Person's Co., Ltd. v. Christman
| Decision Date | 13 April 1990 |
| Docket Number | No. 89-1370,89-1370 |
| Citation | 14 U.S.P.Q.2d 1477,900 F.2d 1565 |
| Parties | , 14 U.S.P.Q.2d 1477 PERSON'S CO., LTD., Appellant, v. Catherine CHRISTMAN, Personal Representative of the Estate of Larry Christman, Appellee. |
| Court | U.S. Court of Appeals — Federal Circuit |
Allan Zelnick, of Weiss Dawid Fross Zelnick & Lehrman, New York City, argued, for appellant. With him on the brief were Stephen F. Mohr and Glenn Mitchell.
Paul G. Juettner, of Juettner Pyle Lloyd & Verbeck, Chicago, Ill., argued, for appellee. With him on the brief was Michael Piontek.
Before BISSELL, Circuit Judge *, and BENNETT and SMITH, Senior Circuit Judges.
Person's Co., Ltd. appeals from the decision of the Patent and Trademark Office Trademark Trial and Appeal Board (Board) 1 which granted summary judgment in favor of Larry Christman and ordered the cancellation of appellant's registration 2 for the mark "PERSON'S" for various apparel items. Appellant Person's Co. seeks cancellation of Christman's registration 3 for the mark "PERSON'S" for wearing apparel on the following grounds: likelihood of confusion based on its prior foreign use, abandonment, and unfair competition within the meaning of the Paris Convention. We affirm the Board's decision.
The facts pertinent to this appeal are as follows: In 1977, Takaya Iwasaki first applied a stylized logo bearing the name "PERSON'S" to clothing in his native Japan. Two years later Iwasaki formed Person's Co., Ltd., a Japanese corporation, to market and distribute the clothing items in retail stores located in Japan.
In 1981, Larry Christman, a U.S. citizen and employee of a sportswear wholesaler, visited a Person's Co. retail store while on a business trip to Japan. Christman purchased several clothing items bearing the "PERSON'S" logo and returned with them to the United States. After consulting with legal counsel and being advised that no one had yet established a claim to the logo in the United States, Christman developed designs for his own "PERSON'S" brand sportswear line based on appellant's products he had purchased in Japan. In February 1982, Christman contracted with a clothing manufacturer to produce clothing articles with the "PERSON'S" logo attached. These clothing items were sold, beginning in April 1982, to sportswear retailers in the northwestern United States. Christman formed Team Concepts, Ltd., a Washington corporation, in May 1983 to continue merchandising his sportswear line, which had expanded to include additional articles such as shoulder bags. All the sportswear marketed by Team Concepts bore either the mark "PERSON'S" or a copy of appellant's globe logo; many of the clothing styles were apparently copied directly from appellant's designs.
In April 1983, Christman filed an application for U.S. trademark registration in an effort to protect the "PERSON'S" mark. Christman believed himself to be the exclusive owner of the right to use and register the mark in the United States and apparently had no knowledge that appellant soon intended to introduce its similar sportswear line under the identical mark in the U.S. market. Christman's registration issued in September 1984 for use on wearing apparel.
In the interim between Christman's first sale and the issuance of his registration, Person's Co., Ltd. became a well known and highly respected force in the Japanese fashion industry. The company, which had previously sold garments under the "PERSON'S" mark only in Japan, began implementing its plan to sell goods under this mark in the United States. According to Mr. Iwasaki, purchases by buyers for resale in the United States occurred as early as November 1982. This was some seven months subsequent to Christman's first sales in the United States. Person's Co. filed an application for U.S. trademark registration in the following year, and, in 1985, engaged an export trading company to introduce its goods into the U.S. market. The registration for the mark "PERSON'S" issued in August 1985 for use on luggage, clothing and accessories. After recording U.S. sales near 4 million dollars in 1985, Person's Co. granted California distributor Zip Zone International a license to manufacture and sell goods under the "PERSON'S" mark in the United States.
In early 1986, appellant's advertising in the U.S. became known to Christman and both parties became aware of confusion in the marketplace. Person's Co. initiated an action to cancel Christman's registration on the following grounds: (1) likelihood of confusion; (2) abandonment; and (3) unfair competition within the meaning of the Paris Convention. Christman counterclaimed and asserted prior use and likelihood of confusion as grounds for cancellation of the Person's Co. registration.
