United States: . . . And Your Name Is? Court Orders Anonymous Parallel Importer To Reveal Itself In "Lever Rule" Trademark Challenge

Last Updated: September 26 2017
Article by Peter A. Sullivan

We recently hosted an event at the firm where we discussed legal issues concerning parallel imports in the transportation industry, so a recent decision by the U.S. Court of International Trade discussing "Lever Rule" protection caught my attention. To those who do not traffic in the world of parallel imports, the Lever Rule is a tool available to trademark owners to limit unauthorized imports of gray market goods bearing the owner's mark. Gray market goods are goods that the trademark owner has approved for sale and distribution in another jurisdiction (and designed and manufactured to conform to the regulations and laws of that other jurisdiction), but that are brought into the United States for resale here. The Lever Rule allows a U.S. trademark owner to have U.S. Customs and Border Protection ("CBP") stop the unauthorized importation of such goods if they are sold under the owner's trademark and if there are physical and material differences between the unauthorized imported goods and the U.S. goods sold under the same trademark.

In early 2017, battery manufacturer Duracell obtained Lever Rule protection for certain gray market batteries bearing the DURACELL trademark.  This decision was challenged by an anonymous importer of gray market batteries calling itself "XYZ Corporation."  XYZ sought judicial review before the Court of International Trade while maintaining its anonymity.  When the case first commenced, the only other party was CBP, and CBP did not object to XYZ maintaining the name of the company as confidential.  CBP and XYZ entered into a protective order to allow the parties to designate information as confidential, including a provision for "attorneys' eyes only" protection.

In July 2017, Duracell moved to intervene in the action as a defendant. The Court granted the motion and added Duracell to the protective order.  About a week after entering into the protective order, Duracell advised XYZ that it objected to designating XYZ's real company name as "attorneys' eyes only."  XYZ resisted and a skirmish ensued.

There were two issues before Judge Choe-Groves: (1) Can XYZ properly identify the company name as confidential information under the protective order; and (2) Can XYZ otherwise maintain anonymity in the proceeding?  XYZ argued that it needed to protect its identity because it feared commercial and legal retaliation from Duracell.  Apparently, XYZ had been importing gray market batteries for twenty-seven years without interference from Duracell, but XYZ nevertheless feared that Duracell would file a trademark infringement suit, bankrupting XYZ and damaging its reputation.

Judge Choe-Groves first determined that company names are not trade secrets or confidential business information of the type covered under the protective order.  The scope of information protected under the protective order included trade secrets, financial data, proprietary business information, and information that the company was obligated to keep confidential by contract obligation or law.  The name of the business itself did not fall into any of the categories in the protective order.

The Court next considered whether to exercise its discretion to allow XYZ to proceed anonymously.  Judge Choe-Groves weighed XYZ's stated privacy interests against the public's interest in knowing the facts and events surrounding court proceedings.  The Court noted that avoiding damage to professional reputation or potential financial hardship are not the types of special circumstance that warrant the use of a pseudonym, and held that the public's interest in disclosure outweighed these concerns. The Court ordered XYZ to refile the complaint without redactions as to its corporate name and the name of its corporate officers.

This decision will be useful to trademark owners who seek these Lever Rule orders, because it will be more difficult for parallel importers to challenge them from the shadows.  In this case, XYZ filed an amended complaint that identified itself as Mile Crest Corp. of Edison, New Jersey.

Author's disclosure: Judge Choe-Groves and I were law partners together at a prior law firm.

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