You're Going to Serve Someone, But Will You Have Jurisdiction?

When is a proceeding not a proceeding, or more precisely, when is a proceeding affecting a mark not a proceeding affecting a mark? No mere word game, the answer can have a profound impact on foreign trademark owners who routinely (and perhaps unthinkingly) appoint their U.S. attorneys as agents to accept service in proceedings affecting their marks. The answer ' or at least an answer ' recently was provided by the U.S. District Court for the Eastern District of California in E&J Gallo Winery v. Cantine Rallo, S.p.A., slip op. 1:04 cv 5153 (OWW) (Aug. 17, 2005), where just such a profound impact faced an Italian winery with a long history whose American counsel accepted service of a summons and complaint in an infringement suit, but made only fleeting efforts to alert his foreign client. The court vacated a default judgment that threatened to terminate a 50-year business in this country because the domestic attorney designated by the foreign trademark applicant under 15 U.S.C. '1051(e) to receive service in “proceedings” affecting the mark was deemed not authorized to receive service in a “litigation” affecting the mark. (The defendant's failure to answer was also deemed excusable neglect. Following the default, the author is now representing the defendant.)

Prior to its recent amendment in 2002, 15 U.S.C. '1051(e) of the Lanham Act required foreign trademark applicants to designate a domestic representative authorized to accept service in “proceedings affecting the mark.” The provision, which in 2002 was made voluntary (no longer mandatory), is not unlike the section of the Patent Act, 35 U.S.C. '293, that provides for the filing in the Patent and Trademark Office by non-resident patentees of “a written designation stating the name and address of a person residing in the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder.” E&J Gallo Winery parted company with the few recent decisions to assess the meaning of the statute in holding that such an appointment ' whatever its effect in administrative proceedings ' does not authorize the designated agent to accept service in litigations affecting the mark. The court thus vacated the default judgment, finding that service on an attorney who had appointed himself domestic representative did not make him agent for service of process for all purposes.

What 15 U.S.C. '1051(e) specifically required ' and after 2002 simply permits ' is that an applicant “not domiciled in the United States” who is seeking to register a trademark must designate in writing “the name and address of some person resident in the United States on whom may be served notices or process in proceedings affecting the mark.” The courts are divided whether a representative so-appointed is authorized to accept service of process only in administrative proceedings affecting the mark, or in all manner or legal proceedings. The first two district courts to have assessed the statute concluded that it did not authorize service in district court proceedings. Outboard Marine Corp. v Chantiers Bentau, 687 F. Supp. 366 (N.D. Ill. 1988); Sunshine Sports Distrib., Inc. v. Sports Authority, Inc., 157 F. Supp. 2d 779 (E.D. Mich. 2001). More recent cases have taken a contrary view. V&S Vin & Sprit Aktiebolag v. Cracovia Brands, Inc., 212 F. Supp. 2d 852 (N.D. Ill. 2002); Haemoscope Corp. v. Pentapharm AG, 2002 WL 31749195 (N.D. Ill. Dec. 9, 2002). Accord, Havana Club Holding, S.A. v. Galleon, S.A., 974 F. Supp. 302 (S.D.N.Y. 1997) (dicta).

Outboard Marine, evidently the first reported decision to address the statute (itself a curiosity given the 42 years that passed between adoption and first interpretation), construed the statute based on the 1925 testimony of Arthur Barber, a U.S. Trademark Association witness, who objected to language in an early draft bill that expressly permitted service “in any action or proceeding.” Congress' later removal of the words “action or” from the final legislation demonstrated an intent, Outboard Marine held, to confine the statutory scope to administrative proceedings but not court actions. As explained in E&J Gallo Winery, a flaw in this historical analysis is that the legislation went through so many drafts between 1925 and 1939 (when the language of the section finally coalesced), not to mention the additional passage of time until 1946 (when the statute was enacted), that it is impossible to tell whether the testimony of Barber, himself not even a member of Congress, had any actual weight in the final drafting or, as a matter of law, should be entitled to any weight given his status as a non-legislator.

Even in the same judicial district in Illinois that decided the case 14 years earlier, Outboard Marine sputtered as precedent when V&S Vin & Sprit in 2002 read the statute in a different spirit. V&S Vin & Sprit agreed the statute is ambiguous ' not because of the legislative history, to which the court (after some analysis) ultimately attached no weight, but because of the overall structure of the statute and the placement of Section 1051 among the provisions concerning registration of trademarks rather than enforcement of rights, where one might expect to find a provision for service of process in proceedings to enforce or curtail rights secured by statute. Nonetheless, V&S Vin & Sprit concluded the statutory term “proceeding” should be given its natural and broadest meaning. Black's Law Dictionary, for instance, defines the term as “the form and manner of conducting juridical business before a court or judicial officer … [the term] also refers to administrative proceedings before agencies, tribunals, bureaus, or the like.” Black's Law Dictionary p. 836 (6th ed. 1991).

