A few links that may help you with the information in this paper:
- TRIPS (Agreement on Trade-Related Aspects of Intellectual Property)
- Joint Recommendation...Well-Known Marks
- Information on the Community Trademark
- Community Trademark Regulations
- The Madrid Protocol
- Membership of the Madrid Union
If you are researching a similar topic, please drop me an email, as I'd enjoy a discussion on such. The usual caveat: Although I believe all information within this essay to be correct, I am not providing legal advice, and would urge anyone seeking such to contact their local bar office for a listing of qualified attorneys. Thank you.
Grupo Gigante: Policy Contradictions of Territoriality
II. Grupo Gigante SA de CV v. Dallo & Co., Inc.
III. Territorial Aspects of Trademark Law – An Introduction
IV. The Concept of Concurrent Use
A. The Tea Rose-Rectanus Doctrine
C. The Future of Concurrent Use
D. Concurrent Use and Grupo Gigante
V. International Territoriality & The Well-Known Mark
A. Paris Convention for the Protection of Intellectual Property
B. Agreement on Trade-Related Aspects of Intellectual Property Rights
C. Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks
VI. Territoriality in the U.S. Courts
A. Steele v. Bulova Watch Co. (1952)
B. Vaudable v. Montmartre, Inc. (1959)
C. Person’s Co., LTD. v. Christman (1990)
D. International Bancorp, LLC v. Societe des Bains de Mer (2003)
E. Empresa Cubanadel Tabaco v. Culbro Corporation (District Court; 2004)
VII. A Return to Grupo Gigante and the Ninth Circuit
VIII. Developments in the Second Circuit
A. Empresa Cubana del Tabaco v. Culbro Corporation (Circuit Court; 2005)
B. ITC Limited v. Punchgini, Inc. (2005)
C. De Beers LV Trademark Limited v. De Beers Diamond Syndicate (2005)
D. Almacenes Exito S.A. v. El Gallo Meat Market, Inc. (2005)
IX. Territoriality within the Lanham Act: Geography or Goodwill?
X. Issues within the Global Economy
B. Use as a Condition to Trademark Rights
C. Effective Marketplace Preclusion
D. Symmetry with Concurrent Use Rationale
A. The Adoption of an International Trademark
B. Continued Development of Regional Trademarks
C. Continued Development of Multinational Registrations
D. Continued International Influence on National Law
E. Expansion of the Well-Known Mark Doctrine – Origination vs. Expansion
F. Resolution of the “Bad Faith” Element
G. Development of Mechanisms Removed from Political Intervention
H. “The Golden Rule – Do unto others…”
Appendix A - Joint Recommendation
I. Introduction
It is beyond contradiction that the economy has become one of global focus, and although many commentators may point to relatively-recent innovations involving the Internet and international jet travel, issues surrounding the integrity of trademarks across national borders have challenged business and the legal profession for much longer. Even within the United States, geographical distinctions have seemingly vanished as the interstate highway system, a host of low-fare regional airlines, and the prominence of cellular phones have connected California to Connecticut and all points between.
In a simpler time, an undefined period of yesteryear, it may have been easier to identify individual pockets of economic activity and, within such, trademarks limited to specific geographies. As travel and communication have become more enhanced over the years, however, these isolated pockets have merged with their neighbors until the present, when it is questionable as to if there remain any such islands where commerce hasn’t reached.
Within this expanding economy, companies naturally desire to introduce their products to new populations of consumers, and in doing so wish to bring forward the brand names, advertising, and goodwill created for and by those items introduced into other markets. The issue becomes complicated when another party has previously utilized or registered a similar mark in that locale, as the situation forces a confrontation between the national aspects of trademarks laws and the underlying purpose of those laws. In addition, questions will arise regarding the intent of the second user of the mark to trade upon the goodwill of the first user’s reputation; a double-edged sword that requires subjective judgment as to why the second user adopted the mark and how well-known the primary mark was at the time the second use started.
II. Grupo Gigante SA de CV v. Dallo & Co., Inc. [1]
As a contemporary illustration of this concept, the 9th Circuit Court of Appeals has recently opined on the case of two grocery store chains, both named “Gigante.” The senior user, Grupo Gigante, started using the mark in 1962, and had expanded to nearly 100 stores by 1991, the year in which the junior user, Dallo & Co., opened its first store in San Diego. Twenty miles separated the senior and junior users, likely an easy case if considered solely under U.S. law, but a situation made much more complex by the presence of the U.S.-Mexican border running between them.
In 1995, Grupo Gigante explored entry into the California market, and in so doing, learned of the use by Dallos. Grupo Gigante did not contact Dallos concerning the “GIGANTE” name until they decided to actually enter the California market in 1998. In the interim period, specifically October 1996, Dallos opened a second store in San Diego. No federal registrations were at issue, most likely because no interstate commerce was involved, but both parties registered the mark with the state of California: Grupo Gigante in June 1998, Dallos in July 1998.
Grupo Gigante opened two stores in the Los Angeles in 1999, and a third in 2000. After the first opening, Dallos forwarded a cease-and-desist letter demanding that Grupo Gigante cease using the “GIGANTE” name. The latter instead filed the instant suit seeking declaratory judgment as its superior right and an injunction against Dallos continued use.
The district court found for Grupo Gigante, finding that their mark had acquired secondary meaning, and that such satisfied the well-known mark exception to the territoriality principle. The court found, however, that laches barred Grupo Gigante barred enforcement of priority against the two Dallos stores already in operation, citing the delay after Grupo Gigante first learned of the Dallos use.
