United States Court of Appeals
For the First Circuit
No. 04-2733
CECIL McBEE,
Plaintiff, Appellant,
v.
DELICA CO., LTD.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Gene Carter, Senior U.S. District Judge]
Before
Selya, Lynch, and Howard,
Circuit Judges.
Alfred C. Frawley, with whom Robert O. Newton and Preti,
Flaherty, Beliveau, Pachios & Haley, LLP were on brief, for
plaintiff, appellant.
Todd S. Holbrook, with whom John G. Osborn and Bernstein,
Shur, Sawyer & Nelson were on brief, for defendant, appellee.
August 2, 2005
LYNCH, Circuit Judge. It has long been settled that the
Lanham Act can, in appropriate cases, be applied
extraterritorially. See Steele v. Bulova Watch Co., 344 U.S. 280
(1952). This case, dismissed for lack of subject matter
jurisdiction, requires us, as a matter of first impression for this
circuit, to lay out a framework for determining when such
extraterritorial use of the Lanham Act is proper.
In doing so, we choose not to adopt the formulations used
by various other circuits. See, e.g., Reebok Int'l, Ltd. v.
Marnatech Enters., 970 F.2d 552, 554-57 (9th Cir. 1992); Vanity
Fair Mills v. T. Eaton Co., 234 F.2d 633, 642-43 (2d Cir. 1956).
The best-known test, the Vanity Fair test, asks (1) whether the
defendant is an American citizen, (2) whether the defendant's
actions have a substantial effect on United States commerce, and
(3) whether relief would create a conflict with foreign law. 234
F.2d at 642-43. These three prongs are given an uncertain weight.
Based on Steele and subsequent Supreme Court case law, we
disaggregate the three prongs of the Vanity Fair test, identify the
different types of "extraterritorial" application questions, and
isolate the factors pertinent to subject matter jurisdiction.
Our framework asks first whether the defendant is an
American citizen; that inquiry is different because a separate
constitutional basis for jurisdiction exists for control of
activities, even foreign activities, of an American citizen.
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Further, when the Lanham Act plaintiff seeks to enjoin sales in the
United States, there is no question of extraterritorial
application; the court has subject matter jurisdiction.
In order for a plaintiff to reach foreign activities of
foreign defendants in American courts, however, we adopt a separate
test. We hold that subject matter jurisdiction under the Lanham
Act is proper only if the complained-of activities have a
substantial effect on United States commerce, viewed in light of
the purposes of the Lanham Act. If this "substantial effects"
question is answered in the negative, then the court lacks
jurisdiction over the defendant's extraterritorial acts; if it is
answered in the affirmative, then the court possesses subject
matter jurisdiction.
We reject the notion that a comity analysis is part of
subject matter jurisdiction. Comity considerations, including
potential conflicts with foreign trademark law, are properly
treated as questions of whether a court should, in its discretion,
decline to exercise subject matter jurisdiction that it already
possesses. Our approach to each of these issues is in harmony with
the analogous rules for extraterritorial application of the
antitrust laws. See Hartford Fire Ins. Co. v. California, 509 U.S.
764, 795-99 (1993).
The plaintiff, Cecil McBee, an American citizen and
resident, seeks to hold the defendant, Delica Co., Ltd. (Delica),
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responsible for its activities in Japan said to harm McBee's
reputation in both Japan and the United States and for Delica's
purported activities in the United States. McBee is a well-known
American jazz musician; Delica is a Japanese corporation that
adopted the name "Cecil McBee" for its adolescent female clothing
line. McBee sued for false endorsement and dilution under the
Lanham Act. The district court dismissed all of McBee's Lanham Act
claims, concluding that it lacked subject matter jurisdiction. See
McBee v. Delica Co., No. 02-198-P-C, 2004 WL 2674360 (D. Me. Nov.
19, 2004) (unpublished).
We affirm, albeit on different reasoning. We conclude
that the court lacked jurisdiction over McBee's claims seeking (1)
an injunction in the United States barring access to Delica's
Internet website, which is written in Japanese, and (2) damages for
harm to McBee due to Delica's sales in Japan. McBee has made no
showing that Delica's activities had a substantial effect on United
States commerce. As to McBee's claim for (3) an injunction barring
Delica from selling its goods in the United States, we hold that
the district court had jurisdiction but conclude that this claim is
without merit because the only sales Delica has made into the
United States were induced by McBee for purposes of this
litigation, and there is no showing that Delica plans on selling
into the United States again.
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I.
The relevant facts are basically undisputed. McBee, who
lives in both Maine and New York, is a jazz bassist with a
distinguished career spanning over forty-five years. He has
performed in the United States and worldwide, has performed on over
200 albums, and has released six albums under his own name
(including in Japan). He won a Grammy Award in 1989, was inducted
into the Oklahoma Jazz Hall of Fame in 1991, and teaches at the New
England Conservatory of Music in Boston. McBee has toured Japan
several times, beginning in the early 1980s, and has performed in
many major Japanese cities, including Tokyo. He continues to tour
in Japan. McBee has never licensed or authorized the use of his
name to anyone, except of course in direct connection with his
musical performances, as for example on an album. In his own
words, he has sought to "have [his] name associated only with
musical excellence."
Delica is a Japanese clothing retailer. In 1984, Delica
adopted the trade name "Cecil McBee" for a line of clothing and
accessories primarily marketed to teen-aged girls. Delica holds a
Japanese trademark for "Cecil McBee," in both Japanese and Roman or
English characters, for a variety of product types. Delica owns
and operates retail shops throughout Japan under the brand name
"Cecil McBee"; these are the only stores where "Cecil McBee"
products are sold. There are no "Cecil McBee" retail shops outside
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of Japan. Delica sold approximately $23 million worth of "Cecil
McBee" goods in 1996 and experienced steady growth in sales in
subsequent years; in 2002, Delica sold $112 million worth of "Cecil
McBee" goods.
