Opinion ID: 201739
Heading Depth: 2
Heading Rank: 2

Heading: Application of the Framework

Text: 44 We apply the framework we have established to the facts of this case. Although district court fact-finding is permissible in a subject matter jurisdiction inquiry, and we defer to such fact-finding, here all the relevant facts are undisputed and the district court did not find any facts. 11 Our review is de novo, see, e.g., Skwira v. United States, 344 F.3d 64, 71-72 (1st Cir.2003), and the burden is on McBee to establish jurisdiction, see, e.g., Able Sales Co. v. Compañía de Azúcar de P.R., 406 F.3d 56, 61 (1st Cir.2005). 45
46 McBee contends that his claim for an injunction against Delica's sales to consumers inside the United States does not constitute an extraterritorial application of the Lanham Act, and therefore the district court should have taken jurisdiction over this claim without pausing to consider whether there was a substantial effect on United States commerce. The factual predicate for this argument is the $2,500 of Cecil McBee brand goods that Delica sold to McBee's investigators in Maine; there is no evidence of any other sales made by Delica to United States consumers. McBee is correct that the court had subject matter jurisdiction over this claim. 47 There can be no doubt of Congress's power to enjoin sales of infringing goods into the United States, and as a matter of Congressional intent there can be no doubt that Congress intended to reach such sales via the Lanham Act. Courts have repeatedly distinguished between domestic acts of a foreign infringer and foreign acts of that foreign infringer; the extraterritoriality analysis to determine jurisdiction attaches only to the latter. See, e.g., Totalplan Corp. of Am. v. Colborne, 14 F.3d 824, 829-30 (2d Cir.1994); Sterling Drug, 14 F.3d at 744-47 & n. 8; Wells Fargo, 556 F.2d at 426-30; Vanity Fair, 234 F.2d at 638-39, 645; see also 4 J.T. McCarthy, McCarthy on Trade-marks and Unfair Competition § 29:56, at 29-151 (4th ed.2005). Since sales in the United States are domestic acts, McBee need not satisfy the substantial effect on United States commerce test for this claim; jurisdiction exists because, under the ordinary domestic test, the $2,500 worth of goods sold by Delica to McBee's investigators in the United States were in United States commerce, at least insofar as some of those goods were shipped directly by Delica to the buyers in the United States. See Carpet Group Int'l v. Oriental Rug Importers Ass'n, Inc., 227 F.3d 62, 71-75 (3d Cir.2000). 48 Our holding that the extraterritoriality tests are inapplicable where plaintiff seeks a remedy for imported goods sold to American consumers is supported in the antitrust context by the language of the FTAIA. The FTAIA provides that the Sherman Act: 49 shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless ... such conduct has a direct, substantial, and reasonably foreseeable effect (A) on trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations; or (B) on export trade or export commerce with foreign nations, of a person engaged in such trade or commerce in the United States.... 50 15 U.S.C. § 6(a)(1). The statute exempts import trade or import commerce from its extraterritoriality effects test; such import trade or import commerce would seem to be reachable so long as the domestic commerce tests are met. See Carpet Group Int'l, 227 F.3d at 71-75; W. Fugate & L. Simonwitz, Foreign Commerce and the Antitrust Laws § 2.14, at 30 (5th ed. Supp.2004). 51 The district court thus had subject matter jurisdiction over McBee's claim for an injunction against Delica's sales of Cecil McBee goods in the United States. Nonetheless, dismissal of the claim was appropriate for reasons stated later. 12 52
53 McBee next argues that his claim for an injunction against Delica's posting of its Internet website in a way that is visible to United States consumers also does not call for an extraterritorial application of the Lanham Act. Here McBee is incorrect: granting this relief would constitute an extraterritorial application of the Act, and thus subject matter jurisdiction would only be appropriate if McBee could show a substantial effect on United States commerce. 13 McBee has not shown such a substantial effect from Delica's website. 54 We begin with McBee's argument that his website claim, like his claim for Delica's sales into the United States, is not an extraterritorial application of the Lanham Act. McBee does not seek to reach the website because it is a method, by Delica, for selling Cecil McBee goods into the United States. In such a case, if a court had jurisdiction to enjoin sales of goods within the United States, it might have jurisdiction to enjoin the website as well, or at least those parts of the website that are necessary to allow the sales to occur. 14 Rather, the injury McBee complains about from the website is that its mere existence has caused him harm, because United States citizens can view the website and become confused about McBee's relationship with the Japanese clothing company. In particular, McBee argues that he has suffered harm from the fact that Delica's website often comes up on search engines ahead of fan sites about McBee's jazz career. 