Thomas & Betts Corp. v. Panduit Corp.

• Decision Date: 22 September 1999
• Docket Number: No. 94 C 2656.,94 C 2656.
• Citation: 71 F.Supp.2d 838
• Parties: THOMAS & BETTS CORPORATION and Thomas & Betts Holdings, Inc. Plaintiffs, v. PANDUIT CORPORATION, Defendant.
• Court: U.S. District Court — Northern District of Illinois

71 F.Supp.2d 838

THOMAS & BETTS CORPORATION and Thomas & Betts Holdings, Inc. Plaintiffs, v. PANDUIT CORPORATION, Defendant.

No. 94 C 2656.

United States District Court, N.D. Illinois, Eastern Division.

September 22, 1999.

Malcolm Hirsten Brooks, Marc L. Fogelberg, McBride, Baker & Coles, Chicago, IL, Sidney David, Keith E. Gilman, Lawrence I. Lerner, Lerner, David, Littenberg, Krumholz & Mentlik, Westfield, NJ, James Hay, Lewis & McKenna, Saddle River, NJ, for Plaintiffs.

Gary Merlchoir Ropski, Jerome Gilson, Roy E. Hofer, John T. Gavrielides, James Michael McCarthy, Stephanie Sue Conis, Cynthia A. Homan, Brinks, Hofer, Gilson & Lione, Chicago, IL, Charles R. Wentzel, Robert A. McCann, Mark D. Hilliard, Panduit Corporation, Legal Dept., Tinley Park, IL, David Craig Hilliard, John Thompson Brown, John Michael Murphy, Pattishall, McAuliffe, Newbury, Hillard & Geraldson, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

MORTON DENLOW, United States Magistrate Judge.

Thomas & Betts Corporation and Thomas & Betts Holdings, Inc. (hereinafter collectively referred to as "T & B") move for an order to delay adjudication of their extraterritorial Lanham Act claims against Panduit Corporation (hereinafter "Panduit") until after adjudication of their domestic Lanham Act claims. The Court held oral arguments on September 2, 1999. This opinion expands upon the Court's ruling and order entered on September 2, 1999. For the reasons previously discussed in open court and set forth below, T & B's motion is granted.

I. BACKGROUND FACTS

T & B and Panduit are the nation's largest suppliers of cable ties. Cable ties are nylon plastic straps used to tie together a group of cables or wires. T & B obtained a utility patent on the two-piece cable tie in 1965, which expired in 1982. T & B also obtained a design patent on the cable tie in 1966, which expired in 1980. In about 1994, Panduit began to produce a cable tie similar to that of T & B, sold under the trademark "BARB-TY." Panduit's product is substantially similar in appearance to that produced by T & B.

T & B originally brought this action in five counts against defendant Panduit. Count I alleges that Panduit's metal barb oval head shaped cable tie infringes on the trade dress of T & B's cable tie in violation of 15 U.S.C. § 1125(a) (hereinafter the "Lanham Act"). Count II alleges that Panduit's use of the name BARB-TY constitutes unfair competition and seeks cancellation of Panduit's trademark registration of the term BARB-TY under 15 U.S.C. § 1064(3). T & B also alleged that Panduit's conduct violates the common law of unfair competition (Count III); the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2 and the Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 et seq. (Count IV); and the Illinois Anti-Dilution Act, 765 ILCS 1035/15 (Count V). Counts III through V are no longer involved in the case.

T & B previously brought a motion for a preliminary injunction which was granted by the trial court in Thomas & Betts Corp. v. Panduit Corp., No. 94 C 2656, 1994 WL 714619 (N.D.Ill.Dec.19, 1994), and later reversed by the Seventh Circuit. Thomas & Betts Corp. v. Panduit Corp., 65 F.3d 654 (7th Cir.1995) (hereinafter "T & B I"). The case was then transferred to this Court which granted summary judgment against T & B on counts I, III, IV, and V. Thomas & Betts Corp. v. Panduit Corp., 935 F.Supp. 1399 (N.D.Ill. 1996). This Court subsequently granted summary judgment against T & B with regard to count II. Thomas & Betts Corp. v. Panduit Corp., 940 F.Supp. 1337 (N.D.Ill.1996). On appeal, the Seventh Circuit reversed the summary judgment on Counts I and II. Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277 (7th Cir.1998)(hereinafter "T & B II"). No appeal was taken regarding Counts III through V.

Panduit then brought a motion to dismiss Count II for lack of subject matter jurisdiction. This Court denied Panduit's motion to dismiss. Thomas & Betts Corp. v. Panduit Corp., 48 F.Supp.2d. 1088 (N.D.Ill.1999).

The parties are currently engaged in discovery while preparing for trial. The issue of extraterritorial jurisdiction first arose in the context of the scope of discovery. Subsequently, T & B filed its motion to delay adjudication of its extraterritorial Lanham Act claims, which is now before the Court.

