Opinion ID: 581353
Heading Depth: 2
Heading Rank: 3

Heading: International Treaties

Text: 75 Yamaha-America's claims under Article X of the Treaty of Friendship and Article 2 of the Paris Convention are based on a common assumption: that in permitting the importation of gray-market goods, appellees are unlawfully discriminating against Yamaha-America because it is owned by a foreign corporation. Yamaha-America readily concedes that it is not, itself, a foreign corporation and that it is not invoking either treaty as a foreign corporation. Yamaha-America's Brief at 19. Instead, Yamaha-America argues that the Regulation violates the treaties by treating it differently from other domestic companies. As the Supreme Court has stated, national treatment means that local subsidiaries of foreign corporations are considered for the purposes of the Treaty [of Friendship] to be companies of the country in which they are incorporated; they are entitled to the rights, and subject to the responsibilities of other domestic corporations. Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 188, 102 S.Ct. 2374, 2381, 72 L.Ed.2d 765 (1982). 76 The crucial question for purposes of both the Treaty of Friendship and the Paris Convention is whether appellees have treated Yamaha-America differently under the Regulation solely because it is a wholly owned subsidiary of a foreign corporation. We think not. The Regulation would apply equally to the counterpart of Yamaha-America, i.e., a domestic, wholly owned subsidiary of an American corporation which produces goods abroad both for sale and for import into the United States. The Supreme Court itself has recognized just such a variation on the typical gray-market situation: 77 Two other variations on this theme occur when an American-based firm establishes abroad a manufacturing subsidiary corporation (case 2b) or its own unincorporated manufacturing division (case 2c) to produce its United States trademarked goods, and then imports them for domestic distribution. If the trademark holder or its foreign subsidiary sells the trademarked goods abroad, the parallel importation of the goods competes on the gray market with the holder's domestic sales. 78 K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 286-87, 108 S.Ct. 1811, 1815, 100 L.Ed.2d 313 (1988). 13 The only relevant fact for the purposes of the Regulation is that the domestic trademark owner is subject to common ownership or control with the company which authorizes the distribution of the gray-market goods abroad. 14 79 Yamaha-America has no cause of action under either the Treaty of Friendship or the Paris Convention to challenge the Regulation for discriminatory treatment. There is no violation of either treaty when Yamaha-America is treated like every other domestic trademark owner that shares common ownership or control with the owner of the foreign trademark.