A Breakout Role: Blocking Cross Border Infringement with the Lanham Act

Written by Anne Gilson LaLonde and Jerome Gilson for the 2018 INTA conference. In the twenty-first century, trademark infringement spills over national borders. But trademark rights are cabined and territorial, existing in each country under its own laws. American trademark owners predictably tussle with infringers abroad while American courts try to sort them out. This pamphlet attempts to straighten out the issue.

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Written by Anne Gilson LaLonde and Jerome Gilson for the 2018 INTA conference. In the twenty-first century, trademark infringement spills over national borders. But trademark rights are cabined and territorial, existing in each country under its own laws. American trademark owners predictably tussle with infringers abroad while American courts try to sort them out.

Trademark owners can sometimes summon Lanham Act power that charges right through United States borders. The federal courts have unquestioned authority to handle much infringement taking place entirely outside the country, or almost entirely. But uniform standards for deciding when and how that power should be used are stunningly absent. The only relevant (although quite influential) Supreme Court case is sixty-five years old. In the age of global connectivity, the circuit courts are, pun intended, all over the map on when to apply the Lanham Act to activity abroad.

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Table of Contents

I. Trader Joe's Company v. Hallatt

II. Introduction

III. How Can the Lanham Act Apply to Activity Outside the United States?

A. United States Law on Extraterritoriality

B. The Seminal Bulova Decision

C. The Goals of the Lanham Act

IV. Jurisdiction or Merits?

V. Factors Courts Analyze in Deciding Lanham Act Extraterritoriality

A. Defendant's Citizenship

B. Effect of Defendant's Conduct on United States Commerce

i. Rationale Behind This Consideration

ii. Degree of Effect on Commerce: Substantial, Significant or Just Some

iii. What Does it Mean to Have an Effect on U.S. Commerce?

a. Confusion Among United States Consumers

b. Sales Diverted from United States Plaintiff Due to Consumer Confusion Abroad

c. Sales Diverted from Foreign Licensee

iv. Actions that Affect United States Commerce

a. Importation of Infringing Goods into the United States

b. Infringing Goods Entering the United States Stream of Commerce

c. Website Accessible in the United States

d. Essential Steps Taken in the United States

e. Shipment Through United States Foreign Trade Zone

f. Financial Gain by Defendant in the United States

g. Defendant's Physical Presence in the United States

C. Considerations of International Comity

VI. The Array of Circuit Tests for Determining Lanham Act Extraterritorial Application

A. The Vanity Fair Factors in the Second Circuit

B. The Nintendo Factors in the Fourth Circuit

C. The American Rice Factors in the Fifth Circuit

D. The Timberlane Factors in the Ninth Circuit

E. The McBee Standard in the First Circuit

F. The Commodores Test in the Eleventh Circuit

G. The Scotch Whiskey Analysis in the Seventh Circuit

VII. Recommended Approach

A. McBee: McBest

B. Back to Where We Started

VIII. Conclusion