A Roll of the Dice for International Trademark Owners

As international businesses seek to expand across borders, including by availing themselves of legal tools (such as the Madrid Protocol) to register in the United States trademarks developed abroad, there is surprisingly little guidance as to what enforceable rights under U.S. law actually result from this process. However, as shown by the recent decision, In re Casino de Monaco Trademark Litigation, 07 Civ. 4802 DAB, 2010 U.S. Dist. LEXIS 33950 (S.D.N.Y. March 31, 2010), even well-established foreign companies can encounter difficulties enforcing rights not grounded in traditional U.S. trademark law principles of use in commerce.

There are perhaps few casino operators of longer standing than Societe de Bains de Mer et du Cercle des Etrangers a Monaco, (“SBM”) owner of the Casino de Monte Carlo (dating to 1866). However, in In re Casino de Monaco Trademark Litigation, the U.S. District Court for the Southern District of New York concluded that SBM possesses no rights in the United States in its registered trademark “Casino de Monaco” and placed in doubt what rights, if any, it might have in the United States in the name “Casino de Monte Carlo.” The court thus: 1) granted summary judgment dismissing SBM's claim for trademark infringement arising from defendant PlayShare's use of the name “Grand Monaco Casino” (subsequently renamed “Grand Mondial Casino”) for its online casino; 2) canceled SBM's registration for the trademark “Casino de Monaco,” and 3) without finally deciding the matter, held it unlikely that SBM could prove ownership in the United States of enforceable rights in the trademark “Casino de Monte Carlo.”

Use in Commerce

U.S. law is generally clear that no trademark rights arise without actual use in commerce. Mere registration of the name Casino de Monaco, without use or a bona fide intent to use, conferred no rights. The court followed such generally accepted principles in concluding that SBM “does not provide goods or services in the U.S., so that it has no rights in the mark.” 2010 U.S. Dist. LEXIS 33950 at *19-21, citing ITC, Ltd. v. Punchgini, Inc., 482 F.3d 135, 155 (2008). The court also followed the ruling in Buti v. Impressa Perosa, S.R.L., 139 F.3d 98 (2d Cir. 1998), that mere advertising and promotion of services in this country do not constitute the rendering of services under an accompanying mark sufficient to warrant trademark protection.

It is indeed, well-accepted that trademark rights are territorial, such that use of a mark in one country confers no rights in another country. See ITC Ltd., 482 F.3d at 155 (“[B]ecause a trademark has a separate legal existence under each country's laws, ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country. Rather, a mark owner must take the proper steps to insure that its rights to that mark are recognized in any country in which it seeks to assert them.”) Although the New York State Court of Appeals did conclude in ITC, Ltd. v. Punchgini, Inc., 880 N.E.2d 852 (N.Y. 2007), later proceedings, 518 F.3d 159 (2d Cir. 2008), as a matter of New York state law (not federal law) that deliberate and literal copying of a mark having substantial recognition in New York could constitute “misappropriation” under some circumstances (even if the copied mark had not been used in commerce in New York), the court in In re Casino de Monaco Trademark Litigation declined to apply this state law doctrine. Indeed, even if the name “Grand Monaco” is similar to “Casino de Monaco,” it is plainly not a literal copy. Nor was SBM able to show the name had achieved any recognition (much less great renown) in New York (or anywhere else in the United States).

