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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
------------------------------------------------*
INTERNATIONAL BANCORP, LLC;
INTERNATIONAL SERVICES,
INCORPORATED; INTERNATIONAL
LOTTERIES, LLC; LAS VEGAS
SPORTSBOOK, INCORPORATED;
BRITANNIA FINANCE CORPORATION,No. 02-1364
Plaintiffs-Appellants,
v.
SOCIETE DES BAINS DE MER ET DU
CERCLE DES ETRANGERS A MONACO,
Defendant-Appellee.
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Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. T. S. Ellis, III, District Judge. (CA-01-115-A)
Argued: December 3, 2002
Decided: May 19, 2003
Before NIEMEYER, LUTTIG, and MOTZ, Circuit Judges.
____________________________________________________________
Affirmed by published opinion. Judge Luttig wrote the majority opin-
ion, in which Judge Niemeyer joined. Judge Motz wrote a dissenting
opinion.
____________________________________________________________
COUNSEL
ARGUED: Anthony James DeGidio, Jr., Toledo, Ohio, for Appel-
lants. George Reynolds Hedges, QUINN, EMANUEL, URQUHART,
OLIVER & HEDGES, L.L.P., Los Angeles, California, for Appellee.
ON BRIEF: James W. Pravel, Alexandria, Virginia, for Appellants.
Gregory P. Barbee, QUINN, EMANUEL, URQUHART, OLIVER &
HEDGES, L.L.P., Los Angeles, California; Carl J. Nichols, BOIES,
SCHILLER & FLEXNER, L.L.P., Washington, D.C., for Appellee.
____________________________________________________________
OPINION
LUTTIG, Circuit Judge:
Plaintiff companies appeal from the district court's summary judg-
ment that their registration and use of forty-three domain addresses
infringe a foreign corporation's rights under the Lanham Act and vio-
late the Anticybersquatting Act, where the foreign corporation adver-
tised its trademark domestically, but only rendered services under it
abroad. We conclude that the district court's judgment, although not
its reasoning, was correct, and therefore affirm.
I.
Appellee, Societe des Bains de Mer et du Cercle des Etrangers a
Monaco ("SBM"), owns and operates historic properties in Monte
Carlo, Monaco, including resort and casino facilities. One of its prop-
erties, a casino, has operated under the "Casino de Monte Carlo"
trademark since 1863. The mark is registered in Monaco, but not in
the United States. SBM promotes this casino, along with its other
properties, around the world. For 18 years, SBM has promoted its
properties from a New York office staffed with four employees.
SBM's promotions within the United States, funded with $1 million
annually, include trade show participation, advertising campaigns,
charity partnerships, direct mail solicitation, telephone marketing, and
solicitation of media coverage.
Appellants, the plaintiff companies, are five companies formed and
controlled by a French national, which operate more than 150 web
sites devoted to online gambling. Included in this roster are 53 web
sites whose domain addresses incorporate some portion of the term
"Casino de Monte Carlo."1 These web sites, along with the gambling
____________________________________________________________
1 E.g., casinodemontecarlo.com, casinodemontecarlo.net, casinomonte-
carlo.com, casinomontecarlo.net, casinomontecarlo.org, and casino-
2
software they employ, also exhibit pictures of the Casino de Monte
Carlo's exterior and interior, contain renderings that are strikingly
similar to the Casino de Monte Carlo's interior, and make allusion to
the geographic location of Monte Carlo, implying that they offer
online gambling as an alternative to their Monaco-based casino,
though they operate no such facility.
When SBM learned of the plaintiff companies' web sites and their
uses of the "Casino de Monte Carlo" mark, it challenged them in the
World Intellectual Property Organization (WIPO). A WIPO panel
ruled against the plaintiff companies and ordered the transfer of the
53 domain addresses to SBM. To escape this judgment, the plaintiff
companies brought suit in federal court against SBM seeking declara-
tory judgment, pursuant to 28 U.S.C. § 2201(a), that they are entitled
to the disputed domain names. SBM counterclaimed under the Lan-
ham Act (15 U.S.C. § 1111 et seq.) for trademark infringement under
section 1125(a);2 trademark dilution under section 1125(c); cyber-
squatting under section 1125(d)(1); and unfair competition in viola-
tion of section 1126(h). The district court ruled against SBM on its
section 1125(c) trademark dilution claim, because SBM had not
shown actual economic harm, and on its section 1126(h) unfair com-
petition claim. But the court ruled in favor of SBM on its trademark
infringement claim and on its cybersquatting claim, awarding SBM
$51,000 in statutory damages and transfer of 43 of the 53 contested
domain addresses.3 The plaintiff companies now appeal from that
adverse judgment.
____________________________________________________________
montecarlo.net.
2 SBM actually styled its section 1125(a) counterclaim as an unfair
competition suit. See J.A. at 64. The district court, although recognizing
it as such at the outset of its opinion, treated the counterclaim throughout
as a trademark infringement claim. Because the tests for trademark
infringement and unfair competition under section 1125(a) are identical,
we adopt the district court's usage and refer to this claim as a trademark
infringement claim.
3 SBM also alleged Virginia common law trademark infringement, but
the district court deemed it unnecessary to address this claim because
federal law provided adequate relief.
3
II.
Although the district court decided this case on motions for sum-
mary judgment, factual determinations underlay its ultimate ruling
(e.g., findings as to likelihood of confusion and secondary meaning).
The plaintiff companies contend that the court exceeded its summary
judgment authority by resolving such questions of fact. Two factors
present in this case justify the judicial posture taken by the court,
however. First, the parties, having prepared for a bench trial, agreed
to submit the voluminous record to the court for dispositive decision
at the time of the summary judgment motions, see J.A. at 1002-03
(the court: "there is really no reason why the Court should not dispose
of this matter on the current record; isn't that right?" Attorney for the
plaintiff companies: "I believe that's correct, your Honor." Attorney
for SBM: "I think that sounds sensible, your Honor." Attorney for
defendant Levy: "That's exactly what I would ask for, your Honor."
The court: "All right.").
Secondly, the court's disposition of the case was consistent with
the fact that the parties did not contradict one another's proffered
facts, but only disputed the inferences that a fact finder would draw
from those underlying facts. With the parties' voluntary submission
of the record, comprised of only uncontroverted proffers, before it,
and being en route to a bench trial anyway, the court properly pro-
ceeded to judgment in the case. Cf. Matter of Placid Oil Co., 932 F.2d
394, 398 (5th Cir. 1991) ("[I]t makes little sense to forbid the judge
from drawing inferences from the evidence submitted on summary
judgment when that same judge will act as the trier of fact, unless
those inferences involve issues of witness credibility or disputed
material facts. If a trial on the merits will not enhance the court's abil-
ity to draw inferences and conclusions, then a district judge properly
should draw his inferences without resort to the expense of trial."
(quotations and citations omitted)).
Because the court decided the case on summary judgment motions,
we review its legal determinations de novo, see Lone Star Steakhouse
& Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 928 (4th Cir.
1995). But since it also engaged in fact-finding to dispose of the mat-
ter, we review its findings of fact for clear error. See, e.g., Petro Stop-
ping Centers, L.P. v. James River Petroleum, Inc., 130 F.3d 88, 91-
4
92 (4th Cir. 1997) ("This circuit reviews district court determinations
regarding likelihood of confusion under a clearly erroneous stan-
dard."); RFE Industries, Inc. v. SPM Corp., 105 F.3d 923, 925 (4th
Cir. 1997) ("[The] district court's findings [as to secondary meaning]
may be disturbed on appeal only if they are clearly erroneous.").4
III.
The plaintiff companies first challenge the district court's determi-
nation that their use of 43 domain addresses violated 15 U.S.C.
§ 1125(a) of the Lanham Act, infringing on SBM's trademark. Cen-
tral to their challenge is the claim that SBM did not have a protectible
interest in the "Casino de Monte Carlo" mark, a prerequisite to SBM's
ability to claim against the plaintiff companies under the Act. See 15
U.S.C. § 1125(a)(1) (allowing only a person "who believes that he or
she is or is likely to be damaged" by the defendant's use of a confus-
ing mark to bring a civil action); see also Lone Star Steakhouse &
Saloon, Inc., 43 F.3d at 930 (proving trademark infringement under
15 U.S.C. § 1125(a) requires a plaintiff to prove it has a protectible
mark).
This circuit requires that an unregistered trademark satisfy two
requirements if its owner is to have a protectible interest in the trade-
mark: The mark must be used in commerce, see 15 U.S.C. § 1051
(only trademarks "used in commerce," or which a person has a bona
____________________________________________________________
4 Though the dissent initially notes the two bases on which we conclude
that the district court properly decided this case upon the submission of
the record, it only takes issue with the first, that the parties intended their
submission to allow the court to reach dispositive judgment. See post at
54-58. Yet, the strength of our second rationale is only made more clear
by the dissent's own analysis.
In discussing the factual findings the district court made, the dissent
says repeatedly that "a fact-finder could well infer" differently. See post
at 61. But, of course, that misses the whole point. The court, by the
agreement of the parties (who agreed to a bench trial), was the fact
finder. And all of the factual issues decided, were issues resolved by
inference of the fact finder from undisputed facts. With no dispute as to
the facts present, it was not improper for the court, here the fact finder,
to make its findings at this point in the proceedings.
5
fide intention to use in commerce, can be registered, signaling Lan-
ham Act protectibility); see also Larsen v. Terk Technologies Corp.,
151 F.3d 140, 146 (4th Cir. 1998) ("to receive protection under
[1125(a)] a trademark . . . must be "in use" in commerce"), and it
must be distinctive, see Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d
455, 464 (4th Cir. 1996) (noting that the degree of protection a mark
may receive is directly related to its distinctiveness). The plaintiff
companies argue that the district court erred in concluding that SBM
met these two requirements. We address both arguments in turn.
A.
Both parties have agreed, in their briefs and at oral argument, that
the critical question in assessing whether SBM "used its mark in com-
merce" is whether the services SBM provided under the "Casino de
Monte Carlo" mark were rendered in commerce. As shown below, the
Lanham Act's plain language makes this conclusion unavoidable and
the parties' agreement unsurprising.
We must first contend with a threshold matter, however. This cir-
cuit has never directly addressed the scope of the term "commerce"
within the Lanham Act. Because of the clarity of the Act's own defi-
nition of the term, see 15 U.S.C. § 1127 (defining "commerce" as "all
commerce which may lawfully be regulated by Congress"), we now
hold that "commerce" under the Act is coterminous with that com-
merce that Congress may regulate under the Commerce Clause of the
United States Constitution. The other circuits to address this question
have concluded the same. See, e.g., United We Stand America, Inc.
v. United We Stand, America, NY, Inc., 128 F.3d 86, 92-93 (2nd Cir.
1997); Planetary Motion v. Techsplosion, 261 F.3d 1188, 1194 (11th
Cir. 2001). Of course, Article I of the Constitution provides that,
[t]he Congress shall have Power . . . to regulate Commerce
with foreign nations, and among the several States, and with
the Indian Tribes[.]
U.S. Const. art. I, § 8, cl. 3. Consequently, "commerce" under the
Lanham Act necessarily includes all the explicitly identified variants
of interstate commerce, foreign trade, and Indian commerce.
6
Understanding commerce under the Act to be coterminous with
that commerce Congress may regulate under the Commerce Clause,
we turn next to the determination of what constitutes "use in com-
merce" under the Act. Again we rely on section 1127, which provides,
of particular relevance here, a specific definition of that term as it
relates to servicemarks, which the "Casino de Monte Carlo" mark
unquestionably is:
The term "use in commerce" means the bona fide use of a
mark in the ordinary course of trade, and not made merely
to reserve a right in a mark. For purposes of this chapter,
a mark shall be deemed to be used in commerce -
. . . .
(2) on services when it is used or displayed in the sale or
advertising of services and the services are rendered in
commerce, or the services are rendered in more than one
State or in the United States and a foreign country and the
person rendering the services is engaged in commerce in
connection with the services.
15 U.S.C. § 1127 (emphasis added).
Consistent with this definition of the statutory "use in commerce"
requirement, the Supreme Court has said that "[t]here is no such thing
as property in a trade-mark except as a right appurtenant to an estab-
lished business or trade in connection with which the mark is
employed. . . . [T]he right to a particular mark grows out of its use,
not its mere adoption;" United Drug Co. v. Theodore Rectanus, Co.,
248 U.S. 90, 97 (1918). Because a mark is used in commerce only if
it accompanies services rendered in commerce, i.e., it is employed
appurtenant to an established business or trade that is in commerce,
"mere advertising" of that mark does not establish its protectibility,
though advertising is itself commerce that Congress may regulate.
With these principles in clear view, we proceed to address whether
the "Casino de Monte Carlo" mark was used in commerce. In their
briefs and before the court below, the parties debate principally
7
whether the activities of SBM's New York office conducted under the
"Casino de Monte Carlo" mark constitute services rendered in inter-
state commerce. SBM, for its part, contends that the office's booking
of reservations is a rendered service, and that its maintenance of the
office, its advertising in this country, and its promotional web page
attach the "Casino de Monte Carlo" mark for sales and advertising
purposes to this interstate service, thereby satisfying the "use in com-
merce" requirement. The plaintiff companies argue, to the contrary,
that there is no evidence in the record that the New York office books
reservations to the casino, and that, as a result, the office engages in
no activity beyond "mere advertising." They argue further that the
casino gambling services are the only established business to which
the trademark applies, and that that service, being rendered in
Monaco, is not rendered in commerce that Congress may regulate.
The district court, accepting SBM's arguments, concluded as follows:
[I]t is clear from the undisputed record that SBM's New
York office was one of SBM's many international sales
offices from which customers could book reservations.
Thus, the record shows that in this respect, SBM "services
are rendered" in the United States.
Int'l Bancorp v. SBM, 192 F. Supp. 2d 467, 479-80 (E.D. Va. 2002)
[Summary Judgment].
SBM's argument and the district court's reasoning are in error
because the New York-office bookings on which they rely do not
relate to the casino in question, but, rather, to SBM's resort facilities.
As became evident at oral argument and upon our review of the
record, SBM's assertion that the record contains evidence that its
New York office booked reservations to the casino is unsubstantiated.
The plaintiff companies correctly point out that since the "Casino de
Monte Carlo" mark only pertains to the casino and its gambling ser-
vices, any guest reservations SBM's New York office and web site
book for SBM's various resorts, which reservation services the record
does disclose, are irrelevant to the analysis. And the other operations
of SBM's New York office, at least as they appear in the record, are
merely promotional in nature. The Lanham Act and the Supreme
Court, as shown above, make clear that a mark's protection may not
be based on "mere advertising."
8
Because SBM presented no record evidence that the New York
office did anything other than advertise the "Casino de Monte Carlo"
mark, if its case rested on this alone, the plaintiff companies would
have the better of the argument. When they appeared before the court,
however, we asked the parties to address themselves to the question
of whether the casino services at issue were rendered in foreign trade,
and the plaintiff companies conceded that the record contained evi-
dence that United States citizens went to and gambled at the casino.
