History of Events - Starbucks Litigation

The following is a summary of key events that have occurred between Starbucks and The Black Bear Micro Roastery.  We have included hyperlinks to the actual text of communications that we sent to Starbucks, but we will respectfully refrain from posting the text of their communications to us until, until such communications become a matter of public record.

 

[1]  August 13, 1997

Starbucks legal department contacts us by phone.

Polly Kim Close, corporate counsel for Starbucks, talks to Annie Clark and demands that we stop using the name Charbucks Blend, and that we pull all existing products with that name from supermarket shelves.

Polly was not at all rude, but is unmistakably threatening (as in implied lawsuit) in her demands.

[2]  August 13, 1997

Jim Clark called Polly Kim Close and discussed Starbucks concerns and demands.

The conversation was polite, but there was no give on the part of Starbucks, and Jim was not at all inclined to immediately give in to Starbuck’s demands.

Jim indicated that Black Bear would consider the issues, and get back to Starbucks with a formal response.

Jim also asked Polly to put Starbuck’s demands in a printed format.

[3]  August 15, 1997

Polly Kim Close faxed Starbucks demands to us.

[4]  August 21, 1997

We faxed our formal response to Polly Kim Close at Starbucks.

To view text of our response, click here.

[5]  September 9, 1997

Received a fax from Polly Kim Close at Starbucks.

Polly was responding to our August 21, 1997 fax.

She acknowledged that Starbucks was dealing with a “family” business, and offered to consider compensating us for the expenses that would result from their demands.

She requested product data, and estimated labor data from us to serve as a cost basis for their consideration.

[6]  We considered the possible offer from Starbucks, and sought the advice of our legal counsel, Steve Konowitz of Konowitz and Greenberg, 110 Cedar Street, Wellesley Hills, MA.

We subsequently authorized Steve to represent us in this matter.

[7]  October 1, 1997

Steve Konowitz notified Starbucks that his office was representing us, and that he would be responding by October 10, 1997.

[8]  October 10, 1997

Steve Konowitz responded to Starbucks.  The following are key aspects of the response:

All allegations of trademark infringement and dilution were denied.

Starbucks was asked to present, and document evidence to support their allegations.

It was made clear to Starbucks that we were not in a financial position to defend ourselves in trademark litigation.

Starbucks was asked for clarification as to the logistics of structuring a possible settlement.

To view text of the response, click here.

[9]  February 13, 1998

Since there was no further communication from Starbucks, I faxed Polly Kim Close at Starbucks in an attempt to get confirmation that Starbucks was not going to proceed any further with this matter.

Since so much time had passed, it seemed obvious that our use of  “Charbucks” was not an important issue to Starbucks.

We assumed that if they felt they were being damaged, they would have taken some sort of action to protect themselves.

            To view text of our response, click here.

[10]         April 10, 1998

John Rawls of Blanc, Williams, Johnston & Kronstadt, LLP at 1900 Avenue of the Stars, Los Angeles, CA contacted our attorney, Steve Konowitz.

John informed Steve that his firm was representing Starbucks in this matter, and wanted to reopen settlement discussions.

[11]         April 27, 1998

Steve Konowitz responded to John Rawls.

He reiterated his request for a settlement structure.

To view text of the response, click here.

[12]         After the April 27, 1998 response, we gave our consent for John Rawls to contact us directly in order to facilitate the settlement discussions.

[13]         During the first two weeks in May, 1998, we had a number of phone conversations with John Rawls.

John was a very reasonable and polite individual to deal with.

It seemed as though a settlement was going to be reached.  We agreed not to discuss any of the legal merits of the matter, but rather to focus solely on reaching an arrangement that would be equitable to both parties.

[14]         May 26, 1998

We received a Settlement Agreement draft from John Rawls.

The agreement was not what we expected, and it became clear that this matter was going to drag on, driving our legal expenses out of sight.

What we found specifically objectionable were two components of the proposal.

i)        Starbucks wanted to limit our total legal fee reimbursement to a total of $2,500, while we had already incurred over $1,300 in legal fees.

ii)       Starbucks wanted to limit our response to any inquiries about this matter to a “jointly developed statement”.  Just “developing” this statement could have cost us a considerable amount in legal fees, unless we quickly acceded to their initial wording, which couldn’t have been further from acceptability.

             

We were incensed that such a large company would attempt to maneuver us into a situation where virtually any terms could be extorted, because we wouldn’t be able to afford to do otherwise.

To make matters worse, they were trying to force us into silence ... “force” because we wouldn’t be able to afford to “develop” anything close to what we might consider a reasonable statement.

             

To be threatened with financially crippling litigation, for what was now close to nine months, and then to have them attempt to trap us and silence us, seemed far short of  “the American way”.

