The World in U.S. Courts: Winter 2014 - Intellectual Property (IP)
Plaintiff staged "museum quality" exhibitions of memorabilia from the RMS Titanic. Defendant Zaller and related companies were alleged to have stolen the plaintiffs’ ideas abroad and staged a competing exhibition in Macau. RMS Titanic sued for violations of the Lanham Act and related claims of fraud and breach of contract. The defendants moved to dismiss on the ground that federal jurisdiction did not exist over claims arising outside of the U.S.
The court surveyed the different tests for applying the Lanham Act extraterritorially, none of which was binding on it, and adopted the "McBee" test formulated by the First Circuit: Jurisdiction exists if the defendant is a U.S. citizen or, regardless of citizenship, if the alleged violations occurred in the U.S. If the defendant is not a U.S. citizen and the acts complained of occurred outside the U.S., jurisdiction would exist only if there was a "substantial effect" on U.S. commerce, judged in light of the goals of the Lanham Act.
The Court found that it had jurisdiction over the U.S. defendants because of their citizenship and also because their marketing efforts in the U.S. were alleged to have caused confusion among potential customers of RMS Titanic. No jurisdiction was found as to a non-U.S. defendant whose only role was to stage the exhibition in Macau.