This concession, when taken together with the undisputed fact that the
Casino de Monte Carlo is a subject of a foreign nation, makes
unavoidable the legal conclusion that foreign trade was present here,
and that as such, so also was "commerce" under the Lanham Act.
Since the nineteenth century, it has been well established that the
Commerce Clause reaches to foreign trade. And, for the same length
of time, the Supreme Court has defined foreign trade as trade between
subjects of the United States and subjects of a foreign nation. See In
re: Trademark Cases, 100 U.S. 82, 96 (1879) ("commerce with for-
eign nations means commerce between citizens of the United States
and citizens and subjects of foreign nations"); see also Henderson v.
Mayor of City of New York, 92 U.S. 259, 270 (1875) (same); United
States v. Holliday, 70 U.S. 407, 417 (1865) (same). And, of course,
commerce does not solely apply "to traffic, to buying and selling, or
the interchange of commodities . . . Commerce, undoubtedly, is traf-
fic, but it is something more: it is [commercial] intercourse." Gibbons
v. Ogden, 22 U.S. 1, 189 (1824) (C.J. Marshall). Service transactions
are clearly commercial intercourse, and by extension can clearly con-
stitute foreign trade. Cf. United States v. American Building Mainte-
nance Indus., 422 U.S. 271, 283 (1975) (noting that an entity engages
in commerce when it is "directly engaged in the production, distribu-
tion, or acquisition of goods or services in interstate commerce")
(emphasis added). Thus, while SBM's promotions within the United
States do not on their own constitute a use in commerce of the "Ca-
sino de Monte Carlo" mark, the mark is nonetheless used in com-
merce because United States citizens purchase casino services sold by
a subject of a foreign nation, which purchases constitute trade with a
foreign nation that Congress may regulate under the Commerce
Clause. And SBM's promotions "use[ ] or display[ ] [the mark] in the
sale or advertising of [these] services . . . rendered in commerce."
9
At oral argument, the plaintiff companies objected to this straight-
forward reasoning. They argued first that any trade that United States
citizens engaged in at the casino was not subject to regulation by Con-
gress since it did not occur in the United States.
COURT: Commerce [i.e., commerce within Congress' regu-
latory ambit, and thus equally commerce under the Lanham
Act] includes services with a foreign country doesn't it?
Appellant: Not unless they're rendered in the United States.
COURT: Unless the Supreme Court has held otherwise?
Appellant: Unless the Supreme Court has held otherwise, of
course.
Oral Argument, Dec. 3, 2002. In the alternative, they argued that even
if Congress could regulate transactions between United States citizens
and foreign subjects that occur abroad, the particular transactions at
issue here should not be considered foreign trade because the Casino
de Monte Carlo was a "playground for the very, very rich," id., and
thus did not have a substantial effect on foreign trade. Both arguments
are unavailing.
The plaintiff companies' first argument fails because the locality in
which foreign commercial intercourse occurs is of no concern to Con-
gress' power under the Constitution to regulate such commerce. In
United States v. Holliday, when examining the extent of Congress'
authority over Indian commerce, the Supreme Court noted that under
Gibbons v. Ogden the foreign commerce power "must be exercised
wherever the subject exists. . . . The locality of the traffic can have
nothing to do with the power." Holliday, 70 U.S. at 417-18 (emphasis
added). The subject of foreign trade, as the Supreme Court noted in
In re: Trademark Cases, Henderson, and Holliday, is defined not by
where the trade occurs, but by the characteristics of the parties who
engage in the trade, just as the Holliday Court concluded that the sub-
ject of Indian commerce is defined not by whether the commerce
occurs on Indian territory, but rather by whether the trade brings
United States citizens and tribal Indians together as transacting part-
10
ners. See also United States v. Mazurie, 419 U.S. 544, 554 (1975)
("This Court has repeatedly held that [the Indian commerce clause]
affords Congress the power to prohibit or regulate the sale of alco-
holic beverages to tribal Indians, wherever situated . . ." (emphasis
added)).
Thus it is that Congress has validly enacted laws such as the Trad-
ing With the Enemy Act (TWEA), Act of Oct. 6, 1917, ch. 106, 40
Stat. 411, and the International Emergency Economic Powers Act
(IEEPA), title II, Pub. L. 95-223, 91 Stat. 1626 et seq., codified at 50
U.S.C. § 1701 et seq., under its authority to regulate foreign com-
merce and has provided, via those enactments, for the regulation of
commercial intercourse between United States citizens and subjects of
foreign nations, see, e.g., United States v. Yoshida International, Inc.,
526 F.2d 560 (C.C.P.A. 1975) (upholding broad import surcharge on
products imported by United States citizens in transactions with Japa-
nese sellers, which regulation was issued by the executive under
TWEA's delegation of foreign commerce authority). And more
importantly here, thus it is also that these laws extend their regula-
tions to reach commercial intercourse that occurs solely on the foreign
sovereign's soil. See, e.g., 31 C.F.R. § 515.560(a)(3) (1977) (prohibit-
ing United States citizens from purchasing merchandise in Cuba with
a foreign market value in excess of $100). Such embargo authority,
encompassing embargoes of commercial intercourse abroad by
United States citizens with subjects of foreign nations, has long been
recognized to be a valid exercise of Congress' foreign commerce
clause power:
It has, we believe, been universally admitted, that [the for-
eign commerce clause] comprehend[s] every species of
commercial intercourse between the United States and for-
eign nations. No sort of trade can be carried on between this
country and any other, to which this power does not extend.
Gibbons v. Ogden, 22 U.S. at 193-94.
Congress are, by the Constitution, vested with the power to
regulate commerce with foreign nations; and however, at
periods of high excitement, an application of the terms "to
regulate commerce" such as would embrace absolute prohi-
11
bition may have been questioned, yet, since the passage of
the embargo and non-intercourse laws, and the repeated
judicial sanctions those statutes have received, it can
scarcely, at this day, be open to doubt, that every subject
falling within the legitimate sphere of commercial regula-
tion may be partially or wholly excluded . . . Such exclusion
cannot be limited to particular classes or descriptions of
commercial subjects; it may embrace manufactures, bullion,
coin, or any other thing. The power once conceded, it may
operate on any and every subject of commerce to which the
legislative direction may apply it.
United States v. Marigold, 50 U.S. 560, 566-67 (1850). The Supreme
Court's acceptance of this expansive authority confirms that Congress
may regulate foreign trade wherever it occurs.
Nor, in modern times, has the Supreme Court ever suggested that
Congress' authority over foreign trade is limited in the manner that
the plaintiff companies suggest. To the contrary, when it has consid-
ered the scope of Congress' authority over foreign trade, the Court
has emphasized the expansive nature of that authority. See, e.g.,
Pfizer, Inc. v. India, 434 U.S. 308, 313 n.11 (1978) ("The Chief Jus-
tice's dissent seems to contend that the Sherman Act's reference to
commerce with foreign nations was intended only to reach conspira-
cies affecting goods imported into this county. But the scope of con-
gressional power over foreign commerce has never been so limited
. . ." (citations omitted)).
Congress' interest in foreign trade and the Executive's interest in
foreign affairs unavoidably intersect, and this intersection can give the
mistaken impression that Congress' authority over foreign trade must
be limited so as to accommodate the President's authority over for-
eign affairs. The first interest, that of foreign trade, the Constitution
assigns entirely to the legislative authority of Congress. See U.S.
Const. art. I, § 8, cl. 3. The second, that of foreign affairs, it assigns
jointly to the political branches (i.e., Congress and the Executive). See
U.S. Const. art. I, § 8, cl. 1 and 11; id. art. II, § 2. The intersection of
these two interests, and the dual allocation of authority over the latter,
has long been noted:
12
If our government should make [restrictions on foreign com-
merce] the subject of a treaty, there could be no doubt that
such a treaty would fall within the power conferred on the
President and the Senate by the Constitution. [Foreign com-
merce] is in fact, in an eminent degree, a subject which con-
cerns our international relations, in regard to which foreign
nations ought to be considered and their rights respected,
whether the rule be established by treaty or by legislation.
Henderson, 92 U.S. at 273. But no precedent suggests that the inter-
secting foreign affairs power the Constitution vests in the Executive
in any way curtails the foreign trade power the Constitution vests in
Congress, and there is thus no rationale for limiting the scope of con-
gressional authority in the realm of foreign commerce to commercial
intercourse that occurs solely within the United States.5
The plaintiff companies' second argument, that the purchase of
gambling services by United States citizens at the Casino de Monte
Carlo is not commerce because it does not have a substantial effect
on the foreign commerce of the United States, also fails. The substan-
tial effects test is not implicated here at all.
The Supreme Court has articulated the substantial effects test to
ensure that Congress does not exceed its constitutional authority to
regulate interstate commerce by enacting legislation that, rather than
regulating interstate commerce, trammels on the rights of states to
regulate purely intra-state activity for themselves pursuant to their
police power. See United States v. Morrison, 529 U.S. 598, 608-09
(2000). But while "Congress' power to regulate interstate commerce
____________________________________________________________
5 United States courts may lack jurisdiction under which to enforce leg-
islation Congress promulgates concerning trade that occurs on foreign
soil between United States citizens and foreign subjects, particularly
against those foreign subjects, but this inability to secure jurisdictional
authority creates only a practical shortcoming with such legislation, mak-
ing it perhaps less effective a manner to regulate foreign trade than treaty
or convention. Though "in the case of foreign commerce the national
government might act through a treaty," Bob-Lo Excursion Co. v. Michi-
gan, 333 U.S. 28, 42 (1948) (Douglas, J., dissenting), Congress' author-
ity under Article I of the Constitution remains whole and undiminished.
13
may be restricted by considerations of federalism and state sovereign-
ty[,] [i]t has never been suggested that Congress' power to regulate
foreign commerce could be so limited." Japan Line Ltd. v. Los Ange-
les County, 441 U.S. 434, 448 n.13 (1979).
Although the Constitution, Art. I, § 8, cl. 3, grants Congress
the power to regulate commerce "with foreign Nations" and
"among the several States" in parallel phrases, there is evi-
dence that the Founders intended the scope of the foreign
commerce power to be the greater.
Id. at 448. The rationale that underlies application of the substantial
effects test in the analysis of congressional legislation purporting to
regulate interstate commerce is therefore absent from analysis of con-
gressional legislation purporting to regulate foreign commerce.
Furthermore, the substantial effects test only limits Congress'
authoritative reach with respect to one of the three broad categories
of activity that Congress may regulate under the Commerce Clause.
First, Congress may regulate the use of the channels of
interstate commerce. . . . Second, Congress is empowered to
regulate and protect the instrumentalities of interstate com-
merce . . . . Finally, Congress' commerce authority includes
the power to regulate . . . those activities that substantially
affect interstate commerce.
Morrison, 529 U.S. at 609 (emphasis added). Consequently, the sub-
stantial effects test does not limit Congress' regulation of activity that
is itself commercial intercourse occurring interstate; it governs only
Congress' regulation of non-commercial intercourse activity that
effects interstate commerce.
Here, the regulated activity at issue is itself commercial intercourse
(i.e., the trademarks are an instrumentality of commercial intercourse
and the provision of the services necessarily involves both channels
of and instrumentalities of that commercial intercourse). And the reg-
ulated commercial intercourse involves transactions between United
States citizens and the subject of a foreign nation, qualifying the inter-
14
course as a literal example of foreign trade. Even were the substantial
effects test to govern some instances of congressional regulation of
foreign trade, the present case, because it involves only the first two
"broad categories of activity that Congress may regulate under its
commerce power," id. at 608, and not the third, does not implicate the
substantial effects test.6
The plaintiff companies, seeking to avoid the full import of this
foreign trade analysis, ask us to be wary in addressing whether United
States trademark protection can extend to services rendered abroad
and suggest that other courts have decided this question in the nega-
tive with reasoning that should persuade us not to extend trademark
protection in this instance. In particular, the plaintiff companies point
to the Second Circuit's opinion in Buti v. Perosa, S.R.L., 139 F.3d 98
(2nd Cir. 1998). In Buti, the Second Circuit decided that the ad hoc
distribution in the United States of an Italian restaurant's t-shirts, key
chains, and cards, by the owner of the restaurant who was also the
owner of a modeling agency, to his colleagues in the modeling indus-
try, did not establish that the mark was used in commerce.
Buti is not persuasive authority to us for several reasons, however.
First, the Buti court did not analyze the application of the Lanham Act
to foreign trade because, as it noted, the plaintiff, in a "pivotal conces-
sion[ ], . . . conceded at oral argument that . . . the food and drink ser-
vices [it sells] form no part of the trade between Italy and the United
States." Id. at 103. And in fact, even though the Buti court did not
analyze trademark rights created via foreign trade, it did acknowledge
the basis for such. See id. (noting that a key inquiry is "whether [the
plaintiff] has conducted the affairs of its Milan Fashion Cafe in such
a way as to "substantially affect" United States interstate or foreign
commerce, and thereby fall within Congress' authority under the
____________________________________________________________
6 Insofar as the plaintiff companies are instead relying on their "sub-
stantial effects" argument not to challenge the determination that the
activity at issue constitutes foreign trade, but to challenge the court's
exercise of jurisdiction over them with regards to their extraterritorial
conduct, see Steele v. Bulova Watch Co., 344 U.S. 280 (1952), their
objection fails. Both they and SBM submitted to the federal court's exer-
cise of in personam jurisdiction over them. They cannot now challenge
its exercise of such.
15
Commerce Clause"). Secondly, even had the Buti plaintiff not explic-
itly conceded that his business was not foreign trade, it is not clear
that the facts before the Buti court would have established that the
plaintiff used the mark in that putative foreign trade. As the Second
Circuit carefully noted, the restaurant undertook no "formal advertis-
ing or public relations campaign [aimed at United States citizens]."
Id. at 100.
Here, SBM does not concede that its services do not constitute for-
eign trade when United States citizens purchase them. Instead, the
plaintiff companies concede the very elements we conclude constitute
foreign trade. And quite clearly SBM has used the mark in its foreign
trade, formally, and at great cost, advertising its services intentionally
to United States citizens under the "Casino de Monte Carlo" mark.
Because SBM used its mark in the sale and advertising of its gam-
bling services to United States citizens; because its rendering of gam-
bling services to United States citizens constitutes foreign trade;
because foreign trade is commerce Congress may lawfully regulate;
and because commerce under the Lanham Act comprises all com-
merce that Congress may lawfully regulate, the services SBM renders
under the "Casino de Monte Carlo" mark to citizens of the United
States are services rendered in commerce, and the "use in commerce"
requirement that the Lanham Act sets forth for the mark's protecti-
bility is satisfied.
B.
The use of an unregistered mark in foreign trade does not in any
way assure its owner that the mark will merit Lanham Act protection;
it only makes such protection possible. For an unregistered mark that
is used in foreign trade to merit Lanham Act protection, that mark
must be distinctive among United States consumers. The plaintiff
companies argue that even if the "Casino de Monte Carlo" mark is
used in commerce, it is not distinctive because it is merely geographi-
cally descriptive, and that since it is not distinctive, it is not protect-
ible.
