HCBA Lawyer Magazine Vol. 29, No. 2 | Page 40

CoUrt reAffirmS USe in CommerCe teSt for foreign BrAndS
Intellectual Property Section
Chairs: Cole Carlson – GrayRobinson, P.A. & Ryan M. Corbett – Burr & Forman
A foreign company
can establish
U.S. common law
rights, even
W
hether a party’s
use of a purported
trademark constitutes
“use in commerce”
is a question that often trips up even
experienced trademark practitioners.
The Eleventh Circuit recently
clarified the difference between
“use in commerce” for purposes
of establishing extraterritorial
enforcement jurisdiction and “use
in commerce” for purposes of
determining protectable trademark
rights. The takeaway: a foreign
company can establish U.S. common
law rights, even without U.S. sales,
if “advertising, publicity, and
solicitation” in the name of the
mark demonstrates use “sufficiently
public to identify or distinguish the
marked goods in an appropriate
segment of the public mind.”
The foreign mark owner in
Direct Niche, LLC v. Via Varejo S/A,
898 F.3d 1144 (11th Cir. 2018) met
that test. The case came to the
Eleventh Circuit in the context of a
declaratory judgment action under
the Anticybersquatting Consumer
Protection Act (ACPA), 15 U.S.C.
§ 1114(2)(D)(v). Brazilian company
Via Varejo owned the Casas Bahia
chain of more than 750 Brazilian
retail stores. The company owned
registered trade marks in more than
40 countries (but not, at the time the
case was brought, in the U.S.), and it
sold consumer goods online through
its website, casasbahia.com.br.
38
without U.S. sales,
with sufficiently
public advertising.
© Can Stock Photo / guyerwood
Direct Niche purchased the
domain casasbahia.com at a
premium at an online auction
and used the domain to serve up
advertisements — receiving more
than 3.5 million hits over a 2-year
period and generating more than
$15,000 in advertising revenue.
Not surprisingly, Via Varejo
brought a UDRP proceeding
against Direct Niche, and the
panel ordered transfer.
More surprisingly, Direct Niche
responded with a declaratory
judgment action. Direct Niche
argued that because Via Varejo
did not operate in the U.S. or ship
goods to the U.S., it did not use
the mark in commerce in the U.S.
And because, in Direct Niche’s
view, Via Varejo did not have a
U.S. registered or common law
mark, Direct Niche contended
its actions did not violate ACPA.
The trial court found Via
Varejo’s use sufficient to establish
common law rights. Direct Niche
appealed, arguing that the
“substantial effects” test set forth
in Steele v. Bulova Watch Co., Inc.,
344 U.S. 280 (1952) demonstrated
that Via Varejo’s operation of
Brazilian stores and a Brazilian
website did not have “substantial
effects” on the United States.
On appeal, the Eleventh
Circuit noted that the
jurisdictional analysis in Bulova
Watch is not the same as the
“use in commerce” test for
ownership. The court reaffirmed
its ownership test: a mark owner
must prove adoption and “use
in a way sufficiently public to
identify or distinguish the marked
goods in an appropriate segment
of the public mind as those of
the adopter of the mark.”
Once it affirmed the legal test,
the Eleventh Circuit reviewed the
facts for clear error and upheld
the trial court’s fact findings.
In particular, the trial court was
persuaded by evidence that Via
Varejo sold advertising on its
site to U.S.-based companies,
and that the Casas Bahia website
received millions of visits yearly
from U.S.-based IP addresses.
The Eleventh Circuit held those
factual findings
were not clearly
erroneous.
Author:
Dineen Pashoukos
Wasylik -
DPW Legal
NOV - DEC 2018
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HCBA LAWYER