Delica puts out a "style book" or catalog that includes
pictures and descriptions of the products in its "Cecil McBee"
line; this style book is written in Japanese with some English
words for effect. The style book is available in Japan at the
retail stores and in certain other locations; sometimes it is
included with shipped packages of "Cecil McBee" products. The
style book contains telephone and fax numbers which allow a
customer to order "Cecil McBee" merchandise from another company,
Opus M. Co., Ltd., and have it shipped directly to the customer.
Opus M. Co. buys the goods from Delica for this purpose, and then
uses yet another company, Hamasho Co., Ltd., to do the shipping.
It is undisputed that Hamasho Co. has never shipped any "Cecil
McBee" goods outside of Japan. As described later, Delica's policy
generally is to decline orders from the United States.
Delica operates a website, http://www.cecilmcbee.net,
which contains pictures and descriptions of "Cecil McBee" products,
as well as locations and telephone numbers of retail stores selling
those products. The website is created and hosted in Japan, and is
written almost entirely in Japanese, using Japanese characters
(although, like the style book, it contains some English words).
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The website contains news about the "Cecil McBee" line, including
promotions. Customers can log onto the site to access their
balance of bonus "points" earned for making past "Cecil McBee"
purchases, as well as information about how to redeem those points
for additional merchandise. However, the site does not allow
purchases of "Cecil McBee" products to be made online. The website
can be viewed from anywhere in the Internet-accessible world.
McBee produced evidence that, when searches on Internet
search engines (such as Google) are performed for the phrase "Cecil
McBee," Delica's website (www.cecilmcbee.net) generally comes up as
one of the first few results, and occasionally comes up first,
ahead of any of the various websites that describe the musical
accomplishments of the plaintiff. Certain other websites
associated with Delica's "Cecil McBee" product line also come up
when such searches are performed; like www.cecilmcbee.net, it is
evident from the search results page that these websites are
written primarily in Japanese characters.
In 1995, plaintiff McBee became aware that Delica was
using his name, without his authorization, for a line of clothing
in Japan. He contacted an American lawyer, who advised him that
Delica was unlikely to be subject to personal jurisdiction in the
United States. McBee retained a Japanese attorney, who sent a
letter to Delica asking it to cease using the "Cecil McBee" name.
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When Delica declined, McBee petitioned the Japanese Patent Office
to invalidate Delica's English-language trademark on "Cecil McBee."
On February 28, 2002, the Japanese Patent Office ruled
Delica's trademark in Japan invalid. However, Delica appealed to
the Tokyo High Court, which on December 26, 2002, vacated the
decision of the Japanese Patent Office. On remand, the Japanese
Patent Office found for Delica and reinstated Delica's registration
of the "Cecil McBee" trademark. McBee appealed that ruling to the
Tokyo High Court and lost; the trademark reinstatement has become
final.1
In early 2002, Delica formulated a policy not to sell or
ship "Cecil McBee" brand products to the United States and informed
its managers throughout the company. Delica's admitted reason for
this policy was to prevent McBee from being able to sue Delica in
the United States.
McBee was beginning to consider just such a strategy.
From December 2001 through early 2003, McBee retained three
Japanese-speaking investigators to attempt to purchase "Cecil
McBee" products from Delica and have them shipped to Maine. They
1
The Japanese courts' rationale for finding in favor of Delica
was (1) while Japanese law protects a person's full name from
exploitation, McBee's full name, including his middle name, was
"Cecil Leroy McBee," and thus the "Cecil McBee" line of products
was not an exact copy of McBee's full name; and (2) McBee received
no protection for the abbreviated version of his name, "Cecil
McBee," because the name had not received sufficient recognition in
general Japanese society.
-8-
met with mixed success. One initially, in December 2001, contacted
the webmaster of http://www.cecilmcbee.net by email, asking about
certain jewelry displayed on the website; that webmaster referred
the investigator to the "Cecil McBee" retail shops in Japan for
further information, but noted that at that time only domestic
shipping was available.
The investigators then used the telephone numbers on the
http://www.cecilmcbee.net website to contact various "Cecil McBee"
retail stores in Japan directly. The investigators made it clear
that they were residents of the United States inquiring about
purchasing "Cecil McBee" goods. When the investigators requested
an opportunity to buy merchandise and have it shipped to them in
Maine, some stores stated that this could not be done, some of the
stores worked out an arrangement whereby they would ship to an
address in Japan but the investigator would then arrange to have
the products forwarded to Maine, and some of the stores, at various
times, shipped directly to the investigators in Maine. The total
value of "Cecil McBee" merchandise purchased by these three
investigators -- including both goods shipped directly to Maine by
Delica and goods shipped via the indirect method -- was
approximately $2,500. As counsel for McBee has conceded, there is
no evidence of any other "Cecil McBee" sales by Delica to the
United States.
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Further, there is virtually no evidence of "Cecil McBee"
brand goods entering the United States after being sold by Delica
in Japan. McBee stated in affidavit that "[f]riends, fellow
musicians, fans, students, and others . . . have reported seeing
[his] name on clothing, shopping bags [and] merchandise (whether
worn or carried by a young girl walking on the street in Boston or
New York or elsewhere) . . . ." But no further evidence or detail
of these sightings in the United States was provided. McBee also
provided evidence that Cecil McBee goods have occasionally been
sold on eBay, an auction website that allows bids to be placed and
items sold anywhere in the world. Most of the sellers were not
located in the United States, and there is no evidence that any of
the items were purchased by American buyers.
