Beyond Belmora: foreign TM owner proceeds under Lanham Act and Inter-American Convention

S.A.S. v. Latinfood U.S. Corp., Civ. No. 16-6576, —
F.Supp.3d —-, 2017 WL 6940696 (D.N.J. Dec. 29, 2017)
Industria, a Colombian food corporation and Colombian owner
of the Zenú and Ranchera marks, sued Latinfood, for reasons you can guess when
you learn that they are doing business in the US as Zenú Products Co.  Applying Belmora,
the court allows the various Lanham Act claims to proceed, and cites Christine
Haight Farley’s work
in also allowing claims under the Inter-American
Convention for Trademark and Commercial Protection (IAC).  Copyright claims weren’t discussed in the
motion to dismiss.
The Zenú mark “has been used for more than sixty years to
identify meat, sausage, beans and other packaged food products in Colombia and
elsewhere,” while the Ranchera mark “has been used extensively in Colombia and
elsewhere for more than 25 years, and is among the most well-known trademarks
for sausages and meat products.” Industria claimed fame across Latin America
and alleged that people “residing in Colombia, individuals who have travelled
to Colombia and individuals who have moved from Colombia to the United States
are familiar with the [Zenú] and Ranchera trademarks and [Industria’s] food
products sold under the [Zenú] and Ranchera marks.” (Id.)
Industria Ranchera

Part of Industria website

Industria’s Zenú products include “the [Zenú] mark in a red
stylized font underlined by a brush-stroke type line against a white
background.” Words indicating the type of food contained in the packaging are
“often written diagonally underneath the [Zenú] mark.” Canned products an
additional “thick colorful band at the bottom of the label where additional
information such as the weight or quantity of the product is conveyed in white
type.” Industria maintains a website “that is accessible by the public,
including consumers in the United States, at http://www.zenu.com.co.”
Industria’s Ranchera mark is “always displayed in a red
‘western’ or ‘rancher-inspired’ font which is then outlined first in white and
then in black.” It “curves slightly upward in the middle of the word.” A “rancher
theme” is used across the Ranchera packaging.  
Industria has numerous relevant trademark registrations in
Colombia, and an International Registration from 2014 from WIPO; it filed an
application to extend the IR at the PTO in 2014.  Prior US registrations have lapsed.  In 2014, Industria also filed a 44(e)
application for “ZENÚ (Stylized)” for various food products which was barred by
Latinfood’s US-registered Zenú mark.  Industria
also applied in the US for “RANCHERA (stylized)” for various meats, based on
Sections 1(b) and 44(e), in 2016.
Latinfood allegedly began copying Industria’s marks around
2011.  Latinfood allegedly touted its
possession of “ ‘an exclusive distribution and importing rights agreement for
the tri-state area’ with a major product manufacturer in Colombia.” Latinfood
allegedly uses the identical stylized logo and trade dress for Zenú, as well as
its trade dress, and its website, http://www.zenu.us.com, “closely mimics both the
domain name and trade dress presented on [Industria]’s website,
http://www.zenu.com.co.” The labels were also allegedly substantially similar to
Industria’s copyrighted labels.  Indeed,
Latinfood allegedly attempted to buy 400,000 Zenú labels from Industria’s own Zenú
label provider in Medellin.
Latinfood website: note Ranchera listing 3d row left