Although SBM owned a U.S. registration for its claimed mark, “Casino de Monaco,” the registration was not accompanied by any proof of actual use. There was, indeed, a claim in the case that the registration had been obtained fraudulently. Without going so far as to find fraud, the court held that the bare allegation of intent to use, unsupported by any evidence of use or intended use, was insufficient to sustain any rights in this country. Although the court did not cite all of the precedents presented in the parties' briefing, Honda Motor Co. v. Winkelmann, 90 U.S.P.Q.2d 1660 (T.T.A.B. 2009), held that a foreign applicant such as SBM that cannot offer any tangible proof of intended use on all of the goods for which it seeks registration, fails to satisfy the required element of bona fide intent to use that a foreign applicant must meet. Similarly, in Boston Red Sox Baseball Club LP v. Sherman, 88 U.S.P.Q.2d 1581, 1587 (T.T.A.B. 2008), the Board held an application invalid where the applicant could not substantiate its plans to use the mark on any of an impossibly large number of goods specified. Accord, Jonathan M. Kelly v. Citystay Hotels, LLC, Cancellation No. 92/048,998 (April 28, 2010). In declining to enforce a registered mark without proof of use, the holding can be traced conceptually to the seminal decision, Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358, 364 (2d Cir. 1959), which refused injunctive relief to a trademark registrant in a geographic area where it had no presence. Yet, before In re Casino de Monaco Trademark Litigation, the principle had not been applied to marks registered under the more modern intent-to-use provisions of the Lanham Act. However, when Congress amended the Lanham Act to permit applications based on intent to use rather than actual use in commerce, it confirmed that “[a]n intent to use applicant should not be entitled to injunctive relief until it commences use. Without such use, applicant could not establish likelihood of confusion in the marketplace.” Report of the Trademark Review Commission, 77 Trademark Rep. 375, 403 (1987); USTA The Trademark Law Rev. Act of 1988, p. 43 (1989). Accord, Senate Judiciary Committee Report on S. 1883, S. Rep. No. 100-515, p. 30 (Sept. 15, 1988) (“[R]ights in a mark are not created unless and until the mark is used, and consumer confusion cannot arise without such use.”).

As evidence of use, SBM also alleged that “Casino de Monaco” was a nickname for “Casino de Monte Carlo.” However, the court rejected such evidence as being based merely on “self-serving affidavits” of Societe des Bains' own officers or employees. 2010 U.S. Dist. LEXIS 33950 at *23. The court stated “[t]here is no real evidence that the claimed nickname/moniker/umbrella term that signifies Casino de Monaco has ever existed in the United States.” Id.

Unregulated Use/Promotional and Advertising Activity

Because gaming is so highly regulated, a further issue (ultimately not addressed by the court) was whether unregulated use by SBM of either name, “Casino de Monaco” or “Casino de Monte Carlo,” in the United States would have been unlawful, therefore giving rise to no valid trademark rights. See, e.g., CreAgri, Inc. v. USANA Health Scis., Inc., 474 F.3d 626, 630 (9th Cir. 2007) (“use in commerce only creates trademark rights when the use is lawful.”). Rather, discrediting SBM's claimed evidence of use, the very fact that SBM had not used its claimed mark in this country showed it lacked any bona fide interest sufficient to maintain rights here.

Because of the ambiguity with which SBM pleaded rights in the claimed mark “Casino de Monte Carlo” the court reached no definitive conclusion as to whether SBM owned any rights in the United States. However, reviewing the evidence of alleged commercial use of “Casino de Monte Carlo” (such as opening lines of credit or issuing “gold cards” to U.S. gamblers to go play in Monaco), the court noted that “the activity in the record constitutes nothing more than promotional and advertising activity in the U.S.” 2010 U.S. Dist. LEXIS 33950 at *25. The court thus cited Buti v. Impressa Perosa, which held that mere advertising activity was insufficient to create trademark rights, and questioned whether SBM could possibly show such rights ' notwithstanding a prior favorable decision in the case, International Bancorp, LLC v. Societe de Bains de Mer et du Cercle, 329 F.3d 359 (4th Cir. 2003), which had upheld rights in the mark “Casino de Monte Carlo” notwithstanding an absence of use in this country. 2010 U.S. Dist. LEXIS 33950 at *24-25 n. 9. The court also noted that SBM does not enjoy exclusive use of the name “Monte Carlo” for casinos in the United States. Because the very definition of a trademark is its ability to identify goods or services coming from a single source of origin, Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739, 743 (2d Cir. 1998) (the significance of a claimed trademark is its “ability to identify goods sold under it as coming from one particular source”), the court noted that SBM is involved in an ongoing dispute with MGM Mirage, operator of the Las Vegas Monte Carlo. Said the court: “[w]ithout some resolution, the mark CASINO DE MONTE CARLO can be reasonably construed as not 'identifying one source of origin.'” 2010 U.S. Dist. LEXIS 33950 at *22 n. 8.

Conclusion

In sum, In re Casino de Monaco Trademark Litigation is a clear warning, even to well-known, long-established enterprises, that certain verities of U.S. trademark law and its basis in use in commerce continue to apply. As has been said, no trade, no mark. Without some skin in the game, perhaps there is no game.

Jonathan E. Moskin, a member of this newsletter's Board of Editors, is a partner in the New York office of Foley & Lardner LLP, and represented Playshare in In re Casino de Monaco Trademark Litigation.

