Tuesday, January 16, 2018

Beyond Belmora: foreign TM owner proceeds under Lanham Act and Inter-American Convention

S.A.S. v. Latinfood U.S. Corp., Civ. No. 16-6576, --- F.Supp.3d ----, 2017 WL 6940696 (D.N.J. Dec. 29, 2017)

Industria, a Colombian food corporation and Colombian owner of the Zenú and Ranchera marks, sued Latinfood, for reasons you can guess when you learn that they are doing business in the US as Zenú Products Co.  Applying Belmora, the court allows the various Lanham Act claims to proceed, and cites Christine Haight Farley’s work in also allowing claims under the Inter-American Convention for Trademark and Commercial Protection (IAC).  Copyright claims weren’t discussed in the motion to dismiss.

The Zenú mark “has been used for more than sixty years to identify meat, sausage, beans and other packaged food products in Colombia and elsewhere,” while the Ranchera mark “has been used extensively in Colombia and elsewhere for more than 25 years, and is among the most well-known trademarks for sausages and meat products.” Industria claimed fame across Latin America and alleged that people “residing in Colombia, individuals who have travelled to Colombia and individuals who have moved from Colombia to the United States are familiar with the [Zenú] and Ranchera trademarks and [Industria’s] food products sold under the [Zenú] and Ranchera marks.” (Id.)

Industria Ranchera

Part of Industria website

Industria’s Zenú products include “the [Zenú] mark in a red stylized font underlined by a brush-stroke type line against a white background.” Words indicating the type of food contained in the packaging are “often written diagonally underneath the [Zenú] mark.” Canned products an additional “thick colorful band at the bottom of the label where additional information such as the weight or quantity of the product is conveyed in white type.” Industria maintains a website “that is accessible by the public, including consumers in the United States, at www.zenu.com.co.”

Industria’s Ranchera mark is “always displayed in a red ‘western’ or ‘rancher-inspired’ font which is then outlined first in white and then in black.” It “curves slightly upward in the middle of the word.” A “rancher theme” is used across the Ranchera packaging.  

Industria has numerous relevant trademark registrations in Colombia, and an International Registration from 2014 from WIPO; it filed an application to extend the IR at the PTO in 2014.  Prior US registrations have lapsed.  In 2014, Industria also filed a 44(e) application for “ZENÚ (Stylized)” for various food products which was barred by Latinfood’s US-registered Zenú mark.  Industria also applied in the US for “RANCHERA (stylized)” for various meats, based on Sections 1(b) and 44(e), in 2016.

Latinfood allegedly began copying Industria’s marks around 2011.  Latinfood allegedly touted its possession of “ ‘an exclusive distribution and importing rights agreement for the tri-state area’ with a major product manufacturer in Colombia.” Latinfood allegedly uses the identical stylized logo and trade dress for Zenú, as well as its trade dress, and its website, www.zenu.us.com, “closely mimics both the domain name and trade dress presented on [Industria]’s website, www.zenu.com.co.” The labels were also allegedly substantially similar to Industria’s copyrighted labels.  Indeed, Latinfood allegedly attempted to buy 400,000 Zenú labels from Industria’s own Zenú label provider in Medellin.

Latinfood website: note Ranchera listing 3d row left

Latinfood applied to register the Zenú mark for various meats in the US in 2013, claiming 2011 as its year of first use. Industria alleged that this was fraudulent and in bad faith, and that Latinfood’s claimed specimens were in fact Industria products. Latinfood’s Zenú registration has been cited by examiners under 2(d) in Office Actions blocking Industria’s applications, allegedly preventing it from offering its goods for sale in the US under the Zenú mark.  (It’s legal to sell stuff without registering the marks, but I see why there’s a problem.) In 2014, Industria began a cancellation proceeding before the TTAB, which is still pending.  (One suspects that Belmora played a role in encouraging Industria to move to litigation.) 

A similar story can be told for the Ranchera mark, though Latinfood’s application for registration was ultimately denied by the PTO because of a third-party registration. However, Latinfood is allegedly still selling products bearing the mark.

