While the ITC can provide significant injunctive relief to holders of registered trademarks whose trademarks are infringed, it is not for everyone. The selection of the right forum will depend on a number of factors

Louis Vuitton recently registered a big win in a trademark infringement suit at the US International Trade Commission (ITC), receiving significant injunctive relief. However, when the ITC is mentioned, patent-based, not trademark-based, investigations spring to mind. After all, the ITC is primarily a patent infringement forum and its docket over the years bears this out. While there is the occasional trademark investigation at the ITC, it is far from being a part of that tribunal's standard fare.

Nonetheless, Louis Vuitton's victory is a reminder that the ITC also adjudicates trademark infringement disputes – and that it offers a big pay-off to prevailing complainants. In light of Louis Vuitton's success, this article considers whether the ITC is a viable alternative forum to US district courts for trademark holders seeking redress for infringement.

The short answer is that while Louis Vuitton's success at the ITC may be inspiring to trademark holders tired of being ripped off, the ITC is clearly not for everyone. Yet for those trademark holders that can meet the unique jurisdictional requirements of the ITC and seek only the straightforward injunctive relief that the ITC offers, Louis Vuitton has shown that the ITC may be the place to go.

Louis Vuitton investigation

In Certain Handbags, Luggage, Accessories And Packaging Thereof, Inv 337-TA-754 (June 13 2012) complainants Louis Vuitton Mallatier SA (Paris, France) and Louis Vuitton US Manufacturing, Inc (California) charged 15 respondents from the United States and China with violating Section 337 of the Tariff Act of 1930, as amended (19 USC §1337).

Section 337 is a trade statute. Section 337(a)(1)(C) makes unlawful "[t]he importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee of articles that infringe a valid and enforceable United States trademark registered under the Trademark Act of 1946 [15 USCA 1051and following]" (19 USC §1337(a)(1)(C)). Louis Vuitton's complaint charged the respondents with infringing multiple US trademark registrations of its 'toile' trademark. The Louis Vuitton toile monogram mark was created in 1896 and features an "entwined LV monogram and various design motifs displayed in a repeated fashion, at regularly spaced intervals, in horizontal lines covering the entire surface of the products on which the mark is used". But, of course, you already knew this.

The ITC found trademark infringement of the toile monogram mark and issued injunctive relief in the form of a general exclusion order pursuant to Section 337(d)(2) (19 USC §1337(d)(2)). This general exclusion order prohibits the import into the United States of all infringing "handbags, luggage, accessories, and packaging" (slip op at 11). Because this was a general exclusion order, the injunctive remedy applied to all infringing products – even to the infringing products of entities that were not named as respondents in the ITC proceeding (see Kyocera Wireless Corp v International Trade Comm'n, 545 F 3d 1340 (Fed Cir 2008)).

The Louis Vuitton investigation is not the first time that the ITC has addressed the issue of trademark infringement. Indeed, in its opinion, the ITC cited its previous investigations in Certain Hair Irons and Components Thereof (Inv 337-TA-637, 2009 WL 7152177 (Mar 2009) (Comm'n Op)) and Certain Battery-Powered Ride-On Toy Vehicles and Components Thereof (Inv 337-TA-314, 0091 WL 11732578 (Aug 1991) (Comm'n Op)) in discussing the appropriate remedy. In both investigations, infringement was found and injunctive relief ordered.

Yet it is the Louis Vuitton investigation that has brought about renewed focus on the trademark infringement provisions of Section 337. Apparently, ride-on toy vehicles and hair irons do not have the same sex appeal as Louis Vuitton handbags. The Louis Vuitton name and the subject matter of luxury brand goods appear to be the catalyst for the current interest (perhaps curiosity is the better word) in the ITC. Regardless, the trademark protection provisions of Section 337 were being enforced by the ITC well before infringement of the toile monogram mark created such a stir. There are reasons why trademark holders have gone to the ITC in the past to protect their marks, and why they will continue to do so in the future. These are discussed below.

