Bell & Howell: Mamiya Co. v. Masel Supply Co.

• Decision Date: 30 September 1982
• Docket Number: No. 81 CV 2446 (ERN).,81 CV 2446 (ERN).
• Citation: 548 F. Supp. 1063
• Parties: BELL & HOWELL : MAMIYA CO., Plaintiff, v. MASEL SUPPLY CO., Defendant.
• Court: U.S. District Court — Eastern District of New York

548 F. Supp. 1063

BELL & HOWELL : MAMIYA CO., Plaintiff, v. MASEL SUPPLY CO., Defendant.

No. 81 CV 2446 (ERN).

United States District Court, E. D. New York.

September 30, 1982.

Wallenstein, Wagner, Hattis, Strampel & Aubel, Chicago, Ill. by Robert E. Wagner, Robert E. Browne, and Pennie & Edmonds, New York City by John E. Kidd, Joseph J. C. Ranalli, Robert M. Kunstadt, New York City, for plaintiff.

Nims, Howes, Collison & Isner, New York City by Kenneth R. Umans, New York City, for defendant.

MEMORANDUM OF DECISION AND ORDER

NEAHER, District Judge.

This trademark case brings into sharp focus the commercially significant question of whether an American company, which is engaged on an exclusive basis in the business of importing and selling trademarked goods of foreign manufacture under United States trademark rights owned by it, may enjoin another's unauthorized, competitive sale in the United States of the same identically trademarked goods, which were made and placed in the stream of international commerce by the foreign manufacturer, who did not intend that such goods be sold here. The action is now before the Court on plaintiff's motion for a preliminary injunction, following the issuance of a temporary restraining order, which has remained in effect with the consent of the parties. Based upon the facts which do not appear to be seriously disputed, the Court is of opinion that a preliminary injunction should be granted.

Plaintiff, formerly named Bell & Howell : Mamiya Company, and now named Osawa & Co., is a Delaware corporation.¹ It is the registered owner of United States trademark registrations for three "MAMIYA" marks,² and, on a purportedly exclusive basis, it imports and sells in this country medium format³ photographic equipment under these marks. The equipment is manufactured in Japan by the Mamiya Camera Co. ("Mamiya Co."), a Japanese company, sold by Mamiya Co. to a Japanese trading company, J. Osawa & Co. Ltd. ("Osawa Japan"), and then sold by the latter to plaintiff.

By agreement with Mamiya Co., Osawa Japan holds the exclusive right to distribute MAMIYA medium format equipment worldwide, except in Japan, which Mamiya Co. has reserved for itself. By a further oral agreement with plaintiff, Osawa Japan has named it the exclusive American distributor of these cameras. Osawa Japan owns all of the stock of Osawa & Co. (USA), Inc. ("Osawa USA"), a New York corporation which owns 93% of plaintiff's stock. Mamiya Co. of Japan holds the remaining 7%.

It appeared from the papers, and is now established that defendant Masel Supply Co. and another company had imported from Hong Kong (without opposition by U. S. Customs) non-counterfeit MAMIYA medium format cameras which they purchased from someone other than plaintiff and then resold in the United States, without authorization from plaintiff. There is no question that the equipment sold by defendant was made by Mamiya Co. and distributed by Osawa Japan. Defendant simply contends that no likelihood of confusion, dilution or unfair competition can arise from its sales of imported MAMIYA cameras in competition with plaintiff's sales of the same goods.

Despite the importance of the question raised, there are only a few certain landmarks. These are Justice Holmes' brief decision for the Supreme Court in A. Bourjois & Co. v. Katzel Co., 260 U.S. 689, 43 S.Ct. 244, 67 L.Ed. 464 (1923), rev'g, 275 F. 539 (2d Cir. 1921), rev'g, 274 F. 856 (S.D.N. Y.1920), and the two congressionally imposed restrictions on the importation of trademarked goods contained in the Act of September 21, 1922, ch. 356, title iv, § 526, 42 Stat. 975, superseded by section 526 of the Tariff Act of 1930 (codified at 19 U.S.C. § 1526), and in section 42 of the Lanham Act (codified at 15 U.S.C. § 1124). Understandably, these have been subjected to extremely close scrutiny by practitioners and scholars, who have expressed widely divergent views about their significance. With the important exception of United States v. Guerlain, Inc., 155 F.Supp. 77 (S.D.N.Y. 1957), vacated and remanded, 358 U.S. 915, 79 S.Ct. 285, 3 L.Ed.2d 236 (1958), action dismissed, 172 F.Supp. 107 (S.D.N.Y.1959), the legal journals have been the main battleground. Now this case has brought the sufficiency of those views to the fore.

