaint filed: February 12, 2018
AMENDED REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
Plaintiff Stone Brewing Co., LLC (“Plaintiff” or “Stone”) respectfully submits
this Request for Judicial Notice pursuant to Federal Rule of Evidence 201.
Under Federal Rules of Evidence 201, courts are permitted to rely on "a fact
that is not subject to reasonable dispute because it: (1) is generally known within the
trial court's territorial jurisdiction; or (2) can be accurately and readily determined
from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid.
201(b). This includes information governmental entities have made publicly
available on websites, unless the authenticity or accuracy of the websites or
information displayed is disputed. Daniels-Hall v. Nat'l Ed. Ass'n, 629 F.3d 992, 998
(9th Cir. 2010); see also Code Rebel, LLC v. Aqua Connect, Inc., 2014 WL 46695 at
*4 (C.D. Cal. 2014) (taking judicial notice of applications and registrations before
the United States Patent and Trademark Office as “not subject to reasonable dispute
and [] capable of accurate and ready determination.”).
In addition to the authentication provided by the Declaration of J. Noah Hagey
(submitted concurrently herewith), judicial notice pursuant to Fed. R. Evid. 201 is an
appropriate basis for the Court to consider documents on file with the U.S. Patent
and Trademark Office (“USPTO”). Thus, Plaintiff respectfully requests that the
Court take judicial notice of the following documents on file with the USPTO
pursuant to Fed. R. Evid. 201. Copies of these filings are attached as Exhibits to the
Declaration of J. Noah Hagey:
Exhibit 1 – Stone Brewing’s U.S. Trademark Registration No. 2,168,093
Exhibit 2 – Stone Brewing’s U.S. Trademark Registration No. 2,168,093,
Trademark Documents Docket
Exhibit 3 – Stone Brewing’s Combined Declaration of Use and
Incontestability for U.S. Reg. No. 2,168,093
Exhibit 4 – MillerCoors’ U.S. Trademark Application Serial No. 77284994
Exhibit 5 – MillerCoors’ U.S. Trademark Application Serial No.
77284994, Trademark Documents Docket
Case 3:18-cv-00331-BEN-LL Document 28-2 Filed 05/09/18 PageID.272 Page 2 of 4
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2 Case No. 18-cv-0331-BEN-JMA
AMENDED REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
Exhibit 6 – USPTO Rejection of MillerCoors’ U.S. Trademark
Application: In re. Trademark Application No. 77284994 – STONES, PTO
Dkt. No. 4060KE-1027 (Dec. 3, 2007)
Exhibit 7 – MillerCoors’ U.S. Trademark Application Serial No. 85002333
Exhibit 8 – MillerCoors’ U.S. Trademark Application Serial No.
85002333, Trademark Documents Docket
Exhibit 9 – Molson Coors 2017 SEC Form 10-K
Dated: May 9, 2018 Respectfully Submitted,
BRAUNHAGEY & BORDEN LLP
By: s/J. Noah Hagey
J. Noah Hagey
Attorneys for Plaintiff
Stone Brewing Co., LLC
Case 3:18-cv-00331-BEN-LL Document 28-2 Filed 05/09/18 PageID.273 Page 3 of 4
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3 Case No. 18-cv-0331-BEN-JMA
AMENDED REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIMS
CERTIFICATE OF SERVICE
I hereby certify that on this 9th day of May, 2018, I electronically transmitted
the foregoing AMENDED REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF
PLAINTIFF STONE BREWING CO., LLC’S MOTION TO DISMISS
DEFENDANT MILLERCOORS LLC’S COUNTERCLAIMS AND SUPPORTING
DECLARATION OF J. NOAH HAGEY to the Clerk’s office using the CM/ECF
system, which will send a notice of filing to all counsel of record.
s/J. Noah Hagey
J. Noah Hagey
Case 3:18-cv-00331-BEN-LL Document 28-2 Filed 05/09/18 PageID.274 Page 4 of 4
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Case No. 18-cv-0331-BEN-JMA AMENDED DECLARATION OF J. NOAH HAGEY
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
STONE BREWING CO., LLC,
Plaintiff / Counterclaim Defendant,
v.
MILLERCOORS LLC,
Defendant / Counterclaim Plaintiff.
