A v. Ex Rel. Versace, Inc. v. Gianni Versace, S.P.A.
2001 WL 13342, 126 F. Supp. 2d 328, 2001 U.S. Dist. LEXIS 39 (2001)
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Rule of Law:
A U.S. court may apply the Lanham Act and its own injunctions extraterritorially to a defendant's conduct when (1) the defendant is a U.S. citizen or constructive citizen, (2) there is no conflict with foreign trademark law, and (3) the defendant's conduct has a substantial effect on United States commerce.
Facts:
- Gianni Versace, S.p.A. ('Gianni') is a world-famous design house that owns trademarks incorporating the name 'Versace' and its 'Medusa' logo.
- Alfredo Versace ('Mr. Versace'), an Italian citizen and long-time U.S. resident, was involved with A.V. By Versace, Inc. ('A.V.') and Foldom International (U.S.A.), Inc. ('Foldom').
- A.V. manufactured and sold clothing and athletic shoes bearing the trademarks 'A.V. By Versace' and 'Alfredo Versace'.
- Gianni's attorneys sent a 'cease and desist' letter to Kinney Shoe Corporation, a customer of A.V., alleging that its sale of A.V.'s products infringed Gianni's trademarks.
- Mr. Versace and Foldom were manufacturing, selling, and licensing products including suits, jeans, and handbags bearing names like 'AV Versace' and 'Alfredo Versace'.
- Mr. Versace and Foldom operated from the same office address, phone number, and fax number in New York City.
- Foldom was the importer of record for approximately $90,000 worth of goods bearing the 'Alfredo Versace' name for Mr. Versace.
- Mr. Versace solicited purchasers for goods bearing the allegedly infringing marks from his showroom in New York City and orchestrated his foreign activities from this location.
Procedural Posture:
- A.V. By Versace, Inc. sued Gianni Versace, S.p.A. and Alfredo Versace in the U.S. District Court for the Southern District of New York (the 'A.V. Action'), seeking a declaratory judgment.
- Gianni filed a separate lawsuit in the same court against Alfredo Versace and Foldom International (the 'Foldom Action') for trademark infringement, requesting a preliminary injunction.
- The U.S. District Court (Judge Stein) granted Gianni's request and issued a preliminary injunction against Alfredo Versace and Foldom.
- Counsel for Mr. Versace and Foldom proposed adding the phrase 'in the United States' to several paragraphs of the injunction to limit its geographic scope, but the judge signed the injunction without these additions.
- Defendants later requested a conference to clarify the injunction's extraterritorial application, but the request was denied.
- The U.S. District Court (Judge Leisure) consolidated the 'A.V.' and 'Foldom' actions.
- Gianni filed a motion to modify the preliminary injunction pursuant to Rule 60(a), asking the court to clarify that the injunction was intended to apply extraterritorially.
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Issue:
Does a preliminary injunction issued by a U.S. district court in a trademark infringement case under the Lanham Act apply to a defendant's conduct outside the United States?
Opinions:
Majority - Leisure, District Judge
Yes, the preliminary injunction applies to the defendant's conduct outside the United States. A court has the power to apply an injunction extraterritorially under the Lanham Act when the defendant's foreign conduct is subject to U.S. jurisdiction. The court clarified that the original injunction was intended to apply globally, based on the prior judge's rejection of proposed geographic limitations, the grammatical structure of the order, and the defendant's own actions in notifying foreign licensees. The court then justified this extraterritorial reach by applying the three-part 'Vanity Fair' test. First, although Mr. Versace is an Italian citizen, he is a 'constructive U.S. citizen' for this analysis because he has resided and done business in the U.S. for decades and is the controlling force behind his co-defendant, a U.S. corporation. Second, no conflict with foreign law exists because Mr. Versace failed to provide evidence of valid trademark rights abroad, while Gianni demonstrated successful opposition to his trademark applications in other countries. Third, Mr. Versace's conduct has a substantial effect on U.S. commerce because his entire infringing scheme, including foreign activities, was orchestrated from his New York office, infringing goods were imported into the U.S., and his actions created a high likelihood of consumer confusion that harmed Gianni's reputation and business.
Analysis:
This opinion reinforces the significant extraterritorial reach of the Lanham Act and the injunctive power of U.S. federal courts in trademark disputes. The court's application of the 'constructive citizen' doctrine to a resident alien who is the controlling force behind a U.S. corporation is a key development, preventing individuals from using foreign citizenship as a shield while operating from within the U.S. The decision solidifies that orchestrating foreign infringement from U.S. soil, combined with consumer confusion and harm to a U.S. trademark holder's reputation, is sufficient to meet the 'substantial effect' on commerce requirement. This provides a strong precedent for trademark holders seeking to enforce their rights globally against infringers based in the United States.
