Steele v. Bulova Watch Co., Sup. Ct. 1952
Parties:
Bulova Watch Company - Plaintiff
Steele – Defendant/Petitioner
Facts:
Bulova registered a trademark in the US and sold its watches in
the U.S. Steele registered the mark Bulova in Mexico but the
mark was later cancelled but it continued to sell watches in
Mexico with the Bulova mark.
Steele purchased some of the
watch parts used by his company in the United States, and the
fraudulent watches often appeared back across the border in the
United States. Steele had initially registered the mark in
Mexico, but the Mexican Supreme Court upheld an administrative
ruling that had nullified that registration. Bulova sued Steele
in United States federal court for trademark infringement and
requested injunctive and monetary relief. The district court
judge held that the court lacked jurisdiction over the matter.
The appeals court reversed the lower court’s ruling, finding
that there was a cause of action under the Lanham Act. The
Supreme Court granted certiorari.
Issue:
Whether Steele’s conduct fell within the control of Congress by
virtue of the Lanham Act.
Analysis/Holding:
The intent of the Lanham Act, (15 U.S.C. §§ 1051–1127), is to
regulate commerce to prohibit the use of deceptive marks that
could mislead the public. "Commerce" is defined as "all
commerce which may lawfully be regulated by Congress." § 45, 15
U. S. C. § 1127. In this case, Steele’s Bulova registration was
cancelled so the Mexican trademark laws didn’t stand in the way
of U.S. action. Steele is a U.S. citizen and some of the
activity that Bulova complains about took place in U.S. (some
watches sold in Mexico made their way back to the United States
and the watch parts were being purchased in the United States).
Here, there are harms occurring in both countries. Both parties
were U.S. Citizens. Actions took place in both countries.
Comity of Nations - the principle that one sovereign nation
voluntarily adopts or enforces the laws of another sovereign
nation out of deference, mutuality, and respect.
Vanity Fair Mills v. T. Eaton Co., Court of Appeals, 2nd Circuit
1956
Facts:
Plaintiff manufactured women's clothing and used the trademark
"Vanity Fair" on its underwear. Defendant was a Canadian clothing
retailer that purchased plaintiff's branded merchandise and sold
it, properly branded, in Canada, but later used the same mark upon
its products. Plaintiff brought claims of trademark infringement
and unfair competition under the Lanham Act (the Act), 15 U.S.C.S.
§ 1051 et seq. The lower court dismissed all the claims, concluding
that subject matter jurisdiction over the Canadian trademark issues
was lacking and that those claims were intertwined with the
American issues.
Issue:
Whether the claim arises under U.S. law.
Analysis:
If you are a U.S. citizen, you have to abide by the laws in the
country where you are doing business. The remedies for trademark
infringement provided by the Lanham Act may not be applied
extraterritorially against foreign citizens for actions undertaken
in a foreign jurisdiction. The Lanham Act, (15 U.S.C. §§ 1051–
1127), protects the use of trademarks in commerce, and defines
commerce for trademark purposes as any commerce that may be
lawfully regulated by Congress. Although Congress may regulate
commerce between foreign nationals and United States citizens,
there is no evidence that Congress intended that the protections of
the Lanham Act should be extended for application over the actions
of foreign nationals undertaken in foreign jurisdictions.
This court in Steele v. Bulova Watch Co., 344 U.S. 280 (1952), did
hold that a federal court had jurisdiction to apply the Lanham Act
over the infringing actions of a United States citizen for actions
that occurred in Mexico, but that involved and had an effect on
commerce domestically. In this case, the alleged infringers are
Canadian citizens who hold a presumably valid Canadian trademark
registration, for actions that have occurred almost entirely in
Canada.
Holding:
In the absence of United States citizenship by the actors, or
substantial effect on domestic commerce, the Lanham Act should not
be given extraterritorial application. Two of the three factors of
the Bulova Test were absent here and one wasn’t enough to give
jurisdiction to US courts.
Disposition:
Dismissal affirmed.
Three Factor Bulova Test
These factors are used to determine whether U.S. District Court
can exercise jurisdiction over the dispute.
(1) the defendant's conduct had a substantial effect on United
States commerce;
(2) the defendant was a United States citizen and the United
States has a broad power to regulate the conduct of its
citizens in foreign countries; and
(3) there was no conflict with trade-mark rights established
under the foreign law
Sterling Drug, Inc. v. Bayer AG (2nd Cir., 1994)
Parties:
Sterling - Plaintiff
Bayer – Defendant
Facts and Procedural Background:
Bayer was a German company that held the rights to the mark
“Bayer” for pharmaceutical products in Germany and for the
majority of the rest of the world. The rights to the mark in the
United States were owned by Sterling Drug. Sterling sued Bayer
in the United States, alleging that Bayer had infringed on its
rights to the mark and had violated the agreement governing
those rights. The district court held that Bayer had violated
Sterling’s trademark and contract rights and enjoined Bayer from
using the mark in the United States, and abroad in any way that
might make its way to American consumers. Bayer appealed,
arguing that the injunction’s extraterritorial application
interfered with its rights under foreign laws.
Issue:
Whether federal courts may narrowly apply the protections of the
Lanham Act extraterritorially against foreign users of marks.
Analysis:
The District Court’s decision would have messed up Bayer’s
business all over the world, not just in the U.S.