Case No. 18-cv-0331-BEN-JMA AMENDED DECLARATION OF J. NOAH HAGEY IN SUPPORT OF PLAINTIFF STONE BREWING CO., LLC’S REQUEST FOR JUDICIAL NOTICE AND MOTION TO DISMISS DEFENDANT MILLERCOORS LLC’S COUNTERCLAIMS Date: June 18, 2018 Time: 10:30 a.m. Judge: Hon. Roger T. Benitez Complaint filed: February 12, 2018
Trademarks > Trademark Electronic Search System (TESS)
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Word Mark STONEGoods andServices IC 032. US 045 046 048. G & S: beers and ales. FIRST USE: 19980106. FIRST USE IN COMMERCE: 19980106
Mark DrawingCode (1) TYPED DRAWING
Serial Number 75083606Filing Date April 4, 1996Current Basis 1AOriginal FilingBasis 1B
Published forOpposition July 29, 1997
RegistrationNumber 2168093
Registration Date June 23, 1998Owner (REGISTRANT) STONE BREWING CO. CORPORATION CALIFORNIA 1999 Citracodo Parkway Escondido CALIFORNIA
92029
(LAST LISTED OWNER) STONE BREWING CO., LLC LIMITED LIABILITY COMPANY CALIFORNIA 1999 CITRACADOPARKWAY ESCONDIDO CALIFORNIA 92029
AssignmentRecorded ASSIGNMENT RECORDED
Attorney ofRecord Allison Hagey
Type of Mark TRADEMARKRegister PRINCIPALAffidavit Text SECT 15. SECT 8 (6-YR). SECTION 8(10-YR) 20080628.Renewal 1ST RENEWAL 20080628Live/DeadIndicator LIVE
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EXHIBIT 1 PAGE 4
Case 3:18-cv-00331-BEN-LL Document 28-5 Filed 05/09/18 PageID.281 Page 2 of 2
The owner, STONE BREWING CO., residing at 155 Mata Way, Suite 104, San Marcos, CA US 92069, is using the mark in commerce on or inconnection with the goods and /or services as follows:
For International Class 032, the owner is using or is using through a related company or licensee the mark in commerce on or in connection withall goods and/or services listed in the existing registration.
The owner is submitting one specimen for each class showing the mark as used in commerce on or in connection with any item in the class oflisted goods and/or services , consisting of a(n) Scanned image of mark as used on marketing material..Specimen-1
The registrant hereby appoints Neil K. Nydegger, Esq. and Matthew K. Hillman; Wayne M. Chancellor of Nydegger & Associates, 348 OliveStreet, San Diego, CA USA 92103 to submit this Combined Declaration of Use and Incontestability Under Sections 8 & 15 on behalf of theregistrant. The attorney docket/reference number is 11159.1.
A fee payment in the amount of $300 will be submitted with the form, representing payment for 1 class(es), plus any additional grace period fee,if necessary.
Declaration
The owner is using or is using through a related company or licensee the mark in commerce on or in connection with the goods/servicesidentified above, as evidenced by the attached specimen(s) showing the mark as used in commerce. The mark has been in continuous use incommerce for five consecutive years after the date of registration, or the date of publication under Section 12(c), and is still in use in commerceon or in connection with all goods and/or services as identified above. There has been no final decision adverse to the owner's claim ofownership of such mark for such goods and/or services, or to the owner's right to register the same or to keep the same on the register; and thereis no proceeding involving said rights pending and not disposed of either in the Patent and Trademark Office or in the courts.
The undersigned being hereby warned that willful false statements and the like are punishable by fine or imprisonment, or both, under 18 U.S.C.Section 1001, and that such willful false statements and the like may jeopardize the validity of this document, declares that he/she is properlyauthorized to execute this document on behalf of the Owner; and all statements made of his/her own knowledge are true and that all statementsmade on information and belief are believed to be true.