55 Delica's website, although hosted from Japan and written in Japanese, happens to be reachable from the United States just as it is reachable from other countries. That is the nature of the Internet. The website is hosted and managed overseas; its visibility within the United States is more in the nature of an effect, which occurs only when someone in the United States decides to visit the website. To hold that any website in a foreign language, wherever hosted, is automatically reachable under the Lanham Act so long as it is visible in the United States would be senseless. The United States often will have no real interest in hearing trademark lawsuits about websites that are written in a foreign language and hosted in other countries. McBee attempts to analogize the existence of Delica's website, which happens to be visible in any country, to the direct mail advertising that the Vanity Fair court considered to be domestic conduct and so held outside the scope of the extraterritoriality analysis. See Vanity Fair, 234 F.2d at 638-39. The analogy is poor for three reasons: first, the advertising in Vanity Fair was closely connected with mail-order sales; second, direct mail advertising is a far more targeted act than is the hosting of a website; and third, Delica's website, unlike the advertising in Vanity Fair, is in a foreign language. 56 Our conclusion that McBee's website claim calls for extraterritorial application of the Lanham Act is bolstered by a consideration of the now extensive case law relating to treatment of Internet websites with respect to personal jurisdiction. We recognize that the contexts are distinct, but the extraterritorial application of jurisdiction under the Lanham Act evokes concerns about territorial restraints on sovereigns that are similar to concerns driving personal jurisdiction. To put the principle broadly, the mere existence of a website that is visible in a forum and that gives information about a company and its products is not enough, by itself, to subject a defendant to personal jurisdiction in that forum. See, e.g., Jennings v. AC Hydraulic A/S, 383 F.3d 546, 549-50 (7th Cir.2004); ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 713-15 (4th Cir.2002). 57 Something more is necessary, such as interactive features which allow the successful online ordering of the defendant's products. See, e.g., Jennings, 383 F.3d at 549. The mere existence of a website does not show that a defendant is directing its business activities towards every forum where the website is visible; as well, given the omnipresence of Internet websites today, allowing personal jurisdiction to be premised on such a contact alone would eviscerate the limits on a state's jurisdiction over out-of-state or foreign defendants. Id. at 549-50. 58 Similarly, allowing subject matter jurisdiction under the Lanham Act to automatically attach whenever a website is visible in the United States would eviscerate the territorial curbs on judicial authority that Congress is, quite sensibly, presumed to have imposed in this area. 59 Our conclusion does not make it impossible for McBee to use the Lanham Act to attack a Japan-based website; it merely requires that McBee first establish that the website has a substantial effect on commerce in the United States before there is subject matter jurisdiction under the Lanham Act. We can imagine many situations in which the presence of a website would ensure (or, at least, help to ensure) that the United States has a sufficient interest. The substantial effects test, however, is not met here. 60 Delica's website is written almost entirely in Japanese characters; this makes it very unlikely that any real confusion of American consumers, or diminishing of McBee's reputation, would result from the website's existence. In fact, most American consumers are unlikely to be able to understand Delica's website at all. Further, McBee's claim that Americans looking for information about him will be unable to find it is unpersuasive: the Internet searches reproduced in the record all turned up both sites about McBee and sites about Delica's clothing line on their first page of results. The two sets of results are easily distinguishable to any consumer, given that the Delica sites are clearly shown, by the search engines, as being written in Japanese characters. Finally, we stress that McBee has produced no evidence of any American consumers going to the website and then becoming confused about whether McBee had a relationship with Delica. 61
