ITNA's Comments to USPTO on the Hague Conference on Private International Law's|
Proposed Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters
1 December 2000
The Honorable Q. Todd Dickinson
Under Secretary of Commerce for
Intellectual Property and Director of the
United States Patent and Trademark Office
Washington, D.C. 20231
Attention: Elizabeth Shaw (via e-mail)
Dear Under Secretary Dickinson:
Re: Draft Hague Convention on Jurisdiction and Foreign Judgments
The International Trademark Association ("INTA") appreciates the opportunity to respond to the United States Patent and Trademark Office's request for comments on the Hague Conference Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters ("Draft Convention") that was published in the 17 October 2000 Federal Register (65 Fed. Reg. 61306).
INTA is a 122 year-old worldwide membership organization, representing over 3,800 corporations, package design firms, law firms and professional associations in 120 countries. INTA's membership crosses all industry lines, including manufacturers and retailers, and is united in the goal of supporting the essential role trademarks play in promoting effective commerce, protecting the interest of consumers, and encouraging free and fair competition.
We must preface our comments with two caveats. INTA has not yet been able to study the Draft Convention as thoroughly as it would wish, and has been unable to solicit the views of members from countries other than the United States. The comments set out in this letter therefore should be regarded as preliminary. We hope that INTA will have the opportunity to submit further comments at a later date.
Lack of Clarity and Need
Our analysis has been based on the text of the Draft Convention, which seems to us unclear in many respects. We are aware that implementing legislation would be required if the United States adhered to the Convention and that the legislation might clarify portions of the Draft. Since the legislation could not vary substantively from the terms of the Draft, however, we have assumed in our analysis that the language of the Draft and the language of the implementing legislation would be identical.
Even a preliminary review of the Draft Convention gives rise to serious concerns. The Draft Convention would require radical changes in the principles that now govern the exercise of jurisdiction by United States courts. These principles are well settled and well accepted; we believe they work well and, perhaps more important, work equitably, in cases involving trademarks in traditional contexts. INTA has grave doubts as to the wisdom of altering the principles governing jurisdiction of trademark disputes in traditional contexts and for this reason would oppose the changes that the Draft Convention would compel.
Failure to Address Internet Issues
The Internet is not a traditional context for trademarks. Its uniquely international character has raised new jurisdictional issues that are neither readily resolved by existing law nor expressly addressed by the Draft Convention. To the extent that the Draft Convention may be construed to address Internet issues, the construction seems likely to be detrimental to the interests of trademark owners in the United States and elsewhere, as explained below. If the Draft Convention is construed to leave Internet issues unaddressed, it will ignore the one area in which internationally accepted jurisdictional principles are needed. We therefore believe the Draft Convention must be revised to address Internet issues explicitly. Absent such revisions, the utility of the Draft Convention is dubious at best.
We recognize, of course, that work on the Draft Convention began before the Internet became an integral part of many of our lives, and before e-commerce became an accepted way to do business. Given that the United States Patent and Trademark Office accepted use of the word "Internet" in identifications only a few months ago, it is not surprising that text of the Draft Convention written five or more years ago does not deal with Internet issues. Nonetheless, Internet issues exist and must be addressed.
The international reach of the Internet and its use of domain names have presented entirely new challenges to trademark owners. Before the Internet, a trademark owned and used in one country was protected to a significant extent by geographic, economic, cultural, and linguistic barriers from international infringement. If international infringement did occur, the non-U.S. infringer was by definition doing business in the United States and subject to the jurisdiction of United States courts. This is no longer true; the Internet has erased in large part the barriers to international infringement that used to exist. Trademark owners worldwide are now vulnerable to infringement on the Internet by anyone anywhere. Existing jurisdictional principles are ill-prepared to deal with an infringer who may be on the other side of the world; the Draft Convention does not deal with him or her either. We regard this failure as a serious and potentially fatal flaw.
Our views as to the critical importance of Internet issues to trademark owners today are confirmed by the United States Patents Quarterly, a weekly publication of the Bureau of National Affairs that collects and publishes intellectual property cases, including trademark cases decided by federal courts, state courts, and the Trademark Trial and Appeal Board. Of the twelve trademark cases found in the United States Patents Quarterly issues of November 6, 13, and 20, 2000, three turned on Internet issues. When a quarter of reported trademark cases revolve around the Internet, it seems to us clear that Internet issues cannot reasonably be ignored.