On review, the Ninth Circuit Court of Appeals remanded, allowing that a well-known mark exception to territoriality did exist, but stating that the district court had not applied the correct standard. Per the appellate court, secondary meaning as applied by the district court was a proper measure when adjudging a mark within the United States, but “where the mark has not before been used in the American market, the court must be satisfied, by a preponderance of the evidence, that a substantial percentage of consumers in the relevant American market is familiar with the foreign mark.”[2]
This case provides a contemporary backdrop for analyzing the disparate standards applied to conflicting marks within the United States versus the situation where a mark in the United States is being used in conflict with a foreign mark. Although Grupo Gigante embodies many of the elements pertinent to the broader discussion, its facts are limited in some respects,[3] and alternate case law and commentaries will be examined.
Before delving into the analysis of the Grupo Gigante decision, it is appropriate to review the evolution of two seemingly-contradictory geographical doctrines, and in doing so to analyze the policy components that have guided these doctrines to their present form.
III. Territorial Aspects of Trademark Law – An Introduction
Absent any application of law, a trademark embodies the goodwill garnered via the mark’s use in commerce, the reputation assigned to it amongst the grouping of consumers that have experienced the product or service. Under this simplistic method of evaluation, the only geographical boundaries imposed are those dictated by the mark itself and the extent to which its consumers carry the goodwill to others. Although a company may have a limited area of impact based upon a combination of internal and external constraints, the societal changes noted above may carry the mark’s reputation far outside this area.
It is certainly conceivable that two parties might innocently arrive to the same mark for similar goods, and it is equally conceivable that a second party might recognize the potential of a remote mark and opt to introduce it to the local market without any reference to the first user. Dependent upon the relative areas of trade, the two marks may co-exist in commerce without any impact on one another, and each may continue to build goodwill within their respective markets. Should one of the parties wish to expand geographically, however, a conflict will almost certainly arise regarding who has the greatest right in the mark.
The question of territoriality, in this circumstance, is answered with reference to the goodwill underlying each mark within both the current and prospective markets. By itself, this is a complex issue that requires a somewhat subjective determination of the marks’ present geographic impacts, as well as estimates regarding the future expansion of each. In the modern world, these determinations are made more difficult in light of a business’ ability to almost instantaneously employ a mark worldwide through the Internet and establish goodwill in areas that may have been unreachable just a decade prior. Again, absent any introduction of law, the decision regarding priority in a mark is one of equity, and a quest befitting Solomon himself.
In a utopian environment, territoriality would be defined solely by goodwill, but yet another complicating factor arises through the governance of rights via national laws. This distinct definition of territoriality limits the purely equitable approach by introducing separate legal rights as dictated by each country’s own laws, and although numerous international agreements have sought to align the procedures for securing trademark rights, it still remains necessary, with limited exception,[4] to gain and defend rights on a country-by-country basis.
Allowing that there is a disconnect between the natural expansion of goodwill and geographical boundaries, determination of a solution necessarily requires understanding as to how courts would resolve a conflict occurring solely within the United States, then further comprehension as to how the decision would differ if addressed against foreign marks seeking recognition and enforcement within the United States.
IV. The Concept of Concurrent Use
As established, goodwill is not necessarily constrained to geographic or political boundaries, as it seeks to expand to the reputation of the product itself. In a society that has progressively become more mobile, more connected, and more enabled to find items that may have previously been remote in nature, the mark owner may not be able to accurately gauge precise areas of impact.
Within the U.S., it became apparent that circumstances existed wherein two parties could arrive to the same or similar marks for the same goods, prompting a balancing of avoidance of confusion with the protection of each party’s goodwill in the respective marks. Compounding the issue was the allocation of geographies where neither party has built a reputation, prompting the judicial system to determine an equitable division. In the event that one of the involved parties had secured a federal registration, the solution was somewhat facilitated, but as shown below in the Dawn Doughnut circumstance, there were situations in which even the federal registration didn’t permit the rights holder to immediately demand the alternate user to cease use of the mark.
Again, although the conceptual premise of concurrent use makes a degree of sense in any territorial mark dispute, it is a domestic policy under the Lanham Act. As will be shown below, it has certainly influenced opinions regarding the international use of marks, but as the latter abuts a series of national laws, rights are generally determined on a country-by-country basis under those laws.
A. The Tea Rose-Rectanus Doctrine
Within U.S. trademark history, two cases decided in the early twentieth century established the basis for concurrent use jurisprudence, now encapsulated within the Tea Rose-Rectanus doctrine, a name derived from the subject marks and parties to these cases.[5]
The “TEA ROSE” case involved the right to use that mark in connection with the sale of flour in Alabama. The Court, after introducing the basic function of trademark law,[6] stated one of the guiding principles regarding rights in a trademark itself: “[I]t is plain that in denying the right of property in a trademark it was intended only to deny such property right except as appurtenant to an established business or trade in connection with which the mark is used.”[7] More simply put, rights in a trademark vest through its use, a concept firmly embedded in the Lanham Act codified in 1946,[8] and act to protect the goodwill underlying the trademark, not the trademark itself.
Before addressing itself more specifically to the facts applicable to the joined parties within Hanover, the Court summarized its position on priority of use as follows:
“In the ordinary case of parties competing under the same mark in the same market, it is correct to say that prior appropriation settles the question. But where two parties independently are employing the same mark upon goods of the same class, but in separate markets wholly remote the one from the other, the question of prior appropriation is legally insignificant; unless, at least, it appear that the second adopter has selected the mark with some design inimical to the interests of the first user, such as to take the benefit of the reputation of his goods as to forestall the extension of his trade or the like.”[9]
In the first part of its ruling, the Court found that the Allen & Wheeler Company may have had previous sales into Alabama, but that a prolonged absence from that market had essentially stripped it of the right to maintain a trademark infringement action against Hanover, who had since established a substantial presence in that state using the “TEA ROSE” mark.
