McBee v. Delica Co., Ltd.

Decision Date02 August 2005
Docket NumberNo. 04-2733.,04-2733.
Citation417 F.3d 107
PartiesCecil McBEE, Plaintiff, Appellant, v. DELICA CO., Ltd., Defendant, Appellee.
CourtU.S. Court of Appeals — First Circuit

Alfred C. Frawley, with whom Robert O. Newton and Preti, Flaherty, Beliveau, Pachios & Haley, LLP were on brief, for plaintiff, appellant.

Todd S. Holbrook, with whom John G. Osborn and Bernstein, Shur, Sawyer & Nelson were on brief, for defendant, appellee.

Before SELYA, LYNCH, and HOWARD, Circuit Judges.

LYNCH, Circuit Judge.

It has long been settled that the Lanham Act can, in appropriate cases, be applied extraterritorially. See Steele v. Bulova Watch Co., 344 U.S. 280, 73 S.Ct. 252, 97 L.Ed. 319 (1952). This case, dismissed for lack of subject matter jurisdiction, requires us, as a matter of first impression for this circuit, to lay out a framework for determining when such extraterritorial use of the Lanham Act is proper.

In doing so, we choose not to adopt the formulations used by various other circuits. See, e.g., Reebok Int'l, Ltd. v. Marnatech Enters., 970 F.2d 552, 554-57 (9th Cir.1992); Vanity Fair Mills v. T. Eaton Co., 234 F.2d 633, 642-43 (2d Cir.1956). The best-known test, the Vanity Fair test, asks (1) whether the defendant is an American citizen, (2) whether the defendant's actions have a substantial effect on United States commerce, and (3) whether relief would create a conflict with foreign law. 234 F.2d at 642-43. These three prongs are given an uncertain weight. Based on Steele and subsequent Supreme Court case law, we disaggregate the three prongs of the Vanity Fair test, identify the different types of "extraterritorial" application questions, and isolate the factors pertinent to subject matter jurisdiction.

Our framework asks first whether the defendant is an American citizen; that inquiry is different because a separate constitutional basis for jurisdiction exists for control of activities, even foreign activities, of an American citizen. Further, when the Lanham Act plaintiff seeks to enjoin sales in the United States, there is no question of extraterritorial application; the court has subject matter jurisdiction.

In order for a plaintiff to reach foreign activities of foreign defendants in American courts, however, we adopt a separate test. We hold that subject matter jurisdiction under the Lanham Act is proper only if the complained-of activities have a substantial effect on United States commerce, viewed in light of the purposes of the Lanham Act. If this "substantial effects" question is answered in the negative, then the court lacks jurisdiction over the defendant's extraterritorial acts; if it is answered in the affirmative, then the court possesses subject matter jurisdiction.

We reject the notion that a comity analysis is part of subject matter jurisdiction. Comity considerations, including potential conflicts with foreign trademark law, are properly treated as questions of whether a court should, in its discretion, decline to exercise subject matter jurisdiction that it already possesses. Our approach to each of these issues is in harmony with the analogous rules for extraterritorial application of the antitrust laws. See Hartford Fire Ins. Co. v. California, 509 U.S. 764, 795-99, 113 S.Ct. 2891, 125 L.Ed.2d 612 (1993).

The plaintiff, Cecil McBee, an American citizen and resident, seeks to hold the defendant, Delica Co., Ltd. (Delica), responsible for its activities in Japan said to harm McBee's reputation in both Japan and the United States and for Delica's purported activities in the United States. McBee is a well-known American jazz musician; Delica is a Japanese corporation that adopted the name "Cecil McBee" for its adolescent female clothing line. McBee sued for false endorsement and dilution under the Lanham Act. The district court dismissed all of McBee's Lanham Act claims, concluding that it lacked subject matter jurisdiction. See McBee v. Delica Co., No. 02-198-P-C, 2004 WL 2674360 (D.Me. Nov.19, 2004) (unpublished).

We affirm, albeit on different reasoning. We conclude that the court lacked jurisdiction over McBee's claims seeking (1) an injunction in the United States barring access to Delica's Internet website, which is written in Japanese, and (2) damages for harm to McBee due to Delica's sales in Japan. McBee has made no showing that Delica's activities had a substantial effect on United States commerce. As to McBee's claim for (3) an injunction barring Delica from selling its goods in the United States, we hold that the district court had jurisdiction but conclude that this claim is without merit because the only sales Delica has made into the United States were induced by McBee for purposes of this litigation, and there is no showing that Delica plans on selling into the United States again.