Though the plaintiff companies correctly argue that the mark is
geographically descriptive (i.e., it geographically describes where the
casino is located and nothing more), this objection does not foreclose
16
the mark's distinctiveness. Descriptive marks will be deemed distinc-
tive if they achieve secondary meaning. See Perini Corp. v. Perini
Construction, Inc., 915 F.2d 121, 125 (4th Cir. 1990) ("Secondary
meaning is the consuming public's understanding that the mark, when
used in context, refers, not to what the descriptive mark ordinarily
describes, but to the particular business that the mark is meant to
identify." (emphasis added)). Thus, the relevant question here is
whether the district court correctly found that the mark possessed sec-
ondary meaning.
The district court employed two distinct analyses to assess the sec-
ondary meaning of "Casino de Monte Carlo." The court engaged in
traditional Perini analysis, examining a variety of factors - the Per-
ini factors - that we have said are relevant in assessing secondary
meaning. Though proof of secondary meaning is a "vigorous evidenti-
ary requirement[ ]," see id., plaintiffs can meet their burden by offer-
ing proof including, though not limited to, 1) advertising
expenditures; 2) consumer studies linking the mark to a source; 3)
sales success; 4) unsolicited media coverage of the product; 5)
attempts to plagiarize the mark; and 6) the length and exclusivity of
the mark's use. See id.
The district court, finding that SBM provided proof of substantial
advertising expenditures; significant sales success within the United
States; substantial unsolicited media coverage of the casino; frequent
attempts by others to plagiarize the mark; and a long history of con-
tinuous, if not exclusive, use of the mark; concluded that SBM had
met its burden. Summary Judgment, 192 F. Supp. 2d at 481-82. Upon
our review of the record, we conclude that the court's conclusion as
to these points is not clear error.
Furthermore, the district court noted that under our precedent in
Larsen v. Terk Technologies, 151 F.3d 140, 148-49 (4th Cir. 1998),
SBM met its burden of proving secondary meaning, irrespective of
the Perini test, because it had established that the plaintiff companies
directly and intentionally copied the "Casino de Monte Carlo" mark.
See Summary Judgment, 192 F. Supp. 2d at 481 ("the record leaves
no doubt that the plaintiff companies intentionally and directly copied
SBM's mark"). Under Larsen, a trademark plaintiff that proves that
the defendant directly and intentionally copied its mark is presumed
17
to have proved that mark's secondary meaning, and the defendant
must then disprove that presumption. We decided Larsen on the logic
of two prior cases, Osem Food Industries Ltd. v. Sherwood Foods,
Inc., 917 F.2d 161 (4th Cir. 1990), and M. Kramer Mfg. Co., Inc. v.
Andrews, 783 F.2d 421 (4th Cir. 1986), which established that a per-
son who directly and intentionally copies another's trade dress has
the burden of refuting a presumption that the trade dress has second-
ary meaning.
The plaintiff companies argue that applying the presumption to
trademarks, as Larsen does, as opposed to trade dress, as Osem and
M. Kramer do, is unsupported by policy, violates Fed. R. Evid. 301,
and has been rejected by other circuits. None of this, however, dimin-
ishes the precedential force that Larsen has on this case. And since
the plaintiff companies did not present evidence sufficient to rebut the
Larsen presumption, let alone to counter the Perini factors discussed
above, the district court's conclusion that the "Casino de Monte
Carlo" mark is distinctive, see Summary Judgment, 192 F. Supp. 2d
at 482, must be affirmed.
The dissent contends that the district court did not engage in two
distinct analyses of secondary meaning, but rather applied the Larsen
presumption, and then improperly shifted the burden of proof to the
plaintiff companies, in effect requiring them, unfairly, to prove that
SBM's mark did not have secondary meaning. The district court did
not so merge the analyses, and though it intertwined its two analyses,
such was only natural since it was in the posture of the fact finder,
and not simply addressing questions of law.
The district court's conclusion that the Larsen presumption applied
placed a rebuttal burden on the plaintiff companies. That is, if SBM
had offered no proof of secondary meaning whatsoever, SBM would
still be due a finding that its mark enjoyed secondary meaning unless
the plaintiff companies proffered some evidence, not ultimately per-
suasive evidence, just some evidence, that the fact finder concluded
was probative in disproving secondary meaning. Here, upon looking
at the relevant evidence presented by the plaintiff companies, which
as one would expect the court did through the lens of the traditional
Perini categories, the district court found that none of that evidence
was probative, at any level.
18
In addition, having evaluated the evidence and found that none of
it successfully rebutted the Larsen presumption, the court also noted
that SBM's evidence, when evaluated in the applicable Perini catego-
ries resulted in findings sufficient to establish secondary meaning.
Thus, the court said,
In sum, far from rebutting the [Larsen] presumption of dis-
tinctiveness that operates here, the Perini factors, when
applied to the facts of this case, actually support that pre-
sumption.
Summary Judgment, 192 F. Supp. 2d at 482 (emphasis added).
That the dissent, had it been the fact finder, might have drawn dif-
ferent inferences from the evidence, and so concluded that the Larsen
presumption was rebutted, is irrelevant here. The district court was
the fact finder, charged with drawing inferences from the evidence;
it was that court's responsibility (as it would have been the jury's
responsibility had the parties instead opted for a jury trial) to deter-
mine whether or not the plaintiff companies' presented any evidence
that rebutted the Larsen presumption. The district court quite simply
found that none of the evidence presented by the plaintiff companies
was probative of a lack of secondary meaning, and on that finding
alone, it could have concluded that SBM met the secondary meaning
requirement. That the court went on to note that even under the Perini
analysis SBM met its burden does not transform its analysis into one
that requires the plaintiff companies to carry the ultimate burden.
C.
Because the district court properly concluded, though for the wrong
reasons, that the "Casino de Monte Carlo" mark was used in com-
merce, and because its conclusion that the mark had secondary mean-
ing was not clearly erroneous, the court's determination that the mark
was protectible was proper, and it did not err by proceeding to assess
whether the plaintiff companies' use of the mark constituted trade-
mark infringement.
D.
The dissent's disagreement with this part of our holding today is
based on (1) a conflation of the two critical elements of the "use in
19
commerce" inquiry, see post at 37-38 ("The majority reaches the
unprecedented conclusion that an entity's use of its foreign trade-
marks solely to sell services in a foreign country entitles it to trade-
mark protection under United States law, even though the foreign
mark owner has never used or registered its mark in the United
States."); (2) two cases decided by the Trademark Trial and Appellate
Board ("TTAB"), which cases, like the dissent here, conflate the dis-
tinct elements of the two-pronged "use in commerce" requirement,
see post at 42-43, 44-45 (citing to Mother's Restaurant, Inc. v. Moth-
er's Other Kitchen, Inc., 218 U.S.P.Q. 1046 (TTAB 1983), and to
Linville v. Rivard, 41 U.S.P.Q.2d 1731 (TTAB 1997) ("Linville II"));
and (3) policy arguments. See post at 46. With these grounds as its
justification for deciding the matter differently, the dissent labels our
application of the straightforward statutory command of the Lanham
Act as one that "threatens to wreak havoc over our country's trade-
mark law and would have a stifling effect on United States commer-
cial interests generally," see post at 46. We address the dissent's bases
for its disagreement seriatim.
But, before we address the dissent's reasoning, we note, we think
importantly, that:
(1) The dissent does not disagree with the court's conclusion that
the text of the Lanham Act extends protection to marks that meet the
statutory requirements for being "used in commerce," provided they
also enjoy secondary meaning;
(2) The dissent does not disagree with the court's conclusion that
the "use in commerce" requirement entails two distinct elements: a
service being rendered in commerce, and a mark for that service being
used or displayed in the sale or advertising of that service.
(3) The dissent does not disagree with the conclusion that "com-
merce" under the Lanham Act is coterminous with commerce that
Congress may regulate;
(4) The dissent does not disagree with the court's conclusion that
the commerce at issue, the selling by SBM of gambling services to
United States citizens abroad, constitutes foreign commerce under
20
Article I of the United States Constitution and so also constitutes
commerce under the Lanham Act; and
(5) The dissent does not disagree with the court's conclusion that
SBM did intentionally and formally use and display its mark in the
sale and advertising of its services in the United States to United
States citizens in an effort to spur sales of its services to them.
We believe that these conclusions alone justify our holding that
SBM's mark would merit Lanham Act protection (provided the mark
also enjoyed secondary meaning), and absent the dissent's disagree-
ment on these points, we do not understand the statutory basis for its
disagreement.
As to the dissent's failings, as we imagine them, first the dissent
conflates the two distinct aspects of the statutory "use in commerce"
requirement. The distinct elements of the analysis are set out above.
See supra p. 7. But in short, section 1127 defines the term "use in
commerce" with respect to services as being when a mark is "used or
displayed in the sale or advertising of services and the services are
rendered in commerce." As a consequence of the conjunctive com-
mand, it is not enough for a mark owner simply to render services in
foreign commerce for it to be eligible for trademark protection. Nor
is it enough for a mark owner simply to use or display a mark in the
sale or advertising of services to United States consumers. Both ele-
ments are required, and both elements must be distinctly analyzed.
Though the dissent contends that it understands there are two dis-
tinct elements to the use in commerce requirement, see post at 37-38,
its opinion betrays its claim. It must necessarily conflate the two ele-
ments to conclude, as it does, that today we hold "the protection of
United States trademark law extends to a mark used exclusively in
Monaco," post at 37, for it readily admits that only one of the two ele-
ments of use occurred abroad, the rendering of services, and that the
other element, SBM's New York City-based brand-building efforts,
did indeed occur in the United States.
This case presents a record replete with demonstrations of SBM's
singularly impressive commitment to building brand identity in the
United States. These efforts constitute, as we explain above, see supra
21
p. 21, a "use or display in the sale or advertising" of the services that
we elsewhere determined were also rendered in commerce. It cannot
but be concluded that this use of the mark - that is the building of
brand identity among United States consumers - very much
occurred in the United States, and indisputably so.
On our understanding of the statutory language it does not follow
that since the mark has not been rendered in commerce in the United
States it is equally fair to say that the mark has not been used in the
United States, when in fact it has been widely used in the United
States for advertising and marketing purposes. Unless one conflates
these two elements then, one cannot fairly criticize our holding today
as protecting a mark "exclusively" used in Moncaco. At most one can
criticize us for providing protection to a mark used in both Monaco
and the United States.
The dissent's different understanding of the statute and of the two
elements it sets out for establishing "use in commerce" is that both
elements of "use in commerce" must occur within the geographic bor-
ders of the United States, a merging of the contents of the two ele-
ments that is not provided for by the statute. The dissent believes it
can defend this proposition on the basis that many courts over the
years have said that "use" must occur in the United States in order for
a mark to merit Lanham Act protection. But, a "use in commerce"
whose elements occur, as here, both in the United States and abroad
is not exclusive foreign use, and is not controlled by the principles of
law upon which the dissent relies. Indeed, that the statute's definition
of the term commerce encompasses foreign commerce (thus naturally
including some services rendered outside the United States borders)
points, in fact, in the opposite direction from the dissent's conclusion.
Yet we reject the dissent's interpretation of "use" not only because
the statute does not suggest it, but also because the authorities to
which the dissent cites for its rule that " [b]oth elements must occur
in the United States in order to satisfy the use in commerce require-
ment" do not yield the precise formulation that the dissent suggests
they do. While these cases support the general contention that "use"
must be in the United States, they do not support the very different
conclusion that both distinct elements of the statutory "use in com-
merce" definition for servicemarks must occur within the United
22
States. Rather, these authorities, employing the term "use" in loose
and often varying ways, have either not drawn the distinction between
the two elements of use that are required in the statutory analysis of
servicemarks, or have drawn the distinction but then have not stated
that both elements of a servicemark's use must occur within the geo-
graphic confines of the United States.
Indeed, of the many cases the dissent cites, only two provide the
support it seeks. Both of those cases decided by the TTAB, Mother's
Restaurant, Inc. and Linville II, are unpersuasive authority to us
because of their failure properly to distinguish analytically between
the two distinct elements of the "use in commerce" requirement, and
between the distinct content of those elements. But before we reject
the reasoning of those two cases, we first owe the dissent a run-down
on the other cases it presents as contrary precedent to our decision
today.
The dissent suggests that the Federal Circuit opposes our rule. In
particular, it points to Person's Co. Ltd. v. Christman, 900 F.2d 1565
(Fed. Cir. 1990). In Person's, however, the court faced the question
of whether a Japanese manufacturer of clothes that had sold its
clothes in Japan, and had never used or displayed its mark to adver-
tise or sell its products in the United States, could establish priority
of use in the mark based on its Japanese operations. Though the
record did disclose a single occurrence when a United States citizen
purchased goods in Japan from the company, thus arguably meeting
the commerce requirement, no evidence whatsoever was proffered
that the company had in any way used or displayed its mark to adver-
tise or sell its product to United States consumers. Thus it was that
only "foreign use" (i.e., the foreign advertising of its product to for-
eign consumers) of the mark existed.7 Of course, the court's rejection
____________________________________________________________
7 As will quickly be seen in the analysis that follows, courts have long
loosely used the term "foreign use." Sometimes the term signals that the
commerce at issue does not qualify as commerce that Congress may reg-
ulate, and that thus there is only "foreign use." Sometimes the term sig-
nals that, though qualifying commerce is present, the mark owner has not
used or displayed the mark in advertising and sales efforts directed at
United States consumers, and thus that there is only "foreign use." And
sometimes, the term signals that neither qualifying commerce, nor quali-
23
of such foreign use in no way reflects upon the case before us today
where SBM did use and display its mark to advertise or sell its ser-
vices in the United States to United States consumers.8
The dissent also points to Imperial Tobacco Limited v. Philip Mor-
ris, Inc., 899 F.2d 1575 (Fed. Cir. 1990), as its justification. But, just
a glance at the first paragraph in the first section of that opinion tips
off the careful reader that that court too understood that varied forms
of commerce could support trademark protection:
No use of the mark in commerce in or with the United States
was alleged.
Id. at 1577 (emphasis added). By this factual notation, the court made
clear, albeit by implication, that commerce in the United States is not
____________________________________________________________
fying use or display in advertising or sales, is present, and thus that there
is only "foreign use."
Of equal importance, the Lanham Act provides different statutory defi-
nitions of use for marks attached to goods and services. Thus, the term
"use" when used in the context of a case involving goods bears one
meaning, and, when used in the context of a case involving services,
bears another.
To the extent that this prior imprecision underlies the dissent's reason-
ing, its approach to the question is somewhat understandable. However,
after today, such imprecision can no longer, in this circuit, cause
improper decision of these difficult cases.
8 The dissent suggests that our distinguishing of Person must be wrong
because application of our rule to the facts of the Person case would
result in a different outcome than the Federal Circuit reached in that case.
See post at 48. That is not correct. The statutory provision we apply
today is directed solely and specifically to services and to evaluating
what constitutes use in commerce for servicemarks. We would not apply
our interpretation of the statutory provisions addressing services to a case
involving goods. We only examine Person, and the other cases we
address that involve goods instead of services, in order to demonstrate
that the dissent's importation of language about "foreign use" from those
cases into the case at bar does not result, when applied within the ser-
vices construct, to the absurd results that the dissent suggests it would.
