How Far Does Your U.S. Trademark Law Reach?

Honors Org Corner

By: Chad Holley

Posted: 1/1/01

January 2008

Chad Holley is an Associate Editor for the Southwestern Law Review. Holley’s article on developments in U.S. trademark law will be published in the law review this winter.

    Cecil McBee is an internationally famous American jazz musician— a Grammy winner, a member of the Jazz Hall of Fame, a faculty member at the prestigious New England Conservatory. He is now 72 years old, and wishing to be known only for his music, he has never licensed his name for any other commercial use.
    In 1995, however, McBee discovered that a Japanese company, Delica Company, Ltd., was selling millions of dollars per year worth of clothes and accessories to teenage girls in Japan—under the brand name “Cecil McBee.” McBee sued the company in a United States district court.
    My law review note is about why he lost and about an important new rule that emerged from the decision against him.
    United States trademark law, which is codified in the Lanham Act, specifically addresses situations of “false endorsement”—i.e., where one’s name is used, without license, to create a misleading impression that one endorses, approves, or sponsors another’s product.
    But as McBee discovered, a critical preliminary question arises in cases like his: Does U.S. trademark law apply to conduct that occurs abroad, particularly when the defendant i a foreign citizen?
    The short answer to that question is “sometimes.” For instance, application of U.S. trademark law often depends on whether the alleged misconduct had a substantial effect on U.S commerce. More surprisingly, perhaps, it can also depend on what court you sue in. The federal Courts of Appeals disagree on the appropriate test for deciding whethe
the Lanham Act applies to a given instance of foreign misconduct. As these courts see it, it is a question of whether a U.S. court has subject matter jurisdiction over the claim.
    Which brings us back to McBee, the musician. For, in 2005, the First Circuit took McBee v. Delica as an opportunity to clarify that jurisdiction’s test for determining exactly when the Lanham Act reaches foreign misconduct. In doing so, the First Circuit rejected all the tests used in the other circuits and laid out an admirably straightforward analysis: Where the defendant is a U.S. citizen or the defendant’s conduct has a substantial effect on U.S. commerce, the court possesses subject matter jurisdiction; but before deciding whether to exercise that jurisdiction,the court must consider whether granting the plaintiff relief would conflict with another country’ laws. It remains to be seen whether this test will find a home in other circuits, or survive the scrutiny of the Supreme Court.
    I argue in my note that the McBee test is better than its competitors, even if it wasn’t ultimately favorable to Cecil McBee (alas, he couldn’t establish that the Japanese clothing company’s conduct had a substantial effect on U.S. commerce).
    The McBee test is also generally friendlier to plaintiffs, like McBee, who seek to protect their U.S. trademark rights abroad—they are not limited to proceeding only against U.S. defendants, as they are in some circuits.
    And yet, I question whether the First Circuit’s new analysis will have much practical significance, ultimately, in light of the difficulty of establishing the requisite personal jurisdiction in claims against foreign defendants.
    As McBee v. Delica so pointedly demonstrates, these promise to remain pressing issues, not just for U.S. companies with worldwide brands, or foreign companies holding U.S. trademarks, but even for the “little guys,” like Cecil McBee.