Coalition to Preserve Integrity v. United States

• Decision Date: 05 December 1984
• Docket Number: Civ. A. No. 84-0390.
• Citation: 598 F. Supp. 844
• Parties: COALITION TO PRESERVE the INTEGRITY OF AMERICAN TRADEMARKS, et al., Plaintiffs, v. The UNITED STATES of America, et al., Defendants, and 47th Street Photo K-Mart Corporation, Intervenor-Defendants.
• Court: U.S. District Court — District of Columbia

598 F. Supp. 844

COALITION TO PRESERVE the INTEGRITY OF AMERICAN TRADEMARKS, et al., Plaintiffs, v. The UNITED STATES of America, et al., Defendants and 47th Street Photo K-Mart Corporation, Intervenor-Defendants.

Civ. A. No. 84-0390.

United States District Court, District of Columbia.

December 5, 1984.

COPYRIGHT MATERIAL OMITTED

William Allen, Covington & Burling, Washington, D.C., for plaintiffs.

David M. Cohen, Velta A. Melnbrencis, U.S. Dept. of Justice, Washington, D.C., for U.S.

Robert W. Steele, Washington, D.C., for K-Mart Corp.

Nathan Lewin, Jamie S. Gorelick, Washington, D.C., for 47th Street Photo.

MEMORANDUM OPINION

NORMA HOLLOWAY JOHNSON, District Judge.

Plaintiffs bring this action for declaratory and injunctive relief, in part in the nature of mandamus, alleging that certain regulations of the Customs Service, an agency of the Department of the Treasury, are inconsistent with the Tariff Act of 1930 and the Lanham Trademark Act of 1946. Asserting that these regulations deny them their entitlement to the full protection of their trademarks as mandated by these statutes, plaintiffs seek a declaration that the regulations are inconsistent with the statutes, an injunction prohibiting enforcement of these regulations, and an order directing that the statutes be enforced in accordance with their express terms.

BACKGROUND

Plaintiffs, American companies suing individually or by representation through their membership in the Coalition to Preserve the Integrity of American Trademarks (COPIAT), are manufacturers or distributors of such trademarked products as fragrances and cosmetics, watches, tires, fine crystal, cameras, photographic equipment, binoculars, and electronic goods. As owners of trademarks registered with the United States Patent and Trademark Office, plaintiffs have also filed copies of the certificates of registration with the Customs Service pursuant to section 42 of the Lanham Act. They claim to suffer damage from the importation and sale in this country of products known as diverted, graymarket, or parallel goods manufactured by their foreign subsidiaries or licensees and bearing their trademarks but imported without authorization. Seeking a mandatory order directing the Customs Service to exclude such goods from entry into this country, plaintiffs contend that the Tariff Act of 1930 and the Lanham Trademark Act of 1946 give them an unqualified right to demand such exclusion. Although plaintiffs license certain foreign subsidiaries to manufacture goods bearing their trademarks, they assert that unrelated third parties import these products without their consent.

Defendants are the United States of America, Donald T. Regan, Secretary of the Treasury, and William Von Raab, Commissioner of the United States Customs Service. Intervenor-defendant 47th Street Photo is a retailer of camera, video, and other electronic equipment in New York City. Intervenor-defendant K-Mart Corporation (K-Mart) is a mass merchandiser and retailer operating more than 2,000 discount department stores. Both 47th Street Photo and K-Mart are engaged in the sale of diverted goods to consumers in this country. Progress Trading Company, Inc., and The American Free Trade Association, which import and distribute diverted goods, as well as four American consumers, were granted leave to file briefs as amici curiae and support the position of K-Mart.

This matter is presently before the Court on the motion of intervenor-defendant 47th Photo to dismiss, plaintiffs' motion for summary judgment, the cross motion of federal defendants for summary judgment, and the cross motion of intervenor-defendant K-Mart for summary judgment. For the reasons set forth below, the motion of 47th Street Photo to dismiss will be granted in part and denied in part; the motion of plaintiffs for summary judgment will be denied; and, the cross motions of federal defendants and K-Mart for summary judgment will be granted.

