Using the Lanham Act to Make Trademark Pirates Walk the Plank

In prior blog posts, we've talked about trademark pirates, sometimes referred to as trademark squatters, who are individuals or businesses registering trademarks in a country for the sole purpose of later selling the trademark at a premium.

In this article, we'll discuss what trademark pirates are and how your business can protect your brand.

Don't let Trademark Pirates Ruin Your Brand

For example, a company in China may see that Trader Joe’s has become a popular U.S. brand and well-established trademark.  If they anticipate the company will be expanding internationally, they may register the mark in China, thereby forcing Trader Joe’s to buy it from them if they want to expand into the market under the same name.

Trademark pirates cause serious concern for companies doing business internationally, but the Lanham Act can sometimes provide a remedy. The Lanham Act is the U.S. federal law that establishes a system of trademark registration and causes of action for enforcement. It is a complex statute that provides a number of different bases for lawsuits, including trademark infringement, dilution, consumer confusion, unfair competition, and false endorsement.

Since the Lanham Act is a U.S. law, the issue becomes whether it can be used against defendants operating in foreign countries and, if so, under what circumstances. In 1962, the U.S. Supreme Court decided a case, Steele v Bulova Watch Co., in which it recognized the Act’s extraterritorial reach. While holding that the law applied to the facts in Steele, which involved a Mexican trademark registration and production of watches in Mexico but sold in the U.S., the court did not set forth a general test or analysis for future courts to follow.

Lower federal courts have adopted different tests to determine whether the Lanham Act can be applied to a particular set of facts involving foreign-registered trademarks. Although they vary slightly, the core of each test is aimed at determining whether the defendant and their acts are sufficiently connected to the U.S. to justify the application of the Act. It is a balance between protecting the rights of U.S. trademark holders and maintaining respect for international laws and jurisdictional issues.

A few examples of factors that the courts typically look at include:

  • whether the defendant’s conduct impacts U.S. commerce and how substantially;
  • whether the defendant is a U.S. citizen;
  • the link between a defendant that is a foreign citizen and the U.S.;
  • the interest of the foreign country in regulating its own trademark system and commerce; and
  • whether the allegedly infringing goods or services are sold in the U.S.

It’s not the easiest argument to make and courts have come out both ways, sometimes allowing the extra jurisdictional application of the act, sometimes not. In all cases it is a very fact specific inquiry, meaning there is no black and white rule.

The intersection of trademark and international law is a tricky one, but it is nonetheless important to any company conducting international business. The attorneys at Whitcomb Law, P.C. can help your business understand and enforce your rights.

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