Why the ITC?

If you are in hot pursuit of an infringer, the ITC is an attractive forum – in some ways, even more attractive than the district courts. The advantages of the ITC apply no matter whether the investigation is trademark or patent based.

First, the speed of an ITC investigation is a huge draw. The ITC has justly earned its reputation as a 'rocket docket'. The typical length of an ITC proceeding is 18 months. Some investigations can be as long as 24 months, particularly complex, patent-based investigations with multiple respondents. However, by and large, 18 months is a pretty accurate measure from the time when the ITC institutes the investigation to the time when it issues a final decision on the merits. This timeline is impressive by anyone's standards.

The speed of the ITC can be alluring to a trademark holder seeking not only to protect profits from slipping away to infringers, but also to preserve the hard-earned reputation of its brand name. The protection of brand name is particularly critical to a company such as Louis Vuitton, whose products fall into the luxury brand category.

Second, as reflected in the product-oriented case names of its investigations, the ITC has in rem jurisdiction over its investigations (eg, see Certain Toner Cartridges and Components Thereof, Inv 337- TA-740, 2011 WL 2470590 (June 2011) (Comm'n Op)). Remember, Section 337 of the Tariff Act of 1930 is a trade statute. Thus, although in personam jurisdiction is often obtained, the ITC's limited jurisdictional requirements make life a little easier for the complainant. For instance, in the Louis Vuitton investigation, several of the respondents were Chinese companies, and overall eight of the 15 respondents were found to be in default. However, this presented no problem as the ITC had in rem jurisdiction.

Third – and importantly – injunctive relief is easier to obtain in an ITC proceeding than in district court. For example, in eBay v MercExchange (547 US 388, 391 (2006)), a Patent Act case, the Supreme Court held that in order to obtain injunctive relief the plaintiff must show that:

  • there is irreparable harm;
  • the remedies available at law (eg, monetary damages) are inadequate;
  • considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
  • the public interest would not be disserved by a permanent injunction.

Compare this to other cases in which courts applied a similar four-factor analysis in deciding whether to grant injunctive relief in trademark cases (eg, Highmark, Inc v UPMC Health Plan, Inc (276 F 3d 160 (3d Cir 2001)); Enrique Bernat FSA v Guadalajara, Inc (210 F 3d 439 (5th Cir 2000)); American Bd of Psychiatry and Neurology v Johnson-Powell (129 Fed 3d 1 (1st Cir 1997))).

The four-factor analysis of eBay, however, does not apply to a Section 337 proceeding (Spansion Inc v International Trade Com'n, 629 F 3d 1331 (Fed Cir 2010)). Thus, when the ITC finds trademark infringement, injunctive relief is the prescribed default remedy.

Pursuant to Section 337(d)(1), the ITC is to issue a limited exclusion order (prohibiting only the import of the infringing products of the named respondents in the ITC proceeding), unless the issuance of such an order would be against the public interest (19 USC §1337(d)(1)). Accordingly, the ITC considers only one of the four factors that a district court must consider – that is, the public interest.

As occurred in the Louis Vuitton investigation, however, the ITC may issue broader injunctive relief in the form of a Section 337(d)(2) general exclusion order. Such an order may be issued on a showing that:

  • a limited exclusion order would otherwise be circumvented; or
  • there is a pattern of violation and it is difficult to determine the source of the infringing products (19 USC §1337(d)(2)).

In addition, where it is shown that significant commercial inventories of the infringing products are present in the United States, the ITC can issue a cease-and-desist order, preventing those products from entering into the stream of the nation's commerce (19 USC §1337(f)).

As noted, general exclusion orders prohibit the importation of all infringing products, regardless of their source. This remedy can be particularly attractive in a trademark infringement case where cheap counterfeit products are being manufactured in a foreign land by both known and unknown entities. Louis Vuitton certainly found it attractive.

