American Rice, Inc. v. Arkansas Rice Growers Co-op. Ass'n

• Decision Date: 28 March 1983
• Docket Number: No. 82-2146,82-2146
• Citation: 701 F.2d 408
• Parties: AMERICAN RICE, INC., Plaintiff-Appellee, v. The ARKANSAS RICE GROWERS COOPERATIVE ASSOCIATION, d/b/a Riceland Foods, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 408

701 F.2d 408

218 U.S.P.Q. 489

AMERICAN RICE, INC., Plaintiff-Appellee, v. The ARKANSAS RICE GROWERS COOPERATIVE ASSOCIATION, d/b/a Riceland Foods, Defendant-Appellant.

No. 82-2146.

United States Court of Appeals Fifth Circuit.

March 28, 1983.

George D. Martin, Galveston, Tex., James L. Kurtz, Washington, D.C., for defendant-appellant.

Paul L. DeVerter, II, and Larry Currell Jones, Houston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before WISDOM, REAVLEY and TATE, Circuit Judges.

WISDOM, Circuit Judge:

In this interesting and unusual trademark dispute, we are asked to explore the extraterritorial reach of the Lanham Act, 15 U.S.C. Sec. 1051 et seq. The district court, 532 F.Supp. 1376 (1982), concluded that it was not powerless to prevent the acts complained of, despite the facts that the sales of the products bearing the allegedly infringing marks were consummated in a foreign country, Saudi Arabia, and none of those products found their way back into the United States. Finding also that there was a likelihood of confusion between the competing products, the district court issued a preliminary injunction, enjoining the defendant from any acts likely to cause confusion in the Saudi Arabian consuming public. ¹ We affirm.

I.

The plaintiff, American Rice, Inc. ("ARI"), and defendant, Arkansas Rice Growers Cooperative Association ("Riceland"), in this trademark suit are farmers' marketing cooperatives that process, mill, package, and market rice for their member-patrons. ARI is based in Houston, Texas, and counts among its members 1700 farmers in Arkansas, Louisiana, and Texas. Riceland's 14,000 members are located in Arkansas, Louisiana, Mississippi, and Missouri. Both cooperatives are actively engaged in selling rice under a number of brands in the United States and abroad. During the fiscal year ending July 31, 1981, ARI's sales in Saudi Arabia totalled over $100 million, giving it the lion's share or roughly 73 percent of that country's market. Riceland's performance in Saudi Arabia has been more modest, although it is the largest producer of rice in the United States. The company reported no sales in the years 1979 and 1980, approximately $5 million between 1980-1981, and $5.8 million in fiscal year 1981-1982 through the date of the district court's hearing.

In 1975, ARI purchased Blue Ribbon Mills, a company that had been exporting its rice to Saudi Arabia since 1966, and was assigned that company's trademarks. Included among those trademarks were the word marks "Blue Ribbon", "Chopstick", and "Abu Bint", and the design mark of a girl. Since the takeover of Blue Ribbon, ARI has continued to market rice under these marks with the assistance of its brokerage firm, Alpha Trading and Shipping Agencies, Ltd. ("Alpha"). Alpha is ARI's exclusive agent in Saudi Arabia, and is licensed by ARI to use the mark "Abu Bint" and to assist it in the on-going efforts to obtain a trademark registration in that country. ARI has attempted to register the "Abu Bint" mark since 1972, when a Saudi official rejected the application.

At the time of the injunctive order, ARI owned two federal registrations for the girl design trademark, and Texas trademark registrations, in both English and Arabic, of the word mark "Abu Bint". The plaintiff contends, and the trial court found, that "Abu Bint" translates into English as "of the girl" or "girl brand". ² The girl design marks, which are featured prominently on ARI's rice bags sold in Saudi Arabia, show the head and torso of a young oriental woman holding a bowl of rice and chopsticks. The color combination is red, yellow, and black. The words "chopstick" and "rice" appear in large, oriental-style writing, and the words "golden parboiled" are set into the table of the girl design. "Abu Bint" is printed at the top of each bag in Arabic script, and the logo and full name of ARI appear at the bottom in smaller English print.

ARI's rice is referred to only as Abu Bint in Saudi Arabia, and not as Chopstick brand. The reason for this, as the district court stated, is that the largely illiterate Saudi Arabian public distinguishes rice brands on the basis of the design on the package. The high incidence of illiteracy also explains why the plaintiff does not advertise, but relies instead on promotional schemes. ARI sells its rice in merchant "offices" where Saudis are permitted to view samples and place their orders. The rice is typically purchased in large quantities, 25 or 100 pound burlap bags.