McBee states that he finds the use of his name by Delica
"undignified, highly offensive and repugnant." He feels that he
has been harmed by Delica's use of his name because people have
reported to him that they have seen his name on Delica's products,
either in the United States or in Japan, or on Delica's website,
and have asked him if he endorsed those products. Even when he
denies having a relationship with Delica, some people do not
believe him, and some have asked him, "both in jest and with some
degree of seriousness," whether he is "into young girls," the
target audience for Delica's "Cecil McBee" line.2
2
McBee's expert, Joseph McNulty, testified that Delica's use
of the name "Cecil McBee" on its Internet website could decrease
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McBee produces little evidence relating to the frequency
of such incidents, nor does he give many specific examples. He
testified in deposition that two of his American friends and fellow
musicians, while touring Japan, had seen a "Cecil McBee"
advertisement created by Delica and had become confused as to
whether McBee had some relationship with a clothing line; they
asked McBee about the relationship when they returned to the United
States. McBee told some of his students at the New England
Conservatory of Music about his lawsuit against Delica, in order to
help them understand the value of intellectual property law to a
musician; some of his students found the Delica website and started
rumors of his having a relationship with a women's clothing
company. He feels that some of his students may have lost their
focus during his classes because they are thinking about his
connection to women's clothing. Further, his class enrollment has
dropped "for one reason or another" and so his position as a
professor at the Conservatory has been made more uncertain.
McBee has seen his own name on "Cecil McBee" merchandise
in Japan while touring and has become angry. His Japanese touring
partner during his recent tours of Japan (from 2002 onwards) has
made announcements before concerts that McBee had no relationship
with the Delica clothing line. In McBee's view, his audience of
McBee's ability to receive compensation for lending his name to
another company's brand. However, as McBee's own brief points out,
McBee has never shown any interest in this kind of product
marketing.
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Japanese fans at his concerts has become younger through time and
therefore more in line with the core age group of consumers for
Delica's brand. McBee also notes that a fan once came up to him
while he was performing in Taiwan to speak with him about Delica's
line; the fan apparently presumed a connection between McBee and
the line. As of 2003, McBee only had one regular tour in Japan
each year, lasting three weeks or so each time; in McBee's view
"[i]t is speculating, but it is . . . possible" that Delica's
"Cecil McBee" brand had led to his failure to receive additional
Japanese touring opportunities.
II.
McBee's complaint, filed October 1, 2002, alleged
trademark dilution and unfair competition claims under the Lanham
Act, 15 U.S.C. § 1051 et seq., as well as various pendent Maine
state law claims. McBee requested injunctive relief, damages, and
attorney's fees. The core of McBee's Lanham Act claims is false
endorsement: that the unlicensed use of his name has "made a
misleading and false inference" that McBee endorses, approves, or
sponsors Delica's product, and that inference has caused McBee
harm. See 15 U.S.C. § 1125(a); 4 J.T. McCarthy, McCarthy on
Trademarks and Unfair Competition § 28.14, at 28-19 (4th ed. 2005);
see also Wendt v. Host Int'l, Inc., 125 F.3d 806, 812 (9th Cir.
1997).
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Delica first moved to dismiss the complaint, under Fed.
R. Civ. P. 12(b)(2), on the ground that the Maine federal district
court lacked personal jurisdiction over it. A magistrate judge
recommended that the motion be denied, emphasizing the existence of
Delica's website and the $2,500 in sales to McBee's investigators
in Maine, see McBee v. Delica Co., No. 02-198-P-C, 2003 WL 1872907
(D. Me. April 14, 2003) (unpublished); the district court adopted
the magistrate judge's recommendation on July 9, 2003. Discovery
proceeded. Delica then moved to dismiss McBee's complaint under
Fed. R. Civ. P. 12(b)(1), asserting that the court lacked subject
matter jurisdiction over McBee's Lanham Act claims because Delica's
actions constituted extraterritorial conduct outside the ambit of
the Act. Delica also moved for summary judgment under Fed. R. Civ.
P. 56 based on laches, collateral estoppel due to the Japanese
court decision against McBee, and various merits issues, including
McBee's alleged failure to make a sufficient showing of likelihood
of confusion to sustain his Lanham Act claims. McBee opposed but
not on grounds of insufficient discovery, nor did he file a Rule
56(f) affidavit.
The magistrate judge issued a recommended decision on
these motions on August 19, 2004.3 See McBee v. Delica Co., No.
02-198-P-C, 2004 WL 2634465 (D. Me. Aug. 19, 2004) (unpublished).
3
Delica's laches claim was rejected in a separate, earlier
recommended decision of the magistrate judge, see McBee v. Delica
Co., No. 02-198-P-C, 2003 WL 22586387 (D. Me. Nov. 10, 2003)
(unpublished), which was adopted by the district court.
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On the subject matter jurisdiction question, the magistrate judge
first noted that the Supreme Court had held, in Steele v. Bulova
Watch Co., 344 U.S. 280 (1952), that the Lanham Act could, in some
circumstances, be applied to reach extraterritorial conduct. See
McBee, 2004 WL 2634465, at *2. The magistrate judge also noted
that this circuit has never laid out a test for when such
extraterritorial application is appropriate. See id. at *2 n.3.
The magistrate judge thus utilized the test stated by the Second
Circuit in Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F.2d 633,
642 (2d Cir. 1956), described earlier. See McBee, 2004 WL 2634465,
at *2. However, the magistrate judge accepted the Fifth Circuit's
modification of the first prong in Am. Rice, Inc. v. Arkansas Rice
Growers Coop. Ass'n, 701 F.2d 408, 414 n.8 (5th Cir. 1983), and
required a showing of only "some" effect on United States commerce.