II. ISSUES PRESENTED

T & B now moves for an order to delay adjudication of its extraterritorial Lanham Act claims until after adjudication of its domestic Lanham Act claims. T & B proposes to go to trial first on Lanham Act claims arising from domestic business conducted by Panduit. In an effort to curb expenses relating to foreign discovery, if T & B does not prevail on its domestic claims, it agrees to voluntarily dismiss its Lanham Act claims arising out of foreign business conducted by Panduit. Conversely, if T & B does prevail on its domestic claims, T & B will seek a second trial on Lanham Act claims arising from foreign business activities.

Therefore, the issues before the Court are 1) whether this Court has jurisdiction to hear T & B's extraterritorial claims, 2) whether this Court has the discretion to decline to exercise its jurisdiction over T & B's extraterritorial claims, and 3) whether such discretion should be exercised at this time. The Court concludes that it has jurisdiction to hear T & B's extraterritorial claims. Furthermore, the Court has the discretion to decline to exercise its jurisdiction over Lanham Act claims arising from foreign business activities, however a full consideration should await the outcome of the trial on the domestic Lanham Act claims.

III. EXTRATERRITORIAL JURISDICTION OF THE LANHAM ACT

A. District Courts Have Extraterritorial Jurisdiction Under the Lanham Act

1. The Lanham Act Confers Broad Extraterritorial Jurisdiction

The Lanham Act provides a civil action against "any person who shall, without consent of the registrant, use in commerce any reproduction, counterfeit copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods ... with which such use is likely to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. § 1114(1)(a). The action is available to any plaintiff with a registered United States trademark and may be based, among other things, upon any "device ... which is likely to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. § 1125(a)(1). Commerce is sweepingly defined as "all commerce which may lawfully be regulated by Congress." 15 U.S.C. § 1127.

The Lanham Act confers broad judicial jurisdiction over all commerce which may lawfully be regulated by Congress. Steele v. Bulova Watch Co., 344 U.S. 280, 283, 73 S.Ct. 252, 254, 97 L.Ed. 319 (1952); Ocean Garden, Inc. v. Marktrade Co., Inc., 953 F.2d 500, 503 (9th Cir.1991). Congress has the power to regulate foreign trade practices of United States citizens, even though those acts might occur outside the territorial boundaries of the United States, Bulova Watch Co., 344 U.S. at 286, 73 S.Ct. at 255. It has long been established that "the United States is not debarred by any rule of international law from governing the conduct of its own citizens upon the high seas or even in foreign countries when the rights of other nations or their nationals are not infringed." Bulova Watch Co., 344 U.S. at 285, 73 S.Ct. at 255 (quoting Skiriotes v. Florida, 313 U.S. 69, 73, 61 S.Ct. 924, 927, 85 L.Ed. 1193 (1941)).

2. Courts Have Formulated A Three Part Test to Determine Extraterritorial Jurisdiction

The Lanham Act can be applied to foreign activities where the defendant is a United States citizen, the defendant's actions affect American commerce, and there is no conflict with foreign trademark law. In Bulova, the Court exercised extraterritorial jurisdiction in a case between United States citizens involving a United States trademark, acts of trademark infringement in a foreign country, no foreign trademark issue, and no conflict with foreign trademark laws. Bulova Watch Co., 344 U.S. 280, 73 S.Ct. 252. Because Mexico's courts nullified the Mexican registration of Bulova, there was no conflict with foreign law. In upholding the award of extraterritorial injunctive relief, the Court held, "Where ... there can be no interference with the sovereignty of another nation, the District Court in exercising its equity powers may command persons properly before it to cease or perform acts outside its territorial jurisdiction." Bulova Watch Co., 344 U.S. at 289, 73 S.Ct. at 257.

The Second and Fifth Circuits subsequently refined the factors in Bulova into a three-part test. A district court has proper extraterritorial jurisdiction when 1) the defendant is a United States citizen, 2) the defendant's actions had some effect on United States commerce, and 3) there is no conflict with trademark rights established under foreign law. Vanity Fair Mills, Inc., v. T. Eaton Co., 234 F.2d 633, 642 ( 2d Cir.1956); American Rice, Inc. v. Arkansas Rice Growers Coop. Ass'n, 701 F.2d 408, 414 (5th Cir.1983). These factors are the primary elements in analyzing extraterritorial jurisdiction. The absence of any one factor is not dispositive, and a court should not limit its inquiry to only these factors. American Rice, Inc., 701 F.2d at 414.

In a case with facts similar to those in Bulova, the court in American Rice, applying the Bulova test, found that extraterritorial jurisdiction is proper in a case involving a United States citizen plaintiff, a United States citizen defendant, a United States trademark, infringement upon the trademark by the defendant in a foreign country, no foreign trademark issue, and no conflict with foreign trademark law. Although substantially all the infringement activity of the defendant occurred outside the geographical territory of the United States, the court held, "Merely because the consummation of the unlawful activity occurred...