The World in U.S. Courts: Fall 2014 - Intellectual Property (Trademark)
July.24.2014
Plaintiff German and Italian manufacturers of amusement rides sued Chinese competitors under the Lanham Act based on the latter's alleged infringement of trademarks in promotions at an international trade show in Florida. For reasons not relevant here, the Chinese manufacturers did not appear to defend the case and a default judgment was entered, with damages and injunctive relief ordered. The Chinese manufacturer ultimately retained counsel and sought a withdrawal of the default judgment.
The U.S. District Court in Florida concluded that it had personal jurisdiction over the defendants and that no basis existed to vacate the default judgment. However, it revisited the question whether the Lanham Act confers jurisdiction over the Chinese manufacturers' "extraterritorial sales," which had been the basis for its previous damages award. In so doing, the Court applied the jurisdictional rule applicable in the Eleventh and Second Circuits, which looks to whether the defendants are U.S. citizens, the non-U.S. activity had "substantial effects" in the U.S., and exercising jurisdiction would "interfere with the sovereignty of another nation." The Court found the first two factors to suggest the absence of jurisdiction: the defendants were all Chinese companies, and the plaintiffs merely submitted a declaration in support of damages that their reputation "could" be affected in the U.S. by the defendants' conduct. These factors were deemed to be dispositive, and the Court concluded that the defendant's extraterritorial sales could not give rise to a damages award. It did, however, retain an injunction prohibiting the defendants from continuing to market their amusement rides in Florida, which conduct had been found to violate the Lanham Act.
[Editor's note: the Mauber Rides case is also addressed under the Personal Jurisdiction heading of this report.]