See McBee, 2004 WL 2634465, at *4. The magistrate judge
recommended that all of McBee's Lanham Act claims for injunctive
relief be dismissed because they failed two of the three Vanity
Fair factors, but that all of his Lanham Act damages claims be
allowed to go forward because they met two prongs of the test.4
See id. at *3-*4.
Delica filed an objection, arguing that all of McBee's
Lanham Act claims -- and not just those claims requesting
4
The magistrate judge recommended that Delica's motion for
summary judgment on the remaining Lanham Act damages claims and on
the various pendent state law claims be denied. See McBee, 2004 WL
2634465, at *5-*15.
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injunctive relief -- failed the Vanity Fair test for
extraterritorial application. McBee moved that the recommended
decision be modified. He conceded that American courts had no
extraterritorial jurisdiction to enjoin sales that occurred in
Japan, but argued that there was jurisdiction for his damages claim
against those sales. McBee also stated that he sought an
injunction against Delica's sales of "Cecil McBee" goods in the
United States and against Delica's use of the "Cecil McBee" website
to reach United States consumers; these forms of relief, he argued,
did not constitute extraterritorial applications of the Lanham Act
at all and therefore the court should assert subject matter
jurisdiction over them.
The district court amended the magistrate judge's
recommended decision by holding that it lacked subject matter
jurisdiction over all of McBee's Lanham Act claims, including both
those for injunctive relief and damages. See McBee v. Delica Co.,
No. 02-198-P-C, 2004 WL 2674360 (D. Me. Nov. 19, 2004)
(unpublished). The district court, like the magistrate judge,
applied essentially the test laid out by the Second Circuit in
Vanity Fair. See id. at *1. But the district court disagreed with
the magistrate judge's application of that test, finding that a
claim for damages, like a claim for injunctive relief, would create
a conflict with Japanese trademark law. See id. at *2. Finding
two of the three factors unsatisfied, the court ordered McBee's
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Lanham Act claims dismissed for lack of subject matter jurisdiction
without considering the effect of Delica's actions on United States
commerce. See id. With respect to this factor, however, the court
noted that Delica's only sales into the United States "appear to
have been made for purposes of this lawsuit alone." Id. at *1 n.2.
After dismissing McBee's Lanham Act claims, the court declined to
exercise supplemental jurisdiction over his pendent state law
claims. See id. at *2. This made it unnecessary for the court to
consider Delica's summary judgment motion on other bases.
On appeal, McBee renews his argument that his claims for
a domestic injunction, both against Delica's sales into the United
States and against its broadcasting of its website in the United
States, do not constitute extraterritorial applications of the
Lanham Act at all. Further, while McBee concedes that United
States courts lack jurisdiction over his Lanham Act claim for an
injunction against Delica's sales in Japan, he argues that the
district court had extraterritorial jurisdiction over damages
claims against those same sales. Delica responds by arguing that
United States courts lack extraterritorial jurisdiction over all of
McBee's Lanham Act claims, and further urges lack of personal
jurisdiction, preclusion due to collateral estoppel based on the
Japanese judgment, and laches as alternative grounds for
affirmance.
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III.
A. Framework for Assessing Extraterritorial Use of the Lanham Act
By extraterritorial application of the Lanham Act, we
mean application of the Act to activity (such as sales) of a
defendant outside of the territorial boundaries of the United
States. In addressing extraterritorial application of the Lanham
Act, we face issues of Congressional intent to legislate
extraterritorially, undergirded by issues of Congressional power to
legislate extraterritorially. Usually in addressing questions of
extraterritoriality, the Supreme Court has discussed Congressional
intent, doing so by employing various presumptions designed to
avoid unnecessary international conflict. See, e.g., Spector v.
Norwegian Cruise Line Ltd., 125 S. Ct. 2169, 2177 (2005); F.
Hoffman-La Roche Ltd. v. Empagran S.A., 124 S. Ct. 2359, 2366-73
(2004); see also EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248
(1991) ("It is a longstanding principle of American law that
legislation of Congress, unless a contrary intent appears, is meant
to apply only within the territorial jurisdiction of the United
States." (internal quotation marks and citation omitted)).
The parties characterize the extraterritoriality issue
as, at least in part, one of subject matter jurisdiction under the
Act, and it is often viewed that way. See, e.g., Levi Strauss &
Co. v. Sunrise Int'l Trading Co., 51 F.3d 982, 984 (11th Cir.
1995); Ocean Garden, Inc. v. Marktrade Co., Inc., 953 F.2d 500, 502
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(9th Cir. 1991); see also United Phosphorus, Ltd. v. Angus Chem.
Co., 322 F.3d 942, 945-51 (7th Cir. 2003) (en banc) (question
whether Sherman Act applied extraterritorially under the Foreign
Trade Antitrust Improvements Act (FTAIA), 15 U.S.C. § 6a, went to
subject matter jurisdiction of court).
The Supreme Court has long since made it clear that the
Lanham Act could sometimes be used to reach extraterritorial
conduct, but it has never laid down a precise test for when such
reach would be appropriate.5 Steele v. Bulova Watch Co., 344 U.S.
280 (1952); see also Arabian Am. Oil Co., 499 U.S. at 252-53
(distinguishing Steele). The circuit courts have established a
variety of tests for determining when extraterritorial application
of the Lanham Act is appropriate, treating different factual
contexts as all subject to the same set of criteria. See Vanity
Fair Mills v. T. Eaton Co., 234 F.2d 633, 642 (2d Cir. 1956); see
also Int'l Café, S.A.L., v. Hard Rock Café Int'l (U.S.A.), Inc.,
252 F.3d 1274, 1278-79 (11th Cir. 2001) (applying Vanity Fair);
Nintendo of Am., Ltd., v. Aeropower Co., 34 F.3d 246, 250-51 (4th
Cir. 1994) (adopting the Vanity Fair test, although requiring a
"significant effect" rather than a "substantial effect" on United
States commerce); Reebok Int'l, Ltd. v. Marnatech Enters., Inc.,
5
The Lanham Act was substantially amended in 1988, see
Trademark Law Revision Act of 1988, Pub. L. No. 100-667, 102 Stat.
