A core principle in U.S. intellectual property (IP) law is that IP rights are territorially limited. A U.S. patent, copyright, trademark, or trade secret affords the holder exclusive rights solely within the United States. This principle also exists at the international level, as reflected in the Agreement on Trade Related Aspects of Intellectual Property (TRIPS). There are no transnational intellectual property rights, though Europe is launching a Unitary Patent for certain EU members, with an expected start in the second half of 2022.
A recent decision by the United States Court of Appeals for the Federal Circuit in a trademark case highlights how the territoriality principle operates – or perhaps doesn’t – in the context of acquiring U.S. trademark rights based on foreign use of the mark. In Meenaxi Enterprise, Inc. v. Coca-Cola Company, the Federal Circuit reviewed a decision by the Trademark Trial and Appeal Board (TTAB) within the U.S. Patent and Trademark Office (USPTO) in favor of Coca-Cola, which sought to cancel Meenaxi’s THUMS UP and LIMCA marks. Coca-Cola alleged that Meenaxi was using the marks in the United States to misrepresent the source of its goods. In order for Coca-Cola to prevail on this claim, it had to first show that it had rights over those marks within the United States. The problem with this argument, the Federal Circuit held, was that the marks in question were not sufficiently well known in the United States to create the necessary rights.
Parle (Exports), Limited of Bombay, India (“Parle”) introduced in India THUMS UP cola in 1977 and LIMCA lemon-lime soda in 1971. After purchasing Parle in 1993, Coca-Cola acquired Parle’s Indian registrations of the THUMS UP and LIMCA marks, selling those beverages throughout India and in various foreign markets. The Indian High Court of Delhi found these marks to be “well known” in India. Coca-Cola contends that third parties have imported these drinks into the United States to Indian grocery stores, restaurants, and other retail outlets.
Since 2008, Meenaxi has sold beverages to Indian grocers in the United States under both the THUMS UP and LIMCA marks. Meenaxi performed a trademark search at the USPTO, which yielded an abandoned application for THUMS UP and an expired registration for LIMCA. Meenaxi applied for, and was granted, registrations for the THUMS UP and LIMCA marks for colas, concentrates, and sodas in 2012. In 2016, Coca-Cola sought to cancel Meenaxi’s registrations under § 14(3) of the Lanham Act, asserting that Meenaxi was using Coca-Cola’s marks to misrepresent the source of Meenaxi’s THUMS UP cola and LIMCA lemon-lime soda.
The TTAB held in Coca-Cola’s favor and cancelled Meenaxi’s marks. As a threshold issue, the TTAB had to address whether Coca-Cola possessed the appropriate statutory entitlement to bring a cancellation claim. Relying upon the Supreme Court’s decision in Lexmark International, Inc. v. Static Control Components, Inc., the TTAB found that Coca-Cola satisfied both the zone-of-interest and proximate damage prongs of the statutory entitlement inquiry. According to the TTAB, the reputation of Coca-Cola’s THUMS UP and LIMCA beverages in India and other countries would extend to the United States among the significant number of Indian-American consumers based on population data. The TTAB also found that Coca-Cola reasonably believed that Meenaxi’s use of the THUMS UP and LIMCA marks could upset the expectations of Coca-Cola customers and that Meenaxi had used its U.S. registrations to block Coca-Cola’s importation of THUMS UP and LIMCA through third parties. On the merits, the TTAB found that Meenaxi knew of Coca-Cola’s marks in India and had intentionally adopted logos and a slogan nearly identical to Coca-Cola’s, resulting in cancellation of Meenaxi’s marks.
On appeal, the Federal Circuit reversed, holding that Coca-Cola failed to establish a statutory cause of action. The two asserted injuries were lost sales and reputational injury. As to lost sales, Coca-Cola presented limited evidence, merely relying on two employee testimonies of reseller and importer activity. The amount of THUMS UP Coca-Cola sold in the United States was small and at only two locations, and the company lacked concrete future plans to expand into the U.S. market. The Federal Circuit determined that this was not sufficient.