Metcalf had attempted to enter the Alabama market utilizing the same mark, albeit with change in the sourcing noted on the label. In ruling against Metcalf, and overturning the lower court, the Court found that even if Steeleville (Metcalf’s source) had prior rights to the “TEA ROSE” mark, the rights were not in the Alabama market, and further that Metcalf had intended to trade upon the reputation of Hanover by adopting a similar label.
Two years after the Hanover decision, the Court revisited the issue of concurrent use when it considered the rights to the “REX” trademark.[10] Therein, a predecessor to United Drug marketed a dyspepsia remedy under the mark in Massachusetts, later receiving a federal registration. In the interim, prior to the federal registration, a druggist nicknamed “Rex” (apparently short for Rectanus) in Louisville, Kentucky began selling a blood purifier under the same mark. United Drug objected to this use when it desired to enter the Louisville market nearly two decades after Mr. Rectanus initiated his use. In allowing the latter to continue his use in the Louisville market, the Court stated:
“Undoubtedly, the general rule is that, as between conflicting claimants to the right to use the same mark, priority of appropriation determines the question. But the reason is that purchasers have come to understand the mark as indicating the origin of the wares, so that its use by a second producer amounts to an attempt to sell his goods as those of his competitor. The reason for this rule does not extend to a case where the same trade-mark happens to be employed simultaneously by two manufacturers in different markets separate and remote from each other, so that the mark means one thing in one market, as entirely different thing in another. It would be a perversion of the rule of priority to give it such an application in our broadly extended country that an innocent party who had in good faith employed a trade-mark in one state , and by the use of it had built up a trade there, being the first appropriator in that jurisdiction, might afterwards be prevented from using it, with consequent injury to his trade and goodwill, at the insistence of one who theretofore had employed the same mark, but only in other and remote jurisdictions, upon the ground that its first employment happened to antedate that of the first-mentioned trader.”[11]
Through these two cases, the Supreme Court established a doctrine that recognized the locality of trademark use, even when subsequent federal registrations granted a nationwide right. The combined effect of these rulings is to protect those that innocently and independently develop goodwill in a mark prior to the assertions of superior right.[12]
The Tea Rose-Rectanus doctrine remains guiding law nearly a century after the events there under. §2(d) of the Lanham Act allows for the registration of concurrent marks where “confusion, mistake, or deception is not likely to result from the continued use by more than one person of the same or similar marks under conditions and limitations as to the mode or place of use of the marks or the goods on or in connection with which such marks are used.”[13] Further, the Director is charged with establishing the conditions, including geographical limitations, applicable to the concurrent rights.[14]
The Tea Rose-Rectanus doctrine and the codification of concurrent use are concerned with assuring that the innocent adopter of a mark prior to another’s federal registration is not foreclosed from utilizing the mark in the area where the innocent user had established goodwill. These are equitable concepts that attempt to balance the creation of an exclusive trademark right.[15]
One of the primary purposes for registering a trademark is to inform other users of the exclusive right, thereby precluding the “innocent adopter” protection noted above. Some courts, however, desired to extend equity even to those that failed to take notice of a prior registered trademark, and thereby created equity in a mark after constructive notice that the mark was exclusively owned by another.
In 1959, the Second Circuit considered the circumstance of the Dawn Doughnut Company, a marketer of doughnut mixes headquartered in Michigan, which owned a federal registration for “DAWN” dating to 1927.[16] The defendant in the case, Hart‘s Food Stores, innocently utilized the same mark in doughnut sales within a 45-mile radius of Rochester, New York, with such use beginning in 1951. A strict application of the Lanham Act in this circumstance would have required Hart to cease use of the mark.
The court determined, however, that such a result was not appropriate given that Dawn Doughnut had not expanded to the Rochester marketplace, and held that “no likelihood of public confusion arises from the concurrent use of the mark in connection with retail sales of doughnuts and other baked goods in separate trading areas.”[17] This ruling did not create a permanent right of concurrent use, however, as the court also stated that
“the fact that the defendant employed the mark ‘Dawn,’ without actual knowledge of plaintiff’s registration, at the retail level in a limited geographical area of New York state before the plaintiff used the mark in that market, does not entitle it to either exclude the plaintiff from using the mark in that area or to use the mark concurrently once the plaintiff licenses the mark or otherwise exploits it in connection with retail sales in that area.”[18]
In other words, Hart’s could continue to build goodwill under the “DAWN” mark in the Rochester, but it enjoyed no permanent right should Dawn Doughnut decide to move into that market. The goodwill would thereby be ceded to Dawn Doughnut at that time, and equity placed the risk of loss upon the party that could have avoided the conflicting use in light of a previously-registered superior right.
The Ninth Circuit, the same court ruling upon Grupo Gigante, had applied similar logic to a case decided previous to the better-known Dawn Doughnut ruling, and had determined that the junior use did not impact the trademark owner’s immediate rights.[19] Although this equitable stance has been adopted by other circuit courts, it is not absolute. The Sixth Circuit, for example, found in one case that the junior user of the mark “CARMAX” could not continue its use despite the fact that the trademark owner was not using and had no definite plans to expand within the relevant market.[20]
In the limited context of the Dawn Doughnut Rule, the increased cross-market reach of the Internet creates some speculation as to the availability of this equity result. Adapting the fifty-year-old facts of Dawn Doughnut to a modern business environment where the company may have chosen to utilize the Internet as an addition to its traveling sales staff, the court may have had a more difficult determination as to the mark’s ownership in the Rochester market.[21] Regardless, the rule survives as an illustration of the efforts of the courts to arrive at an equitable result even where it appears that superior exclusive rights have been established via a federal registration.