3935, and was amended again in 1999, see Trademark Amendments Act
of 1999, Pub. L. No. 106-43, 113 Stat. 218, but the key
jurisdictional language of the Lanham Act has remained unchanged
since Steele.
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970 F.2d 552, 554-57 (9th Cir. 1992) (applying the jurisdictional
"rule of reason" from Timberlane Lumber Co. v. Bank of Am., 549
F.2d 597 (9th Cir. 1977): plaintiff must show (1) some effect on
United States commerce, (2) an effect that is sufficiently great to
be a cognizable injury to plaintiff under the Lanham Act, and (3)
the interests and links to American commerce must be sufficiently
strong in relation to those of other nations to justify, in terms
of comity, an extraterritorial application of the act); Am. Rice,
Inc. v. Ark. Rice Growers Coop. Ass'n, 701 F.2d 408, 414 & n. 8
(5th Cir. 1983) (modifying Vanity Fair's first prong to require
only "some effect" on United States commerce). This court has not
previously addressed the question.
Steele found that there was Lanham Act jurisdiction over
a defendant, selling watches in Mexico, who was a United States
citizen and whose "operations and their effects were not confined
within the territorial limits of a foreign nation."6 344 U.S. at
286. Defendant made no sales within the United States. The Court
held that the Lanham Act conferred broad jurisdiction in that its
purpose was to regulate "commerce within the control of Congress."
15 U.S.C. § 1127. The Act prohibits the use of certain infringing
6
The Court in a more recent case held that Title VII could not
be applied extraterritorially at all, even to domestic employees
working for domestic employers overseas. See Arabian Am. Oil Co.,
499 U.S. at 250-54. The Court held that Title VII's jurisdictional
language, in contrast to the language of the Lanham Act, did not
evince a Congressional intent to apply Title VII abroad sufficient
to overcome the presumption against such extraterritorial
application. See id.
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marks "in commerce." 15 U.S.C. § 1114(1); Id. § 1125(a).
Importantly, commerce is defined in the Act as "all commerce which
may lawfully be regulated by Congress." Id. § 1127.
The Steele Court did not define the outer limits of
Congressional power because it was clear that the facts presented
a case within those limits. The Steele Court explicitly and
implicitly relied on two different aspects of Congressional power
to reach this conclusion. First, it explicitly relied on the power
of Congress to regulate "the conduct of its own citizens," even
extraterritorial conduct. Steele, 344 U.S. at 285-86. This
doctrine is based on an idea that Congressional power over American
citizens is a matter of domestic law that raises no serious
international concerns, even when the citizen is located abroad.
See id. at 285-86 (citing Skiriotes v. Florida, 313 U.S. 69, 73
(1941) (Florida state criminal law banning taking of sponges from
high seas) and Branch v. Federal Trade Comm'n, 141 F.2d 31, 35 (7th
Cir. 1944) (federal unfair competition law)); see also F. Hoffman-
La Roche Ltd., 124 S. Ct. at 2367; Cook v. Tait, 265 U.S. 47, 54-56
(1924) (income tax law); Restatement (Third) of Foreign Relations
Law of the United States § 402(2) (1986) ("[A] state has
jurisdiction to prescribe law with respect to . . . the activities
. . . of its nationals outside as well as within its territory.").7
7
The nationality basis for extraterritorial jurisdiction is
also explicit in certain statutes. For example, both the treason
statute, see 18 U.S.C. § 1381, and the selective service statute,
see 50 U.S.C. App. § 453, apply to all American citizens regardless
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Second, Steele also implicitly appears to rely on
Congressional power over foreign commerce, although the Foreign
Commerce clause is not cited -- the Court noted that the
defendant's actions had an impact on the plaintiff's reputation,
and thus on commerce within the United States. See 344 U.S. at
286-87, 288. The Steele Court concluded that an American citizen
could not evade the thrust of the laws of the United States by
moving his operations to a "privileged sanctuary" beyond our
borders. Id. at 287.
For purposes of determining subject matter jurisdiction,
we think certain distinctions are important at the outset. The
reach of the Lanham Act depends on context; the nature of the
analysis of the jurisdictional question may vary with that context.
Steele addressed the pertinent Lanham Act jurisdictional analysis
when an American citizen is the defendant. In such cases, the
domestic effect of the international activities may be of lesser
importance and a lesser showing of domestic effects may be all that
is needed. We do not explore this further because our case does
not involve an American citizen as the alleged infringer.
When the purported infringer is not an American citizen,
and the alleged illegal activities occur outside the United States,
then the analysis is different, and appears to rest solely on the
foreign commerce power. Yet it is beyond much doubt that the
of whether they might be located abroad.
-21-
Lanham Act can be applied against foreign corporations or
individuals in appropriate cases; no court has ever suggested that
the foreign citizenship of a defendant is always fatal. See, e.g.,
Sterling Drug, Inc. v. Bayer AG, 14 F.3d 733, 746 (2d Cir. 1994);
Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 429
(9th Cir. 1977). Some academics have criticized treating the
Lanham Act differently from patent and copyright law, which
generally are not applied extraterritorially. See C. Bradley,
Extraterritorial Application of U.S. Intellectual Property Law, 37
Va. J. Int'l L. 505 (1997); but see R. Schechter, Comment, The Case
For Limited Extraterritorial Reach of the Lanham Act, 37 Va. J.
