On Sept. 26, the Ninth Circuit found that a mark can be counterfeit even when the genuine mark is not used on the same goods.
Defendant Able Time, Inc., imported a shipment of watches bearing the mark TOMMY, which is a registered trademark owned by Tommy Hilfiger Licensing, Inc. The Bureau of Customs and Border Protection seized the watches pursuant to the Tariff Act, which authorizes seizure of any “merchandise bearing a counterfeit mark.”
The punch line is Tommy Hilfiger did not make or sell watches at the time of the seizure. It also did not own any trademark registration for TOMMY in International Class 14, the class that includes watches.
Given these facts, the Able Time argued it was not possible for it to counterfeit Tommy Hilfiger’s mark.
The Central District of California agreed, and granted Able Time’s motion for summary judgment finding the civil penalty that Customs imposed was unlawful.
The Ninth Circuit, however, reversed, finding it did not matter under the Tariff Act that Tommy Hilfiger did not make watches bearing the subject mark. What mattered, the court found, was that Tommy Hilfiger owned a registration for the mark and Able Time’s use of the mark on watches created a likelihood of confusion.
In the court’s words:
“The district court granted summary judgment to Able Time in large part because it believed that the government’s interpretation ran afoul of the principle that a trademark is not a ‘right in gross.’ This principle holds that a registered trademark can be used by someone other than its owner so long as the use does not confuse the public, because trademarks are tied to their use on products and do not exist in the abstract. The statutory scheme at issue here sufficiently connects the marks and the goods on which they are used. The offending merchandise must ‘copy or simulate’ a registered mark, which means that the watches must be likely to cause confusion in order for a civil penalty to apply. This requirement prevents a step backwards towards a ‘right in gross’ theory of trademark because it requires the owner to use the registered mark. If the owner did not use the mark, then the public would be unlikely to confuse it with the offending mark.”
Based on this reasoning, the court reversed and remanded for the district court to determine whether: (1) the mark on the watches is identical to or substantially indistinguishable from the registered mark, and (2) whether the offending mark copies or simulates the registered mark pursuant, which amounts to the traditional likelihood of confusion test for infringement.
The case cite is U.S. v. Able Time, Inc., __ F.3d. __, 2008 WL 4350027, No. 06-56033 (9th Cir.) (Sept. 25, 2008).