Steele v. Bulova Watch Company/Opinion of the Court

The issue is whether a United States District Court has jurisdiction to award relief to an American corporation against acts of trade-mark infringement and unfair competition consummated in a foreign country by a citizen and resident of the United States. Bulova Watch Company, Inc., a New York corporation, sued Steele, petitioner here, in the United States District Court for the Western District of Texas. The gist of its complaint charged that 'Bulova,' a trade-mark properly registered under the laws of the United States, had long designated the watches produced and nationally advertised and sold by the Bulova Watch Company; and that petitioner, a United States citizen residing in San Antonio, Texas, conducted a watch business in Mexico City where, without Bulova's authorization and with the purpose of deceiving the buying public, he stamped the name 'Bulova' on watches there assembled and sold. Basing its prayer on these asserted violations of the trade-mark laws of the United States, Bulova requested injunctive and monetary relief. Personally served with process in San Antonio, petitioner answered by challenging the court's jurisdiction over the subject matter of the suit and by interposing several defenses, including his due registration in Mexico of the mark 'Bulova' and the pendency of Mexican legal proceedings thereon, to the merits of Bulova's claim. The trial judge, having initially reserved disposition of the jurisdictional issue until a hearing on the merits, interrupted the presentation of evidence and dismissed the complaint 'with prejudice,' on the ground that the court lacked jurisdiction over the cause. This decision rested on the court's findings that petitioner had committed no illegal acts within the United States. With one judge dissenting, the Court of Appeals reversed; it held that the pleadings and evidence disclosed a cause of action within the reach of the Lanham Trade-Mark Act of 1946, 15 U.S.C. 1051 et seq., 15 U.S.C.A. § 1051 et seq. The dissenting judge thought that 'since the conduct complained of substantially related solely to acts done and trade carried on under full authority of Mexican law, and were confined to and affected only that Nation's internal commerce, (the District Court) was without jurisdiction to enjoin such conduct.' We granted certiorari, 343 U.S. 962, 72 S.Ct. 1060.

Petitioner concedes, as he must, that Congress in prescribing standards of conduct for American citizens may project the impact of its laws beyond the territorial boundaries of the United States. Cf. Foley Bros., Inc. v. Filardo, 1949, 336 U.S. 281, 284 285, 69 S.Ct. 575, 577, 93 L.Ed. 680; Blackmer v. United States, 1932, 284 U.S. 421, 436-437, 52 S.Ct. 252, 254, 76 L.Ed. 375; Branch v. Federal Trade Commission, 7 Cir., 1944, 141 F.2d 31. Resolution of the jurisdictional issue in this case therefore depends on construction of exercised congressional power, not the limitations upon that power itself. And since we do not pass on the merits of Bulova's claim, we need not now explore every facet of this complex and controversial Act.

The Lanham Act, on which Bulova posited its claims to relief, confers broad jurisdictional powers upon the courts of the United States. The statute's expressed intent is 'to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce; to protect registered marks used in such comme(r)ce from interference by State, or territorial legislation; to protect persons engaged in such commerce against unfair competition; to prevent fraud and deception in such commerce by the use of reproductions, copies, counterfeits, or colorable imitations of registered marks; and to provide rights and remedies stipulated by treaties and conventions respecting trade-marks, trade names, and unfair competition entered into between the United States and foreign nations.' § 45, 15 U.S.C. § 1127, 15 U.S.C.A. § 1127. To that end, § 32(1) holds liable in a civil action by a trade-mark registrant '(a)ny person who shall, in commerce,' infringe a registered trade-mark in a manner there detailed. 'Commerce' is defined as 'all commerce which may lawfully be regulated by Congress.' § 45, 15 U.S.C. § 1127, 15 U.S.C.A. § 1127. The district courts of the United States are granted jurisdiction over all actions 'arising under' the Act, § 39, 15 U.S.C. § 1121, 15 U.S.C.A. § 1121, and can award relief which may include injunctions, 'according to the principles of equity,' to prevent the violation of any registrant's rights. § 34, 15 U.S.C. § 1116, 15 U.S.C.A. § 1116.