In the Louis Vuitton investigation, the ITC's remedy discussion is informative because it shows the kind of evidence that is necessary in a trademark investigation to support the issuance of a general exclusion order. There, the ITC found that "infringing and counterfeit goods have been found in major markets such as New York and Los Angeles, as well as in secondary markets, including Memphis, Tennessee and Columbus, Ohio" (slip op at 5). "These goods are also available through a wide variety of retailers, including kiosks, stores, swap meets, flea markets, trade shows and via Internet retailers" (id).

Further, the ITC concluded that the evidence demonstrates the difficulty of identifying the source of counterfeit and infringing goods, as many respondents failed to appear and participate in discovery. "The evidence further shows that the businesses of manufacturers and sellers of infringing and counterfeit merchandise are easily formed and dissolved, such that even the respondents that participated in this investigation could not identify the manufacturers and distributors of the infringing and counterfeit goods they sold" (slip op at 7).

The ITC also found that the evidence demonstrated a low barrier to entry in the manufacture of infringing and counterfeit handbags, luggage, accessories and packaging. "[T]he evidence shows that the cost to manufacture and export infringing handbags from China to the United States is between $1.25 and $4.00 per item" (slip op at 8). This is somewhat lower than the retail price for a real Louis Vuitton handbag. The ITC's evidentiary analysis in the Louis Vuitton investigation is similar to its analysis in Certain Energy Drink Products (Inv 337-TA- 678, 2011 WL 7628060 (corrected Nov 2011) (Comm'n Op)), a trademark infringement finding involving Red Bull wherein the ITC issued a general exclusion order. This shows that the Louis Vuitton investigation did not break new ground; it just seems to have made a bigger splash than most other ITC trademark investigations.

So why is the ITC not the forum of choice for everyone?

Despite its advantages, the ITC is clearly not an appropriate forum for all registered trademark holders (or patent holders, for that matter). As noted, Section 337 is a trade statute and there is a jurisdictional requirement that the infringing products be imported (see Certain Cigarettes and Packaging Thereof, Inv 337-TA-643, 2009 WL 6751505 (Oct 2009) (Comm'n Op) – the import of grey-market cigarettes invoked the ITC's jurisdiction under Section 337).

Indeed, the Section 337(d)(2) general exclusion order issued in the Louis Vuitton investigation prohibited the import of all infringing goods. This was the only remedy that the ITC could hand out (Louis Vuitton did not seek a cease-and-desist order.) Had there been no import of infringing products, the ITC would have had no jurisdiction over the trademark infringement dispute.

Therefore, unless the infringer that a company is targeting imports its infringing goods into the United States, the ITC is not the right forum. There is simply no ITC jurisdiction. If such is the case, you can stop reading and begin preparing a complaint for district court. In addition to importation, one other jurisdictional requirement is peculiar to the ITC. Pursuant to Sections 337(a)(2) and (3), a complainant at the ITC must establish a "domestic industry" relating to the articles protected by the asserted trademark (19 USC §§1337(a)(2) and (3)). A trademark complainant, therefore, must show:

  • a significant investment in plant and equipment;
  • a significant investment of labour or capital; or
  • a substantial investment in its exploitation, including engineering, research and development or licensing.

If a company cannot prove a domestic industry, its time at the ITC will be short indeed – it will be on the bad end of a motion to terminate the investigation for lack of jurisdiction.

In the Louis Vuitton investigation, complainants relied on their manufacturing operations in the United States to establish a domestic industry. The ITC found that a domestic industry existed based on Louis Vuitton's manufacturing facility in California, its building improvements, the number of workers employed and its investments in plant and equipment, all of which related to the asserted toile monogram marks. So if a company is a registered trademark holder with a domestic industry, and products infringing that registered trademark are being imported into the United States, it meets the jurisdictional requirements of Section 337. However, the ITC still might not be the right forum.

