USPTO Kicks “Hijacker” of Foreign Trademark Out the Door

When, if ever, is it okay to use a trademark in U.S. commerce that is identical to another company’s mark used outside the U.S.? Courts have struggled with this issue for years, and the U.S. Patent and Trademark Office (USPTO) recently stepped into the fray in a precedential decision released earlier this month.

In denying an application filed by USA Ham LLC for LA MONTSERRATINA for various meat products, the Office upheld an opposition by Plumrose Holding LLC, whose wholly owned subsidiary La Montserratina C.A. had used the same mark for the same goods in Venezuela for 75 years. Because the original trademark was not used in the U.S., the opposition was not based on the usual “likelihood of confusion” but rather a much less common “misrepresentation of source” claim under § 14(3) of the Trademark Act. 

Unlike a claim of likelihood of confusion, in which the issue is often decided based primarily on how the parties’ marks and goods/services are defined in their trademark filings, the three factors to consider in a “misrepresentation of source” claim go beyond the filings themselves:

1. Present use of the challenged mark by the defendant
2. Specific acts or conduct by the defendant that are deliberately aimed at passing off its goods as those of the plaintiff
3. Either damage to plaintiff’s reputation or lost sales

In its LA MONTSERRATINA analysis, the Office first distinguished a 2022 ruling by the U.S. Court of Appeals for the Federal Circuit (its overseeing court) that had allowed continued registration of THUMS UP and LIMCA for cola despite prior use of the same marks in India for the same goods by Coca-Cola. The Office noted that in the Federal Circuit case, there was a lack of evidence regarding (1) how many Indian Americans had visited or lived in India, (2) how many times Coca-Cola’s products were re-sold in the U.S., and (3) consumer awareness in the U.S. of Coca-Cola’s marks. 

The Office found the LA MONTSERRATINA case to be “materially different” from that case. In finding that USA Ham had deliberately tried to pass off its goods as those of La Montserratina C.A., the Office cited the following conduct:

• Adoption of the same mark and changing the stylization to the identical typeface of the original
• Use of packaging that mimicked the original
• Selling goods in stores that cater to Venezuelan Americans who knew the original
• Continuing the conduct despite knowing at least one retail customer believed the products were the original

The Office also noted that there were communications from U.S. consumers to La Montserratina C.A. that indicated their awareness of the brand, and hence its reputation in the U.S., even if they were not confused as to the source of goods sold in U.S. commerce. The Office acknowledged that while deliberate copying of a foreign trademark is not by itself evidence that the mark has a reputation in the U.S. or that the user in the U.S. acted in bad faith, in this case USA Ham had engaged in “calculated” and “culpable” behavior that constituted “hijacking” of the mark.

Takeaways

In addition to protecting consumers from confusion, the right to control one’s reputation has long been deemed a function of trademark law. Perhaps the LA MONTSERRATINA decision will inspire other trademark owners to add “misrepresentation of source” as a count in opposition or cancellation actions where the defendant’s conduct indicates a deliberate attempt to mislead consumers. Trademark owners outside the U.S. who are considering legal action should be sure to “do their homework” to establish a convincing record of U.S. consumers being aware of their brand. Finally, all trademark owners should keep in mind that the USPTO has jurisdiction only over the right to register marks; separate court action is required to stop use of a mark, even where the USPTO finds the defendant’s conduct to be reprehensible.