The record reveals the following significant facts which for purposes of a dismissal must be taken as true: Bulova Watch Company, one of the largest watch manufacturers in the world, advertised and distributed 'Bulova' watches in the United States and foreign countries. Since 1929, its aural and visual advertising, in Spanish and English, has penetrated Mexico. Petitioner, long a resident of San Antonio, first entered the watch business there in 1922, and in 1926 learned of the trade-mark 'Bulova.' He subsequently transferred his business to Mexico City and, discovering that 'Bulova' had not been registered in Mexico, in 1933 procured the Mexican registration of that mark. Assembling Swiss watch movements and dials and cases imported from that country and the United States, petitioner in Mexico City stamped his watches with 'Bulova' and sold them as such. As a result of the distribution of spurious 'Bulovas,' Bulova Watch Company's Texas sales representative received numerous complaints from retail jewelers in the Mexican border area whose customers brought in for repair defective 'Bulovas' which upon inspection often turned out not to be products of that company. Moreover, subsequent to our grant of certiorari in this case the prolonged litigation in the courts of Mexico has come to an end. On October 6, 1952, the Supreme Court of Mexico rendered a judgment upholding an administrative ruling which had nullified petitioner's Mexican registration of 'Bulova.'

On the facts in the record we agree with the Court of Appeals that petitioner's activities, when viewed as a whole, fall within the jurisdictional scope of the Lanham Act. This Court has often stated that the legislation of Congress will not extend beyond the boundaries of the United States unless a contrary legislative intent appears. E.g., Blackmer v. United States, 1932, 284 U.S. 421, 437, 52 S.Ct. 252, 254, 76 L.Ed. 375; Foley Bros., Inc. v. Filardo, 1949, 336 U.S. 281, 285, 69 S.Ct. 575, 577, 93 L.Ed. 680. The question thus is 'whether Congress intended to make the law applicable' to the facts of this case. Ibid. For 'the United States is not debarred by any rule of international law from governing the conduct of is own citizens upon the high seas or even in foreign countries when the rights of other nations or their nationals are not infringed. With respect to such an exercise of authority there is no question of international law, but solely of the purport of the municipal law which establishes the duty of the citizen in relation to his own government.' Skiriotes v. State of Florida, 1941, 313 U.S. 69, 73, 61 S.Ct. 924, 927, 85 L.Ed. 1193. As Mr. Justice Minton, then sitting on the Court of Appeals, applied the principle in a case involving unfair methods of competition: 'Congress has the power to prevent unfair trade practices in foreign commerce by citizens of the United States, although some of the acts are done outside the territorial limits of the United States.' Branch v. Federal Trade Commission, 7 Cir., 1944, 141 F.2d 31, 35. Nor has this Court in tracing the commerce scope of statutes differentiated between enforcement of legislative policy by the Government itself or by private litigants proceeding under a statutory right. Thomsen v. Cayser, 1917, 243 U.S. 66. 37 S.Ct. 353, 61 L.Ed. 597; Mandeville Island Farms v. American Crystal Sugar Co., 1948, 334 U.S. 219, 68 S.Ct. 996, 92 L.Ed. 1328; cf. Vermilya-Brown Co. v. Connell, 1948, 335 U.S. 377, 69 S.Ct. 140, 93 L.Ed. 76; Foley Bros., Inc., v. Filardo, supra. The public policy subserved is the same in each case. In the light of the broad jurisdictional grant in the Lanham Act, we deem its scope to encompass petitioner's activities here. His operations and their effects were not confined within the territorial limits of a foreign nation. He bought component parts of his wares in the United States, and spurious 'Bulovas' filtered through the Mexican border into this country; his competing goods could well reflect adversely on Bulova Watch Company's trade reputation in markets cultivated by advertising here as well as abroad. Under similar factual circumstances, courts of the United States have awarded relief to registered trademark owners, even prior to the advent of the broadened commerce provisions of the Lanham Act. George W. Luft Co. v. Zande Cosmetic Co., 2 Cir., 1944, 142 F.2d 536; Hecker H-O Co. v. Holland Food Corp., 2 Cir., 1929, 36 F.2d 767; Vacuum Oil Co. v. Eagle Oil Co., C.C.1907, 154 F. 867, affirmed, C.C.1908, 162 F. 671. Cf. Morris v. Altstedter, 93 Misc. 329, 156 N.Y.S. 1103, affirmed, 1916, 173 App.Div. 932, 158 N.Y.S. 1123. Even when most jealously read, that Act's sweeping reach into 'all commerce which may lawfully be regulated by Congress' does not constrict prior law or deprive courts of jurisdiction previously exercised. We do not deem material that petitioner affixed the mark 'Bulova' in Mexico City rather than here, or that his purchases in the United States when viewed in isolation do not violate any of our laws. They were essential steps in the course of business consummated abroad; acts in themselves legal lose that character when they become part of an unlawful scheme. United States v. Bausch & Lomb Optical Co., 1944, 321 U.S. 707, 720, 64 S.Ct. 805, 812, 88 L.Ed. 1024; United States v. Univis Lens Co., 1942, 316 U.S. 241, 254, 62 S.Ct. 1088, 1095, 86 L.Ed. 1408. '(I)n such a case it is not material that the source of the forbidden effects upon * *  * commerce arises in one phase or another of that program.' Mandeville Island Farms v. American Crystal Sugar Co., 1948, 334 U.S. 219, 237, 68 S.Ct. 996, 1006, 92 L.Ed. 1328. Cf. United States v. Frankfort Distilleries, 1945, 324 U.S. 293, 297 298, 65 S.Ct. 661, 663-664, 89 L.Ed. 951. In sum, we do not think that petitioner by so simple a device can evade the thrust of the laws of the United States in a privileged sanctuary beyond our borders.

