Stuhlbarg Int'l Sales Co. v. Brush & Co.

• Citation: 240 F.3d 832
• Decision Date: 13 February 2001
• Docket Number: Nos. 99-56676,s. 99-56676
• Parties: (9th Cir. 2001) STUHLBARG INTERNATIONAL SALES COMPANY, INC., a California corporation, d/b/a SISCO, Plaintiff-Appellee, v. JOHN D. BRUSH AND COMPANY, INC., a New York corporation, Defendant-Appellant. 99-56875
• Court: U.S. Court of Appeals — Ninth Circuit

Page 832

240 F.3d 832 (9th Cir. 2001)

STUHLBARG INTERNATIONAL SALES COMPANY, INC., a California corporation, d/b/a SISCO, Plaintiff-Appellee, v. JOHN D. BRUSH AND COMPANY, INC., a New York corporation, Defendant-Appellant.

Nos. 99-56676 99-56875

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted November 16, 2000

Filed February 13, 2001

[Copyrighted Material Omitted]

COUNSEL: William Roberts (argued), Richard P. McElroy, Timothy D. Pecsenye, Rachel L. Brendzel, Blank, Rome, Comisky & McCauley, LLP, Philadelphia; Dennis G. Martin, Willmore F. Holbrow III, Blakely, Sokoloff, Taylor & Zafman, LLP, Los Angeles, for appellant John D. Brush & Co., Inc.

Gary M. Anderson (argued), Vern Schooley, Russell C. Pangborn, Fulwider, Patton, Lee & Utecht, LLP, Long Beach, for appellee Stuhlbarg International Sales Co., Inc.

Appeal from the United States District Court for the Central District of California Dean D. Pregerson, District Judge, Presiding. D.C. No.CV-99-10556-DDP.

Before: Procter Hug, Jr.,^* M. Margaret McKeown, and Richard A. Paez, Circuit Judges.

OPINION

McKEOWN, Circuit Judge:

This case, which arises from a trademark dispute over the use of the term "Fire-Safe," was precipitated by the U.S. Customs Service's detention of imported safes bearing that mark. Stuhlbarg International Sales Co., known as Sisco, brought a suit for declaratory judgment and cancellation of the "Fire Safe" trademark owned by John D. Brush & Co. The district court granted Sisco's request for a preliminary injunction. It restrained Brush from interfering with Sisco's importation of safes, and ordered Brush to consent to the Customs Service's release of the detained products. On appeal, Brush challenges the district court's jurisdiction, arguing that exclusive jurisdiction rests with the Court of International Trade and that the claims are barred by the doctrines of exhaustion and ripeness. Brush also contests the preliminary injunction. We conclude that the district court had jurisdiction, was not barred from hearing the claim, and did not abuse its discretion in issuing the preliminary injunction.

BACKGROUND

Brush and Sisco are competitors in the home and small business strongbox market. Each company produces safes designed to protect the contents from fire. Since about 1930, Brush has manufactured and sold fire-resistant security storage boxes. Brush claims to have used the mark "Fire-Safe" for more than 30 years, although its trademark application indicates only that the mark was used at least as early as 1984. Brush is the owner of two federally registered trademarks:

1. U.S. Trademark Registration No. 1,395,406, granted in 1986, for "all purpose non-metallic lockable containers for storing valuables;" and

2. U.S. Trademark Registration No. 1,572,870, granted in 1989, for "fire resistant containers in the nature of safes, security chests, and filing cabinets."

Sisco is of somewhat more recent vintage. Morton Stuhlbarg, Sisco's founder and president, is a former Brush employee. After leaving Brush in the late 1970s, he formed the now-defunct Saga International, Inc., and thereafter started Sisco.¹ Sisco manufactures safes which have recently been sold under the Brinks Home Security label as "The Protector Fire safe."

For more than ten years, the parties have, in one form or another, been engaged in a trademark dispute over the term "Fire-Safe." Since at least 1987, Sisco has used the term "fire safe" with Brush's knowledge.² Over the years, Brush has engaged in a series of escalating responses. First, judging that Sisco's sales were insignificant, Brush made a calculated judgment to rely on the marketplace. Next, in 1990 Brush objected in writing to Sisco's use of the term "fire safe." Sisco responded by denying infringement, stating that the mark was descriptive and generic, and making clear that it would continue to use it. Brush did not sue Sisco or take further action at that time.