C. The Future of Concurrent Use
As noted above, the economics of the world have changed, and of course the same may be said of domestic commerce. Whereas Massachusetts and Kentucky may have been geographically-distant in 1915, it is questionable as to if they would be so deemed today. Still, the true test lies not solely with the geographical delineations, but rather those distinctions coupled with the marks in question. Economic realities dictate that many companies will focus first on developing a local reputation, and expand only when their capital structure permits them to further exploit the goodwill developed locally.
Arguably, the Internet has facilitated even a purely local concern to establish a national, and indeed worldwide, presence, but it remains a question of evidence as to if such use is “in commerce” and if that use has garnered the requisite goodwill. A mark may be represented on a webpage and accessible from anywhere, but may have no significant impact on consumer confusion.[22] A recent TTAB decision further questions the survival of concurrent use registrations in this light,[23] but as courts are acclimated to making evidentiary rulings, the issue does not appear to endanger concurrent use registrations to the degree highlighted therein.
D. Concurrent Use and Grupo Gigante
Foremost, there is no true applicability of the concurrent use doctrine to the Grupo Gigante case, although it is easy to understand how the district court arrived at the same secondary meaning standard for the famous mark exception. The cases underlying the Tea Rose-Rectanus Doctrine involved markets from Ohio to Alabama and Massachusetts to Kentucky, respectively. Grupo Gigante involved two geographies that are twenty miles apart, close enough that they may otherwise be classified as a single market. Given the similarities in demographics, the court was justified in finding that the “GIGANTE” mark as employed by Dallos in San Diego, California would likely cause confusion with that originally utilized in Tijuana, Mexico by Grupo Gigante.
Although concurrent use is a trademark concept applied to solely domestic trademark law, the policy embodied therein addresses itself more to the definition of territoriality that is exclusive of political boundaries and instead concentrated on the expansion of goodwill attributable to the mark itself. As commerce seeks to expand without respect for national boundaries, secondary meaning illustrates an equitable basis for the granting of trademark rights.
The international community has recognized the potential for consumer confusion, as well as the adoption by another of a mark made “famous” in another jurisdiction. Its efforts to address such are addressed in the next section.
V. International
Territoriality & The Well-Known Mark
Internationally, issues of confusion arise between users of similar marks within different countries, an accelerating issue as the world becomes figuratively smaller in an economic context. Recognizing such, the international community has responded through various treaties and guidance designed to create uniform treatment of qualified well-known marks.
A. Paris Convention for the Protection of Intellectual Property[24]
The Paris Convention was drafted in a manner that stressed the political aspects of territoriality, as it allowed for national treatment of the obligations that it established. Article 2(1) requires that a signatory of the Paris Convention may not demand higher standards for protection that those extended to its own citizens.[25] Strictly read, this Article implies that a member may discriminate against those countries that have not joined the Paris Union by refusing protection outright or demanding that other conditions by satisfied.[26]
National treatment is very apparent in Article 6, which makes two primary statements regarding the registration of a mark. Foremost, 6(1) allows that “[t]he conditions for the filing and registration of trademarks shall be determined in each country of the Union by its domestic legislation.”[27] This rule is conditioned by 6(2), by which a Union member may not deny an application or registration on the basis of the mark’s status in the country of origin.[28]
The second primary point can be found in Section 3, which establishes independence of the mark in plain language: “[a] mark duly registered in a country of the Union shall be regarded as independent of marks registered in the other countries of the Union, including the country of origin.”[29] There are two instances wherein this absolute independence is disregarded in favor of efficiency and facilitation of procurement.
Foremost, because trademark rights are based primarily upon national law, it is possible that a mark utilized in one country may not be eligible for protection in another. For example, whereas a mark in a certain form may be protectable in one member country, law in the country wherein expansion is sought may prohibit such a form. Article 6quinquies was structured to break down this inefficiency, which would essentially operate to restrict an owner from expanding the goodwill attached to a particular mark into a foreign jurisdiction. This article states, “[e]very trademark duly registered in the country of origin shall be accepted for filing and protected as is in the other countries of the Union, subject to the reservations indicated in this Article.”[30] The delineated exceptions include where the mark “as-is” would infringe third-party rights in the country where protection is desired, where they are “devoid of distinctive character” or have become generic, or where the mark is contrary to public order or morality.”[31]
The second exception allows for a temporal shift rather than an overruling of national law. Article 4 mandates a six-month period of priority from the first application in a member state wherein the owner of that application may elect to file within other member countries and maintain the original application date.[32] The effect of this provision creates a period wherein a national entity may be the first to utilize a mark domestically, yet may find that right to continued use obviated where the foreign application predates the domestic use or registration.[33]
Pertinent to the discussion on the well-known marks doctrine, Article 6bis acknowledges national treatment while requiring members to invalidate domestic marks constituting imitations of extraterritorial marks that have gathered the requisite fame. This provision states:
“The countries of the Union undertake ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith.”[34]
Perhaps the most important aspect of this provision regards the question of fame to be resolved as pertinent to the country wherein imitation is alleged, versus the fame in the country of origin or other nations where protection has been extended. This distinction subjects each member to the obligation of determining what constitutes a “well-known mark” and thus embraces national treatment even as it requires acknowledgement of foreign rights.