As international businesses seek to expand across borders, including by availing themselves of legal tools (such as the Madrid Protocol) to register in the United States trademarks developed abroad, there is surprisingly little guidance as to what enforceable rights under U.S. law actually result from this process. However, as shown by the recent decision, In re Casino de Monaco Trademark Litigation, 07 Civ. 4802 DAB, 2010 U.S. Dist. LEXIS 33950 (S.D.N.Y. March 31, 2010), even well-established foreign companies can encounter difficulties enforcing rights not grounded in traditional U.S. trademark law principles of use in commerce.

There are perhaps few casino operators of longer standing than Societe de Bains de Mer et du Cercle des Etrangers a Monaco, (“SBM”) owner of the Casino de Monte Carlo (dating to 1866). However, in In re Casino de Monaco Trademark Litigation, the U.S. District Court for the Southern District of New York concluded that SBM possesses no rights in the United States in its registered trademark “Casino de Monaco” and placed in doubt what rights, if any, it might have in the United States in the name “Casino de Monte Carlo.” The court thus: 1) granted summary judgment dismissing SBM's claim for trademark infringement arising from defendant PlayShare's use of the name “Grand Monaco Casino” (subsequently renamed “Grand Mondial Casino”) for its online casino; 2) canceled SBM's registration for the trademark “Casino de Monaco,” and 3) without finally deciding the matter, held it unlikely that SBM could prove ownership in the United States of enforceable rights in the trademark “Casino de Monte Carlo.”

Use in Commerce

U.S. law is generally clear that no trademark rights arise without actual use in commerce. Mere registration of the name Casino de Monaco, without use or a bona fide intent to use, conferred no rights. The court followed such generally accepted principles in concluding that SBM “does not provide goods or services in the U.S., so that it has no rights in the mark.” 2010 U.S. Dist. LEXIS 33950 at *19-21, citing ITC, Ltd. v. Punchgini, Inc., 482 F.3d 135, 155 (2008). The court also followed the ruling in Buti v. Impressa Perosa, S.R.L., 139 F.3d 98 (2d Cir. 1998), that mere advertising and promotion of services in this country do not constitute the rendering of services under an accompanying mark sufficient to warrant trademark protection.

It is indeed, well-accepted that trademark rights are territorial, such that use of a mark in one country confers no rights in another country. See ITC Ltd., 482 F.3d at 155 (“[B]ecause a trademark has a separate legal existence under each country's laws, ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country. Rather, a mark owner must take the proper steps to insure that its rights to that mark are recognized in any country in which it seeks to assert them.”) Although the New York State Court of Appeals did conclude in ITC, Ltd. v. Punchgini, Inc., 880 N.E.2d 852 (N.Y. 2007), later proceedings, 518 F.3d 159 (2d Cir. 2008), as a matter of New York state law (not federal law) that deliberate and literal copying of a mark having substantial recognition in New York could constitute “misappropriation” under some circumstances (even if the copied mark had not been used in commerce in New York), the court in In re Casino de Monaco Trademark Litigation declined to apply this state law doctrine. Indeed, even if the name “Grand Monaco” is similar to “Casino de Monaco,” it is plainly not a literal copy. Nor was SBM able to show the name had achieved any recognition (much less great renown) in New York (or anywhere else in the United States).