24
the only commerce that can satisfy the Act, but that commerce with
the United States is also implicated.
The analysis that follows then confirms that the court was not there
crafting a rule requiring both elements of "use in commerce" to occur
in the United States. The court faced a claim by a United Kingdom
mark owner that it had not abandoned its mark's United States regis-
tration (obtained under the Lanham Act's provision allowing registra-
tion of foreign marks employed exclusively in foreign use). The mark
owner claimed that either its intent to employ the mark in exclusively
United States use (i.e., its claimed intent to sell goods in the United
States to United States citizens), or its existent exclusively foreign use
(i.e., its selling and advertising of goods to foreigners in foreign
lands) could satisfy the Act's ongoing use in commerce requirement.
Faced with these two claimed uses, the court said, "the terms `use'
and `nonuse' mean use and nonuse in the United States[,]" id. at 1579,
thus holding that the exclusively foreign use the mark owner relied on
could not satisfy the Act, and proceeding only to inquire whether the
claimed intent to employ the mark in exclusively domestic use had
been established.
Imperial Tobacco's "use in the United States" principle, then, pre-
sents a distinction between two particular types of uses: one exclu-
sively domestic, one exclusively foreign. And, just as with Person's,
the "use" (exclusively foreign) that Imperial Tobacco determined can-
not support protection is different from the use at issue here, where
the mark is both used in advertising and displays in the United States
and attached to services rendered in qualifying commerce overseas.
The dissent also argues that the appeal of the TTAB's decision in
Linville II, Rivard v. Linville, 133 F.3d 1446 (Fed. Cir. 1998) (Rivard
II), qualifies as relevant Federal Circuit precedent on this issue. How-
ever, such is not the case. The circuit court's holding in that case,
however, can only be understood after explication of the case's proce-
dural history.
First, the TTAB, in Linville v. Rivard, 26 U.S.P.Q.2d 1508 (TTAB
1993) (Linville I), addressed a petition to cancel a mark owner's regis-
tration on summary judgment. As in Imperial Tobacco, the mark
owner acquired Lanham Act registration by relying on the Act's pro-
25
vision for registration of foreign marks. The mark owner was Cana-
dian and used the mark on his Canadian beauty salons. He also
engaged in some advertising to United States consumers, and had
some United States clientele. The Board concluded that these facts
did not constitute use in commerce because the alleged qualifying
commerce at issue (selling to United States consumers) was not quali-
fying commerce.
On appeal to the Federal Circuit, the court, in an unpublished deci-
sion, agreed with the Board's conclusion that use in commerce had
not been established, but not on the basis of the Board's decision, and
in fact without any consideration of whether selling to United States
consumers constituted qualifying commerce, or whether use in com-
merce was established when such was combined with a use in United
States advertising. Instead, assuming that exclusively Canadian use
was at issue, the court relied entirely on its holding from Imperial
Tobacco. See Rivard v. Linville, 11 F.3d 1074, 1993 WL 472795 at
2 (Rivard I). That the court never considered the mark owner's claim
that his servicing of United States consumers and his United States
advertising constituted use in commerce is made apparent by the fact
that the court nowhere mentions those facts.
Despite agreeing with the Board's ultimate disposition of the use
in commerce question, the court vacated and remanded the Board's
decision on other grounds. On remand, in Linville II, the Board reiter-
ated its exact Linville I holding as to the use in commerce issue. That
is, it again concluded that the sale of services to United States con-
sumers was not qualifying commerce.
Following Linville II appeal was again taken, and Rivard II, the
case on which the dissent relies, resulted. In that decision, the circuit
court affirmed the judgment of the Board as to the use in commerce
question, but again, not on the Board's reasoning and without any
consideration of whether servicing United States consumers consti-
tuted qualifying commerce. Instead, the court omitted the relevant
facts (again) and solely relied on its prior unpublished opinion.9 Thus,
____________________________________________________________
9 "Linville established a prima facie case that Rivard abandoned the
ULTRACUTS mark because he did not use it in connection with hair
dressing and beauty salon services in the United States during the rele-
vant time period. 31 U.S.P.Q.2d at 1220." 133 F.3d at 1449.
26
the Federal Circuit in Rivard II only reiterated its holding from Rivard
I (unpublished) and thus likewise only reiterated the principle from
Imperial Tobacco, which principle, as we demonstrate above, is inap-
plicable to the case before us today.
The dissent would also rely on Fifth Circuit precedent to overcome
our reasoning. That decision, Fuji Photo Film Co., Inc. v. Shinohara,
754 F.2d 591 (5th Cir. 1985), has no bearing here for the same rea-
sons as we rejected Person's. Fuji involved two Japanese companies,
formed in 1919 and 1934, respectively. Both manufactured and sold
products within Japan. Beginning in 1967 and 1954, respectively, the
two companies sold their products in the United States. The Fuji court
said that the companies' Japan operations - that is, their manufactur-
ing and selling products to Japanese locals as they had been doing for
generations - did not figure into the trademark analysis. Just as in
Person's, such foreign use (i.e., non-qualifying commerce and the
foreign use and display of the mark to advertise and sell products to
foreign consumers) is not what is before us today.
The dissent would also have it that we are now in conflict with the
Second Circuit on this issue as well. For the reasons given above, we
reject the dissent's contentions as to Buti. See supra pp. 15-16. But
so, too, do we reject the dissent's claim that La Societe Anonyme des
Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265 (2nd Cir.
1974), bears on this case. In that case, the court faced a trademark
claim by a foreign perfume manufacturer against a domestic perfume
manufacturer. The plaintiff initially asked the court to rule that it had
United States trademark rights in its mark, which it had attached to
products it manufactured abroad, had advertised abroad to foreigners,
and had sold abroad to foreigners. The court found that such foreign
use (i.e., again, non-qualifying commerce and foreign use and display
of the mark to advertise and sell the product to foreign consumers)
could not create trademark rights in the plaintiff. Again, such foreign
use is not what is at issue today.10
____________________________________________________________
10 The dissent would also have it that The Morningside Group Limited
v. Morningside Capital Group, LLC, 182 F.3d 133 (2nd Cir. 1999), sup-
ports its position. However, that case did not involve anything like the
case before us. It involved services provided in the United States, and so
27
Closer to home, the dissent suggests that a Fourth Circuit case on
trade dress, CBS, Inc. v. Logical Games, 719 F.2d 1237 (4th Cir.
1983), though not controlling, ought provide parallel reasoning by
which we should abide. Not only does that case not support the dis-
sent's position, but explicit language within it in fact points toward
our decision today. That case involved a trademark infringement suit
by the distributor of Rubik's Cube, against a former distributor of the
product who sold his copied version under the trademark, Magic
Cube. The court rejected the defendant's claim that, based on the
third-party manufacturer's foreign production of and foreign sale to
foreign consumers of the product, he somehow was due trade dress
rights in the product, accruing at the time that he imported the product
into the United States. Such foreign use by the third-party, foreign
manufacturer could not lead to trade dress rights, the court said. Id.
at 1239. Again, such "foreign use" is not what is at stake here.
Perhaps more illuminating from the CBS decision is the following
language the dissent chooses not to highlight, which language seems
in fact to portend something akin to the very case before us today:
[F]actual situations can be imagined in which extensive -
especially reiterated - purchase abroad and marketing in
the United States might operate to create in the American
importer trade dress rights in the United States for a format
employed elsewhere by the foreign manufacturer.
Id.
____________________________________________________________
the court distinguished it from Buti with the language the dissent cites.
We whole-heartedly agree with the principle enunciated by that court in
its distinguishing of Buti, particularly with its statement of the governing
principal: "Mere advertising and promotion of a mark in this country are
not enough to constitute "use" of the mark "in commerce," so as to bring
the activity within the scope of the Lanham Act." The whole point, of
course, is that with respect to services, further inquiry must be made as
to whether such use (advertising and promotion in the United States) is
conjoined with qualifying commerce. Thus, ultimately in Morningside
Group, the court did provide the mark owner with Lanham Act protec-
tion.
28
The dissent would also rely on a long-line of decisions from the
TTAB, to which, the dissent says, proper deference would result in
our adoption of its suggested disposition. However, as noted above,
only two of the cases cited are on point. The remainder are inapposite
for much the same reason as the circuit court cases discussed above
are inapposite.11
____________________________________________________________
11 In Techex, Ltd. v. Dvorkovitz, 220 U.S.P.Q. 81 (TTAB 1983), the
Board considered whether a British company that "resells the equipment
[it purchases from an American company] to its European customers and
provides warranty services to them," and that only intentionally adver-
tises to those European consumers, had United States trademarks rights
as a result of that "foreign use." The board said no. Once more, a differ-
ent foreign use was at issue than is at issue today.
In Stagecoach Properties, Inc. v. Wells Fargo & Co., 199 U.S.P.Q.
341 (TTAB 1978), the Board considered whether a domestic company
that owned a mark, but had not at all used it to advertise or identify
resorts it operated in Mexico, had Lanham Act trademark rights in that
mark as a result of the fact that its resorts engaged in qualifying foreign
commerce. The Board, wisely we think, said no. In reaching its decision
it said, "There is [ ] no evidence to show that the Colorado company
used a design of a stagecoach, in any form, as a sign or mark to identify
its services at [its Mexican resorts]." Id. at 349 (emphasis added). Thus,
the Board rejected the contention that the mark was used or displayed in
the advertising or sale of those services to United States consumers. The
Board did go on in the next sentence as follows: "In addition, applicant's
argument ignores the fundamental rule that activity outside of the United
States is ineffective to create rights in marks in the United States." But
we do not think that this latter statement can be understood, as the dissent
would have it, to be a considered holding that where a United States firm
sells its foreign resort services to United States consumers and advertises
its services to those United States consumers under the mark, that such
a mark would merit no Lanham Act protection. Yet, this is indeed the
result to which the dissent's reasoning tends. Given the immediately pre-
ceding sentence, we read this language to say simply what all the other
courts in the cases we have been reviewing thus far have said: that "for-
eign use" of marks as so understood (that is as foreign sale and/or for-
eign marketing to foreigners) does not establish Lanham Act protection.
In Oland's Breweries v. Miller Brewing Co., 189 U.S.P.Q. 481 (TTAB
1976), the Board dealt with a case in which it explicitly found there was
no foreign commerce (i.e., that commerce that Congress may regulate).
See id. at 488 ("[T]he record shows that opposer has not sold any beer
29
Thus we are left with only two TTAB cases remaining from those
proposed by the dissent that actually bear on the issue before us
today. We recognize that those cases, Rivard and Mother's Restau-
rant, Inc., are due "great weight" from us. See post at 42. But great
weight certainly does not mean obeisance, and it does not even mean
deference, particularly in the face of overwhelmingly clear statutory
language that leads us to a contrary conclusion. And that there is no
____________________________________________________________
under the mark "SCHOONER" in commerce which may lawfully be reg-
ulated by Congress[.]"). Based on this lacking ingredient to Lanham Act
protection, the Board found that the mark had been abandoned. Then,
and only then, did the Board inquire as to whether advertising the mark
owner had done in the United States was evidence of an intent not to
abandon the mark. Thus, it is not a case, as the dissent would have it,
where the presence of foreign commerce, and associated United States-
based advertising was not sufficient to justify trademark protection.
Instead, the mark was abandoned because there was simply no commerce
at all.
Lastly, in Sterling Drug, Inc. v. Knoll A.G. Chemische Fabriken, 159
U.S.P.Q. 628 (TTAB 1968), the Board considered whether a German
pharmaceutical manufacturer had Lanham Act rights to its mark in the
United States where the manufacturer had not advertised in the United
States or to United States consumers, though some United States con-
sumers had been treated with the pharmaceutical in Germany. Again, the
obvious element that is missing here is the use and display of the mark
to advertise or sell the product to United States consumers engaging in
qualifying foreign commerce. See id. at 630 ("Though German publica-
tions containing applicant's advertisements of "TALUSIN" or references
to that mark were received in the United States, there is no indication in
the record that these publications obtained such circulation in the United
States as to make the relevant public for applicant's goods, physicians
and pharmacists, aware of applicant's use of "TALUSIN." In other
words, the advertising in a foreign publication which may occasionally
be found in some library in the United States does not create protectible
rights in the advertised mark in the United States." (emphasis added)).
That the Board would in this case, as in so many others, note that such
"foreign use" (i.e., here, the foreign marketing to foreign consumers) is
not sufficient to establish Lanham Act rights is entirely unobjectionable
in our eyes, and again deals with different "foreign use" than that which
is at issue here.
30
other precedent to support these two decisions by the TTAB simply
confirms all the more our decision to reject its reasoning.
In Linville II, the Board considered whether a Canadian beauty
salon that solely operated Canadian facilities, engaged in certain
Canadian advertising that reached across the border into the United
States, had distributed promotional materials at a single county fair in
the United States, and had at times serviced United States customers,
had "used" its mark under the terms of the Lanham Act. See Linville
II, 41 U.S.P.Q.2d at 1735-36. Faced with these facts, the Board con-
cluded that qualifying commerce was not present, and so denied the
mark any protection. In its opinion, the Board reincorporated its initial
analysis in Linville I. See Linville II, 41 U.S.P.Q.2d at 1736 ("For the
reasons set forth by the Board in the summary judgment decision, we
find that the above activities neither individually nor collectively con-
stituted use of the ULTRACUTS mark in commerce[.]").12
The Linville I opinion moves seamlessly between its rejection of
the presence of qualifying commerce, to a rejection of "use" of the
mark based on that lack of qualifying commerce, thus conflating the
two inquiries and giving its opinion the superficial appearance of hav-
ing rejected a claim similar to that at issue here.
We reject respondent's argument that, through its advertis-
ing, he has used the mark ULTRACUTS in the United
States continuously since 1986. Although the definition of
use in commerce in the statute refers to a mark being "used
or displayed in the sale or advertising of services," the defi-
nition continues with the requirement that[:"]the services
are rendered in commerce, or the services are rendered in
more than one State or in the United States and a foreign
country and the person rendering the services is engaged in
commerce in connection with the services.["] Respondent
also argues that his services are rendered in commerce
because of the effect on commerce which is created by his
____________________________________________________________
12 The Board in Linville II proceeded to reiterate nearly verbatim its
reasoning from Linville I. We analyze the language from Linville I on
which the Board relies, though the same conclusions apply to its duplica-
tive reasoning in Linville II.
31
business, i.e., customers must travel from the United States
to Canada in order to obtain his services, and therefore the
customers travel in commerce. . . . [The cases respondent
cites] in support of his position . . . involved services which
were actually rendered in the United States, i.e., a restaurant
located in Tennessee and a hotel in New York which
attracted interstate travelers. Those fact situations were
manifestly different from that presented here, where during
the relevant time period respondent's hair salons were
located only in Canada.
. . . .
The mere fact that residents of the United States have
availed themselves of respondent's services while in Canada
does not constitute technical trademark use of respondent's
service mark which is sufficient to obtain or maintain a reg-
istration in the United States.
