Continuing Uncertainty Over the Protection of Well-Known Marks in the United States

Continuing Uncertainty Over the Protection of Well-Known Marks in the United States

Graeme Dinwoodie is a Professor of Law at the Chicago-Kent College of Law and is an IP Osgoode Research Affiliate.

The well-known marks doctrine provides an exception to the general rule of territoriality and will protect a foreign mark that is well-known but not used in the United States.  Although it has long been assumed that U.S. federal law contained such an exception, this assumption was cast into doubt last year by the Court of Appeals for the Second Circuit.  In ITC Ltd. v. Punchgini, Inc., 482 F.3d 135 (2d Cir. 2007), the Second Circuit held that federal trademark and unfair competition law did not recognize a "well-known marks" exception to the principle of territoriality.  The court acknowledged that the doctrine was mandated by international law but found that the Lanham Act provided no basis on which to recognize it.  The court was unwilling to develop the doctrine as a matter of policy notwithstanding that "a persuasive policy argument can be advanced in [its] support."

Punchgini conflicts directly with the decision of the Court of Appeals for the Ninth Circuit in Grupo Gigante S.A. De CV  v. Dallo & Co., Inc., 391 F.3d 1088 (9th Cir. 2004), which recognized the well-known marks doctrine under federal law as a matter of trademark policy.  This split prevents uniform national enforcement of trademark law, which is one of the basic purposes of the Lanham Act.  Moreover, failure to protect well-known marks is inconsistent with international obligations of the United States, at a time when U.S. negotiators have been keen to secure equivalent protection for U.S. mark owners abroad.

The complexities of the situation in the United States were only exacerbated by the fact that in Punchgini, the Second Circuit concluded that, although the doctrine did not exist under federal law, the unfair competition law of the State of New York might recognize the doctrine.  Seeking guidance, the court certified questions about state law to the New York Court of Appeals, and the answers from that court effectively offered some protection to well-known marks.  See ITC Limited v. Punchgini, 9 N.Y.3d 467 (2007).  The New York Court of Appeals rephrased the certified questions somewhat, allowing it to characterize the New York case law in its own terms, and held that "New York recognizes common law unfair competition claims [that might protect certain foreign marks against those who compete unfairly in New York], but not the ‘famous' or ‘well-known' marks doctrine."

The New York court held that protecting well-known marks under New York unfair competition law required that the defendants deliberately copied plaintiff's mark and that the relevant consumers in New York "primarily associate" the plaintiff's mark with its goods or services. However, when the case returned to the federal courts, the Court of Appeals for the Second Circuit affirmed the summary dismissal of the plaintiff's claims under New York law.  See ITC Limited v. Punchgini, 518 F.3d 159 (2d Cir. 2008).  The court held that although the plaintiff had shown sufficient evidence of deliberate copying, it had failed to offer proof of the necessary association.  Nor would the Second Circuit allow the plaintiff to rely on the first element of the test (deliberate copying) to prove the second (consumer association).

Last month, however, in Empresa Cubana Del Tabaco v. Culbro Corp., __ F. Supp.2d __ (S.D.N.Y. Nov. 19, 2008), a federal district court in New York granted judgment to a foreign mark owner on a claim brought under New York principles of unfair competition.  A Cuban company successfully argued that a U.S. cigar manufacturer had deliberately copied the COHIBA mark for cigars, and that that mark was primarily associated with the goods of the foreign plaintiff.

It could be argued that, despite the disclaimer by the New York Court of Appeals in Punchgini, the cause of action endorsed by the court under New York law does not radically differ from the protection offered well-known marks by the Grupo Gigante court.  Indeed, the Empresa Cubana decision suggests that in certain respects the New York cause of action may be more liberal than the federal doctrine recognized in Grupo Gigante.  For example, in Grupo Gigante, the Ninth Circuit held that, to receive protection as a well-known mark, the plaintiff's mark must satisfy an "intermediate standard" of renown between secondary meaning and the dilution-based concept of fame.   The New York cause of action requires only secondary meaning.

Ironically, however, in order for the New York claim of the Cuban company to proceed despite the Cuban embargo regulations (which the Second Circuit had previously held barred the Cuban company's well-known mark claims under federal law pre-Punchigini), the court had to be satisfied that the New York claim was not essentially the same as that which had been barred under federal law.  Otherwise, the state law would simply be being used to circumvent the embargo regulations.  The court concluded that the New York claim was not the same: "New York's common law of unfair competition by misappropriation does not provide the foreign party with the right to exclude others from using the mark and does not, like a trademark, reserve a designation for the foreign party's exclusive use."

Uniform national treatment of well-known marks, and U.S. compliance with international obligations, requires Congress to clarify that well-known marks are protected under federal law.  Empresa Cubana only highlights that reliance on New York state law is a wholly inadequate solution theoretically as well as practically.