Star-Kist Foods, Inc. v. P.J. Rhodes & Co.

• Decision Date: 19 September 1985
• Docket Number: STAR-KIST,No. 84-5588,84-5588
• Citation: 227 USPQ 44,769 F.2d 1393
• Parties: FOODS, INC., Plaintiff-Appellee, v. P.J. RHODES & COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1393

769 F.2d 1393

227 U.S.P.Q. 44

STAR-KIST FOODS, INC., Plaintiff-Appellee, v. P.J. RHODES & COMPANY, Defendant-Appellant.

No. 84-5588.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 7, 1984.

Decided Aug. 28, 1985.

As Amended Sept. 19, 1985.

Andrew Baum, Nims, Howes, Collison & Isner, New York City, for plaintiff-appellee.

Edward B. Gregg, Gregg, Caplan & Higgins, Menlo Park, Cal., for defendant-appellant.

Appeal from the United States District Court for the Central District of California.

Before KENNEDY and PREGERSON, Circuit Judges, and SOLOMON, ^* District Judge.

KENNEDY, Circuit Judge:

This is an action arising under the Lanham Act, 15 U.S.C. Secs. 1051-1127 (1982), for trademark infringement and false designation of origin with respect to the ROSE BOWL trademark and the Bowl of Roses Design trademark (the trademarks). P.J. Rhodes & Company (PJR), a California corporation engaged in international trade, appeals from a judgment in favor of Star-Kist Foods, Inc. (Star-Kist), a California corporation engaged in the sale of canned fish. The trial court enjoined PJR from using the trademarks on canned fish sold within the United States or exported from the United States to either the Philippines or any other country in which PJR has not clearly established it's superior right of use. PJR contends the strongest evidence to support its case derives from its shipments to the Philippines from other foreign nations, and accordingly cites as error the pretrial order limiting the scope of relief to sales within the United States or exports from the United States. We affirm in all respects.

PJR was appointed by Star-Kist's predecessors in 1948 as a distributor of ROSE BOWL products in the Philippines. Pursuant to an unwritten agreement, PJR would purchase canned fish either in the United States or abroad, primarily in Japan, and resell it in the Philippines. Resale was under the trademarks, with labels supplied by Star-Kist's predecessors. This informal relation continued when Star-Kist succeeded to ownership of the trademarks in 1980, and endured until Star-Kist terminated PJR's distributorship in a letter dated April 6, 1981. Shortly following receipt of the letter, PJR began selling canned fish in the Philippines under the trademarks, using labels that identified PJR instead of Star-Kist, as the source of the fish. PJR brought an action in the Philippine Patent Office to cancel Star-Kist's Philippine registration of the trademarks, and Star-Kist then commenced the instant proceedings in the district court to enjoin PJR's exportation of canned fish under the trademarks from the United States to the Philippines.

PJR contends the district court erred in granting Star-Kist's motion to limit the scope of relief to exclude evidence of wholly foreign commerce and to preclude adjudication of the right to use or register the trademarks in any country other than the United States. The district court, relying on Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 428-29 (9th Cir.1977), concluded it lacked subject matter jurisdiction over claims involving wholly foreign commerce. As this is a question of law, we exercise de novo review over the district court's determinations. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984). In Wells Fargo we concluded that the Lanham Act's coverage of foreign activities may be analyzed under the test for extraterritorial application of the federal antitrust laws set forth in Timberlane Lumber Co. v. Bank of America National Trust & Savings Ass'n, 549 F.2d 597 (9th Cir.1976) (Timberlane I ). Wells Fargo, 556 F.2d at 427-28. In Timberlane I we held: first, there must be some effect on American foreign commerce; second, the effect must be sufficiently great to present a cognizable injury to plaintiffs under the federal statute; and third, the interests of and links to American foreign commerce must be sufficiently strong in relation to those of other nations to justify an assertion of extraterritorial authority. 549 F.2d at 613-15.

The first and second requirements of the Timberlane I test, arguably, are satisfied here. With respect to the third element, however, we conclude PJR has not established that the interests of and links to American foreign commerce are sufficient to justify the extraterritorial application of the Lanham Act. Compare Steele v. Bulova Watch Co., 344 U.S. 280, 286-87, 73 S.Ct. 252, 255-56, 97 L.Ed. 319 (1952) (the manufacture in the United States of components for defendant's falsely designated Bulova watches, assembled in Mexico and sold to Americans, created a significant impact upon American foreign commerce). The Timberlane I discussion of the third element of the test noted seven relevant factors:

the degree of conflict with foreign law or policy, the nationality or allegiance of the parties and the locations or principal places of business of corporations, the extent to which enforcement by either state can be expected to achieve compliance, the relative significance of effects on the United States as compared with those elsewhere, the extent to which there is explicit purpose to harm or affect American commerce, the foreseeability of such effect, and the relative importance to the violations charged of conduct within the United States as compared with conduct abroad.

549 F.2d at 614. We have held these seven factors should be balanced in each case. Timberlane Lumber Co. v. Bank of America National Trust & Savings Ass'n 749 F.2d 1378, 1384 (9th Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 3514, 87 L.Ed.2d 643 (1985) (Timberlane II ); Wells Fargo, 556 F.2d at 428-29.

Here PJR's petition to cancel Star-Kist's Philippine registration of the trademarks is currently pending in the Philippine Patent Office. Application of the Lanham Act to wholly foreign Philippine commerce could create a conflict with Philippine patent and trademark law and with pending proceedings in that country. See Wells Fargo, 556 F.2d at 428-29 (the existence of a conflict with a foreign trademark registration weighs against extraterritorial application of the Lanham Act). Compare Steele, 344 U.S. at 285, 289, 73 S.Ct. at 255, 257 (plaintiff succeeded in cancelling defendant's Mexican trademark registration prior to the Court's decision, thereby avoiding a conflict with established foreign rights). Further, adjudication of the right to use the trademarks in Philippine commerce with nations other than the United States would require the testimony of Philippine nationals and the production and analysis of Philippine documents. The effect on United States commerce from the alleged illegal use of the trademarks in trade between the Philippines and other foreign countries is relatively insignificant compared to the effect on Philippine commerce. These factors indicate that the significant interest of the Philippines in restricting the extraterritorial application of the Lanham Act should preclude extension of the Act to wholly foreign commerce in this case. The other Timberlane I considerations do not mandate a contrary result. We conclude the district court acted in accordance with principles of international comity and fairness in excluding wholly foreign commerce from the Lanham Act case before it.

PJR next contends Star-Kist's predecessors abandoned the trademarks by failing to use them in the United States between 1974 and 1977. Under the Lanham Act, a trademark is abandoned when its use is discontinued with intent not to resume. 15 U.S.C. Sec. 1127 (1982). Nonuse for two consecutive years constitutes prima facie abandonment, id., but this is a presumption that may be rebutted by showing valid reasons for nonuse or by proving lack of intent to abandon. Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir.1980). Cf. Wallpaper Mfrs., Ltd. v. Crown Wall Covering Corp., 680 F.2d 755, 761 (C.C.P.A.1982) (abandonment of a trademark, being in the nature of a forfeiture, must be strictly proved); ...