B. Agreement on Trade-Related Aspects of Intellectual Property Rights[35]
Hereinafter referred to as TRIPS, this agreement incorporates the nationality principle through its Articles 3 and 4, and requires that each subscribing country extend parallel treatment to the nationals of another.[36] TRIPS incorporates the principles articulated in the Paris Convention, and Article 15 addresses several aspects of what constitutes protectable subject matter.[37]
With respect to famous marks, Article 16 makes three key pronouncements. The first, through 16(1) allows that,
“The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion”[38]
This same provision allows for the presumption of a likelihood of confusion where an identical mark is utilized for the same goods or services.[39]
As regards well-known marks, TRIPS makes two direct references modifying Article 6bis of the Paris Convention. Article 16(2) extends protection to service marks, and guides that “[i]n determining whether a trademark is well-known, Members shall take account of the knowledge of the trademark in the relevant sector of the public, including knowledge in the Member concerned which has been obtained as a result of the promotion of the trademark.”[40] Article 16(3) further extends protection where the goods or services underlying the mark are not the same “provided that use of that trademark in relation to those goods or services would indicate a connection between those goods or services and the owner of the registered trademark and provided that the interests of the owner of the registered trademark are likely to be damaged by such use.”[41]
TRIPS broadened the protections available for well-known marks while maintaining determination under the likelihood of confusion standard articulated therein. As with the Paris Convention, national treatment principles required the determination of well-known status to be made within each member.
C. Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks[42]
The preamble to this document established it as an advisory element with permissive application when it states,
“The Assembly of the Paris Union for the Protection of Industrial Property and the General Assembly of the World Intellectual Property Organization (WIPO), Taking into account the provisions of the Paris Convention for the Protection of Industrial Property relative to the protection of well-known marks; Recommend that each Member State may consider the use of any of the provisions […] as guidelines for the protection for well-known marks.”[43]
The Joint Recommendation, through its Article 2, allows that “in determining whether a mark is a well-known mark, the competent authority shall take into account any circumstances from which it may be inferred that the mark is well known.”[44] It then proceeds to outline several specific elements, identified as being not an exhaustive list, that might be considered in the determining a mark as well-known.
Article 2(1)(b) allows for consideration of factors including the degree of knowledge of the mark with the relative public, duration and geographic extent of the mark and promotion of the same, applications and registrations regarding the mark, including successful enforcement of such, and the mark’s value.[45] Article 2(2)(a), without placing heightened importance on the element, suggests that the relevant public to be considered includes actual and potential users of the goods and services applicable to the mark and/or those persons involved in the distribution and business environments of those goods.[46] Article 2 continues to specify that if a mark is determined to be well known in one relevant sector, it should be considered as such overall, and if a mark is merely known, the member may regard it as well known permissibly.[47]
Respecting the Paris Convention and TRIPS, the Joint Recommendation does not permit consideration of use, registration, or application therefore in the member state, nor does it allow well known status to be derived from such in a foreign jurisdiction.[48] A member may not require that a mark be known by the public at large as a condition of being well-known.[49]
Article 4(1)(a) incorporates TRIPS Article 16(1) in gauging the conflict of competing marks in the circumstance where both the mark and goods and/or services underlying such are similar.[50] Whereas Article 16(3) of TRIPS extended protection to situations where the goods and/or services were dissimilar provided damage to the mark owner, the Joint Recommendation followed suit and specified that “damage” could be found in the following circumstances:
“(i) the use of that mark would indicate a connection between the goods and/or services for which the mark is used, is the subject of an application for registration, or is registered, and the owner of the well-known mark, and would be likely to damage his interests;
(ii) the use of that mark is likely to impair or dilute in an unfair manner the distinctive character of the well-known mark;
(iii) the use of that mark would take unfair advantage of the distinctive character of the well-known mark.”[51]
In conjunction with its mandate that member states protect well-known marks against competing marks, the Joint Recommendation allows that bad faith may be considered as an element.[52] As will be further examined in the historical case law within the U.S., this element has been the subject of some controversy.
Whereas the Joint Recommendation was exactly that, a recommendation, the recognition of well-known marks remains a question for consideration within the judiciary, and the following outlines the development of such within the United States.
VI. Territoriality in the U.S. Courts
Territoriality as applied to political boundaries within the trademark dimension encompasses several sources of law. As noted above, the U.S. is a signatory to several relevant treaties regarding the treatment to be afforded to both domestic and foreign trademarks, and the components thereof have been woven into the Lanham Act as the source of rights for trademark holders in the U.S. As with all statutory enactments, the next challenge regards how the courts will interpret the Lanham provisions, and ultimately influence the next developments, for example, by assigning equitable principles reminiscent of the Tea Rose-Rectanus cases.
There are, of course, variances of opinion as between the different circuit courts, but within these variances it is possible to view the evolution of several key concepts in territoriality. Beyond the basic factual inquiries as to degrees of similarity as between marks, two questions guide the territoriality discussion: where the use of both marks occurred and where the mark had previously gathered goodwill. The former speaks to extraterritoriality, as U.S. law typically applies to marks within the U.S., whereas the latter speaks to the well-known mark exception, requiring a degree of goodwill to be present to prompt judicial intervention.
The following cases represent the stepping stones leading, with some diversion, to the famous mark exception noted in 9th Circuit’s opinion to Grupo Gigante.