Like ARI, Riceland sells its rice in 25 and 100 pound burlap bags through a system of merchants. The defendant initially marketed the rice in bags displaying a lion design, but in 1974 the company entered into an agreement with a Saudi merchant and began selling its product under the name "Abu Binten" or "Twin Girl". The colors appearing on the Twin Girl bags are red, yellow and black, the same colors used by ARI. ³ Four years later, in 1978, Riceland introduced a third brand called "Bint-al-Arab" or "daughter of the Arabs". Although the mark Bint al-Arab is owned by a Saudi merchant, Alamoudi, Riceland contends that it possesses the exclusive right to use the mark outside of Saudi Arabia. ⁴ The Bint al-Arab design portrays a young Arab woman outlined by a black seal. Arabic script is on the top of the seal and Roman lettering is on the bottom. The predominant colors are green, yellow, and black. Below the seal are the English words "extra long grain, parboiled American RICE," and at the bottom of the bag is the Riceland logo. In 1981, at the request of Alamoudi, Riceland modified its Bint al-Arab label and changed the color scheme to red, yellow, and black. The seal was also enlarged and the girl's facial features were altered.

Following the change in the Bint al-Arab label, Riceland began packaging, on a "private label" basis, another variety of rice called "Gulf Girl" in Arabic. The brand once again featured a label with a design of a girl and the colors red, yellow, and black. The girl is portrayed between black Arabic script, from the waist up, her hair uncovered. Unlike the young woman displayed on the Bint al-Arab rice bags, the Gulf Girl is western in appearance.

Even before the Gulf Girl mark was introduced, evidence admitted at the hearing showed that Saudi Arabian merchants, longshoremen, and consumers occasionally confused the defendant's Bint al-Arab brand with the plaintiff's Abu Bint rice. Riceland bags were shipped to and accidentally mixed with ARI bags at a merchant's warehouse. And one witness testified that he heard the owner of the Bint al-Arab mark, Alamoudi, attempt to tell a customer looking for Abu Bint that Bint al-Arab was the same rice.

ARI filed suit against Riceland on October 15, 1981, alleging trademark infringement in violation of the common law and the Lanham Act, 15 U.S.C. Sec. 1051 et seq., false designations of origin in violation of 15 U.S.C. Sec. 1125(a), and deceptive trade practices in violation of the Texas Deceptive Trade Practice Act, Tex.Bus. & Com.Code Ann. Secs. 17.41-.63 (Vernon Supp.1980-81). ARI's complaint sought preliminary and permanent injunctive relief, loss of profits, damages, and costs. An evidentiary hearing on the plaintiff's motion for a preliminary injunction was held on February 5, 1982, and on March 2 the motion was granted, enjoining the defendant from the use of certain trademarks and trade dress in connection with the sale of rice in Saudi Arabia. ⁵ The district court concluded its memorandum opinion and order by finding:

that plaintiff has presented evidence demonstrating its substantial likelihood of success at trial on the merits. Likelihood of confusion is due to the introduction of the red, yellow and black Bint al-Arab and the Gulf Girl labels. Defendant packages and sells the same product, rice, as plaintiff does. They both reach the same market. They both use the same advertising approach, although plaintiff has introduced a significant number of promotional items. There is some evidence of defendant's intent. There is some evidence of actual confusion. The designs of all three labels have similar characteristics. In light of the consuming public, careful distinction between the brands of a common product probably would not be expected. Thus, plaintiff has carried its burden on this element in regard to these two labels.

532 F.Supp. at 1388. The district court also enjoined the defendant from using its green Bint al-Arab label because it, too, was similar to the plaintiff's Abu Bint mark, and its continued use would permit Riceland to retain part of the goodwill misappropriated from ARI.

On appeal, Riceland contends that the district court erred as a matter of law in finding that it had jurisdiction to issue an injunction under the Lanham Act, and in holding that the doctrine of forum non conveniens was inapplicable. It also argues that the district court applied an improper legal standard in determining that ARI had a substantial likelihood of success on the merits, and that its fact findings are clearly erroneous. The district judge's decision is well-researched, carefully reasoned, and correctly sets forth the applicable law. 532 F.Supp. 1376 (1982). We adopt the opinion as our own and affirm the judgment as to each issue considered in the decision. We write only to clarify the related issues of the extraterritorial reach of the Lanham Act and the applicability of the doctrine of forum non conveniens to the facts of this case.

II.

The Lanham Act provides a trademark registrant a civil right of action against "[a]ny person who shall ... use in commerce" a colorable imitation of a registered mark in connection with the sale, offering for sale, or distribution of goods. 15 U.S.C. Sec. 1114(1)(a). "Commerce" is sweepingly defined as "all commerce which may lawfully be regulated by Congress." Id. Sec. 1127. Section 1121...