Signature: /Neil K. Nydegger/ Date: 05/11/2004Signatory's Name: Neil K. NydeggerSignatory's Position: Attorney for Applicant
Mailing Address: Nydegger & Associates 348 Olive Street San Diego, CA 92103
RAM Sale Number: 487RAM Accounting Date: 05/12/2004
Serial Number: 75083606Internet Transmission Date: Tue May 11 18:04:04 EDT 2004TEAS Stamp: USPTO/S08N15-XXXXXXXX-200405111804046150
EXHIBIT 3 PAGE 10
Case 3:18-cv-00331-BEN-LL Document 28-7 Filed 05/09/18 PageID.287 Page 4 of 7
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Word Mark STONESGoods and Services (ABANDONED) IC 032. US 045 046 048. G & S: Beer. FIRST USE: 20040200. FIRST USE IN COMMERCE:
20040200Standard CharactersClaimedMark Drawing Code (4) STANDARD CHARACTER MARKSerial Number 77284994Filing Date September 20, 2007Current Basis 1AOriginal Filing Basis 1AOwner (APPLICANT) MILLERCOORS LLC LIMITED LIABILITY COMPANY DELAWARE 1209 ORANGE STREET
WILMINGTON DELAWARE 19801Assignment Recorded ASSIGNMENT RECORDEDAttorney of Record Lew HansenType of Mark TRADEMARKRegister PRINCIPALLive/Dead Indicator DEADAbandonment Date June 4, 2008
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EXHIBIT 4 PAGE 15
Case 3:18-cv-00331-BEN-LL Document 28-8 Filed 05/09/18 PageID.292 Page 2 of 2
*77284994* CORRESPONDENT ADDRESS: LEW HANSEN SHERIDAN ROSS P.C. 1560 BROADWAY, SUITE 1200 DENVER, CO 80202
RESPOND TO THIS ACTION:http://www.uspto.gov/teas/eTEASpageD.htm GENERAL TRADEMARK INFORMATION:http://www.uspto.gov/main/trademarks.htm
APPLICANT: Coors Global Properties, Inc.
CORRESPONDENT’S REFERENCE/DOCKET NO : 4060KE-1027 CORRESPONDENT E-MAIL ADDRESS: [email protected]
OFFICE ACTION TO AVOID ABANDONMENT, THE OFFICE MUST RECEIVE A PROPER RESPONSE TO THIS OFFICE ACTION WITHIN 6 MONTHSOF THE ISSUE/MAILING DATE. ISSUE/MAILING DATE: 12/3/2007 The assigned examining attorney has reviewed the referenced application and determined the following.
Search of Office RecordsThe examining attorney has searched the Office records and has found no similar registered or pending mark which would bar registration underTrademark Act Section 2(d), 15 U.S.C. §1052(d). TMEP §704.02.
Likelihood of ConfusionThe examining attorney refuses registration under Trademark Act Section 2(d), 15 U.S.C. §1052(d), because the applicant’s mark, when usedon or in connection with the identified goods, so resembles the mark in U.S. Registration No. 2168093 as to be likely to cause confusion, tocause mistake, or to deceive. TMEP §§1207.01 et seq. See the enclosed registration. The examining attorney must analyze each case in two steps to determine whether there is a likelihood of confusion. First, the examiningattorney must look at the marks themselves for similarities in appearance, sound, connotation and commercial impression. In re E. I. DuPont deNemours & Co., 476 F.2d 1357, 177 USPQ 563 (C.C.P.A. 1973). Second, the examining attorney must compare the goods or services todetermine if they are related or if the activities surrounding their marketing are such that confusion as to origin is likely. In re August Storck KG,218 USPQ 823 (TTAB 1983); In re International Telephone and Telegraph Corp., 197 USPQ 910 (TTAB 1978); Guardian Products Co., v.Scott Paper Co., 200 USPQ 738 (TTAB 1978). TMEP §§1207.01 et seq. In determining whether there is a likelihood of confusion, the examining attorney must consider all circumstances surrounding the sale of thegoods. Industrial Nucleonic Corp. v. Hinde Engineering Co., 475 F.2d 1197, 177 USPQ 386 (C.C.P.A. 1973). These circumstances include themarketing channels, the identity of the prospective purchasers and the degree of similarity between the marks and between the goods. Incomparing the marks, similarity in any one of the elements of sound, appearance or meaning is sufficient to find a likelihood of confusion. If the
EXHIBIT 6 PAGE 19
Case 3:18-cv-00331-BEN-LL Document 28-10 Filed 05/09/18 PageID.296 Page 2 of 6
goods of the parties differ, it is necessary to show that they are related in some manner. In re Mack, 197 USPQ 755 (TTAB 1977). TMEP§§1207.01 et seq.
Comparison of the MarksThe examining attorney must compare the marks for similarities in sound, appearance, meaning or connotation. In re E. I. DuPont de Nemours& Co., 476 F.2d 1357, 177 USPQ 563 (C.C.P.A. 1973). Similarity in any one of these elements is sufficient to find a likelihood of confusion. Inre Mack, 197 USPQ 755 (TTAB 1977). TMEP §§1207.01(b) et seq. Additionally, when the applicant’s mark is compared to a registered mark, “the points of similarity are of greater importance than the points ofdifference.” Esso Standard Oil Co. v. Sun Oil Co., 229 F.2d 37, 108 USPQ 161 (D.C. Cir.), cert. denied, 351 U.S. 973, 109 USPQ 517 (1956). TMEP §1207.01(b). The applicant’s proposed mark is “Stones” for beer. The registrant’s referenced mark is “Stone” for beers and ales. The respective marks arecomprised in either whole of significant part of the term “Stone[s].” Consequently, the marks share the same over-all sound, appearance andcommercial impression.