MOTION TO DISMISS

The Court first turns its attention to the threshold issue of jurisdiction and considers the motion of intervenor-defendant 47th Street Photo to dismiss for lack of subject matter jurisdiction. 47th Street Photo contends that the Court of International Trade has exclusive jurisdiction over plaintiffs' claims under section 526 of the Tariff Act and that plaintiffs' averments with respect to section 42 of the Lanham Act fail to state a claim upon which relief may be granted. In support of the motion to dismiss under the Tariff Act, 47th Street Photo relies on a virtually identical action recently decided in the United States Court of International Trade wherein that court rendered a decision on the very jurisdictional issue presented by this case. In Vivitar Corp. v. United States, et al., 585 F.Supp. 1415 (CIT 1984), the Court of International Trade held that it possesses exclusive jurisdiction over claims arising under section 526 of the Tariff Act. The court premised its jurisdiction on its exclusive jurisdiction under 28 U.S.C. § 1581(a) over international trade disputes and rejected the argument that jurisdiction properly lies in the District Courts because the action is based primarily on United States trademark laws. In addition, 47th Street Photo argues that for prudential reasons the Court of International Trade should exercise jurisdiction over this complex issue in order to avoid duplication of judicial and legal resources and possible conflicting decisions. In opposition to the motion to dismiss the claim under the Tariff Act, plaintiffs contend that this court has jurisdiction over all aspects of the case.

The Court rejects intervenor-defendant's contentions and finds that jurisdiction is present in this case by virtue of the general federal question jurisdiction under 28 U.S.C. § 1331, the specific jurisdiction under 28 U.S.C. § 1338(a) of actions arising under statutes relating to trademarks, and the specific jurisdiction under 15 U.S.C. § 1121 of all actions arising under the Lanham Trademark Act. This case, contrary to the argument of 47th Street Photo, is not within the purview of any of the specific provisions of 28 U.S.C. § 1581 which would vest the United States Court of International Trade with exclusive jurisdiction. Therefore, the motion of 47th Street Photo to dismiss for lack of subject matter jurisdiction must be denied.

47th Street Photo also contends that the amended complaint fails to state a claim under section 42 of the Lanham Act, 15 U.S.C. § 1124, in that the goods in question bear a genuine trademark rather than one that copies or simulates a registered trademark. Section 42 of the Lanham Act provides that "no article of imported merchandise ... which shall copy or simulate a trademark registered in accordance with the provisions of this chapter ... shall be admitted to entry at any customhouse of the United States ...." Plaintiffs argue that despite the statute's plain language, the Supreme Court's decisions in A. Bourjois & Co. v. Katzel, 275 F. 539 (2d Cir. 1921), reversed 260 U.S. 689, 43 S.Ct. 244, 67 L.Ed. 464 (1923), and A. Bourjois & Co. v. Aldridge, 292 F. 1013 (2d Cir.1922), 263 U.S. 675, 44 S.Ct. 4, 68 L.Ed. 501 (1923), construed section 27 as barring the parallel importation of genuine trademarked goods. However, the Court finds that Katzel and Aldridge are distinguishable from the instant case. In Katzel, the Supreme Court held that an American purchaser of domestic trademark rights was totally independent from the foreign manufacturer and became the complete master of the trademark in the United States for the reason that the public recognized the American purchaser as the sole source of goods in the United States. It was further held that the foreign manufacturer, who had sold its business and trademark in this country, could not subsequently import its products to this country using the old trademark in competition with the American purchaser of the trademark. The Katzel holding was premised largely on the equities of the case and was intended to overcome the unfairness of permitting the foreign manufacturer, having sold its trademark rights to another, to thereafter arrange to have its goods marketed in the United States by someone other than the independent American purchaser.

Shortly thereafter, in Aldridge, with facts identical to those in Katzel, the Supreme Court ruled per curiam that the same plaintiff as in Katzel could prevent the importation by a third party of face powders made in France by the same company from which the plaintiff obtained its powder. Thus, the Aldridge decision, which was tied completely to the facts and analysis of Katzel, held only that infringing goods within the equitable reasoning of Katzel could be excluded. Under Katzel and Aldridge, a trademark on imported merchandise would be deemed to "copy or simulate" if the United States registrant who had purchased the rights was truly independent of the foreign entity applying the mark abroad and had developed its own goodwill in the American marketplace.

The Court finds, based on the foregoing, that absent the Katzel situation, section 42 of the Lanham Act clearly applies only to merchandise bearing counterfeit or spurious trademarks that "copy or simulate" genuine trademarks. Therefore, plaintiffs' amended complaint fails to state a claim upon which relief may be granted under section 42. Accordingly, the claim under the Lanham Act must be dismissed.

MOTIONS FOR SUMMARY JUDGMENT

Having determined that there is subject matter jurisdiction over plaintiffs' claims under the Tariff Act, the Court will now address the cross motions for summary judgment. Summary judgment is an extraordinary remedy and should be granted only if the pleadings, depositions, answers to interrogatories, admissions, and affidavits conclusively demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P....