U.S. District Court Enters Order Prohibiting Use of Confusing Mark in Canada, Even Though No U.S. Consumers Confused and Plaintiff Held No Registered Canadian Mark

The World in U.S. Courts: Spring 2014 - Intellectual Property (Trademark)

Global Healing Center LP v. National Brands Inc., U.S. District Court for the Southern District of Texas, March 6, 2014

Plaintiff Global Healing Center (GHC) is a leading international manufacturer and distributor of nutritional supplements and "natural health care products." Among its leading brands is Oxy-Powder, which purports to be an "oxygen based colon cleaner." Following GHC’s termination of a manufacture and supply agreement with a defendant, related entities of the defendant (all U.S. companies) began promoting and selling in Canada a competing product called "OxyHealth Powder," which bore a label the court ultimately found confusingly similar to GHC’s label for Oxy-Powder. GHC holds trademark rights for Oxy-Powder in the U.S. but not in Canada.

GHC sued the defendants in U.S. District Court in Houston alleging a variety of claims principally centered on the Lanham Act and trademark infringement. Among other things, it sought an injunction against the defendants’ sale and promotion of OxyHealth Powder in Canada.

The court first established that the substantive requirements of a Lanham Act violation had been satisfied: That GHC owned a valid mark and that the defendants’ actions had created a likelihood of confusion among consumers. Second, the court considered whether the fact that any consumer confusion would exist in Canada, where GHC did not own trademark for its product, was fatal to GHC’s claims. As to this question, the court applied the "Bulova factors" enunciated in a leading New York decision and found that they were satisfied and so jurisdiction would exist: (1) The defendants were U.S. entities; (2) the activities "affected U.S. commerce" (with the court stating that "most of Defendants' infringing activities occurred in the United States including designing the infringing label, printing the labels, affixing the labels, advertising the infringing product, offering to sell the product, selling the product, manufacturing the product, entering into a distribution agreement to sell the product, shipping the product, and receiving payment for the product"); and (3) the defendants did not have superior rights to use the mark in Canada. Of particular note with respect to the second factor, the court concluded that it was irrelevant that U.S. consumers had not been deceived, since U.S. commerce was otherwise implicated.

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