Quotes:
While the stringent Vanity Fair test is appropriate when the
plaintiff seeks an absolute bar against a corporation's use of
its mark outside our borders, that test is unnecessarily
demanding when the plaintiff seeks the more modest goal of
limiting foreign uses that reach the United States. Though
Congress did not intend the Lanham Act to be used as a sword to
eviscerate completely a foreign corporation's foreign trademark,
it did intend the Act to be used as a shield against foreign
uses that have significant trademark-impairing effects upon
American commerce.
Holding:
Maybe in this case the parties could have developed some
disclaimer language. For example, Bayer AG is a registered mark
in Germany but Sterling is a registered mark in U.S.
McBee v. Delica Co., Ltd. (1st Cir., 2005)
Parties:
Cecil McBee – Plaintiff
Delica Co. - Defendant
Facts:
McBee was a successful and internationally renowned American
jazz musician. Delica Co. was a Japanese clothing retailer that
created and sold a line of girls’ clothing under the trade name
“Cecil McBee.” Delica obtained a Japanese trademark for that
name in both English and Japanese characters, and operated
retail stores and a website under the mark. The website was
viewable in the United States over the internet but consisted
almost entirely of Japanese characters.
Procedure:
At McBee’s request, the Japanese trademark office invalidated
Delica’s trademark, but it was later reinstated upon appeal.
Although Delica’s policy was to not sell any Cecil McBee
products in the United States, McBee was able to surreptitiously
have a few items shipped into the United States through the
efforts of Japanese-speaking investigators. McBee sued Delica in
federal court for false endorsement and dilution under the
Lanham Act. The district court dismissed the claims for lack of
subject-matter jurisdiction. McBee appealed, seeking a domestic
injunction against sales in the United States and against the
continued presence of the website on the internet in the United
States.
Analysis and Holding:
McBee sought injunction on sales, injunction on access to the
website, and damages from sales in the U.S. There haven’t been
substantial sales in U.S. and the question of whether the sales
in Japan caused confusion in Japan wasn’t an issue to decide
under U.S. Law. There was no evidence that the sales in Japan
had a substantial effect on U.S. Commerce. Just because any
website is in a foreign language and is visible to the U.S.
doesn’t automatically provide for jurisdiction in U.S. Courts.
Furthermore, purchases couldn’t even be made on the website.
McBee would have to show there was a substantial effect on U.S.
Commerce before it could invoke subject matter jurisdiction
under the Lanham Act.
The sales in the U.S. to McBee investigators didn’t constitute
damages. There was no confusion because the investigators knew
exactly where the products were coming from and who made them.
Holding:
Subject matter jurisdiction under the Lanham Act is proper only
if the complained-of activities have a substantial effect on
United States commerce, viewed in light of the purposes of the
Lanham Act.
Trader Joe’s Co. v. Hallatt (9th Cir., 2016)
Parties:
Trader Joe’s Co. – Plaintiff
Michael Hallatt - Defendant
Facts:
Trader Joe’s was a grocery store company that operated
distinctive stores in the United States selling mainly its own
branded products. Trader Joe’s did not franchise the sale of its
products or intellectual property and had numerous trademarks
for its logo and products, as well as trade-dress protections
for its store design. Hallatt was a Canadian who frequently
crossed the border to buy vast quantities of Trader Joe’s goods
at a Trader Joe’s store. Trader Joe’s learned that Hallatt was
reselling the products at a large markup in Canada, at a store
he had named “Pirate Joe’s” that sported a logo and store design
similar to Trader Joe’s. Hallatt refused Trader Joe’s request to
stop this activity and began using disguises and other
individuals to evade Trader Joe’s refusal to sell products to
him. Trader Joe’s sued Hallatt in federal court alleging
trademark infringement and unfair competition under the Lanham
Act and state law. The district court dismissed the complaints
for lack of subject-matter jurisdiction, and Trader Joe’s
appealed.
Analysis:
There is a two-step framework for determining whether any
statute, including the Lanham Act, reaches foreign conduct
(1)
Whether the statute gives a clear, affirmative
indication that it applies extraterritorially."
Where, as
here, Congress intended a statute to apply
extraterritorially, we proceed to step two and consider
"the limits Congress has (or has not) imposed on the
statute's foreign application."
(2)
We resolve two questions to decide whether the Lanham
Act reaches Hallatt's allegedly infringing conduct, much of
which occurred in Canada:
a. Is the extraterritorial application of the Lanham Act
an issue that implicates federal courts' subjectmatter jurisdiction?
b. Trader Joe's allege that Hallatt's conduct impacted
American commerce in a manner sufficient to invoke the
Lanham Act's protections? Because we answer "no" to
the first question but "yes" to the second, we reverse
the district court's dismissal of the federal claims
and remand for further proceedings.
Under Timberlane Lumber Co. v. Bank of America National Trust &
Savings Ass'n, , the Lanham Act applies extraterritorially if:
(1)
the alleged violations ... create some effect on
American foreign commerce;
(2)
the effect [is] sufficiently great to present a
cognizable injury to the plaintiffs under the Lanham Act;
and
(3)
the interests of and links to American foreign
commerce [are] sufficiently strong in relation to those of
other nations to justify an assertion of extraterritorial
authority.
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