Intellectual Property - Trademark - The World in U.S. Courts: Summer 2019

September.11.2019

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Use of Allegedly Infringing Marks by Non-US Entities Fails to Support Extraterritorial Application of the Lanham Act Because the Claimant Failed to Document Potential US Effects

Optima Media Group Limited v. Bloomberg L.P., US District Court for the Southern District of New York, April 17, 2019

Bloomberg contracted with Optima entities (none a US company) to produce and distribute Africa-specific business news programming. Bloomberg terminated the contract and Optima sued; Bloomberg counterclaimed, contending as relevant here that Optima used Bloomberg’s US trademarks without authorization. The alleged infringement arose from Optima’s claimed use of Bloomberg marks in various communications channels—including website domain names and Facebook, Twitter, and YouTube pages—after the contract authorizing use of the marks was terminated.

Because the allegedly infringing conduct occurred outside the US, the Court considered the circumstances in which the Lanham Act is applied extraterritorially, identifying three factors, at least two of which must be satisfied for application of the US law: (i) whether the defendant is a US citizen, (ii) whether the defendant’s conduct had a substantial effect on US commerce, and (iii) whether the absence of ex-US trademark rights avoids potential conflicts arising from application of the US law. The Court found the citizenship test not to be satisfied, despite the non-US Optima entities having agreed that their contract with Bloomberg would be governed by New York law and disputes resolved in a New York forum. It found the third test met, however, as no non-US trademark rights were alleged to protect Optima’s actions.

The Court’s most substantial discussion related to the second test. Bloomberg alleged an effect on US commerce first through other potential non-US licensees being deterred from seeking to contract with the US company. The Court rejected this argument as conclusory and speculative: “Bloomberg does not specify any potential licensees, any plans Bloomberg has to seek out such licensees, the impairment of any actual efforts to seek out licensees, or any existing authorized licensees who may be harmed.” The Court also found that Bloomberg had provided no basis to conclude, as required, that the effect on US commerce would be “substantial.”

Bloomberg next alleged US consumer confusion, an allegation that if given credence is generally sufficient to create a “substantial” effect on US commerce. Calling it a “closer question,” the Court nevertheless rejected this argument as well on grounds that Bloomberg had failed to make any factual allegations that would make an inference of the existence or magnitude of any confusion “plausible”: “Bloomberg never alleges that it has received any reports of U.S. consumers actually viewing these sites, or even that U.S. consumers viewed these sites at all, whether online or while traveling. Nor does Bloomberg allege any facts that would make it plausible that these sites were, in fact, viewed by U.S. consumers. . . . The mere fact that these sites existed or continue to exist on the Internet makes it possible that U.S. consumers have viewed them, but it does not make it plausible.” The Court thus declined to apply the Lanham Act extraterritorially to Optima’s ex-US conduct.

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