UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK---------------------------------------------------------------------HAGGAR INTERNATIONAL CORPORATION,

doing business as

MONTANA FOOD INDUSTRIES,Plaintiff,-against-UNITED COMPANY FOR FOOD INDUSTRYCORPORATION, et al.,Defendants.---------------------------------------------------------------------X::::::::::::X03-CV-5789 (ARR) (CLP)NOT FOR PRINT ORELECTRONICPUBLICATIONOPINION & ORDERROSS, United States District Judge:On September 22, 2010, Magistrate Judge Cheryl L. Pollak issued a Report andRecommendation (the “R&R”) in this trademark infringement action, recommending thatsummary judgment be denied on the issue of fraud. On October 6, 2009, defendants timely filedobjections to the R&R pursuant to Rule 72(b)(2) of the Federal Rules of Civil Procedure.Having reviewed de novo those parts of the R&R to which defendants have objected, this courtnow accepts Judge Pollak’s recommendations and denies summary judgment.

I. BACKGROUNDA. Procedural History

Plaintiff Haggar International Corporation d/b/a MONTANA Food Industries(“Haggar”), a California corporation in the business of selling or distributing packaged Middle-Eastern vegetables bearing the trademark “MONTANA,” commenced this action in November2003. It alleges that an Egyptian food exporter, United Company for Food Industry Corporation(“United”), its U.S. subsidiary United Company for Food Industry, (USA) Corp., and aBrooklyn-based importer, Trans Mid-East Shipping and Trading Agency, Inc. (collectively,

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“defendants”) have violated the Lanham Act and New York State law by using Haggar’sMONTANA mark on their own vegetables. Defendants counterclaimed, alleging that United—not Haggar—is the owner of the trademark at issue, having created the mark in Egypt and usedthe mark on its exports throughout the world, including the United States.In December 2006, Haggar moved for summary judgment on defendants’ counterclaims,arguing that United had unreasonably delayed enforcing whatever rights it had in theMONTANA mark and that defendants’ counterclaims were therefore barred by the equitabledoctrines of laches and acquiescence. On referral from this court, Judge Pollak issued a Reportand Recommendation dated March 11, 2008, recommending denial of Haggar’s motion forsummary judgment on defendants’ counterclaims because there was a genuine issue of fact withrespect to whether Haggar had fraudulently procured registration of the MONTANA marks,since a party asserting the equitable defenses of laches and acquiescence must come into courtwith clean hands. In an opinion and order dated June 4, 2008, this court adopted Judge Pollak’sMarch 2008 Report and Recommendation and denied summary judgment for Haggar ondefendants’ counterclaims.

B. The Current R&R on the Issue of Fraud

In April 2009, defendants moved for summary judgment that Haggar had fraudulentlyprocured registration of the MONTANA marks. In relevant part and as set forth more fully inJudge Pollak’s R&R on this motion, familiarity with which is presumed, defendants claimed thatHaggar committed fraud on the United States Patent and Trademark Office (“PTO”) by assertingthat it owned the MONTANA trademark when it knew that United was the true owner of themark.Key to defendants’ argument is their claim that Haggar was United’s exclusive distributor

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in the United States. “[A]s between a foreign manufacturer and its exclusive United Statesdistributor, the foreign manufacturer is presumed to be the owner of the mark unless anagreement between them provides otherwise.” Ushodaya Enters., Ltd. v. V.R.S. Int’l, Inc., 63 F.Supp. 2d 329, 336 (S.D.N.Y. 1999). “A distributor . . . does not acquire a right of ownership inthe manufacturer’s or producer’s mark merely because it moves the goods in trade.” Patent andTrademark Office, Trademark Manual of Examining Procedure (TMEP), § 1201.06(a) (5th ed.2007); but cf. Tactica Int’l, Inc. v. Atlantic Horizon Int’l, Inc., 154 F. Supp. 2d 586, 600(S.D.N.Y. 2001) (presumption of trademark ownership in foreign manufacturer may be rebuttedwhere distributor “gives them the benefit” of its name or business style).Defendants claim that United registered trademarks featuring the word “MONTANA” inEgypt in 1986. During that same year it allegedly granted distribution rights for its MONTANAproducts to Mr. Alfi al Masri and began shipping directly to Mr. Sherif Boulos, Mr. al Masri’sson-in-law in the United States, and the incorporator and president of Haggar. According todefendants, Mr. Boulos entered into an oral agreement with United for Haggar to become theexclusive United States distributor for United foods bearing the MONTANA mark. They furtherallege that the agreement did not include the right to use the mark, and that the goods shipped toHaggar were not specially manufactured for Haggar.Haggar disagrees with defendants’ account of its business relationship with United.According to Haggar, no distributorship agreement was ever formed. Rather, Haggar contendsthat Mr. al Masri placed specific orders for goods from United and, upon paying for them,handled all details of exporting the goods to customers of his choice. In Haggar’s version of events, Mr. Boulos worked only with Mr. al Masri, never directly with United, and sold onlyproducts purchased by him in full.