62 McBee's claim for damages due to Delica's sales in Japan fares no better, because these sales as well have no substantial effect on commerce in the United States. McBee seeks damages for Delica's sales in Japan to Japanese consumers based on (a) tarnishing of McBee's image in the United States, and (b) loss of income in the United States due to loss of commercial opportunity as a jazz musician in Japan, stemming from the tarnishing of McBee's reputation there. The alleged tarnishing — both in the United States and Japan — is purportedly caused by the confusion of McBee's name with a brand selling (sometimes provocative) clothing to young teenage girls in Japan. McBee presents essentially no evidence that either type of tarnishing has occurred, much less that it has any substantial effect on United States commerce. 63 McBee's first argument, that American consumers are being confused and/or led to think less of McBee's name because of Delica's Japanese sales, cuts very close to the core purposes of the Lanham Act. See Atl. Richfield Co., 150 F.3d at 193; Sterling Drug, Inc., 14 F.3d at 746; see also Schechter, supra, at 628-30 (arguing that what distinguishes the Lanham Act from areas like patent or copyright, and makes extraterritorial jurisdiction proper in the trademark context while it is improper in those other areas, is the risk that the trademark infringer's foreign sales will eventually confuse domestic consumers, thus costing the mark holder sales domestically as well as abroad). Such confusion and reputational harm in the eyes of American consumers can often — although not always — be inferred from the fact that American consumers have been exposed to the infringing mark. But no inference of dilution or other harm can be made in situations where American citizens are not exposed at all to the infringing product. The trouble with McBee's argument is that there is virtually no evidence that American consumers are actually seeing Delica's products. 64 Quite commonly, plaintiffs in these sorts of cases can meet their burden by presenting evidence that while the initial sales of infringing goods may occur in foreign countries, the goods subsequently tend to enter the United States in some way and in substantial quantities. See, e.g., Steele, 344 U.S. at 286, 73 S.Ct. 252; Nintendo of Am., 34 F.3d at 249, 251; Atl. Richfield Co., 150 F.3d at 193; Totalplan, 14 F.3d at 830. McBee has presented essentially no evidence that Delica's products have been brought into the United States after their initial sale in Japan. McBee's own statement, without more, that people have seen women wearing Delica clothing in the United States does not show very much; likewise, McBee's evidence that Delica's goods are occasionally sold on eBay shows little, given particularly that such goods need not have been auctioned to buyers in the United States. The evidence indicates only one incident in which an American citizen saw McBee advertisements while traveling in Japan and demonstrated confusion upon returning to the United States. 65 Beyond that, there is also nothing that indicates any harm to McBee's career in the United States due to Delica's product sales. McBee's argument that there has potentially been harm to McBee's career as a product endorser is most unlikely, especially given his own disinterest in performing such endorsements. Further, McBee's statement that his teaching career may have been hindered by Delica is speculation. 66 McBee's second argument is that Delica's sales have confused Japanese consumers, hindering McBee's record sales and touring career in Japan. Evidence of economic harm to McBee in Japan due to confusion of Japanese consumers is less tightly tied to the interests that the Lanham Act intends to protect, since there is no United States interest in protecting Japanese consumers. American courts do, however, arguably have an interest in protecting American commerce by protecting McBee from lost income due to the tarnishing of his trademark in Japan. Courts have considered sales diverted from American companies in foreign countries in their analyses. See Totalplan, 14 F.3d at 830-31; see also Am. Rice, 701 F.2d at 414-15 (considering diverted sales in finding some effects test met). 67 Assuming arguendo that evidence of harm to an American plaintiff's economic interests abroad, due to the tarnishing of his reputation there, might sometimes meet the substantial effects test, McBee has presented no evidence of such harm in this case. McBee has presented no evidence of economic harm due to losses in record sales or touring opportunities in Japan. McBee's statement that he might have expected more Japanese touring opportunities by now, and may have had such opportunities absent Delica's sales, is wholly speculative. There is no probative evidence of any decline in McBee's touring revenue as compared to past patterns, nor is there any evidence of any decline in McBee's Japanese record sales. 68 McBee has not shown that Delica's Japanese sales have a substantial effect on United States commerce, and thus McBee's claim for damages based on those sales, as well as McBee's claim for an injunction against Delica's website, must be dismissed for lack of subject matter jurisdiction. We need not reach the issue of whether we should decline jurisdiction because of comity. 15 Were we to assert jurisdiction in this case, where there is no evidence of any harm to American commerce beyond the facts that the plaintiff is an American citizen and that the allegedly infringing goods were sold and seen in a foreign country, we would be forced to find jurisdiction in almost all false endorsement or trademark cases involving an American plaintiff and allegedly infringing sales abroad. 69