E&J Gallo Winery, after agreeing with V&S Vin & Sprit that the structure of the statute rendered it ambiguous, undertook what is undoubtedly the most comprehensive reported analysis of the statute's legislative history, including a review of the evolution of the section from the time of Barber's 1925 testimony through revisions in 1926, 1927, 1928, an almost 10-year hiatus until 1938, and repeated revisions that year and in 1939. However, the court's decision that Section 1051(e) only applies to administrative proceedings (ie, opposition and cancellation proceedings before the Trademark Trial and Appeal Board) was not derived from the history, which it ultimately deemed inconclusive. Rather, the court compared the language of Section 1051(e) with numerous other statutes in which Congress had expressly provided for service in court proceedings.

The Patent Act, quoted above, was one such example. Indeed 35 U.S.C. '293 provides for service not only in proceedings affecting the patent but proceedings affecting “rights thereunder,” and gives specific guidance how to serve a summons when the domestic representative cannot be found. The statute thus more expressly contemplates federal court jurisdiction and the establishment of personal jurisdiction over foreign patentees. E&J Gallo Winery cited six other federal statutes that expressly require designation of an agent for service of process in a range of matters other than administrative proceedings or that provide separately for the appointment of an agent in administrative proceedings on the one hand and district court proceedings on the other. The court thus concluded that, “Congress knows how to provide for service of process in cases before the federal courts when it so intends. It has not done so here.” Slip op. at 31.

Although not directly addressed in E&J Gallo Winery, further reason to question whether Congress intended for Section 1051(e) to encompass service in district court proceedings is the statute's language specifying how service can be effected. After setting forth that an agent must be designated, the section allows that “notices or process may be served upon the person so designated by leaving with him or mailing to him a copy thereof at the address specified … ” Such “ leaving” or “mailing” would clearly not satisfy the minimum requirements for service of process under Fed. R. Civ. P. 4. The inadequacy of such personal service might be of some consequence had Congress intended the statute to apply to all manner of proceedings, including litigations. It is of less moment if E&J Gallo Winery is correct that the provision applies only to administrative proceedings. The contrast with the Patent Act is also illustrative here, since Section 293 more explicitly sets forth the manner of contemplated service on foreign patentees by specifying that if the designated agent cannot be found, “the United States District Court for the District of Columbia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs.” Not only does the Patent Act not speak in terms of simply leaving or mailing a copy of notices or process, it specifically contemplates service of a summons.

Likewise, in providing for appointment of an agent for service, the Lanham Act does not make allowance for the termination of the agency relationship. Conceivably, even after a registration has expired or been canceled, the agent for service could receive a summons to answer an infringement suit. No such possibility could arise if the agency extends only to administrative proceedings, for once the registration is no more, there can be no basis for an administrative proceeding to oppose or cancel it.

As summarized in E&J Gallo Winery, in the long Congressional gestation period before enactment of the Lanham Act, questions concerning methods of service and termination of the agency were addressed in testimony and/or drafts of the legislation. From the fact that neither was expressly resolved in the final legislation, one might infer Congress saw no need to do so since service was contemplated only in administrative proceedings.

One might be tempted to say, in conclusion, that the problem of interpreting Section 1051(e) has been made a thing of the past by the 2002 statutory amendment making the appointment of a domestic representative optional. However, a further aspect of the holding in E&J Gallo Winery suggests why just the opposite may be true. Thus, when the Magistrate in the case first recommended vacatur of the default judgment (before the court itself finally ruled), he concluded that the defendant's original attorney, to the extent he enjoyed an option whether to appoint himself domestic representative, in fact lacked authority from his client to make that choice as he did. In truth, the Magistrate based this recommendation on an incorrect assumption that the current voluntary appointment system applied to an application filed in 2001, before the amendment. That the appointment was in fact mandatory at the time (if the application were to be filed at all) led the court to conclude the client's consent could safely be implied. True in 2001, perhaps, but no longer.

In the future, as domestic attorneys representing foreign applicants enjoy genuine choice whether to be appointed as domestic representatives, actual thought must be given to whether to bind the client. If E&J Gallo Winery is followed, the choice will be relatively simple, as it will only affect service in administrative proceedings. If, instead, the statute is viewed more broadly by other courts as affecting all proceedings, greater consequences will attach. Lacking the benefit of hindsight from 20 or 30 years hence of what other courts will decide (or even 10 years, the term of registration), the issue remains very much alive.