Comparison of the GoodsThe goods of the parties need not be identical or directly competitive to find a likelihood of confusion. They need only be related in somemanner, or the conditions surrounding their marketing be such, that they could be encountered by the same purchasers under circumstances thatcould give rise to the mistaken belief that the goods come from a common source. In re Martin’s Famous Pastry Shoppe , Inc., 748 F.2d 1565,223 USPQ 1289 (Fed. Cir. 1984); In re Corning Glass Works, 229 USPQ 65 (TTAB 1985); In re Rexel Inc., 223 USPQ 830 (TTAB 1984);Guardian Products Co., Inc. v. Scott Paper Co., 200 USPQ 738 (TTAB 1978); In re International Telephone & Telegraph Corp., 197 USPQ910 (TTAB 1978). TMEP §1207.01(a)(i). Since the respective marks are essentially identical, the only issue before the examining attorney is whether the applicant’s goods are so relatedto the registrant’s goods that confusion as to source of origin or sponsorship is likely to occur. The examining attorney must conclude that theyare so related, for it is foreseeable that customers of the applicant might encounter the registrant’s respective goods and mark in the marketplacegiven similar channels of trade within which the identified goods travel. Specifically, it is likely that the applicant’s beer and the registrant’sbeers and ales will be marketed, advertised and ultimately sold or offered in the same or similar fashions. Confusion as to source of origin or sponsorship is extremely likely if the applicant’s proposed mark is allowed to register. Registration istherefore refused by the examining attorney. Although the examining attorney has refused registration, the applicant may respond to the refusal to register by submitting evidence andarguments in support of registration.
Drawing Does Not Match SpecimenThe mark depicted on the drawing disagrees with the mark on the specimen. In this case, the drawing displays the mark as “STONES,” while
the specimen shows the mark as “’STONES” with a “ ’ ” before the word “Stones.” The mark shown on the drawing must be a substantially exact representation of the mark as used on or in connection with the goods and/orservices, as shown by the specimen. 37 C.F.R. §2.51(a); see C.F.R. §2.72(a)(1). Therefore, applicant must submit one of the following:
(1) A new drawing of the mark that agrees with the mark on the specimen but does not materially alter the original mark; 37 C.F.R. §2.72(a);TMEP §§807.14 et seq.; or
(2) A substitute specimen that shows use of the mark that appears on the drawing, and the following statement, verified with an affidavit or
signed declaration under 37 C.F.R. §2.20: “The substitute specimen was in use in commerce at least as early as the filing date ofthe application.” 37 C.F.R. §2.59(a); TMEP §904.05. If submitting a specimen requires an amendment to the dates of use, applicantmust also verify the amended dates. 37 C.F.R. §2.71(c).
If applicant cannot satisfy the above requirements, applicant may amend the Section 1(a) filing basis (use in commerce) to Section 1(b) (intent touse basis), for which no specimen is required. However, should applicant amend the basis to Section 1(b), registration cannot be granted untilapplicant later amends the application back to use in commerce by filing an acceptable allegation of use with a proper specimen. 15 U.S.C.§1051(c); 37 C.F.R. §§2.76, 2.88; TMEP Chapter 1100. In order to amend to Section 1(b), applicant must submit the following statement, verified with an affidavit or signed declaration under 37 C.F.R.§2.20: “Applicant has had a bona fide intention to use the mark in commerce on or in connection with the goods or services listed in theapplication as of the filing date of the application.” 15 U.S.C. §1051(b); 37 C.F.R. §§2.34(a)(2), 2.35(b)(1); TMEP §806.01(b).