In addition to the general concerns expressed above, INTA has specific concerns about many of the provisions in the Draft Convention. Comments on these provisions are set out below.
We share the serious concerns expressed by others at the absence from the Draft Convention of a grant of jurisdiction over defendants "doing business" in a Contracting State. When Article 3(2) is combined with Article 12(4), the result would divest United States courts of jurisdiction over foreign infringers of United States trademarks. For example:
Articles 10(1)(b) and 10(2)
Article 10(1)(b) permits a plaintiff to bring a tort claim in courts of the State in which the injury arose, unless the defendant establishes that he or she could not reasonably have foreseen that his act would result in the injury alleged by the plaintiff. The "foreseeability" exception in the Article invites extended and expensive litigation over jurisdictional issues that would make enforcement of trademark rights against foreign defendants significantly more difficult. Article 10(2) provides that Article 10(b)(1) does not apply to injuries caused by antitrust violations or conspiracies to inflict economic loss. The Draft Convention does not define a conspiracy to inflict economic loss; the phrase could be construed to encompass conduct by two or more persons actionable as unfair competition under Lanham Act section 43(a). Taken together, these provisions could divest United States courts of jurisdiction over infringement and unfair competition claims against non-U.S. defendants. For example:
Article 12 (1)
This provision would give exclusive jurisdiction of in rem proceedings involving immovable property to courts of the Contracting State "in which the property is situated." The Draft Convention does not define immovable property. If immovable property were construed to encompass domain names and domain names were held to be situated in the States in which their owners reside, the Draft Convention would bar United States courts from exercising jurisdiction under the in rem provisions of Lanham Act section 43(d)(2)(A) over cyberpirates domiciled in countries other than the United States and arguably over cyberpirates whose domicile cannot be determined. Since the exercise of jurisdiction under Lanham Act section 43(d)(2)(A) would be limited to domain names owned by defendants "situated" in the United States, it seems likely that proof of the domain name owner's residence here would be a required element of the plaintiff's case. These jurisdictional requirements are contrary to the provisions of Lanham Act section 43(d)(2)(A). They would render the section inapplicable to any domain name registered by someone with a foreign address. Given the ease with which a foreign address can be acquired, it seems reasonable to assume that Article 12(1) could gut the utility of Lanham Act section 43(d)(2)(A).
Consistent with existing practice, the intent of this provision may have been to give exclusive jurisdiction of trademark and patent disputes to the courts of the country in which the trademark or patent was registered. As drafted, however, and in conjunction with Article 12(6), the Draft Convention could have a radically different effect in the United States. The provision now applies only to trademarks "required to be deposited or registered" and to trademarks deemed to have been registered or deposited under an international convention.
In the United States, it is hornbook law that trademark rights come from use, not registration. Hydro-Dynamics, Inc. v. George Putnam & Co., 811 F.2d 1470, 1473 (Fed. Cir. 1987). Since trademarks need not be registered or deposited in the United States and there is, to our knowledge, no international convention under which United States marks are deemed to have been registered, strong arguments could be made that Article 12(4) does not apply to disputes over United States trademarks. If the arguments prevailed, they would divest the United States Trademark Trial and Appeal Board of jurisdiction over oppositions to registration and petitions for cancellation of registrations of marks owned by foreigners, which would have to be brought in the courts of the applicant's or registrant's home country under Article 3. The same would be true of actions for infringement of United States marks by foreigners. For example:
This Article provides that Article 12(4) does not apply to matters raised as "incidental questions." The Draft Convention does not define "incidental questions." The detrimental effects that Article 12(6) could have on United States trademark owners are illustrated in the following examples:
The foregoing examples show that Articles 12(4) and 12(6) of the Draft Convention could change radically the jurisdictional principles that have governed trademark disputes for many years, including the jurisdiction of the Trademark Trial and Appeal Board to determine the right to registration of marks owned by foreigners. INTA does not believe that any of these changes would be beneficial to trademark owners in the United States. Even if non-U.S. courts applied United States law to questions of validity and infringement of United States trademarks, which we note the Draft Convention does not require, it is unrealistic to assume that non-U.S. courts would have the knowledge and expertise to apply United States law correctly. INTA therefore would be strongly opposed to the Draft Convention to the extent that these Articles remain unchanged.