Int'l L. 619 (1997). Nonetheless, the Supreme Court recently
reaffirmed the Steele approach to extraterritorial jurisdiction
under the Lanham Act by distinguishing it in Arabian American Oil
Co. See 499 U.S. at 252-53. The question becomes one of
articulating a test for Lanham Act jurisdiction over foreign
infringing activities by foreign defendants.
The decisions of the Supreme Court in the antitrust
context seem useful to us as a guide. The Court has written in
this area, on the issue of extraterritorial application, far more
recently than it has written on the Lanham Act, and thus the
decisions reflect more recent evolutions in terms of legal analysis
of extraterritorial activity. As the Court noted in Steele, Lanham
Act violations abroad often radiate unlawful consequences into the
-22-
United States, see 344 U.S. at 288; see also Schecter, supra, at
629-30. One can easily imagine a variety of harms to American
commerce arising from wholly foreign activities by foreign
defendants. There could be harm caused by false endorsements,
passing off, or product disparagement, or confusion over
sponsorship affecting American commerce and causing loss of
American sales. Further, global piracy of American goods is a
major problem for American companies: annual losses from
unauthorized use of United States trademarks, according to one
commentator, now amount to $200 billion annually. See Schecter,
supra, at 634. In both the antitrust and the Lanham Act areas,
there is a risk that absent a certain degree of extraterritorial
enforcement, violators will either take advantage of international
coordination problems or hide in countries without efficacious
antitrust or trademark laws, thereby avoiding legal authority.
In Hartford Fire Ins. Co. v. California, 509 U.S. 764
(1993), the Supreme Court addressed the issue of when a United
States court could assert jurisdiction over Sherman Act claims
brought against foreign defendants for a conspiracy that occurred
abroad to raise reinsurance prices. It held that jurisdiction over
foreign conduct existed under the antitrust laws if that conduct
"was meant to produce and did in fact produce some substantial
effect in the United States." Id. at 796; see also United States
v. Nippon Paper Indus. Co., 109 F.3d 1, 4 (1st Cir. 1997); Doe I v.
-23-
Unocal Corp., 395 F.3d 932, 961 (2d Cir. 2002) (applying the
substantial effects test to determine whether jurisdiction should
be asserted over foreign securities fraud).8 The Hartford Fire
Court also held that comity considerations, such as whether relief
ordered by an American court would conflict with foreign law, were
properly understood not as questions of whether a United States
court possessed subject matter jurisdiction, but instead as issues
of whether such a court should decline to exercise the jurisdiction
that it possessed. See id. at 797-98 & n.24.
The framework stated in Hartford Fire guides our analysis
of the Lanham Act jurisdictional question for foreign activities of
foreign defendants. We hold that the Lanham Act grants subject
matter jurisdiction over extraterritorial conduct by foreign
8
This effects test had its origins in United States v.
Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945), although it took
a considerable period of time to gain widespread acceptance. See
generally 1 W. Fugate, Foreign Commerce and the Antitrust Laws §
2.10 (5th ed. 1996). An older and now discredited view, reflected
in American Banana Co. v. United Fruit Co., 213 U.S. 347, 356
(1909), was that antitrust laws were wholly territorial in nature.
Notably, Steele cited American Banana and rejected a territorial
interpretation of that case; it read American Banana as applying
only when there were no effects in the United States from the
foreign antitrust violation. See Steele, 344 U.S. at 288.
In 1982, Congress passed the FTAIA, which provided that the
Sherman Act "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" on United States commerce. 15 U.S.C. § 6(a);
see 1 Fugate, supra, § 2.14. The Supreme Court has never explained
the relationship between the FTAIA and the older, judicially-
created effects test; thus it remains unclear the extent to which
the FTAIA is a codification of that test and the extent to which
the FTAIA amends it. See Hartford Fire, 509 U.S. at 796 n.23; see
also Nippon Paper, 109 F.3d at 4.
-24-
defendants only where the conduct has a substantial effect on
United States commerce.9 Absent a showing of such a substantial
effect, at least as to foreign defendants, the court lacks
jurisdiction over the Lanham Act claim. Congress has little reason
to assert jurisdiction over foreign defendants who are engaging in
activities that have no substantial effect on the United States,
and courts, absent an express statement from Congress, have no good
reason to go further in such situations. See 1A P. Areeda & H.
Hovenkamp, Antitrust Law ¶ 272f (2d ed. 2000) ("When a government's
interest in a transaction is remote, minor, tangential, or
otherwise insignificant, that government would presumably not seek
to control it."); 1 W. Fugate, Foreign Commerce and the Antitrust
Laws § 2.13, at 99-100 (5th ed. 1996).
9
The traditional extraterritorial test for jurisdiction in the
antitrust area has often, including in Hartford Fire, been
articulated as containing a requirement that the defendant intend
to cause the substantial effects on United States commerce that
actually have been created. 509 U.S. at 796. The FTAIA's
"reasonably foreseeable" requirement appears to be related to this
traditional intent requirement. See 15 U.S.C. § 6a. We need not
and do not decide whether a defendant's intent to target United
States commerce plays any role in the jurisdictional inquiry for
purposes of extraterritorial application of the Lanham Act --
either, for example, as a requirement in addition to the
substantial effect requirement, or instead as a factor that, if
present, may reduce the amount of effects on United States commerce
that a plaintiff must show. It is evident that Delica, in this
case, had no intent to target United States commerce.
We do note that lack of intent can sometimes change the scope
of remedies under the Lanham Act. For example, an innocent
infringer can generally only be subject to an injunction against
future use. See 15 U.S.C. § 1114(2). This, of course, is not a
jurisdictional matter.