In essence, plaintiff relies on the fact that it is the registered owner of the United States trademark registrations for the MAMIYA marks and on an unrestrictive reading of Bourjois v. Katzel, supra. Apart from its particular facts, the significance of which has fueled much of the debate, the Bourjois decision undeniably established for American trademark law the principle of the territoriality of trademarks, viz., that

"the protection of a trademark in a certain country depends exclusively on the law of that country, and that the effects of a trademark ownership by use or registration in a country do not reach beyond the borders of that country," II S. Ladas, Patents, Trademarks, and Related Rights 1340 (1975),

and thus rejected the principle of trademark "universality" which the Second Circuit had sustained in decisions going back to Appollinaris Co., Ltd. v. Scherer, 27 F. 18 (C.C.S.D.N.Y.1886). Under the "universality" principle, goods manufactured abroad under a trademark and then imported and sold in the United States were held not to infringe the rights of the owner of the American trademark, simply because the goods were genuine and the public, therefore, was undeceived. In Bourjois v. Katzel the Supreme Court held that an exclusive American distributor of a foreign-made, trademarked product, who possessed the American trademark rights by assignment from the foreign manufacturer, could maintain an infringement suit against one who imported and sold the foreign manufacturer's product under the trademark in competition with the plaintiff.⁴

Defendant acknowledges the continued validity of Bourjois v. Katzel, but focusing on its facts, and one in particular, contends that the case does not render the situation here a true case of trademark infringement. Defendant points out that the plaintiff in Bourjois v. Katzel was apparently unconnected with the foreign manufacturer and originator of the trademark, beyond having been the manufacturer's exclusive American distributor and having acquired from it the American trademark rights. Defendant contrasts this with the more extensive affiliations that exist among plaintiff, its ultimate parent Osawa Japan, and Mamiya Co., which relate to the manufacture and worldwide distribution of MAMIYA medium format photographic equipment. Piercing the "veils" of Osawa USA's 93% ownership of plaintiff and Osawa Japan's sole ownership of Osawa USA, it argues in essence that where the American trademark owner is subject to common ownership or control with the owner and users of the trademark in foreign nations, or forms part of a unified international enterprise engaged in the production and worldwide distribution of the trademarked product — descriptions it urges fit plaintiff — there can be no likelihood of confusion, false designation of origin, dilution or unfair competition for which relief can be granted.

For support, defendant relies on the reasoning of the district court in United States v. Guerlain, Inc., supra, which upheld the government's antitrust, Sherman Act § 2 monopolization claims against three trademark owners who were the exclusive United States distributors for three French perfumers, and who utilized the customs statute, 19 U.S.C. § 1526, supra, to block the importation of perfumes from the French companies to which they were related. Defendant also draws on the somewhat similar reasoning apparent in the United States Customs Service's current interpretation and administration of the related customs and trademark laws, 15 U.S.C. § 1124 and 19 U.S.C. § 1526, which are directed against the importation of foreign-made goods bearing trademarks registered in the United States. 19 C.F.R. Part 133 (1980). See J. Atwood, Import Restrictions on Trademarked Merchandise — The Role of the United States Bureau of Customs, 59 T.M.R. 301 (1969).

In this connection, defendant points out that in 1979 plaintiff was incorporated in Delaware as the business successor to a now-dissolved Illinois partnership of the same name, which distributed MAMIYA and BELL & HOWELL consumer photographic equipment in this country from 1975-1979. The partners in plaintiff's predecessor and their respective shares were Bell & Howell Company (50%), Mamiya Marketing Inc. (17%) and Osawa Marketing Inc. (33%). In 1979, Bell & Howell decided to withdraw from its consumer photographic lines of business and conveyed its share of the partnership's business to its Osawa and Mamiya partners, which then were merged to create plaintiff. As part of the transaction, Bell & Howell assigned ownership of the MAMIYA trademarks from itself to the newly formed marketing company, plaintiff. It also licensed Osawa Japan to sublicense the BELL & HOWELL mark for use on consumer photographic equipment, and plaintiff to use "BELL & HOWELL" as part of its corporate name.

As a result of the merger, Mamiya Marketing's parent, the manufacturer, Mamiya Co., received 15% of plaintiff's stock and Osawa Marketing's parent, Osawa USA, received 85%. Osawa USA itself was wholly owned by Osawa Japan, the exclusive distributor of MAMIYA products outside Japan. A subsequent conversion of debt to equity raised Osawa USA's stake in plaintiff to 93% and diluted Mamiya's to 7%.

Besides these stock ownership ties between plaintiff and the two Japanese companies that together manufacture and distribute the medium format cameras in which plaintiff and defendant deal, three of the six seats on plaintiff's board of directors are filled by directors of Osawa Japan, including its president Zenro Osawa, and the president of Osawa USA. A fourth seat is held by the president of Mamiya Co. In addition, plaintif...