I.

The relevant facts are basically undisputed. McBee, who lives in both Maine and New York, is a jazz bassist with a distinguished career spanning over forty-five years. He has performed in the United States and worldwide, has performed on over 200 albums, and has released six albums under his own name (including in Japan). He won a Grammy Award in 1989, was inducted into the Oklahoma Jazz Hall of Fame in 1991, and teaches at the New England Conservatory of Music in Boston. McBee has toured Japan several times, beginning in the early 1980s, and has performed in many major Japanese cities, including Tokyo. He continues to tour in Japan. McBee has never licensed or authorized the use of his name to anyone, except of course in direct connection with his musical performances, as for example on an album. In his own words, he has sought to "have [his] name associated only with musical excellence."

Delica is a Japanese clothing retailer. In 1984, Delica adopted the trade name "Cecil McBee" for a line of clothing and accessories primarily marketed to teen-aged girls. Delica holds a Japanese trademark for "Cecil McBee," in both Japanese and Roman or English characters, for a variety of product types. Delica owns and operates retail shops throughout Japan under the brand name "Cecil McBee"; these are the only stores where "Cecil McBee" products are sold. There are no "Cecil McBee" retail shops outside of Japan. Delica sold approximately $23 million worth of "Cecil McBee" goods in 1996 and experienced steady growth in sales in subsequent years; in 2002, Delica sold $112 million worth of "Cecil McBee" goods.

Delica puts out a "style book" or catalog that includes pictures and descriptions of the products in its "Cecil McBee" line; this style book is written in Japanese with some English words for effect. The style book is available in Japan at the retail stores and in certain other locations; sometimes it is included with shipped packages of "Cecil McBee" products. The style book contains telephone and fax numbers which allow a customer to order "Cecil McBee" merchandise from another company, Opus M. Co., Ltd., and have it shipped directly to the customer. Opus M. Co. buys the goods from Delica for this purpose, and then uses yet another company, Hamasho Co., Ltd., to do the shipping. It is undisputed that Hamasho Co. has never shipped any "Cecil McBee" goods outside of Japan. As described later, Delica's policy generally is to decline orders from the United States.

Delica operates a website, http://www.cecilmcbee.net, which contains pictures and descriptions of "Cecil McBee" products, as well as locations and telephone numbers of retail stores selling those products. The website is created and hosted in Japan, and is written almost entirely in Japanese, using Japanese characters (although, like the style book, it contains some English words). The website contains news about the "Cecil McBee" line, including promotions. Customers can log onto the site to access their balance of bonus "points" earned for making past "Cecil McBee" purchases, as well as information about how to redeem those points for additional merchandise. However, the site does not allow purchases of "Cecil McBee" products to be made online. The website can be viewed from anywhere in the Internet-accessible world.

McBee produced evidence that, when searches on Internet search engines (such as Google) are performed for the phrase "Cecil McBee," Delica's website (www.cecilmcbee.net) generally comes up as one of the first few results, and occasionally comes up first, ahead of any of the various websites that describe the musical accomplishments of the plaintiff. Certain other websites associated with Delica's "Cecil McBee" product line also come up when such searches are performed; like www.cecilmcbee.net, it is evident from the search results page that these websites are written primarily in Japanese characters.

In 1995, plaintiff McBee became aware that Delica was using his name, without his authorization, for a line of clothing in Japan. He contacted an American lawyer, who advised him that Delica was unlikely to be subject to personal jurisdiction in the United States. McBee retained a Japanese attorney, who sent a letter to Delica asking it to cease using the "Cecil McBee" name. When Delica declined, McBee petitioned the Japanese Patent Office to invalidate Delica's English-language trademark on "Cecil McBee."

On February 28, 2002, the Japanese Patent Office ruled Delica's trademark in Japan invalid. However, Delica appealed to the Tokyo High Court, which on December 26, 2002, vacated the decision of the Japanese Patent Office. On remand, the Japanese Patent Office found for Delica and reinstated Delica's registration of the "Cecil McBee" trademark. McBee appealed that ruling to the Tokyo High Court and lost; the trademark reinstatement has become final.1

In early 2002, Delica formulated a policy not to sell or ship "Cecil McBee" brand products to the United States and informed its managers throughout the company. Delica's admitted reason for...

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