-25-
The substantial effects test requires that there be
evidence of impacts within the United States, and these impacts
must be of a sufficient character and magnitude to give the United
States a reasonably strong interest in the litigation. See, e.g.,
1 Fugate, supra, §§ 2.9, 2.12, 2.13; see also 1A Areeda &
Hovenkamp, supra, ¶ 272f2; United Phosphorus, 322 F.3d at 952-53.
The "substantial effects" test must be applied in light of the core
purposes of the Lanham Act, which are both to protect the ability
of American consumers to avoid confusion and to help assure a
trademark's owner that it will reap the financial and reputational
rewards associated with having a desirable name or product. See,
e.g., Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S.
23, 33-34 (2003); see also Atl. Richfield Co. v. ARCO Globus Int'l
Co., 150 F.3d 189, 193-94 (2d Cir. 1998). The goal of the
jurisdictional test is to ensure that the United States has a
sufficient interest in the litigation, as measured by the interests
protected by the Lanham Act, to assert jurisdiction.
Of course, the Vanity Fair test includes a "substantial
effects" inquiry as part of its three-part test.10 We differ from
10
Some courts have criticized Vanity Fair's "substantial
effects" inquiry as having been taken out of context, and have
replaced it with a much less demanding "some effect" inquiry.
These courts state that the "substantial effects" test was not
clearly embraced in Steele and stems from attempts to determine
when local commerce has a sufficient effect on interstate commerce
to be congressionally reachable, which has no relevance to the
question of determining when wholly foreign commerce can be
reached. See Am. Rice, 701 F.2d at 414 n.8; Wells Fargo & Co. v.
Wells Fargo Express Co., 556 F.2d 406, 428 (9th Cir. 1977).
-26-
the Vanity Fair court in that we disaggregate the elements of its
test: we first ask whether the defendant is an American citizen,
and if he is not, then we use the substantial effects test as the
sole touchstone to determine jurisdiction.
If the substantial effects test is met, then the court
should proceed, in appropriate cases, to consider comity. We also
transplant for Lanham Act purposes Hartford Fire's holding that
comity considerations are properly analyzed not as questions of
whether there is subject matter jurisdiction, but as prudential
questions of whether that jurisdiction should be exercised. See
Hartford Fire, 509 U.S. at 798 n.24. Our analysis differs again
from Vanity Fair on this point. See Vanity Fair, 234 F.2d at 642.
Vanity Fair and other cases have considered as part of the basic
jurisdictional analysis whether the defendant acted under color of
protection of the trademark laws of his own country. We disagree
and do not see why the scope of Congressional intent and power to
create jurisdiction under the Lanham Act should turn on the
existence and meaning of foreign law.
Congress could, of course, preclude the exercise of such
Lanham Act jurisdiction by statute or by ratified treaty. Or it
American Rice involved domestic defendants, although the court did
not restrict the modification of its test to such situations. The
Supreme Court has embraced the "substantial effects" test for
extraterritorial application of the antitrust laws, and Congress,
in the FTAIA, has either codified that understanding or established
an even more restrictive test. We see no reason to treat the
Lanham Act differently.
-27-
could by statute define limits in Lanham Act jurisdiction in such
international cases, as it has chosen to do in the antitrust area.
See 15 U.S.C. § 6a. It has not done so.
B. Application of the Framework
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).
1. Claim for Injunction Barring Delica's United States Sales
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
11
As we noted above, the subject matter jurisdiction issue was
determined on a summary judgment record, after extensive discovery;
McBee did not file a Rule 56(f) affidavit below stating that he
needed more discovery. We note also that in this context, the
jurisdictional inquiry will generally not be wholly distinct from
the merits. See 1A Areeda & Hovenkamp, supra, ¶ 273a.
-28-
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.
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 Trademarks 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).
-29-
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:
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 . . . .
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).
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
12
We do not reach the more complicated question of whether
comity concerns would ever allow a court to decline to exercise
jurisdiction when an injunction is sought against sales in the
United States.
-30-
2. Claim for Injunction Barring Access to Internet Website
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.
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
13
Preliminarily, Delica disputes whether it is technologically
possible to prevent access by American consumers while
simultaneously allowing access to the website in the rest of the
world. We lack the information to resolve this dispute, and at any
rate we need not resolve it in order to decide this dispute.
14
The cases cited by McBee involve such situations and are
therefore easily distinguishable; as well, they contain no analysis
at all of the question McBee has raised. See Euromarket Designs,
Inc. v. Crate & Barrel Ltd., 96 F. Supp. 2d 824, 831-33 (N.D. Ill.
-31-
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.
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:
2000); Playboy Enters. v. Chuckleberry Publ'g, Inc., 939 F. Supp.
1032, 1039-40 (S.D.N.Y. 1996).
-32-
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.
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).
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
-33-
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.
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.
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.
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
-34-
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.
3. Claim for Damages for Delica's Japanese Sales
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
-35-
occurred, much less that it has any substantial effect on United
States commerce.
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.
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
-36-
subsequently tend to enter the United States in some way and in
substantial quantities. See, e.g., Steele, 344 U.S. at 286;
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.
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.
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
-37-
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).
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.
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
-38-
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.
15
Were we to reach comity principles, they would most likely
counsel for dismissal of McBee's claim seeking damages for Delica's
sales in Japan. McBee argues that so long as he seeks only damages
and not an injunction, there is no "true conflict" with Japanese
law because it would be theoretically possible for Delica to comply
with both Japanese and United States law. See Hartford Fire, 509
U.S. at 798-99. McBee's argument makes no sense: an injunction
would no more create a "true conflict" under this definition than
damages, for under either form of relief it would be theoretically
possible for Delica to comply with both nations' laws by not using
the trademark. There is no meaningful distinction between an
injunction and damages for this purpose. The reasoning developed
in the antitrust context in Hartford Fire is not "automatically
transferable" to the trademark context: "It is one thing for the
British reinsurers in Hartford Fire to be barred under United
States law from boycotting activity that they might be free to
engage in without violating British law. But it is quite a
different thing for the holder of rights in a mark under German law
to be ordered to refrain from uses of that mark protected by German
law." Sterling Drug, 14 F.3d at 746-47.