When is a proceeding not a proceeding, or more precisely, when is a proceeding affecting a mark not a proceeding affecting a mark? No mere word game, the answer can have a profound impact on foreign trademark owners who routinely (and perhaps unthinkingly) appoint their U.S. attorneys as agents to accept service in proceedings affecting their marks. The answer ' or at least an answer ' recently was provided by the U.S. District Court for the Eastern District of California in E&J Gallo Winery v. Cantine Rallo, S.p.A., slip op. 1:04 cv 5153 (OWW) (Aug. 17, 2005), where just such a profound impact faced an Italian winery with a long history whose American counsel accepted service of a summons and complaint in an infringement suit, but made only fleeting efforts to alert his foreign client. The court vacated a default judgment that threatened to terminate a 50-year business in this country because the domestic attorney designated by the foreign trademark applicant under 15 U.S.C. '1051(e) to receive service in “proceedings” affecting the mark was deemed not authorized to receive service in a “litigation” affecting the mark. (The defendant's failure to answer was also deemed excusable neglect. Following the default, the author is now representing the defendant.)

Prior to its recent amendment in 2002, 15 U.S.C. '1051(e) of the Lanham Act required foreign trademark applicants to designate a domestic representative authorized to accept service in “proceedings affecting the mark.” The provision, which in 2002 was made voluntary (no longer mandatory), is not unlike the section of the Patent Act, 35 U.S.C. '293, that provides for the filing in the Patent and Trademark Office by non-resident patentees of “a written designation stating the name and address of a person residing in the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder.” E&J Gallo Winery parted company with the few recent decisions to assess the meaning of the statute in holding that such an appointment ' whatever its effect in administrative proceedings ' does not authorize the designated agent to accept service in litigations affecting the mark. The court thus vacated the default judgment, finding that service on an attorney who had appointed himself domestic representative did not make him agent for service of process for all purposes.

What 15 U.S.C. '1051(e) specifically required ' and after 2002 simply permits ' is that an applicant “not domiciled in the United States” who is seeking to register a trademark must designate in writing “the name and address of some person resident in the United States on whom may be served notices or process in proceedings affecting the mark.” The courts are divided whether a representative so-appointed is authorized to accept service of process only in administrative proceedings affecting the mark, or in all manner or legal proceedings. The first two district courts to have assessed the statute concluded that it did not authorize service in district court proceedings. Outboard Marine Corp. v Chantiers Bentau, 687 F. Supp. 366 (N.D. Ill. 1988); Sunshine Sports Distrib., Inc. v. Sports Authority, Inc ., 157 F. Supp. 2d 779 (E.D. Mich. 2001). More recent cases have taken a contrary view. V&S Vin & Sprit Aktiebolag v. Cracovia Brands, Inc ., 212 F. Supp. 2d 852 (N.D. Ill. 2002); Haemoscope Corp. v. Pentapharm AG, 2002 WL 31749195 (N.D. Ill. Dec. 9, 2002). Accord, Havana Club Holding, S.A. v. Galleon, S.A., 974 F. Supp. 302 (S.D.N.Y. 1997) (dicta).

Outboard Marine, evidently the first reported decision to address the statute (itself a curiosity given the 42 years that passed between adoption and first interpretation), construed the statute based on the 1925 testimony of Arthur Barber, a U.S. Trademark Association witness, who objected to language in an early draft bill that expressly permitted service “in any action or proceeding.” Congress' later removal of the words “action or” from the final legislation demonstrated an intent, Outboard Marine held, to confine the statutory scope to administrative proceedings but not court actions. As explained in E&J Gallo Winery, a flaw in this historical analysis is that the legislation went through so many drafts between 1925 and 1939 (when the language of the section finally coalesced), not to mention the additional passage of time until 1946 (when the statute was enacted), that it is impossible to tell whether the testimony of Barber, himself not even a member of Congress, had any actual weight in the final drafting or, as a matter of law, should be entitled to any weight given his status as a non-legislator.

Even in the same judicial district in Illinois that decided the case 14 years earlier, Outboard Marine sputtered as precedent when V&S Vin & Sprit in 2002 read the statute in a different spirit. V&S Vin & Sprit agreed the statute is ambiguous ' not because of the legislative history, to which the court (after some analysis) ultimately attached no weight, but because of the overall structure of the statute and the placement of Section 1051 among the provisions concerning registration of trademarks rather than enforcement of rights, where one might expect to find a provision for service of process in proceedings to enforce or curtail rights secured by statute. Nonetheless, V&S Vin & Sprit concluded the statutory term “proceeding” should be given its natural and broadest meaning. Black's Law Dictionary, for instance, defines the term as “the form and manner of conducting juridical business before a court or judicial officer … [the term] also refers to administrative proceedings before agencies, tribunals, bureaus, or the like.” Black's Law Dictionary p. 836 (6th ed. 1991).