26 U.S.P.Q.2d at 1512 (emphasis added).
Having determined that no qualifying commerce was present, the
Board did not reject a position similar to that present here. And
regardless of whether we approve or disapprove of the Board's Com-
merce Clause analysis, it is readily apparent that their holding, reject-
ing trademark protection where no qualifying commerce is present,
comports with ours.
In Mother's Restaurants, the Board considered whether a Canadian
restaurant that engaged in "advertising and promotional efforts
directed to Americans entering Canada from the United States along
tourist routes," had, by that advertising, created Lanham Act rights
under that mark. The Board, relying fully on a decision of the District
Court for the Western District of New York, said:
[W]e decline to hold that opposer's promotional activities in
Canada regarding "MOTHER'S" and "MOTHER'S PIZZA
PARLOUR & SPAGHETTI HOUSE" prior to 1976 resulted
in superior rights in said marks in the United States so as to
32
preclude applicant from registering a confusingly similar
mark. Rather, it is our view that prior use and advertising of
a mark in connection with goods and services marketed in
a foreign country (whether said advertising occurs inside or
outside the United States) creates no priority rights in said
mark in the United States as against one who, in good faith,
has adopted the same or similar mark for the same or similar
goods or services in the United States prior to foreigner's
first use of the mark on goods or services sold and/or
offered in the United States. . ., at least unless it can be
shown that the foreign party's mark was, at the time of the
adoption and first use of a similar mark by the first user in
the United States, a "famous" mark[.]
Id. at 1048.
We are unpersuaded that this conclusory determination should gov-
ern our analysis. Most importantly, the Board never addressed the
question of whether commerce that Congress could regulate was at
issue. While it appears that such was the case from the factual
description provided, the Board suggests that the only relevant ques-
tion was whether "promotional activities in Canada" could create a
right in a mark. By this formulation of the Lanham Act standard, the
Board seems, like the dissent, to conflate the "commerce" element of
the "use in commerce" requirement with the "use or display of the
mark" element of that same requirement.
The conflation becomes most apparent in the Board's next declara-
tion that such Canadian (or even it says, United States) promotions
attached to Canadian trade "create[ ] no priority rights in said mark
in the United States." Id. It thus appears that the Board, while first
measuring the mark owner's "use" of the mark by promotional activ-
ity, then measures it by whether it is attached to interstate commerce,
never pausing to inquire as to the subtleties of the qualifying com-
merce requirement. Compare id. ("[W]e decline to hold that opposer's
promotional activities in Canada . . . resulted in superior rights[.]"),
with id. ("[A]dvertising of a mark[, wherever occurring,] in connec-
tion with goods and services marketed in a foreign country . . . creates
no priority rights in said mark in the United States [.]").
33
In contrast, the proper inquiry in such circumstances is to evaluate
first whether the commerce to which both parties claim their mark is
attached may be regulated by Congress, and then to evaluate at what
point in time the mark owners' began to use or display the mark in
the advertising and sale of those qualifying services to the qualifying
consumers. Our disagreement with the Board's analytical approach in
Mother's Restaurant convinces us that our circuit's law will be better
served if we hew to the language of the statute and apply the Lanham
Act with a careful eye toward, and an appreciation of, the two distinct
elements of the "use in commerce" requirement.
Indeed, that it is not enough for a mark owner to engage in qualify-
ing commerce to create rights in his mark, and that it is not enough
for a mark owner to use or display the mark in the advertising or sale
of services to create rights in his mark, is critical. This point cannot
be missed else the holding we reach today will indeed be distorted,
as the dissent's misreading of it illustrates.13 Rather, a mark owner
must both engage in qualifying commerce and use or display its mark
in the sale or advertising of these services to the consumers that
engage in that qualifying commerce. Of course, such was not found
by the circuit courts or the Board to be the case in any of the decisions
the dissent cites. While Rivard and Mother's Restaurant may have
presented such facts, the Board in Rivard explicitly disclaimed that
foreign commerce was present, and in Mother's Restaurant it did not
inquire into these distinct elements so that we could even say with
confidence that there the two distinct elements of the "use in com-
merce" requirement were, or were not, in fact met.
____________________________________________________________
13 See post at 39 ("The majority determines that [SBM's casino] ser-
vices `constitute trade with a foreign nation that Congress may regulate
under the Commerce Clause.'" Based on this determination, the majority
accords SBM, the holder of the foreign mark, "Casino de Monte Carlo,"
eligibility for trademark protection[.]"). Of course, that SBM's service
are qualifying commerce did not terminate our analysis of whether SBM
had used its mark in commerce. The second step was to adjudge whether
SBM's massive advertising campaign in the United States, directed to
United States consumers and intended to spur the qualifying commerce
that is in question, constituted a use or display of the mark in the adver-
tising of SBM's qualifying services.
34
As to the dissent's last principal basis for its objection to our hold-
ing today, it is one of policy. The dissent fears that we are undoing
all of the good of our country's trademark laws. See post at 45-46. We
do concede that policy is not our forte. But, we cannot help but note
that since avoidance of consumer confusion is the ultimate end of all
trademark law, this case presents a paradigmatic situation in which
we may see our laws working, as intended, to reduce consumer confu-
sion.
Indeed, the very fact that the Board in Mother's Restaurant would
acknowledge that foreign trademarks deemed "famous" can, with nei-
ther a demonstrated connection to qualifying commerce nor a demon-
strated use or display of the mark in order to advertise or sell services
in such qualifying commerce, enjoy Lanham Act protection, see
Mother's Restaurant, 218 U.S.P.Q. at 1048, illustrates the very real
interest that our trademark laws have in minimizing consumer confu-
sion, so that our economy may enjoy the greatest possible of efficien-
cies and confirms that trademarks developed overseas can themselves
lead to such undesirable and inefficient consumer confusion here at
home.
Ultimately, though, if SBM's mark merits protection under the stat-
ute, we must provide it to them.14 We do not know that this is "reverse
imperialism," see post at 46, but we do know that the law requires that
we permit mark owners like SBM to petition our courts for protection.
And we know as well that if such owners, upon their petition, can
____________________________________________________________
14 The dissent also implies that since SBM could register its mark in the
United States, we should not be overly concerned with providing them
the right of Lanham Act protection we today provide them. See post at
43-44. That fact is, in our minds, as irrelevant here as it would be in a
case involving a domestic manufacturer who, having sold products in
interstate commerce under an unregistered mark, sought the protection of
the Lanham Act from an infringer.
It is inconceivable that courts would interpret the Lanham Act to pun-
ish such mark owners for failing to register their mark where their mark
otherwise meets the statutory requirements for protection. Here, as much,
it is inconceivable that SBM's registration status should affect our analy-
sis of whether or not its mark qualifies for protection under the plain text
of the statute.
35
demonstrate that they meet the requirements of the statute, that they
are then entitled to protection, and that it is beyond us to refuse it to
them.
IV.
Having determined that the district court properly ruled that SBM's
mark was protectible under the Lanham Act, we turn next to review
its conclusion that its mark was infringed by the plaintiff companies'
activity.
To prove infringement of a protectible trademark, a trademark
owner must demonstrate that the infringer's use of the mark is likely
to cause consumer confusion. See Lone Star Steakhouse & Saloon,
Inc., 43 F.3d at 930. On the record before us we cannot conclude that
the district court committed clear error in determining that the plain-
tiff companies' use of the mark would cause consumer confusion. The
domain addresses in question, their use of pictures and renderings of
the actual Casino de Monte Carlo, and the web sites implying that
they provided online gambling as an alternative to their non-existent
Monte Carlo-based casino all support the conclusion that ordinary
consumers would be confused. The district court's grant of summary
judgment to SBM for trademark infringement under § 1125(a) was
therefore justified.
V.
The plaintiff companies lastly argue that the district court's injunc-
tive remedy, ordering transfer of 43 domain names to SBM, was over-
broad and vague, and that less burdensome remedies were available.
But the injunctive order was proper under § 1125(d)(1), the anticyber-
squatting provision that the court concluded the plaintiff companies
had violated, since that provision expressly provides domain name
transfer as remedy. The plaintiff companies do not challenge the dis-
trict court's determination under § 1125(d)(1), other than by their
objection that the "Casino de Monte Carlo" mark is not protectible,
which contention we reject above. In light of SBM's protectible inter-
est in the mark, and the plaintiff companies' failure to challenge the
judgment under § 1125(d)(1) on other grounds, we conclude that the
court's provision of injunctive remedy was proper.
36
CONCLUSION
For the reasons provided herein, the judgment of the district court
is affirmed.
AFFIRMED
DIANA GRIBBON MOTZ, Circuit Judge, dissenting:
The majority reaches the unprecedented conclusion that an entity's
use of its foreign trademark solely to sell services in a foreign country
entitles it to trademark protection under United States law, even
though the foreign mark holder has never used or registered its mark
in the United States. In my view, the majority errs in holding that the
protection of United States trademark law extends to a mark used
exclusively in Monaco by a company incorporated there. For this rea-
son and others set forth within, I respectfully dissent.
I.
Under United States law, the holder of an unregistered mark must
demonstrate "use in commerce" of that mark in order to be eligible
for trademark protection. The Lanham Act provides that "[a] mark
shall be deemed to be in use in commerce . . . on services when it is
used or displayed in the sale or advertising of services and the ser-
vices are rendered in commerce." 15 U.S.C.A. § 1127 (West Supp.
2003). Thus, there are two essential elements that must be present to
constitute "use in commerce" for Lanham Act purposes: (1) advertis-
ing that employs the mark and (2) the rendering of services to which
the mark attaches. Neither alone is sufficient. This two-pronged statu-
tory meaning of "use in commerce" is what I refer to when I say that
SBM did not "use" its mark in commerce because it did not "use" the
mark in the United States.1 Prior to today's holding, all existing
____________________________________________________________
1 This two-pronged meaning of "use" originated in the pre-Lanham Act
trademark cases. See, e.g., Trade Mark Cases, 100 U.S. 82, 94-95
(1879). The Lanham Act's "use in commerce" requirement draws
directly on this earlier understanding. See Zazu Designs v. Loreal, S.A.,
979 F.2d 499, 503 (7th Cir. 1992). In a case presenting facts almost iden-
37
authority, employing precisely this same two-pronged understanding
of use, has similarly concluded that use in the United States is neces-
sary to meet the Lanham Act's use in commerce requirement. None
of this authority has ever suggested that if one element of the use in
commerce requirement - advertising - takes place in the United
States while the other - the rendering of services - occurs outside
the United States, there has been use in the United States. Both ele-
ments must occur in the United States in order to satisfy the use in
commerce requirement.
Indisputably, SBM has satisfied the first element of the use in com-
merce requirement, for no one questions that SBM employed the
Casino de Monte Carlo mark in the United States to advertise and
promote the gambling services that it provides exclusively at its
casino in Monaco. This is not and has never been a case about adver-
tising. Rather, the question here is whether the second element of the
use in commerce requirement has been satisfied, i.e. have the services
that give rise to the Casino de Monte Carlo mark been rendered in
commerce of the United States. The majority holds that they have and
thus accords SBM's mark eligibility for trademark protection under
United States law. I believe, however, that because SBM has not ren-
dered its casino services in the United States, it has not satisfied the
statutory use in commerce requirement in a manner sufficient to merit
protection under the Lanham Act. Subsection I.A provides my analy-
sis of this question; subsection I.B sets forth my response to the
majority's efforts to rebut that analysis.
A.
In this case, some United States citizens purchased "casino ser-
vices" in Monaco from the Societe des Bains de Mer et du Cercle des
____________________________________________________________
tical to the case at hand, the Second Circuit clearly recognized this
understanding of "use" and its grounding in earlier Supreme Court doc-
trine. See Buti v. Perosa, S.R.L., 139 F.3d 98, 103 (2d Cir. 1998) ("Under
this rule, therefore, Santambrogio's mere advertising of the Fashion Cafe
mark, standing alone did not constitute `use' of the mark within the
meaning of the Lanham Act." (citing United Drug Co. v. Theodore Rec-
tanus Co., 248 U.S. 90, 97 (1918)).
38
Estrangers a Monaco (SBM), a "subject of a foreign nation." The
majority determines that those services "constitute trade with a for-
eign nation that Congress may regulate under the Commerce Clause."
Ante at 14. Based on this determination, the majority accords SBM,
the holder of the foreign mark, "Casino de Monte Carlo," eligibility
for trademark protection under the Lanham Act for that mark even
though SBM has never used the mark in the United States.
SBM has not argued, and the district court did not hold,2 that the
mark was entitled to protection under the Lanham Act simply because
SBM used it to sell gambling services in Monaco to United States cit-
izens. Nor did SBM argue, or the trial court hold, that these sales of
gambling services in Monaco to United States citizens constitute for-
eign trade that has been regulated by Congress under the Lanham Act.
Indeed, prior to today, no court, administrative agency, or treatise has
ever espoused or adopted this theory.
Rather, it has long been recognized that use of a foreign mark in
a foreign country creates no trademark rights under United States law.
As the foremost trademark authority has explained,"[f]or purposes of
trademark rights in the United States, `use' means use in the United
States, not use in other nations." 2 J. Thomas McCarthy, McCarthy
on Trademarks and Unfair Competition § 17.9 (4th ed. 2000)
("McCarthy"); see also 3 Rudolf Callman, The Law of Unfair Compe-
tition, Trademarks and Monopolies § 19.24 (4th ed. 1998)
("Callman") (noting that "[t]he use required under United States law
as the foundation of trademark rights must be use in this country and
not abroad . . . . It is well settled that foreign use creates no trademark
rights in the United States.").3
____________________________________________________________
2 The majority properly rejects the only rationale offered by SBM (and
adopted by the district court) for finding the mark used in United States
commerce for Lanham Act purposes, i.e. that advertising in the United
States combined with the booking of reservations to SBM's various
resorts through SBM's New York office sufficed to meet the use in com-
merce requirement. See ante at 7-9.
3 This principle, that use in the United States provides the foundation
for U.S. trademark rights, is a corollary of the well-established principle
that trademark rights exist in each country solely as determined by that
country's law. See Ingenohl v. Olsen & Co., Inc., 273 U.S. 541, 544
39
Until today, every court to address this issue has held that use of
a foreign trademark in connection with goods and services sold only
in a foreign country by a foreign entity does not constitute "use of the
mark" in United States commerce sufficient to merit protection under
the Lanham Act. As the Federal Circuit explained in rejecting the
contention that a Japanese mark holder's use of a trademark solely in
Japan in connection with goods sold to a United States citizen consti-
tuted use of the mark in commerce for Lanham Act purposes:
Such foreign use has no effect on U.S. commerce and can-
not form the basis for a holding that appellant has priority
here. The concept of territoriality is basic to trademark law;
trademark rights exist in each country solely according to
that country's statutory scheme.
Person's Co., Ltd. v. Christman, 900 F.2d 1565, 1568-69 (Fed. Cir.
