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IP Alert: Court Holds No U.S. Jurisdiction to Adjudicate Abandonment of Foreign Trademark

February 2, 2016

Yesterday, in Fresh Del Monte Produce Inc. v. Del Monte Foods, Inc., Judge Jed Rakoff of the United States District Court for the Southern District of New York issued a significant decision under the Lanham Act. The court held that a challenger may not use the Lanham Act to assert in a United States federal court that a presumptively valid foreign trademark has been abandoned by the rights holder. Yesterday’s order constituted a memorandum opinion that clarifies the basis behind an earlier order of the court granting the defendant’s motion to dismiss.

Both the plaintiff and the defendant control certain “Del Monte” trademarks. The plaintiff, Fresh Del Monte Produce Inc., is a producer and distributer of fruits and vegetables in Europe, Africa, and the Middle East, while the defendant, Del Monte Foods, Inc., produces and distributes fruits and vegetables within the United States. Pursuant to a 1989 agreement, the plaintiff and defendant agreed to split the right to use the “Del Monte” name and related trademarks throughout the world. In this lawsuit, the plaintiff alleged that the defendant, Del Monte Foods, had not exercised certain control over foreign trademarks and as such had abandoned those marks in favor of the plaintiff. The plaintiff sued under the Lanham Act seeking a judgment that defendant Del Monte Foods’ ownership interest in the foreign marks had been abandoned and that the foreign marks instead belong to the plaintiff.

The defendant moved to dismiss and the court agreed and granted the motion, concluding as a matter of law that “the Lanham Act may not be applied extraterritorially to adjudicate the validity or ownership status of foreign trademarks.” The court based its decision on what it characterized as a “firmly settled” position that a trademark has a separate legal existence under each country’s laws, and that trademark rights exist in each country solely according to that nation’s laws. The court further pointed to an earlier Second Circuit case raising concerns of international comity, observing that “it would be grossly intrusive for a United States court to utilize the Lanham Act to declare trademarks registered by a foreign government under foreign law abandoned and owned by some other entity.”

The decision is subject to appeal, and Fitch Even attorneys will monitor for any appellate decision in the case. In the meantime, the decision provides an interesting practice pointer for litigants seeking relief under the Lanham Act.

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