A. Steele v. Bulova Watch Co. (1952).[53]
This case tested the constructs of the Lanham Act by determining its effect on potentially infringing activity occurring outside of the United States. Herein Steele, a U.S. citizen, registered the “BULOVA” mark in 1933 within Mexico to capitalize on the advertising done by the Bulova Watch Company (“BWC”), based in New York and holder of a valid U.S. registration. Steele imported Swiss and U.S. parts, then assembling and distributing them in Mexico under the “BULOVA” mark. BWC sought on injunction of that activity, the affixation of an identical mark bearing a valid registration and occurring solely within a foreign jurisdiction.
In considering the reach of U.S. law in this circumstance, the Supreme Court stated, “[A]cts in themselves legal lose that character when they become part of an unlawful scheme. (…) In sum, we do not think that petitioner by so simple a device can evade the thrust of the laws of the United States in a privileged sanctuary beyond our borders.”[54] The Court considered three primary factors in its decision, the foremost being overall impact on U.S. commerce, which the Court deemed evident via the factual circumstances wherein inferior products impacted the U.S.-registered mark. As Steele was a U.S. citizen, the Court found the authority over his extraterritorial actions, and as the Mexican registration was cancelled by that government in a separate action, there was no conflict of laws. Steele was enjoined from subsequent use of the mark.
The Second Circuit employed these tests in a subsequent case involving women’s undergarments and the mark “VANITY FAIR.”[55] Different in that case was the lacking of the second and third factors, as although the effects on commerce were evident, the Court found that the defendant was a foreign person and that there was a conflict of laws where the foreign trademark authority had affirmed the mark. In its opinion, the Court summarized the tests’ applications by stating “that the remedies provided by the Lanham Act, other than in §44, should not be given an extraterritorial application against foreign citizens acting under presumably valid trade-marks in a foreign country.”[56]
B. Vaudable v. Montmartre, Inc. (1959)[57]
Concerning the use of the mark “MAXIM’S” as relating to restaurant services, this case is frequently cited as authority for the well-known mark exception to the territoriality principle. Therein, the defendant was engaged in the restaurant business in New York and adopted the name and trade dress of the Maxim’s restaurant in Paris. Although the opinion states that “there is no doubt to its unique and eminent position as a restaurant of international fame and prestige,” the court only alludes to its rationale in finding such by concluding it “well known in this country, particularly to the class of people residing in the cosmopolitan city of New York who dine out.”[58]
At this early stage in utilization of the territoriality exception, it is notable that the court makes the following observation: “”Whatever the source of the name, it is the origination and development of its use in a particular field which may entitle the user thereof to protection by virtue of the secondary meaning acquired therein.”[59] Probative was the use of several distinctive elements associated to the Parisian version of the restaurant, which the court concluded was a deliberate attempt to appropriate the plaintiff’s goodwill.
The opinion rendered in this case was quite short in comparison to later cases dealing with the well-known marks exception, in large part because the court felt no need to establish notoriety outside of the simple statement of facts recited above. Implicit in the court’s opinion, however, was the finding that the mark had to be well-known in the country where the second use occurred, a requirement essential to the finding that Montmartre was attempting to trade upon the original restaurant’s goodwill.
C. Person’s Co., LTD. v. Christman (1990)[60]
In 1990, the Federal Circuit handed down its decision in the above case, which concerned a set of facts similar to those in the instant case, if not involving greater geographical distances. Therein, Takaya Iwasaki began the use of the mark “PERSON’S” on clothing within Japan in 1977, and established Person’s Co., LTD in 1979 to market this clothing. Christman visited a Person’s store in 1981, and returned to the United States with several items bearing the mark. Upon discovering that the mark was not claimed in the United States, Christman began sales of clothing bearing a similar mark in April 1982, and registered for a federal trademark in April 1983, which issued in September 1984 for use on clothing.
Thereafter, Person’s Co. sought to expand into the United States, having gained a significant level of recognition in the Japanese market. In August 1985, a federal trademark was issued for the “PERSON’S” mark for luggage, clothing, and accessories, classes similar to those granted within the Christman registration.
Both parties acknowledged subsequent confusion in the marketplace and both asserted a superior right to the mark in the following legal action. The Trademark Trial and Appeals Board (“TTAB”) upheld the validity of Christman’s registration and granted the cancellation of the Person’s Co. mark. The appellate court affirmed.
The primary question answered by the court was as follows: “Does knowledge of a mark’s use outside U.S. commerce preclude good faith adoption and use of the identical mark in the United States prior to the entry of the foreign user into the domestic market?”[61] Within this question lies one of the primary arguments made by Person’s Co., as it alludes to the good faith standard utilized for domestic concurrent use rulings.
In answering Person’s reliance on Woman’s World Shops, Inc. v. Lane Bryant, Inc.,[62] the court distinguished the circumstance where “the first use of the mark by both the junior and the senior user was in United States commerce” from the present case wherein “Person’s Co., while first to adopt the mark, was not the first user in the United States.”[63] Under the former concurrent use scenario, likelihood of confusion may be inferred in bad faith situations where the junior user is aware of the senior user’s mark, however under U.S. law, Person’s was not a senior user.[64]
Similarly, Person’s argued that knowledge of the foreign use itself should preclude Christman from obtaining trademark rights within the United States. The Court stated, “[w]hile adoption of a mark with knowledge of a prior actual user in U.S. commerce may give rise to cognizable equities as between the parties, no such equities may be based upon knowledge of a similar mark’s existence or on a problematical intent to use such a similar mark in the future.”[65] The opinion cites to prior cases that may recognize bad faith in the context of a well-known mark or where the U.S. registration is a nominal one simply meant to block expansion, but finds neither of those circumstances present.[66] As to the former, Person’s may have built a strong reputation in the Japanese market, but as the pertinent basis for the judgment is the market being expanded into, the lack of any U.S. sales precluded this exception. The TTAB found that Christman, at the time he began use and applied for registration, was not aware the Person’s intended to expand into the U.S. Although not expressly stated within the opinion, it is assumed that Christman’s use could hardly be nominal given his marketing and line expansions.