1990); accord Fuji Photo Film Co., Inc. v. Shinohara Shoji Kabushiki
Kaisha, 754 F.2d 591, 599 (5th Cir. 1985); Fin. Matters, Inc. v. Pep-
sico, Inc., 806 F. Supp. 480, 484 (S.D.N.Y. 1992); see also La Societe
Anonyme des Perfums Le Galion v. Jean Patou, 495 F.2d 1265, 1270
n.4 (2d Cir. 1974) ("[I]t is well settled that foreign use [of a trade-
mark] is ineffectual to create trademark rights in the United States.").
Although we have never before directly addressed this question, we
____________________________________________________________
(1927) ("A trade-mark started elsewhere would depend for its protection
in Honkong upon the law prevailing in Honkong and would confer no
rights except by the consent of that law."). The United States has long
committed itself to this territoriality principle by joining international
agreements based on it. See, e.g., Paris Convention for the Protection of
Industrial Property, March 20, 1883, art. 6(3), available at
http://www.wipo.int/clea/docs/en/wo/wo020en.htm (last visited March
20, 2003) - a convention that the United States joined in 1883. The
majority builds its contrary thesis on the unremarkable proposition that
for Lanham Act purposes "commerce" is defined as "all commerce which
may lawfully be regulated by Congress." 15 U.S.C.A. § 1127 (West 1998
and Supp. 2002). What the majority overlooks is that to the extent Con-
gress can regulate sales of goods and services by foreigners, bearing for-
eign marks, in foreign nations, it has chosen to do so by providing in the
Lanham Act for compliance with international agreements based on the
territoriality principle. See, e.g., 15 U.S.C. § 1126(b) (West 1998).
40
have "accept[ed] the assertion . . . that`trade dress use in foreign
countries does not create protectible trade-mark rights in the United
States.'" CBS, Inc. v. Logical Games, 719 F.2d 1237, 1239 (4th Cir.
1983); cf. Buti v. Perosa, 139 F.3d 98, 103 (2d Cir. 1998) (noting that
plaintiff conceded that "Congress has no constitutional authority to
regulate the operation of the Fashion Cafe in Milan" perhaps in "rec-
ognition of the fact that . . . registration and use of the Fashion Cafe
name in Italy has not, given the territorial nature of trademark rights,
secured it any rights under the Lanham Act").
Aside from its singularly unpersuasive attempt to distinguish Buti,4
the majority ignores all of this authority. The majority also ignores the
fact that courts have uniformly rejected its precise argument, i.e., use
of a foreign mark in a foreign country somehow grants the foreign
holder of the mark priority over one who uses the mark first in the
United States. See, e.g., Person's, 900 F.2d at 1567-69; Fuji Photo
____________________________________________________________
4 Contrary to the majority's suggestion, ante at 15-16, the plaintiff's
concession in Buti that it did not sell cafe services in "foreign trade" with
the United States, does not render Buti "unpersuasive" here. This is so
because SBM has made - albeit implicitly - exactly the same conces-
sion. Indeed, SBM does not argue that its sale of services abroad consti-
tutes use in the "foreign trade" of the United States. Rather, like the
plaintiff in Buti, SBM claims only that its U.S. advertisement and promo-
tion activities constitute use in the United States. See Brief of Appellees
at 19 (arguing that record provides "evidence of its mark's use in the
United States"); 22 (same); 23 (same); see also id. at 28 (arguing that
application of famous marks doctrine entitles it to trademark protection
"as an alternative to a showing of `use' in the United States."). Thus, in
a context very similar to that at hand, the Second Circuit in Buti recently
indicated its agreement with the rule that rendering services in a foreign
country does not suffice to establish use in commerce for Lanham Act
purposes. Moreover, Morningside Group Ltd. v. Morningside Capital
Group, L.L.C., 182 F.3d 133 (2d Cir. 1999), decided a year after Buti,
makes clear the Second Circuit's intent. There, in the course of holding
that a mark claimant met the "use in commerce" requirement by "con-
duct[ing] material aspects of its investment services in the United
States," the Second Circuit distinguished Buti as a case "in which the ser-
vice mark claimant did not provide its actual business services (the con-
duct of a restaurant business) in the United States, but only advertised
and promoted those services in the United States." Id. at 138.
41
Film, 724 F.2d at 599; Fin. Matters, 806 F. Supp. at 484-85; Johnson
& Johnson v. Diaz, 339 F. Supp. 60, 63 (C.D. Cal. 1971).
Like the courts, the Trademark Trial and Appellate Board (TTAB),
whose decisions are entitled to "great weight," Buti, 139 F.3d at 105
(internal quotation marks omitted); see also In re Dr. Pepper Co., 836
F.2d 508, 510 (Fed. Cir. 1987), has also long rejected this theory, con-
cluding instead that "[p]riority of right in a trademark in the United
States depends on priority of use in the United States and is not
affected by priority of use in a foreign country." Sterling Drug Inc.
v. Knoll A.-G. Chemische Fabriken, 159 U.S.P.Q. 628, 630 (TTAB
1968); see also Techex Ltd. v. Dvorkovitz, 220 U.S.P.Q. 81, 83
(TTAB 1983); Mother's Restaurants Inc. v. Mother's Other Kitchen,
Inc., 218 U.S.P.Q. 1046, 1048 (TTAB 1983); Stagecoach Properties,
Inc. v. Wells Fargo & Co., 199 U.S.P.Q. 341, 349 (TTAB 1978); see
also McCarthy § 29.3 ("Prior use of a trademark in a foreign country
does not entitle its owner to claim exclusive trademark rights in the
United States as against one who used a similar mark in the U.S. prior
to entry of the foreigner into the domestic American market.")5
Nor is the rule any different when, as here, the mark is used in a
foreign country in connection with services or goods sold to United
States citizens. See, e.g., Person's, 900 F.2d at 1567-69 (rejecting
argument that use of trademark on goods sold in Japan by Japanese
company to a U.S. citizen could establish priority rights against per-
son using mark first in the United States); Mother's Restaurants, 218
U.S.P.Q. at 1047-48 (rejecting argument that use of trademark on res-
taurant services provided in Canada by Canadian entity to Americans
created "priority rights in said mark in the United States"); Stage-
coach Properties, 199 U.S.P.Q. at 349 (rejecting argument that use of
____________________________________________________________
5 Even if the plaintiff companies knew of SBM's use of its foreign
mark in connection with services rendered in Monaco, this does not ren-
der the plaintiff companies bad-faith users of the mark in the United
States or preclude them from using the mark in the United States. See
Person's, 900 F.2d at 1570 ("Knowledge of a foreign use does not pre-
clude good faith adoption and use in the United States."); accord Buti,
139 F.3d at 106; Callman § 19.24 and cases cited therein ("[E]ven an
intentional imitator may acquire domestic trademark rights if the mark he
imitates is used in a foreign country.").
42
trademark on hotel and restaurant services provided in Mexico to
"people from the United States" created rights protectible under U.S.
law in part because this "argument ignores the fundamental rule that
activity outside the United States is ineffective to create rights in
marks within the United States"); see also Sterling Drug, 159
U.S.P.Q. at 630-31.
I recognize that, consistent with the Paris Convention and other
international agreements, owners of foreign trademarks can obtain
United States trademark protection by registering their marks in the
United States without having to show actual prior use in this country.
See 15 U.S.C.A. § 1126(e) (West Supp. 2002) (providing that a for-
eign applicant from a country with whom the United States maintains
certain treaty rights can obtain a U.S. registration for a mark regis-
tered in its home country that it intends to use in U.S. commerce).
But, as the majority acknowledges, SBM has not registered its mark
in the United States. See ante at 2.6
Moreover, when the owner of a foreign trademark, like SBM, has
properly registered its foreign mark under the Lanham Act, that regis-
tration merely entitles it to the "same national treatment as any other
registrant." Imperial Tobacco Ltd. v. Philip Morris, Inc., 899 F.2d
1575, 1578 (Fed. Cir. 1990). Therefore, after it has registered its for-
eign mark, the holder of the mark can maintain United States protec-
tion of the mark only if it complies with the requirements of United
____________________________________________________________
6 Of course, the Supreme Court has long held that when a United States
trademark (i.e., a mark used or registered in this country) is at issue, no
"rule of international law" prevents the United States "`from governing
the conduct of its own citizens . . . in foreign countries when the rights
of other nations or their nationals are not infringed.'" Steele v. Bulova
Watch Co., 344 U.S. 280, 285-86 (1952) (quoting Skiriotes v. Florida,
313 U.S. 69, 73 (1941)). For this reason, Congress has the power, which
it has exercised in the Lanham Act, to prohibit United States citizens
from engaging in "deliberate acts" abroad which result in "[u]nlawful
effects in this country," i.e., infringement of a trademark registered in the
United States. Bulova, 313 U.S. at 288. As the majority seems to recog-
nize (by citing Bulova briefly only to distinguish it, see ante 15 n.6),
Bulova offers no support for its theory, which arises from a claim by a
foreign entity to United States trademark protection for a foreign mark
never used or registered in this country.
43
States law. Id. at 1578-79. The Lanham Act provides that any mark
owner - including the owner of a foreign mark - that discontinues
use of the mark may be deemed to have "abandoned" the mark and
that "nonuse" for a statutorily required period of time, now three con-
secutive years (formerly two consecutive years) "shall be prima facie
evidence of abandonment." 15 U.S.C.A. § 1127 (West 1998 & Supp.
2002); see also Emergency One, Inc. v. American Fireagle, Ltd., 228
F.3d 531, 536 (4th Cir. 2000). In this context too"`use' and `nonuse'
[of a trademark] mean use and nonuse in the United States." Imperial
Tobacco, 899 F.2d at 1579 (emphasis added); see also Rivard v. Lin-
ville, 133 F.3d 1446, 1449 (Fed. Cir. 1998); Oland's Breweries Ltd.
v. Miller Brewing Co., 189 U.S.P.Q. 481, 487-88 (TTAB 1976).
Thus, even when the owner of a foreign mark has registered its
mark in the United States, it will be presumed to have abandoned the
mark if it does not use the mark for the statutorily required period of
time in the United States. Use, no matter how extensive, of the mark
in a foreign country during this period, does not rebut the presumption
of abandonment. See Rivard, 133 F.3d at 1448-49; Imperial Tobacco,
899 F.2d at 1579; Oland's, 189 U.S.P.Q. at 487-88. In Oland's, for
example, although a Canadian company used its mark extensively on
beer sold in Canada to United States citizens, because it did not sell
any beer with this mark in the United States during the required statu-
tory period, "a prima facie case of abandonment . . . [was] shown."
Oland's, 189 U.S.P.Q. at 488.
Indeed, in recent years one of our sister circuits has considered and
rejected the majority's theory in the context of facts far more favor-
able to the owner of the foreign trademark. See Rivard v. Linville, 133
F.3d 1446 (Fed Cir. 1998), aff'g, 41 U.S.P.Q.2d 1731 (TTAB 1997).
There, an owner of thirty-seven hair styling salons in Canada (the
majority of which were within one hour of the U.S. border) main-
tained that although he had not used his mark in the United States
itself, he had nonetheless "engaged in activities. . . which constitute
use of the mark in [United States] commerce." 41 U.S.P.Q.2d at 1735.
Specifically, the owner maintained that far-reaching Canadian
advertisement that extended into the United States; distribution of
coupons, gift certificates, and balloons in the United States; and, most
importantly here, purchase by a "`significant' United States clientele"
44
of the salon services in Canada constituted use of his mark in the
United States sufficient to merit protection under the Lanham Act.
The TTAB concluded that "the above activities neither individually
or collectively constituted use of the . . . mark in commerce," and spe-
cifically rejected the owner's "argument" that "travel of customers
from the United States to [his] Canadian salons" meant that those ser-
vices had been rendered "in commerce" because "activity outside the
United States does not create rights in marks within the United
States." Id. at 1735-37. The Federal Circuit affirmed, explaining that
"a prima facie case" had been established that the owner abandoned
his mark "because he did not use it in connection with hairdressing
and beauty salon services in the United States during the relevant time
period." 133 F.3d at 1449.
In sum, as the cases and commentary make clear, a mark cannot
satisfy the use in commerce requirement sufficient to merit protection
under the Lanham Act without a claimant showing use in the United
States. Indeed, I have failed to find, and the majority fails to cite, a
single case in which a court has accorded trademark rights to a for-
eign mark holder absent a showing of use in the United States. More-
over, as all of the existing authorities to address this issue have
concluded, such use requires that both the advertising that employs
the mark and the rendering of the services to which the mark attaches
take place in the United States. Advertising in the United States alone,
no matter how extensive, does not suffice to demonstrate the neces-
sary use in the United States.
Before concluding, I must note the potential consequences of adop-
tion of the majority's rule. The rule announced by the majority today
would mean that any entity that uses a foreign mark to advertise and
sell its goods or services to United States citizens in a foreign country
would be eligible for trademark protection under United States law.7
____________________________________________________________
7 It is worth noting here that, contrary to the majority's suggestion, ante
at 16, proof of distinctiveness by way of secondary meaning does not
necessarily operate as a check on the massive expansion of protection
that would be accorded to foreign marks used solely in foreign countries
under the majority's "use in commerce" holding. This is so because if a
mark is inherently distinctive, the mark holder need not offer any proof
of secondary meaning in order to receive protection. See, e.g., Two
Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992).
45
Such a rule threatens to wreak havoc over this country's trademark
law and would have a stifling effect on United States commercial
interests generally. Before investing in a mark, firms and individuals
would be forced to scour the globe to determine when and where
American citizens had purchased goods or services from foreign sub-
jects to determine whether there were trademarks involved that might
be used against them in a priority contest or in an infringement action
in the United States.8 On the other hand, SBM and companies like it
would, under the majority's rule, suddenly acquire a windfall of
potential United States trademark rights for all of the goods and ser-
vices advertised to and purchased by United States citizens while
traveling in their countries. Like some sort of foreign influenza, these
new entitlements would accompany American travelers on their
return home, creating a vast array of new duties for individuals in the
United States seeking to use the same or similar marks on goods or
services sold in the United States.
Of course, if the law required us to permit this sort of reverse impe-
rialism, whereby foreign subjects would be allowed to colonize
American markets with their foreign trademarks based on sales con-
ducted exclusively abroad, we would have no choice but to allow it.
But the law does not compel this. Rather, the majority's new theory
is contrary to all extant authority. Applying this authority here leads
to only one conclusion: SBM's use in Monaco of its "Casino de
Monte Carlo" mark does not constitute "use in commerce" of the
United States sufficient to gain protection under the Lanham Act.
Therefore, the grant of summary judgment to SBM should be reversed.9
____________________________________________________________
8 Although I appreciate the majority's concern with the policy objective
of avoiding consumer confusion, ante at 35, I do not see how its rule
would enhance the ability of trademark law to achieve this objective.
Indeed, by allowing foreign mark holders to acquire trademark protection
in the United States for goods and services sold exclusively abroad, the
majority's rule would likely generate a whole new set of trademark dis-
putes in the United States, exacerbating consumer confusion in the pro-
cess. Moreover, for the reasons mentioned in the text, the "notice"
function of trademarks vis-a-vis other firms would be severely under-
mined by the majority's rule. See Zazu, 979 F.2d at 503 (discussing
notice function of "use" requirement under U.S. trademark law).
