Federal law, not tribal law, governs infringement case, says Ninth Circuit

United States of America

In Philip Morris USA Inc v King Mountain Tobacco Co Inc (Case 06-36066, January 20 2009), the US Court of Appeals for the Ninth Circuit has considered whether a tribal court had jurisdiction over a non-member’s federal trademark and related state law claims against tribal defendants - namely, King Mountain Tobacco Company Inc, a tribal corporation, its founders and members of the tribe (collectively King Mountain). The case presented the Ninth Circuit with duelling lawsuits that involved a complex mix of federal, state and tribal law.

Philip Morris USA Inc and King Mountain are competitors in the cigarette market. Philip Morris’s packaging for its flagship Marlboro brand consists of a distinctive 'red roof' design, featuring two red triangles that form a white peak with red above it. Philip Morris owns registrations with the US Patent and Trademark Office (USPTO) for several aspects of its package design. King Mountain’s cigarette packaging features an image of a snow-covered mountain against a red backdrop. King Mountain claims that its packaging depicts Mount Adams (a mountain in the US state of Washington) and that any resemblance with Philip Morris’s packaging is “inadvertent and incidental”. King Mountain applied to register its package design, but the USPTO refused registration based on two of Philip Morris’s registrations. Both companies’ cigarettes are offered on the Internet, on the reservation of other tribes and elsewhere.
 
Philip Morris sued King Mountain in federal court for trademark and trade dress infringement, unfair competition, dilution and passing off. King Mountain responded by seeking a declaratory judgment in tribal court that its packaging, design and sales did not infringe Philip Morris’s registrations. King Mountain also claimed that Philip Morris had “come upon the reservation to do business without permission of the Yakima Indian Nation, [was] not licensed thereby and, in doing so, submitted itself to jurisdiction of the tribal court". 
 
In response to the tribal court action, Philip Morris sought an injunction in federal court against the tribal court proceedings. King Mountain responded that Philip Morris had failed to exhaust tribal remedies and show a likelihood of success on the merits of its Lanham Act claims. The district court denied Philip Morris’s injunctions and granted King Mountain’s motion to stay the federal case pending the tribal court’s determination of its jurisdiction, reasoning that a “colourable question” existed as to whether the tribal court had jurisdiction over King Mountain’s tribal action for declaratory relief.
 
The Ninth Circuit reversed and remanded, finding that the tribal court did not have colourable jurisdiction over King Mountain’s tribal action insofar as it implicated Philip Morris’s federal trademark infringement claim against King Mountain. The court recognized that “the inherent sovereign powers of an Indian tribe do not extend to the activities of non-members of the tribe” unless:
  • the non-member has a consensual relationship with the tribe or its members; or
  • the non-member’s activity directly affects the tribe’s “political integrity, economic security, health or welfare”.
Applying principles of tribal jurisdiction, the court held that the tribal court lacked jurisdiction in this case, which arose out of off-reservation conduct by tribal members that allegedly violated non-tribal law and harmed non-members, because:
  • the allegedly infringing conduct took place off the reservation and Philip Morris was not in a consensual relationship with King Mountain; and
  • Philip Morris’s claims did not threaten the political integrity, economic security, health or welfare of the tribe. 
In view of the above, the court stated that exhaustion of tribal remedies would “serve no purpose other than delay.”
 
Tribal courts are not courts of general jurisdiction, and nothing in the Lanham Act suggests that Congress intended to expand tribal jurisdiction. Therefore, this case was properly decided in federal court applying federal law.
 
Emily B Brown, King & Spalding LLP, New York

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