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Elder Gallo Brothers Win Bitter Trademark Lawsuit

June 21, 1989|MARK A. STEIN | Times Staff Writer

SAN FRANCISCO — Ernest and Julio Gallo retained exclusive control of their family's trademark name when a federal judge in Fresno on Tuesday ordered the wine makers' younger brother, Joseph Gallo, to stop using his own name on a brand of cheese.

Ending a rancorous, insult-trading public dispute among members of the normally publicity-shy Gallo clan, U.S. District Judge Robert E. Coyle said in his 61-page order that the younger Gallo actively and unfairly schemed to exploit the valuable name recognition his brothers had cultivated over the last 30 years.

In the course of the legal battle, the wine-making Gallos accused their brother of running a rat-infested cheese plant; lawyers for Joseph Gallo, the cheese maker, countered with accusations that his brothers made cheap wine to sell to drunks.

The judge brushed aside the argument that Joseph Gallo has the right to his own name as a trademark, noting that because of his own misleading advertising "there is substantial evidence of actual confusion" among both retailers and consumers who thought the wines and cheeses were made by the same company.

Critical to the case were some notes made by a Joseph Gallo Farms marketing strategist, which the judge said confirmed the cheese maker's determination "to capitalize on the Gallo name and image"--an image cultured with $300 million worth of advertising over the years.

Even without that argument, the judge said, the wine-making Gallos had taken great care to develop a unique image, one they should not have to forsake only because theirs is a relatively common Italian name.

"If every person named Gallo were entitled to use Gallo as a consumer trademark, Gallo might be adopted as a trademark on any imaginable product," the judge wrote. "Such proliferation of uses would destroy the unique nature of the Gallo brand, its distinctiveness and its commercial value."

Coyle's order, filed Monday and made public Tuesday, gives the Joseph Gallo Cattle Co. of Livingston, Calif., 30 days to cease using "Joseph Gallo" as a trademark for its cheeses. However, his order lets the company use the name in less conspicuous type as long as a new brand name or logo is used as well.

No Jury

The judge spent six months preparing the legal opinion after presiding over a monthlong trial in Fresno that ended just before Christmas last year. There was no jury in the case because the older Gallos did not seek monetary damages--only an order stopping their brother from using the family name.

Joseph Gallo, who was rebuffed in September in a related legal effort to claim a one-third share in the winery started by his older brothers, declined to comment on the ruling. The 69-year-old rancher's lawyer, Denis Rice of San Francisco, said he will advise his client to appeal the decision.

The reclusive Ernest and Julio Gallo, 80 and 79 years old, also had no comment on the ruling. However, they insisted from the start that their lawsuit was filed without malice to protect their trademark and the company, Consolidated Foods, that is licensed to make Gallo-brand salami in cooperation with the winery.

At the same time, their company--E & J Gallo Winery of Modesto, Calif., by far the world's largest wine maker--issued a two-sentence statement: "The court has ruled in our favor, after extensive review of all the facts and law in the case. We are pleased the matter has been brought to a conclusion."

During the trial, relations among the brothers was not so decorous.

The elder Gallos said they had offered their brother a royalty-free license to use the family name if only he would allow regular inspections of his plant by the winery--just as the other licensee was checked. But Joseph refused, so his brothers produced an expert trial witness who characterized Joseph Gallo's cheese operation as shoddy and rodent-infested.

Joseph Gallo fired back by threatening to sue Ernest for slander, while his lawyers used their own experts to shoot down the tainted-cheese innuendo. They also challenged the quality of some of Ernest and Julio's wines, including the cheap, fortified "Thunderbird" and "Night Train" brands said to be favored by many street drunks.

Father Killed Mother

Such rancor was not always the way with the Gallos. After their father shot and killed their mother and then took his own life in 1933, the elder brothers raised Joseph themselves while starting up their wine-making empire with grapes from the family vineyard.

When Joseph was old enough, he became vineyard manager. He held the job for 18 years before striking off on his own as a grape grower and dairy cattleman not far away. He still sells wine grapes to his brothers.

Six years ago, Joseph Gallo expanded his dairy operation and built a cheese plant near Atwater, Calif. After a year of selling bulk cheese to other packagers, he began marketing his own Joseph Gallo brand Cheddar and Monterey jack cheeses. Cheese sales reached $30 million a year by 1987.

That success proved problematical when Joseph Gallo's cheese making appeared to be infringing on the expensive and exclusive cheese-making license his elder brothers had sold to another firm much earlier. When terse, tense negotiations failed, Ernest and Julio Gallo sued in April of 1986.

Joseph Gallo countersued four months later, asserting that his parents intended for him to share equally in the family vineyards that later grew into the billion-dollar-a-year winery. U.S. District Judge Edward Dean Price dismissed the suit, wryly noting that the best witness, the brothers' late father, "was out of reach of the court's process."

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