EXHIBIT 6 PAGE 20
Case 3:18-cv-00331-BEN-LL Document 28-10 Filed 05/09/18 PageID.297 Page 3 of 6
If the applicant has any questions or needs assistance in responding to this Office action, please telephone the assigned examining attorney. TEAS PLUS APPLICANTS MUST SUBMIT DOCUMENTS ELECTRONICALLY OR SUBMIT FEE: TEAS Plus applicants should submitthe following documents using the Trademark Electronic Application System (TEAS) at http://www.uspto.gov/teas/index.html: (1) writtenresponses to Office actions; (2) preliminary amendments; (3) changes of correspondence address; (4) changes of owner’s address; (5)appointments and revocations of attorney; (6) amendments to allege use; (7) statements of use; (8) requests for extension of time to file astatement of use, and (9) requests to delete a §1(b) basis. If any of these documents are filed on paper, they must be accompanied by a $50 perclass fee. 37 C.F.R. §§2.6(a)(1)(iv) and 2.23(a)(i). Telephone responses will not incur an additional fee. NOTE: In addition to the above,applicant must also continue to accept correspondence from the Office via e-mail throughout the examination process in order to avoid theadditional fee. 37 C.F.R. §2.23(a)(2).
RESPOND TO THIS ACTION: If there are any questions about the Office action, please contact the assigned examining attorney. A responseto this Office action should be filed using the form available at http://www.uspto.gov/teas/eTEASpageD.htm. If notification of this Office actionwas received via e-mail, no response using this form may be filed for 72 hours after receipt of the notification. Do not attempt to respond by e-mail as the USPTO does not accept e-mailed responses. If responding by paper mail, please include the following information: the application serial number, the mark, the filing date and the name,title/position, telephone number and e-mail address of the person signing the response. Please use the following address: Commissioner forTrademarks, P.O. Box 1451, Alexandria, VA 22313-1451. STATUS CHECK: Check the status of the application at least once every six months from the initial filing dateusing the USPTO Trademark Applications and Registrations Retrieval (TARR) online system at http://tarr.uspto.gov. When conducting anonline status check, print and maintain a copy of the complete TARR screen. If the status of your application has not changed for more than sixmonths, please contact the assigned examining attorney.
EXHIBIT 6 PAGE 21
Case 3:18-cv-00331-BEN-LL Document 28-10 Filed 05/09/18 PageID.298 Page 4 of 6
USPTO OFFICE ACTION HAS ISSUED ON 12/3/2007 FORAPPLICATION SERIAL NO. 77284994
Please follow the instructions below to continue the prosecution of your application: VIEW OFFICE ACTION: Click on this linkhttp://tmportal.uspto.gov/external/portal/tow?DDA=Y&serial_number=77284994&doc_type=OOA&mail_date=20071203 (or copy andpaste this URL into the address field of your browser), or visit http://tmportal.uspto.gov/external/portal/tow and enter the applicationserial number to access the Office action. PLEASE NOTE: The Office action may not be immediately available but will be viewable within 24 hours of this notification. RESPONSE MAY BE REQUIRED: You should carefully review the Office action to determine (1) if a response is required; (2) how torespond; and (3) the applicable response time period. Your response deadline will be calculated from 12/3/2007. Do NOT hit “Reply” to this e-mail notification, or otherwise attempt to e-mail your response, as the USPTO does NOT accept e-mailedresponses. Instead, the USPTO recommends that you respond online using the Trademark Electronic Application System response format http://www.uspto.gov/teas/eTEASpageD.htm. HELP: For technical assistance in accessing the Office action, please [email protected]. Please contact the assigned examining attorney with questions about the Office action.
WARNING
1. The USPTO will NOT send a separate e-mail with the Office action attached. 2. Failure to file any required response by the applicable deadline will result in the ABANDONMENT of yourapplication.
EXHIBIT 6 PAGE 23
Case 3:18-cv-00331-BEN-LL Document 28-10 Filed 05/09/18 PageID.300 Page 6 of 6
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Word Mark HOLD MY STONESGoods and Services (ABANDONED) IC 025. US 022 039. G & S: Hats; T-shirts
(ABANDONED) IC 032. US 045 046 048. G & S: BeerStandard CharactersClaimedMark Drawing Code (4) STANDARD CHARACTER MARKSerial Number 85002333Filing Date March 30, 2010Current Basis 1BOriginal Filing Basis 1BPublished forOpposition July 13, 2010
Owner (APPLICANT) MillerCoors LLC LIMITED LIABILITY COMPANY DELAWARE 250 South Wacker Drive, Suite 800Chicago ILLINOIS 60606
Attorney of Record Sabrina StavishType of Mark TRADEMARKRegister PRINCIPALLive/Dead Indicator DEADAbandonment Date November 9, 2010
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EXHIBIT 7 PAGE 25
Case 3:18-cv-00331-BEN-LL Document 28-11 Filed 05/09/18 PageID.302 Page 2 of 2
(Mark One)ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ______ to ______ .