-39-
C. Frivolousness of Claim Based on Delica's Product Sales in the
United States
Because we do have subject matter jurisdiction over
McBee's claim for an injunction against Delica's sales in the
United States,16 we proceed on that claim.
We dispose of a preliminary issue: whether there is any
required order for deciding the remaining issues. We would
ordinarily next reach Delica's defense that the federal district
court, sitting in Maine, lacked personal jurisdiction over it.
See, e.g., United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 46
(1st Cir. 1999). But we choose to decide this case on much simpler
grounds. Although the Supreme Court in Steel Co. v. Citizens for
a Better Env't, 523 U.S. 83 (1998), generally barred the practice
of "hypothetical jurisdiction," we have noted that "the rule does
not appear to be an absolute one," Parella v. Ret. Bd. of the R.I.
Employees' Ret. Sys., 173 F.3d 46, 53-56 (1st Cir. 1999), and we
have consistently interpreted the rule as applying in its strict
form only to issues going to Article III's requirements. See,
e.g., Cozza v. Network Assocs., Inc., 362 F.3d 12, 15 (1st Cir.
16
It is true that we lack subject matter jurisdiction over
claims that involve no real federal controversy because they
"clearly appear[] to be immaterial and made solely for the purpose
of obtaining jurisdiction or where such a claim is wholly
insubstantial and frivolous." Steel Co. v. Citizens for a Better
Env't, 523 U.S. 83, 89-90 (1998). This test goes to whether,
legally, there is any real federal interest involved in the case.
The fatal flaw in McBee's claim here, as we explain below, is that
the only sales made to the United States were sales instigated at
his own behest. This sort of factual weakness in a claim does not
go to subject matter jurisdiction.
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2004); Restoration Pres. Masonry v. Grove Europe Ltd., 325 F.3d 54,
59-60 (1st Cir. 2003); United States v. Woods, 210 F.3d 70, 74 n.2
(1st Cir. 2000); Parella, 173 F.3d at 53-56.
The requirements of personal jurisdiction are not rooted
in Article III, although they do have constitutional resonance
through the Due Process clause. See Ins. Corp. of Ir. v. Compagnie
des Bauxites de Guinee, 456 U.S. 694, 702-03 (1982). Unlike
subject matter jurisdiction under Article III, which goes to the
fundamental institutional competence of the court and can be raised
sua sponte at any time, personal jurisdiction is an individual
liberty right and is therefore waivable; a court cannot raise
personal jurisdiction sua sponte. See id. at 702-05. In Parella,
we held that Eleventh Amendment immunity is not subject to the
strict form of Steel Co. and can be bypassed in certain cases,
stressing the waivability of the immunity and the fact that a court
need not raise it sua sponte. See Parella, 173 F.3d at 54-55. As
in the sovereign immunity area, we do not wish to force defendants
to expend resources on difficult personal jurisdiction issues or
courts to reach more difficult issues when there is an
exceptionally easy method -- on the merits -- for the defendant to
prevail. See id. at 56.
Here, where McBee's claim for an injunction barring
Delica's sales in the United States is wholly without merit, and
where the personal jurisdiction question is briefed only as a
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subsidiary issue by both sides, providing us with little guidance,
we have the power to pretermit the personal jurisdiction question.17
We reach these merits now, noting that the questions appealed to us
were decided on a summary judgment record and that we may affirm on
any ground supported by that record, see, e.g., Cimon v. Gaffney,
401 F.3d 1, 4 (1st Cir. 2005), as well as that the ground for our
decision on the merits is closely tied to the facts we used to
decide the jurisdictional question.
As to the merits, there is no evidence of existing
confusion or dilution due to Delica's past sales, since these few
sales were all made to McBee's own investigators, who were brought
in to assist in this litigation and therefore fully understood
McBee's lack of any relationship with Delica. See Millenium
Enters., Inc. v. Millenium Music, Inc., 33 F. Supp. 2d 907, 911 (D.
Or. 1999) (gravamen of unfair competition claim is whether
defendant's actions have created confusion; sale to plaintiff's
agent could not have created any). There is no evidence of any
other sales, nor any evidence that Delica has any desire to sell
into the United States in the future. All the evidence, in fact,
17
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999), is not
to the contrary. Although Ruhrgas contained language on the
importance of personal jurisdiction, the decision merely
established that a court can, in some circumstances, dispose of a
case on a different threshold ground before reaching subject matter
jurisdiction. See id. at 584-85; see also Tenet v. Doe, 125 S. Ct.
1230, 1234 n.4 (2005). The thrust of Ruhrgas was to increase
judicial flexibility, not to decrease it. See Ruhrgas AG, 526 U.S.
at 587-88.
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is to the contrary. Thus, there is no justification for injunctive
relief, and summary judgment must enter for Delica on this claim.
Absent any viable federal claim, the district court's
dismissal of all of McBee's pendent state law claims (without
prejudice to their being refiled in state court) was fully
appropriate and was not an abuse of discretion -- McBee has not
argued otherwise. See 28 U.S.C. § 1367(c); González-de-Blasini v.
Family Dep't, 377 F.3d 81, 89 (1st Cir. 2004). We need not reach
Delica's laches or collateral estoppel arguments.
IV.
The district court's decision ordering judgment for the
defendant Delica is affirmed. Costs are awarded to Delica.
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