Latinfood applied to register the Zenú mark for various
meats in the US in 2013, claiming 2011 as its year of first use. Industria alleged
that this was fraudulent and in bad faith, and that Latinfood’s claimed
specimens were in fact Industria products. Latinfood’s Zenú registration has been
cited by examiners under 2(d) in Office Actions blocking Industria’s
applications, allegedly preventing it from offering its goods for sale in the
US under the Zenú mark.  (It’s legal to
sell stuff without registering the marks, but I see why there’s a problem.) In
2014, Industria began a cancellation proceeding before the TTAB, which is still
pending.  (One suspects that Belmora played a role in encouraging
Industria to move to litigation.) 
A similar story can be told for the Ranchera mark, though
Latinfood’s application for registration was ultimately denied by the PTO
because of a third-party registration. However, Latinfood is allegedly still
selling products bearing the mark.
Industria further alleged that the Latinfood product labels
falsely suggested affiliation with Industria’s business in Colombia, for
example by identifying the company as “Zenu Products US Inc.” instead of
Latinfood, suggesting that it’s a US-based Industria affiliate. The labels also
include a “linea de exportation” designation, meaning “export line” in English,
further implying “that Latinfood products are produced outside of the United
States, much like [Industria]’s products from Colombia would be.” Latinfood
products are allegedly often “featured in the import/foreign sections of the
groceries in which they are sold and are sold alongside products from other
Latin American companies.”  Latinfood
sales representatives allegedly advised store owners that Latinfood has full
rights to the distribution of ZENÚ- and RANCHERA-marked products, misleading
them into believing that they’re dealing with Industria.  The suggestion that the products are imported
was allegedly also false because a majority of the goods were manufactured and
labeled in the US. 
In addition, www.zenu.us.com
was allegedly “confusingly similar” to Industria’s www.zenu.com.co, and described Latinfood’s products
as being part of “una deliciosa tradición,” suggesting an affiliation with Industria’s
sixty year old brand.
Under Belmora, the
Lanham Act claims were ok even though Industria didn’t allege its own use in
commerce in the US of the Zenú and Ranchera marks.  Belmora
wasn’t binding on this court, but the judge found its reasoning persuasive;
there was no “use in commerce” requirement in §43(a), only the Lexmark requirement of standing to bring
false advertising, trade dress infringement, and false association claims,
which was sufficiently pled, even if it might ultimately be difficult to prove.  So too with the claims for cancellation of
Latinfood’s registered mark for fraud. 
Industria sufficiently alleged that Latinfood’s sale of allegedly “sub-par
and noninspected products” harmed Industria by altering consumers’ estimation
of products using the mark and damaging its reputation.  Proximate cause was sufficiently alleged by
allegations that Latinfood targeted Colombians and other consumers familiar
with Industria’s mark, damaged Industria’s goodwill by selling subpar/different
products, and foreclosed Industria’s registration and use of the Zenú mark in
the United States.
Separately, the court specifically rejected any attempt to
impose any more rigorous pleading standard on a Lanham Act false advertising claim
than Iqbal/Twombly requires.  A 1985
case in the Third Circuit was probably no longer good law.  But regardless of the standard, Industria satisfied
it. Industria’s allegations about Latinfood’s use of “Zenu Products US Inc.,” its
use of www.zenu.us.com, its labeling of
its products as imported and representations to have an exclusive distribution
and importing rights agreement with a major product manufacturer from Colombia,
and its allegedly false importation labels for food from manufacturers in the
United States sufficed to state a claim.
The court also held that the IAC creates private rights of
action.  Though there is a presumption
that treaties, even those labeled as “self-executing,” do not create private
rights, the Supreme Court has already held that the IAC is self-executing, and
the court proceeded to examine the terms of the treaty itself, which “was the
culmination of the efforts of many years to secure the cooperation of the
American States in uniform trade mark protection.”  Beneficiaries under the Convention are
defined as (1) nationals of contracting states, and (2) domiciled foreigners
who own a manufacturing or commercial establishment or an agricultural
development in any of the contracting states. The language of the IAC strongly
supported the conclusion that it was intended to create private rights to those
benefited parties.  Even if knowledge of
the other mark were a required element under the IAC, which was not supported
by any authority, Industria sufficiently alleged such knowledge.

Latinfood also made a number of arguments about the
interplay between the IAC and Section 44 of the Lanham Act.  In particular, the last clause in Article 7
of the IAC says “the opposer may claim for himself the preferential right to
use such mark in the country where the opposition is made or priority to
register or deposit it in such country, upon
compliance with the requirements established by the domestic legislation in
such country and by this Convention
” (emphasis added).  Latinfood argued that Industria couldn’t
bring an Article 7 claim because it didn’t comply with §44(b) and (d).  However, international treaties “may grant
rights broader than those granted by domestic law, including the Lanham Act.
Contrariwise, Section 44(d) is not the only potentially applicable section of
the Lanham Act.”  In addition, Section
44(h) of the Lanham Act limited remedies to those “appropriate in repressing
acts of unfair competition,” and Latinfood argued that Industria’s claims didn’t
fall within Chapter IV of the IAC, which is the Chapter devoted to “Repression
of Unfair Competition.” “The resolution of these Section 44 issues will depend
on the development of the facts and the precise contours of the overlapping (or
not overlapping) claims under U.S. law and the treaty. This case is going
forward in any event. These may turn out to be redundant claims, alternative
claims, or supplementary claims; it simply is not clear at present.” 

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