Commission File Number: 1-14829
Molson Coors Brewing Company(Exact name of registrant as specified in its charter)
DELAWARE 84-0178360(State or other jurisdiction ofincorporation or organization)
(I.R.S. EmployerIdentification No.)
1801 California Street, Suite 4600, Denver, Colorado1555 Notre Dame Street East, Montréal, Québec, Canada
80202H2L 2R5
(Address of principal executive offices) (Zip Code)
303-927-2337 (Colorado)514-521-1786 (Québec)
(Registrant's telephone number, including area code)_______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchangeon which registered
Class A Common Stock, $0.01 par value New York Stock ExchangeClass B Common Stock, $0.01 par value New York Stock ExchangeSenior Floating Rate Notes due 2019 New York Stock Exchange1.25% Senior Notes due 2024 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ý NO o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.YES ý NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files). YES ý NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not becontained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growthEXHIBIT 8 PAGE 29
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided to assist in understandingour company, operations and current business environment and should be considered a supplement to, and read in conjunction with, the accompanyingconsolidated financial statements and notes included within Part II—Item 8 Financial Statements and Supplementary Data, as well as the discussion of our businessand related risk factors in Part I—Item 1 Business and Part I—Item 1A Risk Factors, respectively.
Our Fiscal Year
Unless otherwise indicated, (a) all $ amounts are in USD, (b) comparisons are to comparable prior periods, and (c) 2017 , 2016 and 2015 refers to the 12months ended December 31, 2017 , December 31, 2016 , and December 31, 2015 , respectively. For 2016, the consolidated statement of operations includesMillerCoors' results of operations for the period from January 1, 2016, to October 10, 2016, on an equity method basis of accounting and from October 11, 2016, toDecember 31, 2016, on a consolidated basis of accounting. Where indicated, we have reflected unaudited pro forma financial information for 2016 and 2015 whichgives effect to the Acquisition and the related financing as if they were completed on January 1, 2015, the first day of the Company’s 2015 fiscal year.
Operational Measures
We have certain operational measures, such as STWs and STRs, which we believe are important metrics. STW is a metric that we use in our business toreflect the sales from our operations to our direct customers, generally wholesalers. We believe the STW metric is important because it gives an indication of theamount of beer and adjacent products that we have produced and shipped to customers. STR is a metric that we use in our business to refer to sales closer to theend consumer than STWs, which generally means sales from our wholesalers or our company to retailers, who in turn sell to consumers. We believe the STRmetric is important because, unlike STWs, it provides the closest indication of the performance of our brands in relation to market and competitor sales trends.
Acquisition
On October 11, 2016, we completed the acquisition of SABMiller plc's ("SABMiller") 58% economic interest and 50% voting interest in MillerCoors and alltrademarks, contracts and other assets primarily related to the "Miller International Business," as defined in the purchase agreement, outside of the U.S. and PuertoRico (the "Acquisition") from Anheuser-Busch InBev SA/NV ("ABI"). The Acquisition was completed for $12.0 billion in cash, subject to a downward purchaseprice adjustment as described in the purchase agreement. This purchase price "Adjustment Amount," as defined in the purchase agreement, required payment toMCBC if the unaudited EBITDA for the Miller International Business for the twelve months prior to closing was below $70 million.
On January 21, 2018, MCBC and ABI entered into a settlement agreement related to the purchase price adjustment under the purchase agreement.Subsequently, on January 26, 2018, pursuant to the settlement agreement, ABI paid to MCBC $330.0 million, of which $328.0 million constitutes the AdjustmentAmount. This settlement occurred following the finalization of purchase accounting and, as a result, we expect the settlement proceeds related to the AdjustmentAmount to be recorded as a gain within special items, net in our consolidated statement of operations for the three months ended March 31, 2018. Therefore, theamount will not impact the fair value of consideration transferred for the purpose of the previously disclosed purchase accounting. MCBC and ABI also agreed tocertain mutual releases as further described in the settlement agreement which was filed as an exhibit to a Current Report on Form 8-K filed January 22, 2018.
Executive Summary
We are one of the world's largest brewers and have a diverse portfolio of owned and partner brands, including global priority brands Blue Moon, CoorsBanquet, Coors Light, Miller Genuine Draft, Miller Lite, and Staropramen , regional champion brands Carling , Molson Canadian and other leading country-specific brands , as well as craft and specialty beers such as Creemore Springs , Cobra , Doom Bar, Henry's Hard and Leinenkugel's . With centuries of brewingheritage, we have been crafting high-quality, innovative products with the purpose of delighting the world's beer drinkers and with the ambition to be the firstchoice for our consumers and customers. Our success depends on our ability to make our products available to meet a wide range of consumer segments andoccasions.