9 Nor does the "famous marks" doctrine provide SBM any refuge. That
doctrine has been applied so seldom (never by a federal appellate court
46
On this ground, the plaintiff companies were entitled to judgment as
a matter of law.
B.
My friends in the majority respond, at length but without effect, to
the above analysis. See ante at 19-36. It is unclear to me precisely
what they believe the cases, the TTAB decisions, and the treatises dis-
cussed above mean by their repeated directive that the statutory use
in commerce requirement mandates use in the United States. See ante
at 23-24 n.7. What is clear is that the majority contends that this
directive does not require that both elements of the statutory use in
commerce requirement occur in the United States. For, according to
the majority, existing authority, with only two exceptions, presents no
obstacle to the majority's own view that the second element of use in
commerce - the rendering of services - need not occur in the
United States. To bolster that argument, the majority valiantly tries to
distinguish the wealth of authority discussed above. But its distinc-
tions rest on a misreading of the cases. In truth, contrary to the major-
ity's assertions, the new rule it announces today does place our court
squarely in conflict with at least two of our sister circuits, the TTAB,
and all other existing authority on this issue.
First, the Federal Circuit has clearly and repeatedly embraced a
rule that directly conflicts with the majority's. See, e.g., Rivard v. Lin-
ville, 133 F.3d 1446 (Fed. Cir. 1998), aff'g 41 U.S.P.Q.2d 1731
(TTAB 1997); Person's, 900 F.2d at 1567-69; see also Imperial
Tobacco, 899 F.2d at 1579 noting that "`use' and `nonuse' [of a trade-
mark] mean use and nonuse in the United States"). The majority mis-
takenly attempts to diminish Rivard's precedential value, by
explaining at length that this 1998 opinion was preceded by a prior
unpublished opinion vacating an earlier TTAB decision. See ante at
25-27. In fact, the Federal Circuit's 1998 opinion does indeed consti-
____________________________________________________________
and only by a handful of district courts) that its viability is uncertain. Per-
haps for this reason, SBM conceded in the district court that it could not
prevail on a famous marks argument without showing "some use" of its
mark in the United States. See J.A. 196. Since SBM has shown no use
of its mark in the United States, this concession forecloses appellate pur-
suit of this argument.
47
tute recent precedent on this precise issue, and clearly holds that the
TTAB correctly concluded that "activity outside of the United States
does not create rights in marks within the United States," 41
U.S.P.Q.2d at 1736; Rivard, 133 F.3d at 1449-50. The resulting rule
is unambiguous: in order for a service mark to qualify for U.S. trade-
mark protection, the services to which that mark attaches must be ren-
dered in commerce in the United States.
The majority's attempt to distinguish Person's is equally mis-
guided. For the majority contends that the Person's court, in holding
that a foreign mark on goods sold abroad to a United States consumer
was not used in the United States and so not subject to U.S. trademark
protection, was relying on the fact that there had been only "foreign
advertising of [the] product to foreign consumers." See ante at 23-24.
But, in fact, Person's involved a mark for goods, not services; under
the Lanham Act, as long as a mark is attached to the goods it signi-
fies, there is no advertising requirement akin to that pertaining to ser-
vice marks. See 15 U.S.C.A. § 1127 (paragraph 16). This was clearly
the case in Person's, where the court specifically found that the Japa-
nese clothing manufacturer had "applied a stylized logo bearing the
name `PERSON'S' to clothing in his native Japan," and that a United
States citizen "purchased several clothing items bearing the `PER-
SON'S' logo and returned with them to the United States." 900 F.2d
at 1566-67. Thus, the Person's court could not have been relying on
the lack of U.S. advertising as the basis for its holding; instead, it
must have grounded its conclusion that the mark had not been used
in the United States, and for that reason did not qualify for U.S. trade-
mark protection, on the fact that the goods had not been sold in the
United States. Although the majority does not suggest that the Per-
son's holding was incorrect, applying the majority's new rule to the
facts of Person's would lead to a holding exactly the opposite of that
reached by the Federal Circuit. Because the mark owner in Person's
sold his goods (with mark attached) to a U.S. citizen, those goods
were, under the majority's new rule, sold in foreign commerce of the
United States, thereby making the mark eligible for U.S. trademark
protection.
The majority's new rule also conflicts with the Second Circuit's
view on this question. In addition to rejecting my analysis of Buti,
ante at 27, the majority dismisses the more recent Second Circuit
48
opinion in Morningside, 182 F.3d 133, which eliminates any doubt as
to the correctness of my analysis of Buti. Ante at 27 n.10. In Morning-
side, the Second Circuit explained that a foreign financial services
firm, unlike the Italian cafe owner in Buti, did have a valid mark
under United States law because:
this is not a case like Buti v. Impressa Perosa, S.R.L., 139
F.3d 98 (2d Cir. 1998), in which the service mark claimant
did not provide its actual business services (the conduct of
a restaurant business) in the United States, but only adver-
tised and promoted those services in the United States. Mere
advertising and promotion of a mark in this country are not
enough to constitute "use" of the mark "in commerce," so as
to bring the activity within the scope of the Lanham Act (id.
at 105). By contrast, here Morningside Group does conduct
material aspects of its investment services in the United
States.
Morningside, 182 F.3d at 138.
The majority also ignores the fact that the Buti court itself, 139
F.3d at 103-05, after holding that the foreign mark holder's promo-
tional "activities in the United States were insufficient to establish
`use in commerce' of the Fashion Cafe name absent proof that [it]
offered any restaurant services in United States commerce," explicitly
embraced the TTAB rule adopted in Rivard, 41 U.S.P.Q.2d 1735-37,
and Mother's Restaurant, 218 U.S.P.Q. at 1047-48 - the two TTAB
cases that the majority explicitly concedes are "on point" with this
case but which reach a contrary conclusion. See ante at 23, 30-36;
Buti, 139 F.3d at 105 ("We take particular comfort in our reliance on
the TTAB decisions cited above [i.e., Mother's Restaurants and
Rivard] because the principles enunciated therein rest on solid foot-
ing."). As the Buti Court explained, the basic principle animating
these TTAB decisions has long been recognized by the Supreme
Court. Id. at 105 (quoting United Drug Co. v. Theodore Rectanus,
Co., 248 U.S. 90, 98 (1918) ("[T]hat a trademark right is not limited
in its enjoyment by territorial bounds, is true only in the sense that
wherever the trade goes attended by the use of the mark, the right of
49
the [markholder] . . . will be sustained." (emphasis added by Buti
court)).10
Furthermore, all of the other federal appellate decisions, which I
have cited and the majority has rejected, do, in fact, explicitly
embrace the general principle that United States trademark rights, or
trade dress rights, cannot be based on "use" of the trademark or trade
dress in a foreign country. See Fuji Photo Film, 754 F.2d at 599;
Patou, 495 F.2d at 1270 n.4; Logical Games, 719 F.2d at 1239; see
also Rogers v. Ercona Camera Corp., 277 F.2d 94, 97 (D.C. Cir.
1960) ("We take it as settled that ownership rights in a trademark in
the United States, in the case of private persons, exist only as an
appurtenance to a manufacturing or marketing business conducted in
the United States in which the mark is used." (footnote providing cita-
tion omitted)). The majority tries to distinguish these cases on the
ground that although they admittedly involved exclusively "foreign
use" such "`foreign use' . . . is not what is before us today" given the
purchase of casino services by United States citizens in Monaco. Ante
at 27.11 But there is nothing in any of these cases (or any of the other
cases cited in part I.A above) to suggest that the purchase of goods
____________________________________________________________
10 This principle - that the trade upon which the trademark is based
(i.e. the goods or services to which the mark attaches) must reach those
markets in which the trader seeks protection - inevitably leads to the
conclusion that foreign conduct that does not reach United States markets
does not suffice as a basis for according eligibility for U.S. trademark
rights. See United Drug, 248 U.S. at 98; Hanover Star Milling Co. v.
Metcalf, 240 U.S. 403, 416-17 (1916) ("But the mark, of itself, cannot
travel to markets where there is no article to wear the badge and no trader
to offer the article. . . . [T]he trade-mark right assigned" cannot be
"greater in extent than the trade in which it [is] used." (internal quotation
marks omitted)). The majority's rule turns this principle on its head.
Under its rule, whenever United States citizens go into foreign markets
to purchase goods or services, they render any foreign marks attached to
those goods and services eligible for trademark protection in United
States markets.
11 The majority also suggests that some language in Logical Games
"portend[s] something akin to the very case before us today." Ante at 27.
Actually, when read in context, it is clear that this language merely refers
to situations in which an American importer purchases goods abroad and
sells them in the United States.
50
or services by American citizens traveling abroad would somehow
render the use of trademarks to sell those goods or services no longer
"foreign." The crux of the matter, again, is whether the claimant can
demonstrate use in the United States.
As for the numerous TTAB decisions holding that eligibility for
trademark protection requires use in the United States, the majority
dismisses most of them as inapposite and rejects the two (Rivard, 41
U.S.P.Q.2d at 1735-37, and Mother's Restaurants, 218 U.S.P.Q. at
1047-48) that it concedes are "on point." Ante at 30-35. In fact, the
assertedly "inapposite" cases are not inapposite at all; each supports
the basic rule that foreign "use," including sales to United States citi-
zens traveling abroad, does not entitle a foreign mark to eligibility for
trademark protection under United States law.12
____________________________________________________________
12 Thus, Techex cites the rule announced in Mother's Restaurants, sup-
porting the conclusion that, for the TTAB at least, there is no valid dis-
tinction between foreign use that involves the purchase of goods or
services by U.S. citizens traveling abroad and foreign use that does not
involve such purchases. 220 U.S.P.Q at 83. Stagecoach Properties cites
the same principle to reject the argument that use of a mark to sell hotel
and restaurant services to United States citizens in Mexico sufficed to
create U.S. trademark rights. 199 U.S.P.Q. at 349.
In Oland's, the Board concluded that the Canadian brewer had aban-
doned its American registration of the SCHOONER mark in the United
States, even though the Canadian company had advertised with its mark
extensively in the United States and even though United States citizens
had purchased the company's beer in Canada. Oland's, 189 U.S.P.Q. at
482-83. Thus, although the Board concluded that a prima facie case of
abandonment had been shown because the Canadian brewer had not sold
any beer under the SCHOONER mark "in commerce which may be law-
fully regulated by Congress," id. at 488, it did so on facts identical to
those in this case (U.S. advertising plus sales to U.S. citizens in a foreign
country).
Finally, in Sterling Drug, a goods case, the TTAB concluded that even
though the German manufacturer had provided its drug "denoted as
TALUSIN" to doctors who then prescribed it to United States citizens in
Germany, such use did not qualify as "use in commerce" sufficient to
merit protection under the Lanham Act. 159 U.S.P.Q. at 630-31. In
attempting to distinguish this case on the ground that the advertising
there was insufficient to merit trademark protection, the majority makes
the same mistake it made in trying to distinguish Person's, i.e. importing
the advertising requirement for service mark protection to trademark pro-
tection for goods.
51
Moreover, the majority's two reasons for rejecting Rivard and
Mother's Restaurants - that "there is no other precedent to support
these two decisions," ante at 30-31, and that their reasoning is in error
because they "conflate" the two distinct elements of the use in com-
merce requirement, ante at 20 - do not withstand scrutiny. First, as
demonstrated above, both the Federal Circuit and the Second Circuit
have explicitly embraced the rule articulated in the TTAB's Rivard
and Mother's Restaurants decisions, see Rivard, 133 F.3d 1446, and
Buti, 182 F.3d at 103-105, and every other court has adopted an
approach entirely consistent with those TTAB decisions. Second, in
both Rivard and Mother's Restaurants, the TTAB, in expressly refus-
ing to embrace an interpretation of use in commerce like that of the
majority, took great pains not to "conflate" the two elements of the
use in commerce requirement.
Thus, in the TTAB's 1997 decision in Rivard (not the earlier 1993
decision quoted by the majority), the Board canceled a United States
mark registered by the owner of Canadian beauty salons because the
Canadian owner had failed to demonstrate use in the United States,
even though (1) he had engaged in extensive advertising that reached
the United States; and (2) his beauty salon services had been sold to
a "significant United States clientele." 41 U.S.P.Q.2d at 1735-36. In
doing so, the Board took care to separate the two elements of the use
in commerce requirement:
We reject respondent's argument that through his advertis-
ing, he has used the mark ULTRACUTS in the United
States since 1986. Under Section 45 of the Trademark Act,
a mark is deemed to be used in commerce on services
when it is used or displayed in the sale or advertis-
ing of services and the services are rendered in
commerce. . . . [emphasis added by TTAB]
Similarly, we reject respondent's argument that his ser-
vices are rendered in commerce because commerce is
affected by the travel of customers from the United States
to respondent's Canadian salons. . . . This case is readily
distinguishable [from the single-location service provider
cases cited by respondent] as respondent rendered no hair
52
dressing and beauty salon services in the United States dur-
ing the relevant time period.
. . . .
It is well settled that activity outside the United States
does not create rights in marks within the United States. See
Stagecoach Properties, Inc. v. Wells Fargo & Company ,
199 U.S.P.Q. 341 (TTAB 1978). The concept of territorial-
ity is basic to trademark law. See Person's Co. Ltd. v.
Christman, 900 F.2d 1565, 14 U.S.P.Q.2d 1477 (Fed. Cir.
1990). Thus, the fact that United States residents have
availed themselves of respondent's services while in Canada
does not constitute technical trademark use of respondent's
service mark which is sufficient to obtain or maintain a reg-
istration in the United States.
Id. at 1736-37.
There is no conflation of the two elements of use in commerce
here. In fact, the Board's conclusion is unambiguous: mere advertis-
ing that reaches the United States is not enough to constitute use in
commerce; rather, such advertising must be combined with a render-
ing of services in the United States in order to "constitute technical
trademark use of respondent's service mark" and thereby "obtain or
maintain a registration in the United States." Id. at 1737. Thus, con-
trary to the majority's assertion, ante at 32, the Board did in fact "re-
ject a position similar to that present here" (indeed, the relevant facts
are identical to those here: advertising that reaches the United States
plus purchase of services by United States citizens abroad) to reach
precisely the opposite conclusion - "that no qualifying commerce
was present." While the majority may disagree with the Board's con-
clusion (and with the Federal Circuit's published affirmance of this
conclusion, 133 F.3d 1446), it can not fairly do so on the ground that
the Board's reasoning somehow conflated the two elements of use in
commerce.
