Reconciling Globalization and Extraterritorial Application of the Lanham Act: An Analysis of McBee v. Delica, Co.

Pace International Law Review Volume 18 Issue 2 Fall 2006 Article 4 September 2006 Reconciling Globalization and Extraterritorial Application of the Lanham Act: An Analysis of McBee v. Delica, Co. Tom Villecco Follow this and additional works at: https://digitalcommons.pace.edu/pilr Recommended Citation Tom Villecco, Reconciling Globalization and Extraterritorial Application of the Lanham Act: An Analysis of McBee v. Delica, Co., 18 Pace Int'l L. Rev. 455 (2006) Available at: https://digitalcommons.pace.edu/pilr/vol18/iss2/4 This Article is brought to you for free and open access by the School of Law at DigitalCommons@Pace. It has been accepted for inclusion in Pace International Law Review by an authorized administrator of DigitalCommons@Pace. For more information, please contact . NOTE RECONCILING GLOBALIZATION AND EXTRATERRITORIAL APPLICATION OF THE LANHAM ACT: AN ANALYSIS OF MCBEE V. DELICA, CO. Tom Villeccot I. Introduction ....................................... II. Background ....................................... A. The Lanham Act ............................... B. Supreme Court Precedent: Steele v. Bulova Watch Co. ..................................... C. The Circuit Courts of Appeal Interpret Steele . 1. The Second Circuit ........................ 2. The Ninth Circuit .......................... 3. The Fifth Circuit ........................... D. Subject-Matter Jurisdiction and Antitrust L aw ........................................... E. The Doctrine of International Comity .......... III. M cBee v. Delica, Co................................ A . F acts .......................................... B. Procedural History ............................ C. Interpreting Steele ............................ D. Application of the Framework ................. 1. Claim for an Injunction Barring Delica's Sales in the United States ................. 456 458 458 459 460 460 462 464 465 466 468 468 471 472 476 476 t 2007 J.D. Candidate, Pace University School of Law; B.A. in Economics, Hamilton College 2004. The author would like to thank everyone on the staff of Pace International Law Review who played a role in editing this article and bringing it to publication. 1 PACE INT'L L. REV. [Vol. 18:455 Claim for an Injunction Barring Access to 477 Internet W ebsite ........................... 3. Claim for Damages for Delica's Japanese 478 Sales ....................................... 481 IV . D iscussion ......................................... A. The Substantial Effects Test: A More Streamlined Interpretation of Steele ........... 481 B. The Increasingly Elusive Concept of the Doctrine of International Comity .............. 486 492 V . Conclusion ......................................... 2. I. INTRODUCTION In McBee v. Delica, Co.,1 the First Circuit Court of Appeals developed an analytical framework for determining when a plaintiff, in bringing a claim under the Lanham Act, 2 can establish subject-matter jurisdiction over a foreign defendant. Cecil McBee, a highly acclaimed Jazz musician, filed a trademark infringement claim against Delica, Co. Ltd. (Delica), a clothing company incorporated in Japan. 3 Delica employed the name "Cecil McBee" for its clothing line, printed the name on its tshirts, and sold them to teenage girls in Japan. 4 The court held that, in determining whether the plaintiff has established subject-matter jurisdiction under the Lanham Act, the first inquiry is to determine whether the defendant is a United States citizen. 5 A negative answer to the question will prove fatal to the plaintiffs claim, unless he can show that the defendant's activities had a substantial effect on United States commerce. 6 The court also held that international comity, the rule that a court should not render judgments that will conflict with foreign law, is not a factor in the test for subject-matter jurisdiction but rather is solely within the judge's discretion in determining whether the claim should proceed. 7 The court then applied its test to the facts of the case and found that McBee failed to es1 McBee v. Delica, Co., 417 F.3d 107 (1st Cir. 2005). 2 See 15 U.S.C. § 1114 (2006). 3 McBee, 417 F.3d at 115. 4 Id. at 112. 5 Id. at 111. 6 Id. 7 Id. https://digitalcommons.pace.edu/pilr/vol18/iss2/4 2 2006] RECONCILING GLOBALIZATION tablish subject-matter jurisdiction and, as a result, dismissed McBee's claims against Delica. s In rendering its decision, the First Circuit Court of Appeals fanned the flames in an already brewing controversy within the arena of trademark law: what is the legal standard for determining whether a plaintiff has established subject-matter jurisdiction under the Lanham Act against a foreign defendant whose alleged unlawful activities were conducted wholly outside the United States? While the issue initially appears rather mundane, the facts of the case present a singular instance of a larger revolution affecting the entire developed world. That revolution, not surprisingly, is globalization where, largely due to the internet, information can span the entire globe with incredible ease. After all, it would be highly unlikely that the plaintiff, Cecil McBee, would have discovered the alleged unlawful use of his name were it not for the internet. As such, the courts can expect an increasing number of plaintiffs to bring claims under the Lanham Act against foreign defendants. Thus, the more theoretical issue is whether the courts can effectively balance two competing interests - the ability for the statute to fulfill its intended purpose of regulating and protecting American citizens at home and abroad and the need to preserve the paramount value of judicial restraint in which the court should only hear cases and controversies when it has a true interest in adjudicating the dispute. The narrow issue this Note will explore is whether the court's analytical framework effectively balances the aforementioned competing interests during the information age. Part II of this note will provide the history of subject-matter jurisdiction analysis under the Lanham Act, including the various approaches the circuit courts have developed over the recent decades. Part III will discuss the newly decided case of McBee v. Delica, Co.,9 specifically the court's analytical framework, its rationale for applying the framework, and the application of its rationale to the facts of the case. Part IV will examine the heart of the issue- whether the court's substantial effects test can effectively protect American interests abroad without sacrificing its role as a court that only hears proper fed8 Id. at 122-26. 9 McBee, 417 F.3d at 107. 3 PACE INT'L L. REV. [Vol. 18:455 eral questions. Part V will conclude that the court's test properly expands the Lanham Act's reach over foreign defendants without unduly invading upon the sovereignty of foreign nations. This Note will also conclude that Congress should address the broader policy question of whether it shou (...truncated)