Lodestar Anstalt v. Bacardi & Co.

• Decision Date: 21 April 2022
• Docket Number: 19-55864
• Parties: LODESTAR ANSTALT, a Liechtenstein company, Plaintiff/Counter-Defendant/Appellant, v. BACARDI & COMPANY LIMITED, a Liechtenstein company; Bacardi U.S.A., Inc., a Delaware corporation; Bacardi Limited, a Bermuda company, Defendants/Counter-Claimants/Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

31 F.4th 1228

LODESTAR ANSTALT, a Liechtenstein company, Plaintiff/Counter-Defendant/Appellant,

v.BACARDI & COMPANY LIMITED, a Liechtenstein company; Bacardi U.S.A., Inc., a Delaware corporation; Bacardi Limited, a Bermuda company, Defendants/Counter-Claimants/Appellees.

No. 19-55864

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 10, 2020 Pasadena, California

Filed April 21, 2022

G. Warren Bleeker (argued), Gary J. Nelson, and Drew Wilson, Lewis Roca Rothgerber Christie LLP, Glendale, California, for Plaintiff/Counter-Defendant/Appellant.

Michael C. Lynch Jr. (argued) and Andrea L. Calvaruso, Kelley Drye & Warren LLP, New York, New York, for Defendants/Counter-Claimants/Appellees.

Before: Bobby R. Baldock,^* Marsha S. Berzon, and Daniel P. Collins, Circuit Judges.

COLLINS, Circuit Judge:

This trademark dispute requires us to consider the scope and priority of rights granted by an "extension of protection" for a trademark under the "Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks," June 27, 1989, T.I.A.S. No. 03-1102, commonly known as the "Madrid Protocol." A key feature of the Madrid Protocol, as implemented by amendments contained in Title XII of the Lanham Act, is that applicants with trademark protection in other countries may obtain an "extension of protection" in the U.S.—which is generally equivalent to a trademark registration—without first having used the mark in commerce in the United States. Instead, an extension of protection may be granted under Title XII based on the applicant's declaration of a bona fide intent to use its foreign-registered mark in the U.S.

In this case, Lodestar Anstalt ("Lodestar") obtained in 2011 an extension of protection for its Liechtenstein-registered trademark in the use of the word "Untamed" in connection with whiskey, rum, and other distilled spirits. After Bacardi U.S.A., Inc. began an advertising campaign in November 2013 using the phrase "Bacardi Untameable" to promote its rum products, Lodestar brought this trademark-infringement suit against Bacardi U.S.A., Inc. and two of its affiliates (collectively, "Bacardi"). The district court entered summary judgment against Lodestar. On appeal in this court, the parties vigorously dispute whether Lodestar used its "Untamed" mark in commerce in the U.S. before Bacardi's campaign, but we find it unnecessary to decide that issue. Even assuming that Lodestar's first use of its mark in U.S. commerce occurred after Bacardi's campaign began, we conclude that, under the distinctive regime established for the Madrid Protocol, Lodestar's subsequent bona fide use of its registered mark on certain rum products gave rise to a priority of right that it could seek to enforce in an action under the Lanham Act. But Lodestar is still required to satisfy the basic elements of an action for trademark infringement, including a showing that Bacardi's campaign involved a likelihood of confusion with Lodestar's bona fide use of its registered mark in commerce. Because Lodestar failed to make that showing, we affirm the district court's grant of summary judgment.

I

Before turning to the facts of the parties' dispute, we begin with a brief overview of how registration of trademarks under the Madrid Protocol differs from the ordinary process of trademark registration under the Lanham Act.

A

The basic principle underlying federal and state trademark law is "that distinctive marks—words, names, symbols, and the like—can help distinguish a particular artisan's goods from those of others" and that the "[o]ne who first uses a distinct mark in commerce" thereby "acquires rights to that mark." B&B Hardware, Inc. v. Hargis Indus., Inc. , 575 U.S. 138, 142, 135 S.Ct. 1293, 191 L.Ed.2d 222 (2015) (emphasis added); see also Hana Fin., Inc. v. Hana Bank , 574 U.S. 418, 419, 135 S.Ct. 907, 190 L.Ed.2d 800 (2015) ("Rights in a trademark are determined by the date of the mark's first use in commerce."); Brookfield Commc'ns, Inc. v. West Coast Ent. Corp. , 174 F.3d 1036, 1047 (9th Cir. 1999) ("[A] fundamental tenet of trademark law is that ownership" of a trademark "is governed by priority of use."). Although "federal law does not create trademarks," B&B Hardware , 575 U.S. at 142, 135 S.Ct. 1293, it does "provide a degree of national uniformity," Matal v. Tam , ––– U.S. ––––, 137 S. Ct. 1744, 1751–52, 198 L.Ed.2d 366 (2017). In particular, to "help[ ] to ensure that trademarks are fully protected and [to] support[ ] the free flow of commerce," the federal Lanham Act establishes a system of national trademark registration, managed by the U.S. Patent and Trademark Office ("PTO"), to assist in establishing priority of trademark rights. Id. at 1752. "Registration does not create a mark or confer ownership," however, because "only use in the marketplace can establish a mark." Miller v. Glenn Miller Prods., Inc. , 454 F.3d 975, 979 (9th Cir. 2006). Accordingly, the general rule remains that "[a]ll common law and registration rights" rest on the use-based rule of "first-in-time, first-in-right." 2 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 16:1 (5th ed. 2022 Update) (hereinafter " MCCARTHY ON TRADEMARKS ").