In this instance, the Court focused on the intent of the potentially infringing domestic party, an element that would maintain validity in future decisions to be discussed, but likewise an element that would be considered in conjunction with other elements determinative of secondary meaning.
D. International Bancorp, LLC v. Societe des Bains de Mer (2003)[67]
Discussing its departure from the Person’s decision, the 4th Circuit stated in this opinion that, “[t]he statutory provision we apply today is directed solely and specifically to services and to evaluating what constitutes use in commerce for servicemarks. We would not apply our interpretation of the statutory provision addressing services to a case involving goods.”[68] The servicemark distinction is critical to understanding the departure from past decisions wherein it was established that foreign use could not vest U.S. rights in a mark.[69]
In this case, the Societe des Bains de Mer et du Cercle des Etrangers a Monaco (“SBM”) had operated a casino in Monaco under the “CASINO DE MONTE CARLO” mark, registered in Monaco, but not within the United States. SBM promotes the casino from an office in New York with a budget of $1 million annually. International Bancorp had operated a series of gambling websites which contained elements of the above mark as well as pictures and renderings of the SBM casino in Monaco. It also alluded to the websites as an alternative to its physical location operating in Monaco, which did not exist.
The majority arrived at its expanded definition of use in commerce via that found in §45 of the Lanham Act as applicable to service marks, which reads that a mark is utilized in commerce:
“on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.”[70]
Employing the Lanham Act’s definition that commerce “means all commerce which may lawfully regulated by Congress,”[71] the majority moved to the Commerce Clause of the Constitution and determined that foreign trade was an aspect that could be regulated by Congress.[72] Through this statutory analysis, the majority found that the advertising of services that led to services rendered in foreign commerce properly constituted “use in commerce,” essentially establishing a policy under which U.S. trademarks rights are created via delivery of services in a foreign jurisdiction.
The dissent in International Bancorp cites contrary precedent that would require both the advertising and use of the mark to be within the United States in order to meet the use requirement.[73] Specifically, Judge Moritz highlighted Rivard v. Linville, a 1998 case resolved in the federal circuit which determined that although a Canadian chain of hair salons promoted their business in the U.S. and indeed serviced U.S. consumers, “activity outside the United States does not create rights in marks within the United States.”[74] She also discussed a policy argument wherein a trademark clearance search would need to determine if foreign mark owners had sold to U.S. consumers.
E. Empresa Cubanadel Tabaco v. Culbro Corporation (District Court; 2004)[75]
Empresa Cubanadel Tabaco (“Empresa”) was prohibited from distributing its “COHIBA” cigars in the United States as a result of the Cuban trade embargo. Culbro Corporation, now operating as General Cigar, had sold cigars under the mark in the United States from 1978 through 1987. A registered mark was granted to General Cigar in early 1981 without having had any opposition. Prior to the opposition period, General Cigar has responded to PTO inquires regarding the mark by stating that it had no meaning in the industry, and that the mark was arbitrary. In late 1987, the company ceased branding any cigars with the “COHIBA” mark.
In 1992, General Cigar reintroduced the mark with the specific intent of imitating, as closely as possible, the overall appearance of the Cuban version of the cigar by replicating the label, box, and cigar band.[76] The court’s opinion is replete with instances illustrating General Cigar’s desire to capitalize on the “COHIBA” mark.
After a discussion on the guidance provided through the Tea Rose-Rectanus Doctrine within the McCarthy treatise, the court found that the secondary meaning factors would be “critical in determining whether COHIBA was famous within the meaning of the famous marks doctrine”[77] and after verbatim inclusion of the Well Known Marks Recommendations,[78] the court outlined the following six factors utilized in the Second Circuit: “(1) advertising expenditures, (2) consumer studies linking the mark to a source, (3) unsolicited media coverage of the product, (4) sales success, (5) attempts to plagiarize the mark, and (6) length and exclusivity of the mark’s use.”[79]
Because of the embargo, the court set aside factors one and four, and likewise found that length and exclusivity of use was irrelevant given the mark’s abandonment by General Cigar. Regarding survey evidence and previous case law in the Second Circuit, the court found that typically a 50% recognition was required. Inferences were drawn from contemporary surveys given the lack thereof from the period in question, finding that “COHIBA’s aided awareness in September 1994 is significantly higher than it’s 14.5% unaided awareness for that period.”[80] The media coverage aspect of the factors found that coverage within industry publications and wider-circulation general interest magazines were probative in establishing awareness of the COHIBA brand.