The same is true for Mother's Restaurants, which presents a virtu-
ally identical set of facts in the context of a priority contest. In that
case, the opposer argued that advertising of Canadian restaurant ser-
53
vices that reached into the United States combined with purchase of
those services by United States citizens traveling in Canada sufficed
to establish priority of use in the United States. 218 U.S.P.Q. at 1047-
48. In rejecting this claim, the Board certainly did not engage in any-
thing approaching the elaborate "use in commerce" analysis advanced
by the majority today. But the Board, like every court to address this
issue, clearly saw no reason to do so because it determined that adver-
tising that reached American consumers could not by itself provide
the basis for trademark protection in the United States absent a show-
ing of "use of the mark on goods or services sold and/or offered in
the United States." 218 U.S.P.Q. at 1048. Thus, the Board recognized
and correctly addressed both elements necessary to establish priority
of use in disposing of opposer's claim. That it reached a contrary con-
clusion from the majority when confronted with the same set of rele-
vant facts simply illustrates, once again, the extent to which the
majority's rule breaks with all prior authority on the matter.
II.
Even if my colleagues in the majority had correctly resolved the
"use in commerce" issue, I would nonetheless have to dissent. This
is so because, contrary to their holding, the district court erred in
resolving disputed material facts when granting summary judgment to
SBM on the secondary meaning issue and applied an improper sec-
ondary meaning analysis.
A.
The majority properly acknowledges both that the district court
decided the case on cross motions for summary judgment and that in
doing so the court engaged in factfinding. Ante at 4-5. However, the
majority apparently believes that this was justified because the parties
agreed to submit on the "voluminous record" to a bench trial and "did
not contradict one another's proffered facts, but only disputed the
inferences that a fact-finder could draw from those underlying facts."
Id. at 4. In truth, the parties never agreed to submit on the "volumi-
nous record" to a bench trial. Rather, the parties and the district court
agreed that the court would review that record and, on the basis of it,
grant summary judgment to the appropriate party, unless the court
54
determined that material factual disputes required a trial, in which
case the court would hold a trial.
Thus, the district court was not entitled to find facts and resolve
conflicting inferences at this stage of the proceedings. Nor was it
allowed to draw reasonable inferences from the facts before it as if
it were a factfinder. Indeed, given the posture of the case, the court
was required to resolve all inferences in favor of the non-moving
party. Because the plaintiff companies opposed SBM's motion for
summary judgment on trademark infringement, they were entitled to
all such favorable inferences in the context of the secondary meaning
inquiry. See United States v. Diebold Inc., 369 U.S. 654, 655 (1962)
("On summary judgment the inferences to be drawn from the underly-
ing facts . . . must be viewed in the light most favorable to the party
opposing the motion."); Rossignol v. Voorhaar, 316 F.3d 516, 523
(4th Cir. 2003) ("When faced with cross-motions for summary judg-
ment, the court must review each motion separately on its own merits
`to determine whether either of the parties deserves judgment as a
matter of law.'. . . When considering each individual motion, the
court must take care to `resolve all factual disputes and any compet-
ing, rational inferences in the light most favorable' to the party oppos-
ing that motion." (citations omitted)).
The small portion of transcript quoted by the majority, when con-
sidered in context, does not suggest that the parties ever agreed to
anything other than the attempted resolution of the case via summary
judgment. Both before and after the exchange quoted by the majority,
which for clarity I emphasize in the material quoted below, the district
court and the parties made their intentions clear:
THE COURT: . . . I am going to proceed to scour the
record, if you all submit it to the Court on summary judg-
ment, and I will make my own determinations under Rule
56, Local Rule 56(b) and the like, and I will see what I ulti-
mately come up with. If you have some concerns about that,
we will go ahead and have a trial on Monday.
[Counsel for plaintiff companies]: . . . . we would submit
with the record to the Court for consideration without a trial.
. . .
55
. . . .
THE COURT: So then it seems to me that the most efficient
way to proceed is to decide now - is for me to decide
whether there is a necessity for a trial. It seems to me that
there are no experts. I have excluded the plaintiff's. That
would have been an issue of dispute, presumably. . . . so
there is really no reason why the Court should not dispose
of this matter on the current record; isn't that right?
[Counsel for plaintiff companies]: I believe that's correct,
your Honor.
. . . .
[Counsel for SBM]: I think that sounds sensible, your
Honor.
. . . .
[Counsel for plaintiff companies]: That's exactly what I
would ask for, your Honor.
. . . . .
THE COURT: . . . I will now proceed to attack this matter
on the basis of the existing summary judgment record.
. . . . If there is a potential hearing, it will be in two weeks
or three weeks or four weeks, when I get to the bottom.
[Counsel for SBM]: Okay.
THE COURT: There is always the possibility - I don't see
it happening in this case, but I have had the experience of
a voluminous record where counsel and I thought it was
properly disposable on summary judgment, and when I
finally got through working my way through this volumi-
nous record, out popped a disputed issue of fact that I had
56
to call to the parties' attention. And that may happen, but I
don't think so. I don't think so.
. . . .
In any event, so unless I hear from counsel jointly on Mon-
day on this issue, I will assume that I will proceed on the
summary judgment issue - on the summary judgment
record, and then I will ask for oral argument only if it's
needed.
I will enter an order today indicating that. . ..
J.A. 998-1005 (emphasis added to indicate portion of transcript
quoted by majority).
That very day the district court did issue an order stating: "The par-
ties, by counsel, agreed that the matter should be submitted to the
Court on the existing summary judgment record. Should further oral
argument be necessary, the parties will be advised." Order, December
7, 2001 (emphasis added).
Moreover, after filing its initial memorandum opinion granting
summary judgment to SBM, when the district court reopened the pro-
ceedings on the plaintiff companies' motion for reconsideration, the
court continued to recognize that the matter would be resolved either
on summary judgment or after an actual trial, if the court determined
that there were disputed issues of fact. For example, the court noted
that "Rule 56(e) requires a party opposing summary judgment to sub-
mit affidavits setting forth specific facts showing that there is a genu-
ine issue for trial." J.A. 1020-21. In a later exchange with counsel for
SBM, the court again remarked, "[y]our predecessor indicated in
court that he thought it was appropriate to submit it on summary judg-
ment. . . . So you need to have that in mind. Now - but I want to
get these issues correct, and so if the record needs [to be] reopened
for either side, I will do so, and try the matter if necessary." J.A.
1023. The district court also recognized that "[t]he Celotex trilogy of
cases . . . govern in this case." J.A. 1024-25. Finally, the court stated
that in its view, "the defendants either prevail or don't prevail on sum-
57
mary judgment on the record as it existed at the time the original
memorandum opinion issued." J.A. 1041.
Given all of these statements and the fact that the court ultimately
granted SBM summary judgment, JA 1115, it is clear that the majority
is mistaken in concluding that the parties "agreed to submit the volu-
minous record to the court" for a bench trial. Ante at 4. The parties
agreed only to submit the voluminous record as it stood - without
further evidence or witnesses - for determination on summary judg-
ment, if that was possible, i.e., only if, as the district court put it, no
"disputed issue of fact . . . popped out," J.A. 1003, after the court
reviewed the record. Therefore, the district court's resolution of mate-
rial factual disputes and conflicting inferences from the submitted
facts when granting summary judgment constituted error, which the
majority compounds with its attempted justification.
B.
The district court's error in resolving material factual disputes
infected its holding on secondary meaning. In addition, the district
court erred in the manner in which it conducted its secondary mean-
ing inquiry.
In order to receive trademark protection for a geographically
descriptive mark like "Casino de Monte Carlo" the party seeking pro-
tection must prove not only that the mark was used in commerce but
also that the mark has attained secondary meaning. Perini Corp. v.
Perini Constr., Inc., 915 F.2d 121, 125 (4th Cir. 1990).13 A party
establishes secondary meaning "when, `in the minds of the public, the
primary significance of [the mark] is to identify the source of the
product rather than the product itself.'" Wal-Mart Stores, Inc. v.
Samara Bros., Inc., 529 U.S. 205, 211 (2000) (quoting Inwood Labs.,
Inc. v. Ives Labs., Inc., 456 U.S. 844, 851 n. 11 (1982)); see also
Resorts of Pinehurst, Inc. v. Pinehurst Nat'l Corp., 148 F.3d 417, 421
____________________________________________________________
13 For those marks found to be inherently distinctive, the mark holder
would not need to offer any proof of secondary meaning to merit protec-
tion (assuming, of course, that the mark also satisfies the use in com-
merce requirement). See, e.g., Two Pesos, Inc. v. Taco Cabana, Inc., 505
U.S. 763, 768 (1992).
58
(4th Cir. 1998) ("Secondary meaning has been established in a geo-
graphically descriptive mark where the mark no longer causes the
public to associate the goods with a particular place, but to associate
the goods with a particular source." (internal quotation marks, alter-
ation, and citation omitted)).
In this circuit, "[p]roof of secondary meaning entails vigorous evi-
dentiary requirements." Perini, 915 F.2d at 125 (listing six factors
"relevant to" but "not dispositive of" secondary meaning inquiry -
"(1) advertising expenditures; (2) consumer studies linking the mark
to a source; (3) sales success; (4) unsolicited media coverage of the
product; (5) attempts to plagiarize the mark; and (6) the length and
exclusivity of the mark's use" (internal quotation marks and citation
omitted)). Ordinarily, a party claiming trademark protection must
meet its burden on secondary meaning by offering proof under the
Perini factors. We held, in Larsen v. Terk Technologies Corp., 151
F.3d 140, 148-49 (4th Cir. 1998), however, that evidence of "inten-
tional, direct copying" of a mark, provides the party claiming protec-
tion with "a presumption of secondary meaning." Under the Larsen
rule, if the alleged infringer fails to rebut that presumption, the party
claiming infringement is entitled to judgment. Id.
But even if the Larsen presumption did apply here,14 it must be
properly applied. In Larsen, we expressly held that an alleged
infringer could rebut the presumption. Id. at 148 (noting that evidence
of intentional, direct copying creates a presumption entitling the party
claiming infringement to judgment "in the absence of rebutting
proof"). Because the alleged infringer in Larsen "failed to rebut the
presumption," we did not there address the question of the effect of
such rebuttal evidence. However, the ultimate burden of proof always
remains on the one asserting a claim. See St. Mary's Honor Ctr. v.
Hicks, 509 U.S. 502, 507 (1993); Fed. R. Evid. 301. Therefore,
Larsen must be read as consistent with Fed. R. Evid. 301, which pro-
vides that "a presumption imposes on the party against whom it is
directed the burden of going forward with evidence to rebut or meet
____________________________________________________________
14 Of course, I do not believe the Larsen presumption applies here
because copying a foreign trademark that has not been used or registered
in the United States violates no law of this country. See, e.g., Buti, 139
F.3d at 106; Person's, 900 F.2d at 1570.
59
the presumption, but does not shift to such party the burden of proof
in the sense of risk of nonpersuasion, which remains throughout the
trial upon the party on whom it was originally cast." Thus, evidence
proffered by an alleged infringer that rebuts the Larsen presumption
shifts the burden of establishing secondary meaning back to the party
seeking protection, who must then make the requisite showing under
the Perini factors that its mark had in fact attained secondary mean-
ing.
Properly applied to the case at hand, this would mean that the
plaintiff companies' extensive evidence rebutting the presumption of
secondary meaning, including abundant third-party use of the Casino
de Monte Carlo mark by both land-based and web-based casinos
located in the United States, at least some of which SBM conceded
it knew of yet made no effort to eliminate, would shift the burden of
proof on this issue back to SBM. At that point, SBM should have
been required to prove secondary meaning under the Perini factors.
The district court, however, did not interpret Larsen in this way and
so did not require SBM, the party seeking protection, to prove that its
mark had, in fact, attained secondary meaning.15
Instead, the district court found that the Larsen presumption
applied, even though "there [w]as no direct evidence of intentional
copying," because "inferring intent of the plaintiff companies is
proper given that the putative infringing term is identical to SBM's
mark and the infringing use is in the same relevant market: gambling
services." Assuming such an inference is permissible, surely the
plaintiff companies' evidence of similar extensive third-party use
(known and undisturbed by SBM) should have been considered as
rebutting the presumption of secondary meaning, thereby shifting the
burden of proof back to SBM on that issue. But that did not happen.
Upon concluding that the Larsen presumption applied, the district
court then determined not whether SBM had proved secondary mean-
____________________________________________________________
15 Contrary to the majority's suggestion, the district court did not "em-
ploy[ ] two distinct analyses to assess the secondary meaning," beginning
with the "traditional Perini analysis" and then "furthermore" proceeding
under Larsen. See ante at 17-18. Rather, the district court first applied
the Larsen presumption and then considered the Perini factors in light of
this presumption.
60
ing but whether the plaintiff companies had "show[n] that the Perini
factors weigh against secondary meaning." (Emphasis added). Thus
the district court placed the burden of proof on the wrong party -
requiring the alleged infringer to prove no secondary meaning, rather
than requiring SBM to prove secondary meaning.
The district court also made improper factual determinations in
resolving the matter in SBM's favor. For example, the district court
determined that the extensive third-party use of the mark, constituted
evidence of "plagiarism." Yet a fact-finder could well infer from this
evidence that SBM's "Casino de Monte Carlo" mark was not distinc-
tive enough to have achieved the requisite level of secondary meaning
necessary to merit protection under United States law. See, e.g., Echo
Travel, Inc. v. Travel Assoc., Inc., 870 F.2d 1264, 1269 (7th Cir.
1989) (stating that evidence of "third party use of a substantially simi-
lar mark to promote the same goods or services to the same consumer
class weighs against a finding that the consumer class associates the
mark with one source" (emphasis in original)).16
Similarly, the district court ignored the evidence of SBM's failure
to police its mark in any systematic or vigorous way; yet a fact finder
could conclude from this evidence that SBM's mark had lost any dis-
tinctiveness that it may have had. See McCarthy, § 17:17 ("`Without
question, distinctiveness can be lost by failing to take action against
infringers. If there are numerous products in the marketplace bearing
the alleged mark, purchasers may learn to ignore the "mark" as a
source identification. When that occurs, the conduct of the former
____________________________________________________________
16 The majority's recognition, ante at 5 n.4, 18, that conflicting infer-
ences could be drawn from the plaintiff companies' evidence of third-
party use simply confirms, once again, that the district court erred in
drawing the inferences it did given that it decided the case on summary
judgment. Because the plaintiff companies were the non-moving party on
the issue of secondary meaning, any such inferences should have been
viewed and resolved in the light most favorable to them. See Diebold,
369 U.S. at 655; Harley-Davidson Motor Co., Inc. v. Powersports, Inc.,
319 F.3d 973, 989 (7th Cir. 2003) ("The phrase in the light most favor-
able to the nonmoving party . . . simply means that summary judgment
is not appropriate if the court must make a choice of inferences." (inter-
nal quotation marks and citation omitted)).
61
owner, by failing to police its mark, can be said to have caused the
mark to lose its significance as a mark.'" (quoting Wallpaper Mfrs.,
Ltd. v. Crown Wallcovering Corp., 680 F.2d 755, 766 (C.C.P.A.
1982)).
For these reasons, I would conclude that, even if the plaintiff com-
panies were not entitled to summary judgment on the use in com-
merce question (which I believe they were), they have produced
sufficient evidence to raise genuine issues of material fact as to
whether SBM shouldered its burden under the Perini factors. Accord-
ingly, even if the majority's holding on "use in commerce" were cor-
rect, I would reverse the district court's grant of summary judgment
to SBM.
62