United States: Fourth Circuit Construes Lanham Act to Provide Enhance Scope of Trademark Protection to Foreign Businesses

The U. S. Court of Appeals for the Fourth Circuit, over a spirited dissent, affirmed the district court's grant of summary judgment of trademark infringement and interpreted the "use in commerce" requirement of the Lanham Act to include services rendered solely outside of the United States, so long as those services were advertised and provided to citizens of the U.S. International Bancorp, LLC v. Societe des Bais de Mers et du Cercle des Etrangers a Monaco, Case No. 02-1364 (4th Cir. May 19, 2003).

The appellee, Societe des Bais de Mers et du Cercle des Etrangers a Monaco (SBM), owns and operates casino facilities in Monte Carlo, Monaco in connection with the service mark "Casino de Monte Carlo." Although SBM has advertised its casino services in the United States under its mark, it does not provide casino services within the United States. The appellants operate a number of online gambling websites using domain names incorporating the mark "Casino de Monte Carlo."

The most vigorously contested issue was whether the Lanham Act's requirement that a mark must be "used in commerce" in order to be eligible for protection is met where the services provided under that mark were rendered solely outside of the United States. The Fourth Circuit answered that question in the affirmative, interpreting the statutory term "use in commerce" to include use by SBM of its "mark in the sale and advertising of its gambling services to United States citizens. The court reasons that SBM's rendering of gambling services to U.S. citizens constitutes foreign trade that may be regulated by Congress. Thus, the court held that the services SBM renders under the "Casino de Monte Carlo" mark to citizens of the U.S. are services rendered in commerce, and the "use in commerce" requirement of the Lanham Act is satisfied.

The dissent termed the majority's decision permitting enforcement of a mark that has not been used within the United States as "without precedent" and "reverse imperialism." The dissent argued that "[s]uch a rule threatens to wreak havoc over this country's trademark law and would have a stifling effect on United States commercial interests generally. Before investing in a mark, firms and individuals would be forced to scour the globe to determine when and where American citizens had purchased goods or services from foreign subjects to determine whether there were trademarks involved that might be used against them in a priority contest or in an infringement action in the United States." The dissent further argued that, under the majority's rule, SBM and companies like it would suddenly acquire a windfall of potential U.S. trademark rights for all of the goods and services advertised to and purchased by U.S. citizens while traveling in their countries. "Like some sort of foreign influenza, these new entitlements would accompany American travelers on their return home, creating a vast array of new duties for individuals in the United States seeking to use the same or similar marks on goods or services sold in the United States."