The fifth factor regarding attempts to plagiarize the mark provided the Court with perhaps the broadest factual inquiry, and it considered the “[b]ecause COHIBA is a distinctive mark, evidence of copying may be probative.[81] The Court strongly considered Second Circuit precedent finding that “imitative intent can help support a finding of secondary meaning.”[82]
Pertinent to a discussion of the famous marks exception is the ultimate ruling of the Empresa court, which concluded “that the COHIBA trademark achieved a level of fame consistent with secondary meaning as described in Vaudable and other cases. The COHIBA mark is therefore famous within the meaning of the famous marks doctrine, and it is concluded that Cubatabaco had a legally protectable right to the mark at that time.”[83]
VII. A Return to Grupo Gigante and the Ninth Circuit
The equation of secondary meaning with the standard for the famous marks exception expressed within Empresa above had previously found support in the District Court’s opinion in Grupo Gigante. Relying in large part on the McCarthy treatise and its commentaries on the Tea Rose-Rectanus doctrine, the Court found that, “in order to establish that a foreign mark is sufficiently famous to qualify for protection in the United States, the foreign user need only show that the mark is sufficiently known to potential customers in the are of the United States in which it seeks protection.”[84] Further, the Court stated,
“In the context of a foreign mark, the Court also considers where in the world the mark was originally used. For example, where the mark was first used in Paris or Tokyo, it would probably need to be quite famous in the lay meaning of the word in order to be known to consumers in the United States. Where a mark was first used in a country that borders the United States, however, it would need to be much less famous in order to be known to United States consumers who live near that border.”[85]
In this proclamation, the court acknowledges the symmetry of territoriality as both a geographical expansion of goodwill and a politically-inspired limitation.
In considering how well-known the mark was in the Southern California market at issue, the Court turned to factors utilized in the Ninth Circuit, which bear a strong resemblance to those noted above in Empresa. Relevant to the inquiry are “survey evidence; direct consumer testimony; exclusivity, manner and length of use of the mark; amount and manner of advertising; amount of sales and number of customers; established place in the market; and proof of intentional copying by the defendant.”[86] The court placed a large value on the survey evidence presented by Grupo Gigante, finding that “20-22% of Mexican-Americans in the San Diego area were aware of their “GIGANTE” mark when the defendant’s opened their first location in San Diego.”[87] Per the District Court, “GIGANTE” had achieved the requisite degree of fame in the market and ruled in favor of the Mexican corporation, excepting on a theory of laches the two Dallo stores already in operation.
As noted above, the appellate court agreed in the result, but not in the reasoning, and remanded the case. In addition to secondary meaning, the Court of Appeals prompted:
“[w]here the mark has not before been used in the American market, the court must be satisfied, by a preponderance of the evidence, that a substantial percentage of consumers in the relevant American market is familiar with the foreign mark. The relevant American market is the geographical area where the defendant uses the alleged infringing mark. In making this determination, the court should consider such factors as the intentional copying of the mark by the defendant, and whether customers of the American firm are likely to think they are patronizing the same firm that uses the mark in another country. While these factors are not necessarily determinative, they are particularly relevant because they bear heavily on the risks of consumer confusion and fraud, which are the reasons for having a famous-mark exception.”[88]
These instructions may not be entirely helpful to the District Court, which although not articulated specifically within its opinion, theoretically followed its own advice to consider such factors. Other courts have struggled with statistically differentiating a secondary meaning standard from the requisite degree necessary to be well-known for protection under the well-known mark exception.
At a minimum, however, the Circuit Court affirmed the propriety of an exception for well-known marks, an affirmation under question in the Second Circuit.
VIII. Developments in the Second Circuit
Commenting of the ‘well-known marks exception to territoriality, the dissent in International Bancorp stated, “[t]hat doctrine has been applied so seldom (never by a federal appellate court and only by a handful of district courts) that its viability is uncertain.[89] Soon thereafter, the Ninth Circuit Court of Appeals invalidated half of that parenthetical statement by determining that a well known marks exception did indeed exist. Within that period, a district court in the Second Circuit adopted a like sentiment in Empresa, although utilizing a different path and standard of degree for secondary meaning.
Despite a relative absence of the famous marks exception prior to the Grupo Gigante decision, 2005 has seen several developments within the Second Circuit. These applications are not dispositive of the future of the famous marks exception in the Second Circuit, however, as the Circuit Court explicitly left open the question for future consideration. The last case to be highlighted in this section may prompt the Court’s review.
A. Empresa Cubana del Tabaco v. Culbro Corporation (Circuit Court; 2005)[90]
On appeal, the Second Circuit reversed the District Court’s finding of infringement, but within the specific circumstance regarding the Cuban trade embargo,
“There is no contest that, as matters stand, General Cigar has the full panel of property rights in the COHIBA mark, including the right to exclude or limit others seeking to use the mark in the United States. […] There is no doubt that granting […] relief to Cubatabaco would entail a transfer from General Cigar to Cubatabaco of a ‘right, remedy, power, privilege, or interest with respect to [the COHIBA mark].’ […] As it is exactly this brand of property right transfer that the embargo prohibits, we cannot sanction a grant of injunctive remedy to Cubatabaco in the form of the right, privilege, and power to exclude General Cigar from using its duly registered mark.”[91]
The Court declined to directly reach the viability of the well known marks exception as unnecessary given the trade restrictions and stated that General Cigar owned the COHIBA mark in the U.S., even if it had abandoned it for an interim period wherein the embargo disallowed Cubatabaco from acquiring rights.[92]
Cubatabaco also brought an unfair competition claim under §43(a) of the Lanham Act, which had not been litigated at the District Court level. Paralleling an amicus brief filed by the United States, Cubatabaco argued that it could obtain the cancellation of the COHIBA mark in the U.S. as well as an injunction against General Cigar’s further use of the mark, despite being barred from direct ownership by virtue of the embargo. The unfair competition alleged was the consumer confusion made likely by the dual use of the mark, to which the Court answered, “Cubatabaco cannot obtain relief on a theory that General Cigar’s use of the mark causes confusion, because, pursuant to our holding today, General Cigar’s legal right to the COHIBA mark has been established as against Cubatabaco.”[93]