After some discovery, Christman filed a motion with the Board for summary judgment on all counts. In a well reasoned decision, 4 the Board held for Christman on the grounds that Person's use of the mark in Japan could not be used to establish priority against a "good faith" senior user in U.S. commerce. The Board found no evidence to suggest that the "PERSON'S" mark had acquired any notoriety in this country at the time of its adoption by Christman. Therefore, appellant had no reputation or goodwill upon which Christman could have intended to trade, rendering the unfair competition provisions of the Paris Convention inapplicable. The Board also found that Christman had not abandoned the mark, although sales of articles bearing the mark were often intermittent. The Board granted summary judgment to Christman and ordered appellant's registration cancelled.
The Board held in its opinion on reconsideration that Christman had not adopted the mark in bad faith despite his appropriation of a mark in use by appellant in a foreign country. The Board adopted the view that copying a mark in use in a foreign country is not in bad faith unless the foreign mark is famous in the United States or the copying is undertaken for the purpose of interfering with the prior user's planned expansion into the United States. Person's Co. appeals and requests that this court direct the Board to enter summary judgment in its favor.
1. Does knowledge of a mark's use outside U.S. commerce preclude good faith adoption and use of the identical mark in the United States prior to the entry of the foreign user into the domestic market?
2. Did the Board properly grant summary judgment in favor of Christman on the issue of abandonment?
Cancellation
The Board may properly cancel a trademark registration within five years of issue when, e.g. (1) there is a valid ground why the trademark should not continue to be registered and (2) the party petitioning for cancellation has standing. 5 Such cancellation of the marks' registrations may be based upon any ground which could have prevented registration initially. 6 The legal issue in a cancellation proceeding is the right to register a mark, 7 which may be based on either (1) ownership of a foreign registration of the mark in question or (2) use of the mark in United States commerce. 8
The first ground asserted for cancellation in the present action is Sec. 2(d) of the Lanham Act; 9 each party claims prior use of registered marks which unquestionably are confusingly similar and affixed to similar goods.
Section 1 of the Lanham Act 10 states that "[t]he owner of a trademark used in commerce may register his trademark...." 11 The term "commerce" is defined in Section 45 of the Act as ".... all commerce which may be lawfully regulated by Congress." 12 No specific Constitutional language gives Congress power to regulate trademarks, so the power of the federal government to provide for trademark registration comes only under its commerce power. The term "used in commerce" in the Lanham Act refers to a sale or transportation of goods bearing the mark in or having an effect on: (1) United States interstate commerce; (2) United States commerce with foreign nations; or (3) United States commerce with the Indian Tribes. 13
In the present case, appellant Person's Co. relies on its use of the mark in Japan in an attempt to support its claim for priority in the United States. Such foreign use has no effect on U.S. commerce and cannot form the basis for a holding that appellant has priority here. 14 The concept of territoriality is basic to trademark law; trademark rights exist in each country solely according to that country's statutory scheme. 15 Christman was the first to use the mark in United States commerce and the first to obtain a federal registration thereon. Appellant has no basis upon which to claim priority and is the junior user under these facts. 16
Appellant vigorously asserts that Christman's adoption and use of the mark in the United States subsequent to Person's Co.'s adoption in Japan is tainted with "bad faith" and that the priority in the United States obtained thereby is insufficient to establish rights superior to those arising from Person's Co.'s prior adoption in a foreign country. Relying on Woman's World Shops, Inc. v. Lane Bryant, Inc., 17 Person's Co. argues that a "remote junior user" of a mark obtains no right superior to the "senior user" if the "junior user" has adopted the mark with knowledge of the "senior user's" prior use. 18 In Woman's World, the senior user utilized the mark within a limited geographical area. A junior user from a different geographical area of the United States sought unrestricted federal registration for a nearly identical mark, with the exception to its virtually exclusive rights being those of the known senior user. The Board held that such an appropriation with knowledge failed to satisfy the good faith requirements of the Lanham Act and denied the concurrent use rights sought by the junior user. 19 Person's Co. cites Woman's World for the proposition that a junior user's adoption and use of a mark with knowledge...
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