E&J Gallo Winery, after agreeing with V&S Vin & Sprit that the structure of the statute rendered it ambiguous, undertook what is undoubtedly the most comprehensive reported analysis of the statute's legislative history, including a review of the evolution of the section from the time of Barber's 1925 testimony through revisions in 1926, 1927, 1928, an almost 10-year hiatus until 1938, and repeated revisions that year and in 1939. However, the court's decision that Section 1051(e) only applies to administrative proceedings (ie, opposition and cancellation proceedings before the Trademark Trial and Appeal Board) was not derived from the history, which it ultimately deemed inconclusive. Rather, the court compared the language of Section 1051(e) with numerous other statutes in which Congress had expressly provided for service in court proceedings.

The Patent Act, quoted above, was one such example. Indeed 35 U.S.C. '293 provides for service not only in proceedings affecting the patent but proceedings affecting “rights thereunder,” and gives specific guidance how to serve a summons when the domestic representative cannot be found. The statute thus more expressly contemplates federal court jurisdiction and the establishment of personal jurisdiction over foreign patentees. E&J Gallo Winery cited six other federal statutes that expressly require designation of an agent for service of process in a range of matters other than administrative proceedings or that provide separately for the appointment of an agent in administrative proceedings on the one hand and district court proceedings on the other. The court thus concluded that, “Congress knows how to provide for service of process in cases before the federal courts when it so intends. It has not done so here.” Slip op. at 31.

Although not directly addressed in E&J Gallo Winery, further reason to question whether Congress intended for Section 1051(e) to encompass service in district court proceedings is the statute's language specifying how service can be effected. After setting forth that an agent must be designated, the section allows that “notices or process may be served upon the person so designated by leaving with him or mailing to him a copy thereof at the address specified … ” Such “ leaving” or “mailing” would clearly not satisfy the minimum requirements for service of process under Fed. R. Civ. P. 4. The inadequacy of such personal service might be of some consequence had Congress intended the statute to apply to all manner of proceedings, including litigations. It is of less moment if E&J Gallo Winery is correct that the provision applies only to administrative proceedings. The contrast with the Patent Act is also illustrative here, since Section 293 more explicitly sets forth the manner of contemplated service on foreign patentees by specifying that if the designated agent cannot be found, “the United States District Court for the District of Columbia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs.” Not only does the Patent Act not speak in terms of simply leaving or mailing a copy of notices or process, it specifically contemplates service of a summons.

Likewise, in providing for appointment of an agent for service, the Lanham Act does not make allowance for the termination of the agency relationship. Conceivably, even after a registration has expired or been canceled, the agent for service could receive a summons to answer an infringement suit. No such possibility could arise if the agency extends only to administrative proceedings, for once the registration is no more, there can be no basis for an administrative proceeding to oppose or cancel it.

As summarized in E&J Gallo Winery, in the long Congressional gestation period before enactment of the Lanham Act, questions concerning methods of service and termination of the agency were addressed in testimony and/or drafts of the legislation. From the fact that neither was expressly resolved in the final legislation, one might infer Congress saw no need to do so since service was contemplated only in administrative proceedings.

One might be tempted to say, in conclusion, that the problem of interpreting Section 1051(e) has been made a thing of the past by the 2002 statutory amendment making the appointment of a domestic representative optional. However, a further aspect of the holding in E&J Gallo Winery suggests why just the opposite may be true. Thus, when the Magistrate in the case first recommended vacatur of the default judgment (before the court itself finally ruled), he concluded that the defendant's original attorney, to the extent he enjoyed an option whether to appoint himself domestic representative, in fact lacked authority from his client to make that choice as he did. In truth, the Magistrate based this recommendation on an incorrect assumption that the current voluntary appointment system applied to an application filed in 2001, before the amendment. That the appointment was in fact mandatory at the time (if the application were to be filed at all) led the court to conclude the client's consent could safely be implied. True in 2001, perhaps, but no longer.

In the future, as domestic attorneys representing foreign applicants enjoy genuine choice whether to be appointed as domestic representatives, actual thought must be given to whether to bind the client. If E&J Gallo Winery is followed, the choice will be relatively simple, as it will only affect service in administrative proceedings. If, instead, the statute is viewed more broadly by other courts as affecting all proceedings, greater consequences will attach. Lacking the benefit of hindsight from 20 or 30 years hence of what other courts will decide (or even 10 years, the term of registration), the issue remains very much alive.