[15]         May 27, 1998

We faxed a response to John Rawls, and notified him that, amongst other items:

i)        All communication was to cease immediately.

ii)       We would not engage in any further negotiations with him.

iii)     Our attorneys were not authorized to engage in any discussions with anyone connected with Starbucks.

To view text of our response, click here.

[16]         [16] June 26, 1998

In direct opposition to our clear, May 27, 1998 notification to the contrary, John Rawls contacted us by mail in an attempt to drag us into further negations.

[17]         [17] July 6, 1998

We responded to John Rawls, and reiterated our May 27, 1998 position.

To view text of our response, click here.

[18]         November 11, 1998

John Rawls contacted us again by mail.  He demanded a reply by November 13, or they “would proceed accordingly”

[19]         June 26, 2000

John Rawls, now with Jones, Day, Reavis and Pogue at 555 West Fifth Street, Los Angeles, CA, contacted us by mail.

In the letter, John reviewed the history of our negations, reiterated Starbucks position, and inquired as to whether we had any interest in resuming negotiations.

We were asked to respond within seven days, or Starbucks “would proceed accordingly”.

[20]         We did not respond.

[21]         May 29, 2001

John Rawls contacted us by mail again.

This letter was essentially a copy of the June 26, 2000 letter, with the following differences:

i)        The letter stated that Starbucks would now reimburse us for $10,000 of our legal expenses.

ii)       There was a new Settlement Agreement draft.

             

The first problem was that we had asked, over two years ago, not to be contacted any further.

             

The second problem was that there was absolutely no reason to put any cap on our legal fee reimbursement amount, if they were intending to negotiate sincerely.

             

The third problem was that the $10,000 offer in his letter was directly contradicted by the terms being spelled out in the Settlement Agreement draft.  In that draft, the $10,000 was to cover all expenses associated with settlement, and our total expenses were now well in excess of $10,000.  While we would give John the benefit of doubt and assume the discrepancy was an honest mistake, we have to proceed as though clever deception was being employed.

             

The fourth problem was that, due to the three and a half years that had elapsed since this matter began, the product in question was now firmly established with our customer base, and we were not at all receptive to removing the product from circulation.

 

The fifth problem was that Starbucks pursuit of this matter has been so drawn out and casual, that it led us to the conclusion that they would merely harass us up to a point, and then let the issue die.  Since it had been made blatantly clear to them, over a year before, that we had absolutely no intention of acceding to their demands, it seemed obvious that they had no intention of litigating.  They had never produced the evidence repeatedly requested in the past, and there was certainly no reason for them to delay litigation, if they were actually incurring damages as a result of our actions.

 

The letter concluded with the, now familiar, threat to “proceed accordingly” if they didn’t hear from us “within seven days”

[22]         June 5, 2001

We responded in clear and unequivocal language.

To view the text of our response, click here.

[23]         July 2, 2001

Starbucks “proceeded accordingly”.

To view the complaint filed with the US District Court, Southern District of New York, click here.

[24]         We spent the following week researching the United States Code cited in the complaint.

It was our opinion, as it always had been in the past, that Starbucks had no basis in law to support their actions.

However, we discovered the rules of the court required us to hire an attorney to represent us every step of the way.

[25]         [25] We contacted many law firms that specialized in trademark litigation.

We were told essentially the same thing by every firm we talked to: We were right, but it could cost us hundreds of thousands of dollars to prove the point.

[26]         We were faced with a decision of either giving into Starbucks, or facing the possibility of a default judgment that would wipe us out.

[27]         We made the firm decision that we would not give in.

“We” included Jim and Annie Clark, and their two daughters Miranda and Ashley.

[28]         During our conversations with the trademark attorneys, a number of attorneys indicated that we might have insurance coverage under our commercial general liability policy.

While we had never heard of such coverage, we checked our insurance policy carefully, and called our insurance agent to inquire about the possibility of coverage.

It turns out they were correct … we are covered.

[29]         July 12, 2001

We filed a claim with our insurance carrier, Zurich.

[30]         July 19, 2001

Zurich notified us that coverage for our defense would be provided.

[31]         July 23, 2001

Zurich assigned the defense of our case to the law firm of Konowitz and Greenberg.

[32]         July 26, 2001

US District Court Judge Laura Taylor Swain orders a pre-trial conference to be held on November 2, 2001 at 11:15 a.m. in Courtroom 444, 40 Foley Square, New York, New York.

[33]         August 31, 2001

Our answer, and counterclaim to Starbucks complaint is filed with the Clerk’s Office of the US District Court, Southern District of New York.

To view our answer and counterclaim, click here.

[34]         October 18, 2001

Starbucks serves us with Initial Disclosures.