American Banana Co. v. United Fruit Co., 1909, 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed. 826, compels nothing to the contrary. This Court there upheld a Court of Appeals' affirmance of the trial court's dismissal of a private damage action predicated on alleged violations of the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note. The complaint, in substance, charged United Fruit Company with monopolization of the banana import trade between Central America and the United States, and with the instigation of Costa Rican governmental authorities to seize plaintiff's plantation and produce in Panama. The Court of Appeals reasoned that plaintiff had shown no damage from the asserted monopoly and could not found liability on the seizure, a sovereign act of another nation. This Court agreed that a violation of American laws could not be grounded on a foreign nation's sovereign acts. Viewed in its context, the holding in that case was not meant to confer blanket immunity on trade practices which radiate unlawful consequences here, merely because they were initiated or consummated outside the territorial limits of the United States. Unlawful effects in this country, absent in the posture of the Banana case before us, are often decisive; this Court held as much in Thomsen v. Cayser, 1917, 243 U.S. 66, 37 S.Ct. 353, 61 L.Ed. 597, and United States v. Sisal Sales Corp., 1927, 274 U.S. 268, 47 S.Ct. 592, 71 L.Ed. 1042. As in Sisal, the crux of the complaint here is 'not merely of something done by another government at the instigation of private parties'; petitioner by his 'own deliberate acts, here and elsewhere, * *  * brought about forbidden results within the United States.' 274 U.S. at page 276, 47 S.Ct. at page 594, 71 L.Ed. 1042. And, unlike the Banana case, whatever rights Mexico once conferred on petitioner its courts now have decided to take away.

Nor do we doubt the District Court's jurisdiction to award appropriate injunctive relief if warranted by the facts after trial. 15 U.S.C. §§ 1116, 1121, 15 U.S.C.A. §§ 1116, 1121. Mexico's courts have nullified the Mexican registration of 'Bulova'; there is thus no conflict which might afford petitioner a pretext that such relief would impugn foreign law. The question, therefore, whether a valid foreign registration would affect either the power to enjoin or the propriety of its exercise is not before us. Where, as here, there can be no interference with the sovereignty of another nation, the District Court in exercising its equity powers may command persons properly before it to cease or perform acts outside its territorial jurisdiction. State of New Jersey v. City of New York, 1931, 283 U.S. 473, 51 S.Ct. 519, 75 L.Ed. 1176; Massie v. Watts, 1810, 6 Cranch 148, 3 L.Ed. 181; The Salton Sea Cases, 9 Cir., 1909, 172 F. 792; cf. United States v. National Lead Co., 1947, 332 U.S. 319, 351-352, 363, 67 S.Ct. 1634, 1649, 1655, 91 L.Ed. 2077.

Affirmed.

Mr. Justice BLACK took no part in the decision of this case.

Mr. Justice REED, with whom Mr. Justice DOUGLAS joins, dissenting.