This Article provides that a court with jurisdiction of a matter under Articles 3 to 12 has jurisdiction to "order any provisional or protective measures." Applied to the examples discussed above, Article 13(1) clearly would permit a Swiss court to enter a preliminary injunction barring a United States company from use of its mark in the United States and might well permit a Swiss court to order seizure of goods owned in the United States by a United States trademark owner.
This Article provides that the courts of a State in which property is located have jurisdiction to order provisional or protective measures in respect of that property. Application of the Article to domain names is problematic; the Article could divest United States courts of jurisdiction to enter preliminary injunctions against Internet use of infringing marks and domain names owned by foreigners.
This Article permits courts of a State without jurisdiction under Articles 13(1) or 13(2) to order provisional or protective measures limited to the territory of that State. The Article thus precludes all courts of States without jurisdiction under Articles 13(1) and 13(2) from ordering provisional or protective measures against use on the Internet of infringing marks and domain names, since orders could not be limited to Internet usage in a particular State.
This Article provides that the courts of a defendant's home State have jurisdiction over co-defendants from other States if the claims against all defendants are so closely connected that they should be adjudicated together and there is a substantial connection between the State and the dispute involving each defendant. We share the concerns voiced by others that the Article would permit a court to exercise jurisdiction over a defendant without the "minimum contacts" our Constitution has been held to require. For example:
This Article provides that a court with jurisdiction to determine a claim also has jurisdiction to determine a counterclaim arising out of the same transaction or occurrence. There is no exception in the Article for counterclaims governed by the exclusive jurisdiction provisions of Article 12. Thus, Article 15 creates a means of evading those provisions. For example:
When a judgment for money damages has been entered by the courts of a Contracting State, this Article allows the courts of another State to enforce the judgment in a lesser amount. If the award is for non-compensatory damages, including exemplary or punitive damages, it must be recognized "at least to the extent that similar or comparable damages could have been awarded in the State addressed." If the judgment debtor convinces the courts of his home country that the award is "grossly excessive," those courts may enforce the judgment in a lesser amount, but in no event less than could have been awarded in the State addressed. We have serious concerns about the impact of Article 33 on judgments for damages entered by United States courts against non-U.S. defendants held liable for counterfeiting and piracy, including particularly judgments for damages under Lanham Act section 35(b) and 35(c). For example:
This Article could be construed to render the enforcement provisions and the loopholes of Article 33 applicable to settlements "to which a court has given its authority." We do not believe that a settlement agreement requiring one party to pay a sum of money to the other should be subject to change after the fact by the courts of the home country of the paying party. This is what could happen if Article 33 were applied to court-sanctioned settlement agreements sought to be enforced in other States. Of course, the Draft Convention does not address settlement agreements to which no court has given its authority, a category in which the vast majority of United States settlement agreements fall. The practical effect of Article 36 on settlement agreements in the United States therefore might be limited, but its potential effect is distressing.
No consensus has yet been reached on this Article, which would govern the relationship between the Draft Convention and other conventions. We note, however, that the proposals for Article 37 raise potentially serious questions in the context of Community trademark ("CTM") registrations in the European Union ("EU"). A major advantage of a CTM registration is that the courts of any EU member country can enter judgments against infringers; the judgments can be enforced in all EU countries. The effect of Article 37 and the Draft Convention on this and other aspects of Community trademark law is unclear.
The Draft Convention is not a model of clarity. Many of its provisions are open to constructions different from those we have used. The possibility or even probability that the Draft Convention would be construed differently by different States is not encouraging; we regard lack of clarity as an additional defect. When this defect is added to the serious defects we perceive in the Draft Convention's provisions as they relate to trademark rights, INTA cannot but conclude that adherence to the Draft Convention would be a disservice to trademark owners in the United States and elsewhere.
Thank you very much for allowing us to comment on the Draft Convention. Should you have any questions about our comments, please feel free to contact Judith Sapp of Preti, Flaherty, Beliveau, Pachios & Haley, LLC, Portland, Maine, tel. 207-791-3257; e-mail firstname.lastname@example.org.
Kimbley L. Muller
Questions, comments and suggestions to Vergil Bushnell