Publication

Spring 2006Newsletter

When Does the U.S. Trademark Statute Apply to Infringement in Other Countries?

Intellectual Property Update

The U.S. Supreme Court held over 50 years ago that certain acts of infringement of U.S. trademarks would not escape liability under our federal trademark law (the Lanham Act) even though they take place in foreign countries. In that case an American defendant had made and sold spurious Bulova-labeled watches in Mexico, and the real Bulova Watch Co. sued in a U.S. court and won. But the assertion of extra-territorial Lanham Act jurisdiction is still regarded as an extraordinary act, and it is not entirely clear what circumstances will justify such jurisdiction. (Note: there does not appear to be similar extraterritorial jurisdiction over patent and copyright infringement.)

The most recent case to mark the bounds of such jurisdiction in a trademark case is McBee v. Delica Co., 75 U.S.P.Q.2D 1609 (1st Cir. 2005). In that case the plaintiff was Cecil McBee, who lives in the U.S. and is a jazz bassist with a distinguished career spanning over forty-five years. He has recorded over 200 albums, and has released six albums under his own name (including in Japan). He won a Grammy Award in 1989, was inducted into the Oklahoma Jazz Hall of Fame in 1991, and teaches at the New England Conservatory of Music in Boston.

He has performed worldwide, has toured Japan several times, beginning in the early 1980s, and has performed in many major Japanese cities, and continues to tour in Japan.

McBee has never licensed or authorized the use of his name to anyone, except in connection with his musical performances, as for example on an album.

The defendant Delica Co. is a Japanese clothing retailer. In 1984, Delica adopted the trade name "Cecil McBee" for a line of clothing and accessories primarily marketed to teen-aged girls. Delica holds a Japanese trademark for "Cecil McBee," in both Japanese and Roman characters, for a variety of products. Delica owns and operates retail shops throughout Japan under the brand name "Cecil McBee." Delica’s line of "Cecil McBee" goods has experienced steady growth in sales, and in 2002 Delica sold $112 million worth of "Cecil McBee" goods.

There are no "Cecil McBee" retail shops outside of Japan. No "Cecil McBee" goods have been shipped outside of Japan, except for some token shipments engineered by McBee’s own investigators. Delica's policy is to decline orders from the U.S.

Delica operates a website, http://www.cecilmcbee.net, which contains pictures and descriptions of "Cecil McBee" products, as well as locations and telephone numbers of retail stores selling those products. The website is created and hosted in Japan, and is written almost entirely in Japanese, using Japanese characters (although it contains some English words for special effect). The site does not allow purchases of "Cecil McBee" products to be made online, but it can be viewed from anywhere in the world.

When searches on Internet search engines (such as Google) are performed for the phrase "Cecil McBee," Delica's website generally comes up as one of the first few results, and occasionally comes up first, ahead of any of the various websites that describe the musical accomplishments of the plaintiff. Certain other websites associated with Delica's "Cecil McBee" product line also come up when such searches are performed. It is evident from the search results page that all these websites are written primarily in Japanese characters.

McBee retained a Japanese attorney, who asked Delica to cease using the "Cecil McBee" name. When Delica declined, McBee petitioned the Japanese Patent Office to invalidate Delica's English-language trademark on "Cecil McBee." The Japanese Patent Office at first ruled Delica's trademark in Japan invalid. However, Delica appealed to the Tokyo High Court, which vacated the decision of the Japanese Patent Office. On remand to the Japanese Patent Office, that Office reinstated Delica's registration of the "Cecil McBee" trademark. McBee then appealed that ruling to the Tokyo High Court and lost. The trademark reinstatement has become final.

The Japanese court’s rationale for finding in favor of Delica was (1) while Japanese law protects a person's full name from exploitation, McBee's full name, including his middle name, was "Cecil Leroy McBee," and thus the "Cecil McBee" line of products was not an exact copy of McBee's full name; and (2) McBee received no protection for the abbreviated version of his name, "Cecil McBee," because the name had not received sufficient recognition in general Japanese society.

McBee then brought the present suit in a U.S. federal court, hoping to take advantage of the Bulova doctrine to assert extraterritorial jurisdiction over Delica. He sought an injunction against sales into the United States and against the transmission of Delica’s website into the United States. He conceded that U.S. courts lacked jurisdiction to enjoin Delica's sales in Japan, but he argued that the U.S. court had jurisdiction over damage claims based on those same sales, assuming he could prove that he had suffered some economic damage therefrom. But McBee’s U.S. lawsuit also failed.

The U.S. court first noted that in the Bulova case, the mere fact that the defendant was an American citizen would have been sufficient to confer jurisdiction over his conduct, notwithstanding that it occurred in a foreign country. But in the McBee case the defendant was Japanese, not American.

Also, in the Bulova case there was evidence that American tourists had brought some of the defendant’s phony Bulova watches back home from Mexico, thus establishing a risk of harm to Bulova’s domestic reputation. But in the McBee case there was virtually no evidence of the Delica’s "Cecil McBee" brand of goods entering the United States after being sold in Japan.

In the absence of U.S. citizenship on the part of the defendant, the McBee court ruled that the Lanham Act grants subject matter jurisdiction over extraterritorial conduct only where the conduct has a substantial effect on United States commerce. Absent a showing of such a substantial effect, at least as to foreign defendants, the court lacked jurisdiction over the Lanham Act claim. The court then went on to apply this substantial effect test to the facts of the Delica case.

It held that the mere existence of a website that is visible in the U.S., and that gives information about a company and its products, is not enough, by itself, to subject a defendant to jurisdiction in the U.S. If Delica’s website had permitted on-line sales, the result might have been different, but that was not the case here.

As to McBee's claim for damages due to Delica's sales in Japan, the court ruled that it had no jurisdiction because these sales have no substantial effect on commerce in the United States.

McBee argued that Delica's Japanese clothing sales have confused Japanese consumers, thus hindering McBee's recording sales and his touring career in Japan, and that American courts have an interest in protecting American commerce, i.e., in protecting McBee from lost income due to the tarnishing of his trademark in Japan. But the court ruled that McBee had presented no evidence of such harm.

Finally, the court ruled that it did have jurisdiction over the token shipments of Delica merchandise which landed on these shores, but it found no trademark infringement with respect to these few shipments because they were all made to McBee's own investigators, who were brought in to assist in this litigation and therefore fully understood McBee's lack of relationship to Delica.

Comment: Our American trademark law has always been too insular to protect foreign trademarks from domestic appropriation by American businesses, unless those marks were “famous” in our country (and there is even some doubt about the vitality of the “famous marks” doctrine). Now perhaps that chicken has come home to roost.

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