Industria further alleged that the Latinfood product labels falsely suggested affiliation with Industria’s business in Colombia, for example by identifying the company as “Zenu Products US Inc.” instead of Latinfood, suggesting that it’s a US-based Industria affiliate. The labels also include a “linea de exportation” designation, meaning “export line” in English, further implying “that Latinfood products are produced outside of the United States, much like [Industria]’s products from Colombia would be.” Latinfood products are allegedly often “featured in the import/foreign sections of the groceries in which they are sold and are sold alongside products from other Latin American companies.”  Latinfood sales representatives allegedly advised store owners that Latinfood has full rights to the distribution of ZENÚ- and RANCHERA-marked products, misleading them into believing that they’re dealing with Industria.  The suggestion that the products are imported was allegedly also false because a majority of the goods were manufactured and labeled in the US. 

In addition, www.zenu.us.com was allegedly “confusingly similar” to Industria’s www.zenu.com.co, and described Latinfood’s products as being part of “una deliciosa tradición,” suggesting an affiliation with Industria’s sixty year old brand.

Under Belmora, the Lanham Act claims were ok even though Industria didn’t allege its own use in commerce in the US of the Zenú and Ranchera marks.  Belmora wasn’t binding on this court, but the judge found its reasoning persuasive; there was no “use in commerce” requirement in §43(a), only the Lexmark requirement of standing to bring false advertising, trade dress infringement, and false association claims, which was sufficiently pled, even if it might ultimately be difficult to prove.  So too with the claims for cancellation of Latinfood’s registered mark for fraud.  Industria sufficiently alleged that Latinfood’s sale of allegedly “sub-par and noninspected products” harmed Industria by altering consumers’ estimation of products using the mark and damaging its reputation.  Proximate cause was sufficiently alleged by allegations that Latinfood targeted Colombians and other consumers familiar with Industria’s mark, damaged Industria’s goodwill by selling subpar/different products, and foreclosed Industria’s registration and use of the Zenú mark in the United States.

Separately, the court specifically rejected any attempt to impose any more rigorous pleading standard on a Lanham Act false advertising claim than Iqbal/Twombly requires.  A 1985 case in the Third Circuit was probably no longer good law.  But regardless of the standard, Industria satisfied it. Industria’s allegations about Latinfood’s use of “Zenu Products US Inc.,” its use of www.zenu.us.com, its labeling of its products as imported and representations to have an exclusive distribution and importing rights agreement with a major product manufacturer from Colombia, and its allegedly false importation labels for food from manufacturers in the United States sufficed to state a claim.

The court also held that the IAC creates private rights of action.  Though there is a presumption that treaties, even those labeled as “self-executing,” do not create private rights, the Supreme Court has already held that the IAC is self-executing, and the court proceeded to examine the terms of the treaty itself, which “was the culmination of the efforts of many years to secure the cooperation of the American States in uniform trade mark protection.”  Beneficiaries under the Convention are defined as (1) nationals of contracting states, and (2) domiciled foreigners who own a manufacturing or commercial establishment or an agricultural development in any of the contracting states. The language of the IAC strongly supported the conclusion that it was intended to create private rights to those benefited parties.  Even if knowledge of the other mark were a required element under the IAC, which was not supported by any authority, Industria sufficiently alleged such knowledge.

Latinfood also made a number of arguments about the interplay between the IAC and Section 44 of the Lanham Act.  In particular, the last clause in Article 7 of the IAC says “the opposer may claim for himself the preferential right to use such mark in the country where the opposition is made or priority to register or deposit it in such country, upon compliance with the requirements established by the domestic legislation in such country and by this Convention” (emphasis added).  Latinfood argued that Industria couldn’t bring an Article 7 claim because it didn’t comply with §44(b) and (d).  However, international treaties “may grant rights broader than those granted by domestic law, including the Lanham Act. Contrariwise, Section 44(d) is not the only potentially applicable section of the Lanham Act.”  In addition, Section 44(h) of the Lanham Act limited remedies to those “appropriate in repressing acts of unfair competition,” and Latinfood argued that Industria’s claims didn’t fall within Chapter IV of the IAC, which is the Chapter devoted to “Repression of Unfair Competition.” “The resolution of these Section 44 issues will depend on the development of the facts and the precise contours of the overlapping (or not overlapping) claims under U.S. law and the treaty. This case is going forward in any event. These may turn out to be redundant claims, alternative claims, or supplementary claims; it simply is not clear at present.” 

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