The Lanham Act (“Act”) grants a civil right of action against any person who improperly uses in commerce  a registered trademark.  Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 426 (9th Cir. 1977), 15 U.S.C. §§ 1114(a)(1), 1127.  To determine whether the Act applies extraterritorially, i.e. outside the United States, the courts apply a three-prong test: (1) alleged violations must create some effect on American foreign commerce; (2) the effect must be sufficiently great to present a cognizable injury to the plaintiffs under the Act; and (3) the interests of and links to United States foreign commerce must be sufficiently strong in relation to those of other nations to justify an assertion of extraterritorial authority.  Star-Kist Foods, Inc. v. P.J. Rhodes & Co., 769 F.2d 1393, 1395 (9th Cir. 1985) (citing Timberlane Lumber Co. v. Bank of Am. Nat’l Trust & Sav. Ass’n, 549 F.2d 597, 613-615 (9th Cir. 1976), superseded by statute, 15 U.S.C. § 6a.

An example of the analysis that courts use to determine whether to apply the Lanham Act to conduct occurring outside the United States is illustrated in the recent case Love v. Associated Newspapers, Ltd., 611 F.3d 601 (9th Cir. 2010).  The Love case involved an action against a former member of the musical group, The Beach Boys.  Claims under the Act were made as a result of a promotional campaign in the United Kingdom to distribute millions of CDs consisting of solos by the former member of the Beach Boys.  The 9th Circuit Court of Appeal held that the Act would not apply beyond the United States because (1) all relevant acts occurred outside the United States; (2) the alleged violations did not cause any monetary injury in the United States; and (3) the alleged violations did not affect United States commerce.

In the Love case, the Plaintiff also brought claims for violations of his statutory and common law rights of publicity under California law.  The 9th Circuit Court of Appeal rejected these claims as well, finding that Plaintiff failed to prove that his name and likeness diminished in value based on the actions that occurred outside the United States.  Id. at 610-611.  The Court noted that California’s interest in applying its right of publicity laws extraterritorially is based on its interest in “safeguarding its citizens from the diminution in value of their names and likenesses.”  Id. at 610.  To determine whether the common law and statutory right of publicity apply to conduct outside of California, California courts utilize a “governmental interest” analysis to determine which jurisdiction’s interest would be more impaired.  Here, because the United Kingdom had a greater interest in regulating the distribution of millions of copies of CDs in its country, and particularly where there was little support that reduced ticket sales to concerts in the United States would result, the Court applied English law, which does not recognize a right of publicity.

While the Love case concluded that State and Federal laws did not apply to the conduct at issue that occurred outside the United States, the result could be different depending upon the facts and circumstances of each situation.  These issues should be carefully considered both when structuring overseas business relationships and arrangements and also when assessing the risks of potential litigation inside the United States.

For further information, please contact:  Nicholas P. Connon, Managing Partner and Chair of the Middle East Practice Group; Tel:  +1.626.638.1757; e-mail: nconnon@connonwood.com