Recent Ninth Circuit Ruling May Make It Easier to Sue Foreign Trademark Infringers
It is not uncommon for a United States business to find that its trademark is being used by persons outside the U.S. to market similar goods or services in the United States. This can kick off a complicated legal analysis as to whether the business has standing to bring a claim, the cost of such a claim and the risks of not bringing a claim. This analysis can be impacted by fears that a lack of enforcement may weaken the ability to protect the business’ trademark rights in the future.
A recent ruling by a panel of Ninth Circuit judges may make the task of enforcement easier. (The Ninth Circuit Court of Appeals decides cases arising in the states of Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington; cases may be appealed to the U.S. Supreme Court from the Ninth Circuit.) Although the decision is not binding on courts nationwide, it may persuade other Circuit Courts of Appeals to adopt the Ninth Circuit’s reasoning, thereby paving the way for lower costs and quicker resolutions in lawsuits involving claims of trademark infringement by foreign entities.
The case at issue, San Antonio Winery, Inc. v. Jiaxing Micarose Trade Co., Ltd., involves a California winery’s lawsuit against a Chinese company. San Antonio Winery, Inc. (San Antonio) is owned and operated by the Riboli family. The winery owns federal registrations for the trademarks RIBOLI and RIBOLI FAMILY, which it has used in connection with wine and other alcoholic beverages since 1998. Jiaxing Micarose Trade Co., Ltd. (Jiaxing) obtained a U.S. trademark registration for RIBOLI for use in connection with certain items of clothing in 2018. In 2020, Jiaxing applied to register RIBOLI for goods related to wine (e.g., cocktail shakers, wine pourers, and miscellaneous kitchen items). After learning that Jiaxing was selling goods under the RIBOLI mark in the U.S. through sites like Amazon.com, San Antonio sued Jiaxing for trademark infringement, trademark dilution, false designation of origin, and various state law claims in the U.S. District Court for the Central District of California. San Antonio sought to prohibit Jiaxing from using the RIBOLI mark, to cancel the 2018 registration for RIBOLI, and to stop the U.S. Patent and Trademark Office (USPTO) from granting the 2020 application.
Because serving process on foreign companies can be complicated and time-consuming, San Antonio turned to the provisions of § 1(e) of the Lanham Act, 15 U.S.C. § 1051(e). The Lanham Act, which governs the use and registration of trademarks in the U.S., outlines the permitted methods for serving process (i.e., delivering the complaint and summons to the defendant in a lawsuit) on foreign trademark applicants. Section 1(e) of the Lanham Act states that a foreign trademark applicant may designate a U.S. resident to receive notices or process for the applicant in “proceedings affecting the mark.” The law states that if a foreign applicant elects not to designate a U.S. resident for this purpose, or if the person cannot be found, notices or process addressed to the foreign applicant may be served on the Director of the USPTO.
Relying on this provision of the Lanham Act, San Antonio first attempted to contact the U.S.-based attorney who had assisted Jiaxing with its trademark applications to see whether the attorney would accept service on Jiaxing’s behalf. The attorney did not respond, so the winery served process on the Director of the USPTO. The USPTO sent copies of the documents to Jiaxing and added them to the relevant trademark files.
Jiaxing failed to appear in the case. However, the district court denied the winery’s motion for default judgment on the ground that Jiaxing was not properly served, deciding that service on the Director of the USPTO is only permitted in administrative proceedings before the USPTO. Federal district courts are split as to whether the procedure for serving notices or process on the Director of the USPTO applies to both trademark-related court proceedings and administrative proceedings before the USPTO, with some courts determining that the means of service only applies to the latter. Until this case, no Circuit Court of Appeals had addressed the question.
In an order filed on November 14, 2022, the panel of Ninth Circuit judges vacated the district court’s order and declared that the means of serving process on the Director of the USPTO outlined in § 1(e) of the Lanham Act does apply to court proceedings. The Ninth Circuit judges reasoned that the plain meaning of “proceedings,” as used in the statute, includes court proceedings. Further, courts can “affect” trademarks by, among other things, determining a party’s right to registration, ordering cancelation of a registration, or restoring a canceled registration. The judges also reasoned that the word “process” in the statute would be superfluous if the manner of serving process only applied in administrative proceedings before the USPTO where “process” is not served.
Allowing persons and companies in the U.S. to serve trademark-related lawsuits directly through the USPTO could significantly reduce the amount of time plaintiffs must wait to resolve claims of trademark infringement or dilution against foreigners whose marks harm the plaintiffs’ brand. Note, however, that this manner of service of process is only available when the foreign entity has already sought trademark protection in the U.S. by filing an application with the USPTO.
If you have questions about the Ninth Circuit’s ruling and its implications, please contact one of the specialists in Koley Jessen’s Intellectual Property Practice Area.