Trademark Act offers protection for services provided outside the United States

In International Bancorp LLC v Société des Bains de Mer et du Cercle des Etrangers à Monaco, a split US Court of Appeals for the Fourth Circuit has upheld a district court's summary judgment decision that use of the mark CASINO DE MONTE CARLO by a foreign company in advertisements in the United States for services rendered to US citizens abroad can give rise to service mark protection in the United States.

Société des Bains de Mer et du Cercle des Etrangers à Monaco (SBM) owns a number of historic properties in Monaco including a casino that trades under the Monaco-registered mark CASINO DE MONTE CARLO. It was the defendant in a declaratory judgment action in which US-based International Bancorp sought a declaration that it was entitled to certain domain names incorporating the phrase 'Casino de Monte Carlo'. SBM counterclaimed that Bancorp's registration and use of the domain names violated its rights in the CASINO DE MONTE CARLO mark. The hotly contested issue in the case was whether SBM's activities in connection with its casino located in Monte Carlo were sufficient to give rise to protection under the US Trademark Act (also known as the Lanham Act). The district court held that since SBM operates a New York office that advertises its casino, and US citizens go to, and gamble in, the casino in Monaco, its mark is protected in the United States. Bancorp appealed to the Fourth Circuit.

In considering whether SBM's activities are sufficient to constitute 'use in commerce' as required by the Trademark Act, the majority of the Fourth Circuit first held that 'use in commerce' means all use that Congress can regulate under the Commerce Clause of the US Constitution and that this includes foreign trade. Next, the court relied on the Trademark Act's definition of 'use in commerce' to set out a two-prong test to help to determine whether the foreign trade in issue can be protected under the act. Under this test, a court must find both that (i) the mark was used or displayed in the sale or advertising of services to US consumers, and (ii) that the mark owner rendered services in foreign commerce, which includes commerce with US consumers even if the services take place outside the United States. The court reasoned that this test complies with the purpose of US trademark law because uses that fulfil this test would be sufficiently recognized in the United States to the extent that use of a similar mark would cause consumer confusion.

Applying this test to the case at hand, the court found that SBM's activities are sufficient to warrant protection because SBM advertises its services under the CASINO DE MONTE CARLO mark to people in the United States and actually provides those services under the mark to US citizens, albeit while they are in Monte Carlo. In reaching this holding, the Fourth Circuit indicated that it was rejecting precedent of the Trademark Trial and Appeal Board, in which the board had held that marks used to provide services in Canada to US citizens were not entitled to protection in the United States, even though advertisements of the services reached the United States. It remains to be seen, however, whether the board's decisions can be reconciled with the Fourth Circuit's ruling.

Karin Segall, Darby & Darby, New York