Although SBM owned a U.S. registration for its claimed mark, “Casino de Monaco,” the registration was not accompanied by any proof of actual use. There was, indeed, a claim in the case that the registration had been obtained fraudulently. Without going so far as to find fraud, the court held that the bare allegation of intent to use, unsupported by any evidence of use or intended use, was insufficient to sustain any rights in this country. Although the court did not cite all of the precedents presented in the parties' briefing, Honda Motor Co. v. Winkelmann , 90 U.S.P.Q.2d 1660 (T.T.A.B. 2009), held that a foreign applicant such as SBM that cannot offer any tangible proof of intended use on all of the goods for which it seeks registration, fails to satisfy the required element of bona fide intent to use that a foreign applicant must meet. Similarly, in Boston Red Sox Baseball Club LP v. Sherman , 88 U.S.P.Q.2d 1581, 1587 (T.T.A.B. 2008), the Board held an application invalid where the applicant could not substantiate its plans to use the mark on any of an impossibly large number of goods specified. Accord, Jonathan M. Kelly v. Citystay Hotels, LLC, Cancellation No. 92/048,998 (April 28, 2010). In declining to enforce a registered mark without proof of use, the holding can be traced conceptually to the seminal decision, Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358, 364 (2d Cir. 1959), which refused injunctive relief to a trademark registrant in a geographic area where it had no presence. Yet, before In re Casino de Monaco Trademark Litigation, the principle had not been applied to marks registered under the more modern intent-to-use provisions of the Lanham Act. However, when Congress amended the Lanham Act to permit applications based on intent to use rather than actual use in commerce, it confirmed that “[a]n intent to use applicant should not be entitled to injunctive relief until it commences use. Without such use, applicant could not establish likelihood of confusion in the marketplace.” Report of the Trademark Review Commission, 77 Trademark Rep. 375, 403 (1987); USTA The Trademark Law Rev. Act of 1988, p. 43 (1989). Accord, Senate Judiciary Committee Report on S. 1883, S. Rep. No. 100-515, p. 30 (Sept. 15, 1988) (“[R]ights in a mark are not created unless and until the mark is used, and consumer confusion cannot arise without such use.”).

As evidence of use, SBM also alleged that “Casino de Monaco” was a nickname for “Casino de Monte Carlo.” However, the court rejected such evidence as being based merely on “self-serving affidavits” of Societe des Bains' own officers or employees. 2010 U.S. Dist. LEXIS 33950 at *23. The court stated “[t]here is no real evidence that the claimed nickname/moniker/umbrella term that signifies Casino de Monaco has ever existed in the United States.” Id.

Unregulated Use/Promotional and Advertising Activity

Because gaming is so highly regulated, a further issue (ultimately not addressed by the court) was whether unregulated use by SBM of either name, “Casino de Monaco” or “Casino de Monte Carlo,” in the United States would have been unlawful, therefore giving rise to no valid trademark rights. See, e.g., CreAgri, Inc. v. USANA Health Scis., Inc., 474 F.3d 626, 630 (9th Cir. 2007) (“use in commerce only creates trademark rights when the use is lawful.”). Rather, discrediting SBM's claimed evidence of use, the very fact that SBM had not used its claimed mark in this country showed it lacked any bona fide interest sufficient to maintain rights here.

Because of the ambiguity with which SBM pleaded rights in the claimed mark “Casino de Monte Carlo” the court reached no definitive conclusion as to whether SBM owned any rights in the United States. However, reviewing the evidence of alleged commercial use of “Casino de Monte Carlo” (such as opening lines of credit or issuing “gold cards” to U.S. gamblers to go play in Monaco), the court noted that “the activity in the record constitutes nothing more than promotional and advertising activity in the U.S.” 2010 U.S. Dist. LEXIS 33950 at *25. The court thus cited Buti v. Impressa Perosa, which held that mere advertising activity was insufficient to create trademark rights, and questioned whether SBM could possibly show such rights ' notwithstanding a prior favorable decision in the case, International Bancorp, LLC v. Societe de Bains de Mer et du Cercle, 329 F.3d 359 (4th Cir. 2003), which had upheld rights in the mark “Casino de Monte Carlo” notwithstanding an absence of use in this country. 2010 U.S. Dist. LEXIS 33950 at *24-25 n. 9. The court also noted that SBM does not enjoy exclusive use of the name “Monte Carlo” for casinos in the United States. Because the very definition of a trademark is its ability to identify goods or services coming from a single source of origin, Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739, 743 (2d Cir. 1998) (the significance of a claimed trademark is its “ability to identify goods sold under it as coming from one particular source”), the court noted that SBM is involved in an ongoing dispute with MGM Mirage, operator of the Las Vegas Monte Carlo. Said the court: “[w]ithout some resolution, the mark CASINO DE MONTE CARLO can be reasonably construed as not 'identifying one source of origin.'” 2010 U.S. Dist. LEXIS 33950 at *22 n. 8.

Conclusion

In sum, In re Casino de Monaco Trademark Litigation is a clear warning, even to well-known, long-established enterprises, that certain verities of U.S. trademark law and its basis in use in commerce continue to apply. As has been said, no trade, no mark. Without some skin in the game, perhaps there is no game.

Jonathan E. Moskin, a member of this newsletter's Board of Editors, is a partner in the New York office of Foley & Lardner LLP, and represented Playshare in In re Casino de Monaco Trademark Litigation.