District Court Permits Trademark Infringement Claim to Proceed where US Defendant Ordered Alleged Infringement in Canada that Injured US Plaintiff

The World in U.S. Courts: Spring 2017 - Intellectual Property – Trademarks/Lanham Act | January.25.2017

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Wal-Mart Stores, Inc., v. Case-Mate, Inc., US District Court for the Western District of Arkansas, January 25, 2017

Case-Mate sold a line of computer and electronics accessories through its own website as well as retail outlets, including Wal-Mart, and holds US and Canadian trademarks. After selling the Case-Mate line for some time, Wal-Mart began marketing a line of office and school supply products under the name “Casemate,” in retail stores and on its website, both in the US and in Canada, and sought trademark protection for that mark in both countries. No such trademarks have yet issued. As pertinent here, Case-Mate sued Wal-Mart under the Lanham Act for trademark infringement and for using a mark in a manner likely to cause confusion. Wal-Mart argued that its Canadian sales were not properly part of the US case and moved to dismiss the claims to the extent they were based on sales of Casemate products outside the US.

The Court applied a three-part test for determining whether alleged trademark infringement in Canada could be redressed under US law, with an affirmative answer in each case supporting the claim: “(1) whether the defendant’s conduct has a substantial effect on United States commerce; (2) whether the defendant is a United States citizen—as the United States retains considerable power to regulate the conduct of its own citizens in foreign countries; and (3) whether granting relief would entail no conflict with trademark rights already established under foreign law. Wal-Mart did not dispute that the second and third parts of the test—the ones deemed most important—suggested that US jurisdiction was appropriate. Rather, it argued that Case-Mate had not alleged that Wal-Mart’s use of Casemate in Canada had any effect on US commerce. The Court rejected this argument, concluding that Wal-Mart was improperly seeking to limit the ways in which an injury could be shown to (i) press coverage of Wal-Mart’s alleged infringement in Canada, which might injure Case-Mate’s goodwill in the US, and (ii) the possibility that Wal-Mart’s Casemate-branded goods sold in Canada might enter the US. The Court found that a claim could otherwise be based on economic injury allegedly suffered by a US company in the US as a result of infringement elsewhere—here, in Canada—especially if the allegedly unlawful conduct was itself directed by a US company from its US headquarters.

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