Intellectual Property Law

Extra-territorial Application of Lanham Act to 43(a) False Advertising Case

By Marty Schwimmer

I think this is an unusual decision, so if you know of similar ones, please send them along. A Southern District of New York court last week denied reconsideration of its refusal to dismiss a 43(a) false advertising claim arising from activities in Germany. In so doing it adopted an expansive view of the reach of the false advertising provisions of the Lanham Act and of what constitutes 'commerce' under the Act (matched by, in my view, few other cases, most notably the Casino du Monte Carlo decision from the Fourth Circuit).

The three prong Vanity Fair test is the well-settled test in this circuit determining whether the Lanham Act can be applied to activities abroad (234 F.2d 633 (2d Cir 1956).

1. Is there a substantial affect on US commerce;
2. Is there a US defendant;
3. Is there no conflict with the substantive law of the non-US jursidiction affected.

So, for example, a US company sold PENNSYLVANIA cream cheese in Bolivia, and Kraft (owner of the PHILADELPHIA cream cheese mark) sued the US company here (necessitating an evaluation by the US court as to how Bolivian law would handle the matter).

AFAIK, the doctrine tends to be applied, for the most part, to trademark infringement cases relating to goods, but that's only as far as I know. There was a 43(a) case a while back involving basketballs, but I think the non-US portion was trimmed from the case.
Now, the doctrine has been applied, to services, under a 43(a) false advertising case. In NewMarkets v Oppenheim, decision below, Plaintiff contracted with Defendant to form an investment fund. Defendant allegedly circulated the prospectus of a competing fund in Germany falsely stating that plaintiff would manage that fund. Plaintiff sued here, alleging, among other causes, 43(a) false advertising. Court applies Vanity Fair test and determines it will exercise subject matter jurisdiction. Defendant moves for reconsideration saying that use in Germany is not use in commerce, and court denies motion (see text of decision at bottom), holding that the Vanity Fair test determines what is and what is not commerce regulated by Congress.

Some background here and here.

Decision Extra-territorial Jurisdiction Lanham Act

Decision Reconsideration Extra-territorial

Full post as published by Trademark Blog on November 06, 2009 (boomark / email).