Contained in their Initial Disclosures is the following statement:

"... Starbucks is not currently aware of an insurance policy that would be liable to satisfy part or all of a judgment which may be entered in this action or to indemnify or reimburse  for payments made to satisfy the judgment. ..."

This statement is a prelude to a significant action taken by Starbucks attorney John Rawls on November 2, 2001.

To view Starbucks Initial Disclosures, click here.

[35]         October 22, 2001

We serve Starbucks with our Initial Disclosures.

To view our Initial Disclosures, click here.

[36]         November 2, 2001

Attorneys for both sides attend pre-trial conference in New York.

Judge Laura Taylor Swain orders corporate representatives from both sides to attend mediation on November 19, 2001 in New York.

This mediation will mark the first time any individual from Starbucks (other than lawyers) has ever had any contact with us.  No individual from Starbucks has ever made any effort to resolve this matter.

It is significant to note that during discussions between the attorneys present, John Rawls, attorney for Starbucks, made a direct threat to Michael Terry, our attorney.  Rawls threatened to drop Starbucks' claim for "damages" in an attempt to have our insurance carrier withdraw coverage for our defense it this litigation.  This threat was witnessed by one of our other attorneys, Mark Kaufman.

[37]         November 15, 2001

Both sides attended mediation at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, Room 1660, New York, New York.  Chief Magistrate Theodore Katz presided over the mediation.

While mediation proceedings are intended to kept confidential, there are discussions that took place which should be made public:

Steven Konowitz, our attorney, directly informed Judge Theodore Katz that John Rawls had made the afore mentioned threat made to Michael Terry.  When Jim Clark confronted John Rawls with the allegation that Starbucks was acting in a malicious manner, and attempting to make it impossible for us to defend ourselves, he stated that no one at, or representing Starbucks had any malicious intentions whatsoever.  He stated that Starbucks was simply using the legal system in a business like manner to protect their trademark, and he was not attempting to disrupt our insurance coverage in this litigation.

[38]         December, 2001

During December, it became apparent that the November 15 mediation had failed to produce a resolution.

[39]         February 1, 2002

Starbucks serves us with:

Plaintiffs' First Request for Admissions to Defendant. 

Plaintiffs' First Request To Defendant For The Production Of Documents. 

Plaintiffs' First Set of Interrogatories to Defendant.  To view, click here.

[40]         February 4, 2002

Starbucks serves us with:

Plaintiffs' Amended First Request for Admissions to Defendant.  To view, click here.

Plaintiffs' Amended First Request To Defendant For The Production Of Documents.  To view, click here.

[41]         February 8, 2002

Starbucks serves us with: Plaintiffs' First Amended Complaint.

Starbucks follows through with the threat made on November 2, 2001. (see [37] & [38])

To view Amended Complaint (with cover letter to Zurich), click here.]

[42]         March 12, 2002

Zurich Insurance notifies of intent to terminate coverage for defense of this litigation.   To view, click here.   Action on this notification requires Starbucks to file a motion with the Court, and for the Court to allow the complaint to be amended.

[43]         March 19, 2002

1.     Defendant’s Responses to Plaintiffs' Amended First Request for Admissions to Defendant.  To view, click here. 

2.     Defendant’s Answers to Plaintiffs' First Set of Interrogatories to Defendant.  To view, click here.

3.     Defendant’s Responses to Plaintiffs' Amended First Request To Defendant For The Production Of Documents.  To view, click here. 

 

[44]         March 28, 2002

Konowitz & Greenberg file Defendant's First Request for the Production of Documents.

[45]         March 28, 2002

DECLARATION OF JOHN C. RAWLS IN SUPPORT OF PLAINTIFFS' MOTIONS FOR LEAVE TO FILE AMENDED COMPLAINT AND LEAVE TO MODIFY PRE-TRIAL SCHEDULING ORDER is filed with the Court.  To view, click here.

The court's pre-trial scheduling order provided that all "amendments of right" were to be made by December 31, 2001

[46]         April 1, 2002

Starbucks files MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF'S MOTION FOR LEAVE TO FILE AMENDED COMPLAINT.  To view, click here.

[47]         April, 2002

Starbucks files motion with the Court to amend their complaint.  The motion must be ruled on by the court.  The court can either:

grant the motion;

deny the motion;

or schedule a hearing to hear arguments.

[48]         April 8, 2002

Starbucks sends results of survey to Konowitz & Greenberg.  Starbucks, not willing to commit to more than $2,500 for our legal fees in a 1998 settlement proposal, now spends $30,000 for a survey.  To view survey, click here.

[49]         April 10, 2002

Konowitz & Greenberg files opposition to Starbucks' motion to amend their complaint.  To view, click here.

[50]         April 18, 2002

Starbucks deposes Jim Clark in Manchester, NH.