In 2017, we continued to focus on building our brand strength and transforming our portfolio toward the above premium, flavored malt beverages, craft andcider segments. Further, we continued to focus on generating higher returns on our invested capital, managing our working capital and delivering a greater returnon investment for our shareholders. During the first quarter of 2017, we issued the 2017 Notes (as defined in Part II—Item 8 Financial Statements andSupplementary Data, Note
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12, "Debt" of the Notes), and within the first nine months of 2017, we fully repaid our term loans, all of which will generate future interest savings and willcontribute to meeting our deleveraging commitments. As part of our deleveraging commitments we also made a discretionary cash contribution of $200 million tothe U.S. pension plan during 2017.
Summary of Consolidated Results of Operations
The following table highlights summarized components of our consolidated statements of operations for the years ended December 31, 2017 , December 31,2016 , and December 31, 2015 , and unaudited pro forma financial information for the years ended December 31, 2016 , and December 31, 2015 . See Part II-Item8 Financial Statements and Supplementary Data, “Consolidated Statements of Operations” for additional details of our U.S. GAAP results.
Our consolidated historical financial statements and unaudited pro forma financial information have been revised to reflect the retrospective application ofour change in accounting policy as discussed in Part II—Item 8 Financial Statements and Supplementary Data, Note 1, "Basis of Presentation and Summary ofSignificant Accounting Policies" of the Notes. This change impacts our Canada and Europe segments.
We have presented unaudited pro forma financial information to enhance comparability of financial information between periods. The unaudited pro formafinancial information is based on the historical consolidated financial statements of MCBC and MillerCoors, both prepared in accordance with U.S. GAAP, andgives effect to the Acquisition and the completed financing as if they were completed on January 1, 2015. Pro forma adjustments are based on items that arefactually supportable, are directly attributable to the Acquisition or the related financing, and are expected to have a continuing impact on MCBC's results ofoperations. Any non-recurring items directly attributable to the Acquisition or the related financing are excluded in the unaudited pro forma statements ofoperations. The unaudited pro forma financial information does not include adjustments for costs related to integration activities following the completion of theAcquisition, cost savings or synergies that have been or may be achieved by the combined businesses. The unaudited pro forma financial information is presentedfor illustrative purposes only and does not necessarily reflect the results of operations of MCBC that actually would have resulted had the Acquisition and relatedfinancing occurred at the date indicated, or project the results of operations of MCBC for any future dates or periods. See "Unaudited Pro Forma FinancialInformation" below for details of pro forma adjustments.
For the years ended
December 31, 2017 December 31, 2016 December 31, 2015
As Reported As Reported Pro Forma Pro FormaChange As Reported Pro Forma
Pro FormaChange
(In millions, except percentages and per share data)Financial volume in hectoliters (1) 99.563 46.912 101.934 (2.3)% 33.746 104.012 (2.0)%Net sales $ 11,002.8 $ 4,885.0 $ 10,983.2 0.2 % $ 3,567.5 $ 11,238.1 (2.3)%Net income (loss) attributable to MCBC
from continuing operations $ 1,412.7 $ 1,995.8 $ 294.6 N/M $ 391.3 $ 578.3 (49.1)%Net income (loss) attributable to MCBC
per diluted share from continuingoperations $ 6.52 $ 9.35 $ 1.36 N/M $ 2.10 $ 2.67 (49.1)%
N/M = Not meaningful
(1) Historical financial volumes have been recast to reflect the impacts of aligning policies on reporting financial volumes as a result of the Acquisition. See"Worldwide Brand Volume" below for further details.
2017 Financial Highlights
• On an as reported basis - In 2017 , net income attributable to MCBC from continuing operations decreased 29.2% compared to the prior year largely dueto a benefit recorded to special items, net in 2016 for the revaluation gain on the excess of the estimated fair value remeasurement for our pre-existing42% interest in MillerCoors over its carrying value, as well as the reclassification of the loss related to MCBC's historical AOCI on our 42% interest inMillerCoors. This was partially offset by the incremental net income recorded in 2017 associated with the Acquisition. Further, we released an indirect taxloss contingency, which was initially recorded in the fourth quarter of 2016, for a benefit of approximately $50 million during the first quarter of 2017 inour Europe business which favorably impacted net sales and net income attributable to MCBC from continuing operations.
