Opinion ID: 239733
Heading Depth: 2
Heading Rank: 1

Heading: General Extraterritorial Application of the Lanham Act-- the Bulova Case.

Text: 18 Section 32(1)(a) of the Lanham Act, 15 U.S.C.A. § 1114(1)(a), one of the more important substantive provisions of the Act, protects the owner of a registered mark from use 'in commerce' by another that is 'likely to cause confusion or mistake or to deceive purchasers as to the source of origin' of the other's good or services. 'Commerce' is defined by the Act as 'all commerce which may lawfully be regulated by Congress.' § 45, 15 U.S.C.A. § 1127. Plaintiff, relying on Steele v. Bulova Watch Co., 1952, 344 U.S. 280, 73 S.Ct. 252, 97 L.Ed. 252, argues that § 32(1)(a) should be given an extraterritorial application, and that this case falls within the literal wording of the section since the defendant's use of the mark 'Vanity Fair' in Canada had a substantial effect on 'commerce which may be lawfully be regulated by Congress.' 19 While Congress has no power to regulate commerce in the Dominion of Canada, it does have power to regulate commerce 'with foreign Nations, and among the several States.' Const. art. 1, § 8, cl. 3. This power is now generally interpreted to extend to all commerce, even intrastate and entirely foreign commerce, which has a substantial effect on commerce between the states or between the United States and foreign countries. Thomsen v. Cayser, 1917, 243 U.S. 66, 88, 37 S.Ct. 353, 61 L.Ed. 597; N.L.R.B. v. Jones & Laughlin S. Corp., 1937, 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893; Mandeville Island Farms v. American Crystal Sugar Co., 1948, 334 U.S. 219, 68 S.Ct. 996, 92 L.Ed. 1328; Moore v. Mead's Fine Bread Co., 1954, 348 U.S. 115, 75 S.Ct. 148, 99 L.Ed. 145; Branch v. Federal Trade Commission, 7 Cir., 1944, 141 F.2d 31. Particularly is this true when a conspiracy is alleged with acts in furtherance of that conspiracy taking place in both the United States and foreign countries. United States v. Sisal Sales Corporation, 1927, 274 U.S. 268, 47 S.Ct. 592, 71 L.Ed. 1042; United States v. Imperial Chemical Industries, D.C.S.D.N.Y.1951, 100 F.Supp. 504; see Note, Application of the Anti-Trust Laws to Extra-Territorial Conspiracies, 49 Yale L.J. 1312 (1940) and cases cited therein. Thus it may well be that Congress could constitutionally provide infringement remedies so long as the defendant's use of the mark has a substantial effect on the foreign or interstate commerce of the United States. But we do not reach this constitutional question because we do not think that Congress intended that the infringement remedies provided in 32(1)(a) and elsewhere should be applied to acts committed by a foreign national in his home country under a presumably valid trademark registration in that country. 20 The Lanham Act itself gives almost no indication of the extent to which Congress intended to exercise its power in this area. While § 45, 15 U.S.C.A. § 1127, states a broad definition of the commerce subject to the Act, both the statement of Congressional intent in the same section 12 and the provisions of § 44, 15 U.S.C.A. § 1126, indicate Congressional regard for the basic principle of the International Conventions, i.e., equal application to citizens and foreign nationals alike of the territorial law of the place where the acts occurred. And the Supreme Court, in Steele v. Bulova Watch Co., 1952, 344 U.S. 280, 73 S.Ct. 252, 97 L.Ed. 319, the only other extraterritorial case since the Lanham Act, did not intimate that the Act should be given the extreme interpretation urged upon us here. 21 In the Bulova case, supra, the Fifth Circuit, 194 F.2d 567, assuming that the defendant had a valid registration under Mexican law, found that the district court had jurisdiction to prevent the defendant's use of the mark in Mexico, on the ground that there was a sufficient effect on United States commerce. Subsequently, the defendant's registration was canceled in Mexican proceedings, and on review of the Fifth Circuit's decision, the Supreme Court noted that the question of the effect of a valid registration in the foreign country was not before it. The Court affirmed the Fifth Circuit, holding that the federal district court had jurisdiction to prevent unfair use of the plaintiff's mark in Mexico. In doing so the Court stressed three factors: (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, since the defendant's Mexican registration had been canceled by proceedings in Mexico. Only the first factor is present in this case. 22 We do not think that the Bulova case lends support to plaintiff; to the contrary, we think that the rationale of the Court was so thoroughly based on the power of the United States to govern 'the conduct of its own citizens upon the high seas or even in foreign countries when the rights of other nations or their nationals are not infringed', 13 that the absence of one of the above factors might well be determinative and that the absence of both is certainly fatal. 14 Plaintiff makes some argument that many American citizens are employed in defendant's New York office, but it is abundantly clear that these employees do not direct the affairs of the company or in any way control its actions. The officers and directors of defendant who manage its affairs are Canadian citizens. Moreover, the action has only been brought against Canadian citizens. We conclude 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. 23