[51]         May 24, 2002

Debra Bertone, Litigation Specialist for Zurich, sends registered letter which summarizes 2 1/2 months of research on the part of Zurich to support Zurich's intent to end our coverage for this litigation.  To view, click here.

[52]         June 5, 2002

Our response to Zurich's May 24, 2002 letter.  To view, click here.

[53]         June 20, 2002

Debra Bertone responds to the preceding (June 5, 2002) response.  To view, click here.

[54]         June 21, 2002

Our attorney, Michael Terry, sends letter to Chief Magistrate Theodore Katz.  To view, click here.

Judge Swain has referred pending discovery scheduling issues to Judge Katz 

[55]         June 5, 2002

Our response to Zurich's June 20, 2002 letter.  To view, click here.  

[56]        July 19 2002

Starbucks filed a Motion for Summary Judgment.

Summary Judgment is essentially asking the judge to enter a judgment without considering any further evidence.  It is important to understand that the current narrow interpretation of the Federal Trademark Dilution Act by the 2nd Circuit, does not require evidence in support of the plaintiffs' claims of trademark dilution.

Due to the voluminous amount of legal paperwork that will be generated from this point forward, we will no longer be posting documents.  We will post significant events as they occur.  Should documents be desired, please contact us and we will be happy to provide what ever we can.

[57]        August 22, 2002

We file the following items with the US District Court

  • Defendant's Opposition to Plaintiffs' Motion for Summary Judgment and Cross-Motion for Summary Judgment.

  • Defendant's Statement of Additional Material Facts Pursuant to Local Rule 56.1

  • Defendant's Memorandum of Law in Opposition to Plaintiffs' Motion and in Support of Defendant's Cross-Motion for Summary Judgment

  • Affidavit of Michael K. Terry

[58]         March 4, 2003

The United States Supreme Court renders a crucial decision that reverses the 2nd Circuit's narrow interpretation of the Federal Trademark Dilution Act.  What the Supreme Court has essentially affirmed is that all claims made in a court of law must be supported by evidence, the essence of "due process"..  To view the decision, click here.

[59]         March 4, 2003

In light of the March 4, 2003 Supreme Court decision, Michael Terry faxed Judge Swain, requesting that the parties be allowed to submit supplemental memoranda for consideration by the court

[60]         March 14, 2003

Judge Swain faxed the office of Konowitz & Greenberg, granting Michael Terry's request for the submission of supplemental memoranda.

[61]         March 28, 2003

Judge Swain denies Starbucks' 4/2/02 Motion to Amend.

This ends Starbucks attempt to extort an agreement from us by attempting to end our insurance coverage for our defense in this matter. To view order, click here.

[62]         April 9, 2003

Defendant's Supplemental Memorandum in Opposition to Plaintiffs' Motion for Summary Judgment and Support of its Cross-Motion for Summary Judgment is filed with the US District Court.

[63]         April 11, 2003

Plaintiffs' Supplemental Memorandum of Law in Further Support of Motion for Summary Judgment is filed with the US District Court.

[64]         September 28. 2004 

Judge Swain enters her Opinion and Order on: Starbucks' Motion for Summary Judgment, and our Cross-Motion for Summary Judgment.

Starbucks' Motion for Summary Judgment was denied on all counts.

Our Cross-Motion for Summary Judgment. was denied on all counts, except Count Five (violation of New Your General Business Law §§ 349 and 350) was granted.

[65]         November 19, 2004

Both sides attend a second mediation at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, Room 17A, New York, New York.  Chief Magistrate Theodore Katz presided over the mediation.

During the mediation, John Rawls (Starbucks' attorney), handed documents to Judge Katz, attorney Steven Konowitz, and Glenn Denzler (Zurich Claims Adjuster) a document in which Starbucks stipulates that no monetary compensation is being sought by Starbucks.  This is a "last minute" attempt by Starbucks to cause Zurich to withdraw coverage for our defense, and, failing that, to eliminate our Amendment 7 right to a trial by jury.

Also during this mediation, we held a conversation with a corporate representative for the first time since we were first contacted on August 13, 1997.  While the representative was deeply apologetic for the fact that we had not been initially contacted by a Starbucks' corporate representative, no progress was made.

[66]        March 15, 2005 through March 17, 2005

The trial is held Room 1305 in the United States Courthouse, 40 Centre Street, New York, NY - Judge Laura Taylor Swain presiding.  Starbucks did request a bench trial, which means Judge Swain will render the decision, rather than a jury.

[67]        December 22, 2005

Judge Swain enters her decision in our favor, on all counts, and request the Clerk of Court to close the case.

[68]        December 28, 2005

Clerk of Court enters Judgment.  To view the judgment, click here.

[69]        January 26, 2006

Starbucks files Notice of Appeal of Judge Swain's December 22, 2005 decision (Docket #: 06-0435-cv).