Avoiding the ITC

The ITC is not for everyone. For instance, an important limitation of the ITC is that it can provide injunctive relief only. If a mark owner seeks both injunctive relief and monetary damages, then the district court is the answer. Contrast the ITC's ability to provide relief with the district court where, in addition to injunctive relief, a plaintiff may also receive monetary relief under Sections 1117(a) and/or 1125(a) of the Lanham Act in the form of the defendant's profits and actual damages (see Victoria Crises, Inc v Yangtze Cruises, Inc, 630 F Supp 2d 255 (EDNY 2008); GTFM, Inc v Solid Clothing, Inc, 215 F Supp 2d 273 (SDNY 2002)). Furthermore, in the district courts, unlike at the ITC, attorneys' fees are available to the prevailing party in "exceptional" cases.

In addition, the ITC does not offer a jury trial. There, an administrative law judge will hear and rule on the case, subject only to review by the six ITC commissioners (and thereafter by the Federal Circuit). If a mark owner believes that its trademark infringement case would best be understood (and appreciated) by a jury, possibly in a district sympathetic to its company, then it should head for the district courts.

Another limitation of the ITC is the 'vanilla' injunctive relief that it has to offer. There is nothing wrong with a limited exclusion order that prohibits named respondents from importing their infringing products into the United States. Better yet, there is nothing wrong with a general exclusion order prohibiting the import of all infringing products, regardless of their source. This injunctive relief, courtesy of Sections 337(d)(1) and (d)(2), is of no small consequence. Still, the ITC cannot provide the kind of customised relief that a mark owner might need to protect its trademark.

In that regard, a district court has broader discretion than the ITC in fashioning injunctive relief for trademark infringement. For example, in Levi Strauss & Co v Sunrise Int'l Trading, Inc (51 F 3d 982 (11th Cir 1995)) it was held that the district court had the authority to freeze those assets which could have been used to satisfy an equitable award of profits for the holder of the trademark for Levi's 501 jeans. Another example is Moore Business Forms, Inc v Seidenbrug (619 F Supp 1173 (WDLA 1985)), where the defendant was ordered to destroy all business cards, stationery or other documents that used the words 'Moore' or 'More', and to set up an intercept operator to advise callers of the correct number of the plaintiff.

The point here is that on proving trademark infringement and establishing a right to injunctive relief, the district courts can fashion the remedy as needed. While the ITC can provide broad injunctive relief, it does not have the flexibility of the district courts. The ITC can prescribe limited and general exclusion orders, but its ability to tailor a remedy is somewhat restricted. For example, in Certain Personal Data and Mobile Communications Devices and Related Software (Inv 337-TA-710, 2011 WL 3813117 (July 2011) (Comm'n Op)) the ITC did delay the effective start date for the general exclusion order, but did so solely out of consideration of the public interest factors of Section 337 – in particular, the need to maintain competition among smartphone manufacturers.

Conclusion

So what does the Louis Vuitton investigation teach us? Frankly, nothing new. However, what it does do is call attention to the fact that the ITC can, as it has for some time, provide significant injunctive relief to holders of registered trademarks whose trademarks are infringed. Still, the ITC is not for everyone. Whether it is the right forum for a mark owner will depend, in part, on the relief that it seeks, the origin of the infringing products, the speed at which the relief is needed and possibly the number of respondents and their locations.

Registered trademark owners intent on proceeding against infringers should take stock of their overall circumstances and make a determination as to whether to proceed in district court or the ITC – and in some cases both (pursuant to 28 USC §1659, a party in a civil action that is also a respondent in an ITC proceeding may stay the district court action).

Perhaps the real value of the Louis Vuitton investigation is that it simply informs the registered trademark community – particularly the high-end luxury product group – that when it comes to selecting a forum to pursue trademark infringement, there is a choice.

This article is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. Brinks Hofer Gilson & Lione does not intend to create an attorney-client relationship by offering this information and review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention. For further information, please contact a Brinks Hofer Gilson & Lione lawyer.