Lever Brothers Co. v. United States of America
877 F.2d 101, 11 U.S.P.Q. 2d (BNA) 1117, 278 U.S. App. D.C. 166 (1989)
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Rule of Law:
Section 42 of the Lanham Act bars the importation of foreign-made goods that bear a trademark identical to a valid U.S. trademark but are physically and materially different from the U.S. version, regardless of whether the foreign and domestic trademark holders are corporate affiliates.
Facts:
- Lever Brothers Company (Lever US), an American corporation, manufactures and sells 'Shield' deodorant soap and 'Sunlight' dishwashing liquid in the United States.
- Lever Brothers Ltd. (Lever UK), a British corporate affiliate of Lever US, manufactures and sells products in the United Kingdom under the identical 'Shield' and 'Sunlight' trademarks.
- The U.S. and UK versions of Shield soap are materially different; the U.S. version is formulated to lather more easily in conditions typical of U.S. showers and contains an anti-bacterial agent not present in the UK version.
- The U.S. and UK versions of Sunlight detergent are also materially different; the UK version is formulated for the high-mineral-content water common in Britain and performs poorly in the softer water typical of most of the U.S.
- Third parties purchased the UK versions of these products and imported them into the U.S. for sale, without the authorization of Lever US.
- American consumers purchased the imported UK products, believing they were the familiar U.S. versions, and subsequently expressed confusion and disappointment with the products' different performance and quality.
Procedural Posture:
- Lever US requested that the U.S. Customs Service block the importation of the UK-manufactured Shield and Sunlight products.
- The Customs Service refused to block the imports, citing its 'affiliate exception' regulation, 19 C.F.R. § 133.21(c)(2).
- Lever US sued the United States in the U.S. District Court for the District of Columbia, seeking a preliminary injunction to prevent the Customs Service from applying the affiliate exception to its products.
- The district court, a court of first instance, denied the preliminary injunction, finding the Customs Service's interpretation of the law to be correct.
- Lever US, as the appellant, appealed the district court's denial of the injunction to the U.S. Court of Appeals for the D.C. Circuit.
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Issue:
Does Section 42 of the Lanham Act require the U.S. Customs Service to bar the importation of foreign goods that are physically different from, but bear the same trademark as, goods produced by an affiliated U.S. manufacturer, despite a Customs regulation creating an 'affiliate exception'?
Opinions:
Majority - Williams
Yes. (Tentative) Section 42 of the Lanham Act presumptively requires the U.S. Customs Service to bar such imports, rendering the affiliate exception invalid as applied to physically different goods. The natural reading of § 42 is that it is intended to prevent consumer confusion and deceit. When identical trademarks have acquired different meanings and represent physically different products in different countries, the importation of the foreign version causes the precise confusion Congress sought to avoid. The existence of a corporate affiliation between the domestic and foreign producers does not eliminate or reduce the likelihood of this confusion, nor does it function as a constructive consent to importation. The court distinguishes this situation from 'gray market' cases involving physically identical goods, emphasizing that the material physical differences here are key to the finding of a statutory violation. Citing the territoriality principle from the 'face-powder trilogy' of cases, the court reasoned that a trademark's function is to signal a consistent level of quality and goodwill within a specific national market, a function that is undermined by the importation of physically different goods under the same mark.
Analysis:
This decision significantly challenges the broad application of the Customs Service's long-standing 'affiliate exception.' It establishes the 'material differences' test, shifting the legal analysis from corporate structure to the potential for consumer confusion based on the physical characteristics of the products. By prioritizing the territoriality of trademarks and their role in signaling domestic goodwill, the ruling provides U.S. trademark holders with a powerful tool to block imports from their own foreign affiliates if those goods differ from U.S. products. This precedent carves out a major exception to the traditional gray market doctrine and strengthens protection for U.S. companies that tailor products specifically for the American market.