• On a pro forma basis - In 2017 , net income attributable to MCBC from continuing operations increased from $294.6 million to $1,412.7 million ,primarily as a result of lower special charges specifically related to the 2016 impairment
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charge of $495.2 million and an income tax benefit in the current year resulting from U.S. tax reform. Additionally, as noted above, we released anindirect tax loss contingency, which was initially recorded in the fourth quarter of 2016, for a benefit of approximately $50 million during the first quarterof 2017 in our Europe business which favorably impacted net sales and net income attributable to MCBC from continuing operations. Further,consolidated results were favorably impacted by positive global pricing, net pension benefits, cost savings, and marketing, general and administrativeefficiencies, partially offset by the impacts of lower volume, cost inflation and investments behind our global business capabilities.
• During 2017, we issued the 2017 Notes and fully repaid our term loans and also refinanced our senior notes maturing during the year with commercialpaper, resulting in net debt payments of approximately $1.1 billion, which will generate future interest savings and will contribute to meeting ourdeleveraging commitments. In addition, we also made contributions of approximately $310 million to our defined benefit pension plans as part of ouroverall pension de-risking strategy and deleveraging goals.
• We generated cash flow from operating activities of approximately $1.9 billion , representing a 65.6% increase from approximately $1.1 billion in 2016.The increase in operating cash flow in 2017 compared to 2016 is primarily related to the addition of the consolidated U.S. business and lower cash paidfor taxes (refund in 2017 as compared to cash tax paid in 2016), partially offset by higher cash paid for interest and higher pension contributions.
• Regional financial highlights:
• In the U.S. segment, our income from continuing operations before income taxes decreased on a reported basis due to a net gain in 2016 ofapproximately $3.0 billion recorded within special items related to the Acquisition. On a pro forma basis compared to 2016, our income fromcontinuing operations before income taxes increased driven by higher net pricing, cost savings and lower marketing, general and administrativeexpenses, partially offset by cost of goods sold inflation, and lower shipment volumes. During the year we focused on gaining segment share inpremium, accelerating performance in above premium and stabilizing our below premium brand volume. In the premium segment, CoorsBanquet completed its eleventh consecutive year of volume growth. We also grew our share of the premium light segment with both Miller Liteand Coors Light . Miller Lite completed its thirteenth consecutive quarter of increased segment share which elevated the brand to the numberthree beer in America, according to Nielsen. Coors Light remained the number two beer and completed its eleventh consecutive quarter ofincreased segment share. In above premium, Blue Moon Belgian White grew during each quarter and continued to acquire incremental taphandles while Leinenkugel's was up low-single digits for the year, carried by Summer Shandy's best volume year in the brand's history. Ourbelow premium brand volumes showed a trend improvement relative to recent years led by the Keystone family.
• In our Canada segment, we drove positive pricing and mix resulting from lower year-over-year contract brewing volume. However, volumedeclined as a result of market pressure in Quebec and weak industry performance in Ontario. We reported income from continuing operationsbefore income taxes of $212.8 million in 2017 compared to a loss of $125.6 million in 2016 primarily driven by lower special charges due toindefinite-lived intangible asset brand impairment charges incurred in 2016 of $495.2 million , positive pricing, cost savings and favorableforeign currency impacts, partially offset by lower volume, cycling lower distribution costs from the prior year, cost inflation, higher brandamortization, and higher compensation expense.
• In our Europe segment, our continued portfolio premiumization and mix management positively impacted our performance as we grew volumesin our above premium brands. In 2017, we reported income from continuing operations before income taxes of $281.0 million , versus income of$149.7 million in 2016 , primarily driven by the first quarter 2017 reversal of the indirect tax provision which was recognized in the fourthquarter of 2016 and higher net pension benefits. We also grew our market share as brand volumes increased 10.3% in Europe.
• Our International segment reported a loss from continuing operations before income taxes of $19.7 million in 2017 , compared to a loss of $39.7million in the prior year, primarily driven by special charges as a result of total alcohol prohibition in the state of Bihar, India which resulted inan aggregate impairment charge of $30.8 million recorded in 2016. This improvement was also driven by the addition of the results of theMillerCoors Puerto Rico business, which were previously included as part of the U.S. segment, volume growth in several Latin Americanmarkets, and the addition of the Miller global brands. Overall improvements in the International segment were partially offset by the transfer ofroyalty and export volume to the Europe segment and the loss of the Modelo contract in Japan.
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