When the market picked up in the late 1990s, Brush decided to take more definite action. In 1997, it unsuccessfully attempted to enforce a court-approved stipulation between Brush and Saga against Sisco. See supra note 1. The relationship soured still further in 1999 when, according to Brush, Sisco began targeting Brush's major customers. From May through October 1999, Sisco secured significant orders for its products from large retailers who had been buying from Brush, including Staples, Target, and Kmart. This signaled a substantial increase in potential sales and market share, and prompted Brush to take the action that precipitated this lawsuit: in June 1999, Brush recorded its "Fire-Safe " trademark with the U.S. Customs Service. Thus, on October 8, 1999, Customs detained nine containers holding approximately 6,400 Sisco safes. The safes were destined for one of Sisco's new customers, Kmart, and were due at Kmart distribution centers in late October. Customs did not provide Sisco with notice of seizure or exclusion. Sisco did not file a protest with Customs or a complaint in the Court of International Trade.

Instead, five days after detention, Sisco filed suit in federal district court, seeking a declaratory judgment of noninfringement and cancellation of Brush's trademarks. Upon Sisco's motion, the court issued a temporary restraining order;³ a contempt order; and a preliminary injunction in which it enjoined Brush from hindering Sisco's importation of safes bearing the designations "Firesafe," "Fire-Safe," or "Fire Resistant Safe" and ordered Brush to provide Customs with written consent to Sisco's importation of safe products. Brush appeals these orders.

DISCUSSION

I. SUBJECT MATTER J URISDICTION

Brush contends that the district court did not have subject matter jurisdiction over this case, and that the Court of International Trade has exclusive jurisdiction to hear a challenge to the detention of Sisco's goods. The existence of subject matter jurisdiction is a question of law reviewed de novo. See Garvey v. Roberts, 203 F.3d 580, 587 (9th Cir. 2000).

This case lies at the intersection of two legal/factual contexts: trademark protection and customs regulation. For although this case involves goods detained by Customs, at bottom it is a suit seeking cancellation of federally registered trademarks and a declaration of non-infringement. Sisco's beef is with Brush's assertion of its claimed trademark rights. The complication arises here because those two subjects-trademark and customs--are governed by different jurisdictional provisions.

In general, federal district courts have original jurisdiction over actions based on federal statutes relating to trademarks. 15 U.S.C. S 1121, 28 U.S.C. SS 1331, 1338; see Kmart Corp. v. Cartier, Inc., 485 U.S. 176, 182 (1988) ("Both thegeneral federal-question provision . . . and the specific provision regarding actions . . . relating to trade-marks. . . would, standing alone, vest the district courts with jurisdiction over this action."). This grant of jurisdiction is limited, however, by statutes conferring exclusive jurisdiction on the Court of International Trade, or CIT. Id. The CIT's exclusive jurisdiction is well defined in four sections of the federal code, 28 U.S.C. SS 1581-1584, that deal primarily with civil customs and trade actions by and against the United States. Unless an action falls within the CIT's exclusive "carve out" jurisdiction, then jurisdiction is proper in the district court.

This dichotomy between district court and CIT jurisdiction creates a much-litigated distinction between parties who challenge a seizure of goods (who may sue in district court) and parties who challenge a denial of a protest of exclusion of goods (who may challenge the denial only in the CIT). The difference was summarized by the CIT in R.J.F. Fabrics, Inc. v. United States, 651 F. Supp. 1431, 1433 (Ct. Int'l Trade 1986): "The practical effect of . . . [exclusion] is to deny entry into the customs territory of the United States. The importer may then dispose of the goods as he chooses. In the case of seizure, however, the government often takes control of the merchandise, and may ultimately institute forfeiture proceedings."

Here, Brush argues that jurisdiction is properly in the CIT under 28 U.S.C. S 1581(a), which governs civil actions against the United States "to contest denial of a protest" under "the Tariff Act of 1930." This argument fails--Sisco has not sued the United States to appeal denial of a protest, but rather has sued Brush to challenge the Fire-Safe trademark.

Although Sisco was notified that its goods were detained, Customs did not provide notice indicating that the goods were seized or excluded. Sisco's goods were in limbo. Indeed, it appears that Sisco's goods were not, as excluded goods are, available for disposal outside the United States, were not free to be diverted elsewhere, and could not be "dispose[d] of . . . as [Sisco] chooses." R.J.F., 651 F. Supp. at 1433. In this case, it is not at all clear that the goods were either seized or excluded. But the record does indicate that there was never a notice of exclusion, or a protest of exclusion, or a denial of a protest. Thus, just as in Kmart Corp. v. Cartier, Inc., "this suit involves no `protest,' much less a denial of one," 485 U.S. at 190-91.

On the other hand, characterizing this as a trademark action--or alternately, as a seizure action, and not a denial of an exclusion protest--is consistent with the district court's jurisdiction over substantive trademark disputes. The CIT jurisdiction statutes do not divest a federal district court of jurisdiction over the underlying trademark dispute. ⁴ Sisco's complaint does not charge the Customs Service with improper application of its regulations; rather, it is a declaratory judg-ment suit under the Lanham Act that concerns substantive trademark issues. The district court's original trademark jurisdiction is not destroyed simply because Sisco...