Because registration does not itself create trademarks, it is not mandatory and the "owner of an unregistered mark may still use [the mark] in commerce and enforce it against infringers." Iancu v. Brunetti , ––– U.S. ––––, 139 S. Ct. 2294, 2297, 204 L.Ed.2d 714 (2019). But trademark registration under the Lanham Act "confers ‘important legal rights and benefits’ on trademark owners who register their marks." B&B Hardware , 575 U.S. at 142, 135 S.Ct. 1293 (citation omitted). "[R]egistration constitutes ‘prima facie evidence’ of the mark's validity," Iancu , 139 S. Ct. at 2297 (quoting 15 U.S.C. § 1115(a) ); it provides " ‘constructive notice of the registrant's claim of ownership,’ which forecloses some defenses in infringement actions," id. at 2297–98 (quoting 15 U.S.C. § 1072 ); it "can make a mark ‘incontestable’ once a mark has been registered for five years," Matal , 137 S. Ct. at 1753 (quoting 15 U.S.C. § 1065, 1115(b) ) (further citations and internal quotation marks omitted); and it "enables the trademark holder ‘to stop the importation into the United States of articles bearing an infringing mark,’ " id. (citation omitted). Obtaining registration thus provides "significant" legal rights that assist in protecting one's trademarks. B&B Hardware , 575 U.S. at 142, 135 S.Ct. 1293.

Under the Lanham Act, the ability to secure registration for a trademark typically depends, as trademark rights generally do, upon actual use of the mark in commerce. Thus, § 1 of the Act has long made registration available to the "owner of a trademark used in commerce ," and it requires an application by any such owner to attest that "the mark is in use in commerce. " 15 U.S.C. § 1051(a)(1), (3) (emphasis added); see also 15 U.S.C. § 1051(a)(1) (1946) (similar). But in 1988, Congress amended § 1 to also allow an application for registration to be filed based on the applicant's "bona fide intention ... to use a trademark in commerce." 15 U.S.C. § 1051(b)(1) (emphasis added). Such an intent-to-use application, however, cannot be granted unless and until the applicant subsequently files a "verified statement that the mark is in use in commerce." Id. § 1051(d)(1). If that statement is filed within a specified timeframe,¹ then, when registration is granted, the initial date of the intent-to-use application becomes the applicant's "constructive-use date," which "gives the applicant priority-of-use over anyone who adopts the mark after [that] date." Zobmondo Ent., LLC v. Falls Media, LLC , 602 F.3d 1108, 1111 n.3 (9th Cir. 2010). Specifically, § 7(c) of the Act states that, "[c]ontingent on the registration of a mark," the "filing of the application to register"—which, in the case of an intent-to-use application, will not initially be accompanied by actual use—"shall constitute constructive use of the mark," thereby conferring a general "right of priority, nationwide in effect," as of the date of the application. 15 U.S.C. § 1057(c) (emphasis added).

By giving priority of right based on constructive use rather than actual use, the intent-to-use registration mechanism reflects, to that limited extent, a departure from trademark law's traditional emphasis on priority of actual use. As the D.C. Circuit has explained, one purpose of the 1988 amendments allowing priority based on such constructive use was to avoid a situation in which a company undertakes potentially costly preparations to develop and use a mark, only to lose priority to others, including trademark "pirates," who outpace the company in making actual commercial use of the mark. Aktieselskabet AF 21. Nov. 2001 v. Fame Jeans Inc. , 525 F.3d 8, 19 (D.C. Cir. 2008) (citation omitted).

The Madrid Protocol, as implemented in the 2002 amendments to the Lanham Act, reflects an additional departure from the traditional emphasis on assigning priority of rights based on actual use. The Protocol establishes an international trademark registration system, and the United States' participation in that system became operative upon the effective date of a new Title XII of the Lanham Act, which added §§ 60–74 to the statute. See 15 U.S.C. §§ 1141 – 1141n ; see also Pub. L. No. 107-273, § 13403, 116 Stat. 1758, 1920 (2002), 15 U.S.C. § 1141 note (noting that Title XII took effect on Nov. 2, 2003). The Protocol allows holders of trademark rights in their respective countries to "secure protection" for their marks in other contracting parties by obtaining, through their home country's trademark office, an "international registration" in the "register of the International Bureau of the World Intellectual Property Organization." See Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, art. 2, June 27, 1989, T.I.A.S. No. 03-1102.

For foreign...