Vanity Fair Mills, Inc. v. The T. Eaton Co. Limited and John David Eaton
234 F.2d 633 (1956)
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Rule of Law:
The Lanham Act does not apply extraterritorially to the acts of a foreign national in their home country when those acts are done pursuant to a presumably valid trademark registration under that country's laws.
Facts:
- Plaintiff Vanity Fair Mills, Inc., a U.S. corporation, has manufactured and sold women's underwear under the 'Vanity Fair' trademark in the U.S. since 1914 and in Canada since 1917.
- Defendant The T. Eaton Co., a Canadian corporation, applied for and was granted a trademark registration for 'Vanity Fair' in Canada in 1915 for various apparel.
- In 1919, Canadian officials rejected Vanity Fair Mills' application to register the 'Vanity Fair' mark for underwear, citing Eaton's prior registration.
- In 1933, Eaton amended its Canadian registration to explicitly include 'women's underwear, corsets, girdles and other foundation garments.'
- From 1945 to 1953, Eaton ceased using its own mark and instead purchased, advertised, and sold Vanity Fair Mills' branded merchandise through its New York office.
- In 1953, Eaton resumed using its own 'Vanity Fair' trademark on cheaper, Canadian-made underwear, sold it alongside Vanity Fair Mills' merchandise, and threatened a Canadian competitor with infringement suits for selling Vanity Fair Mills' products.
- Eaton has also advertised and sold underwear via mail order to some customers residing in the United States.
Procedural Posture:
- Vanity Fair Mills, Inc. sued The T. Eaton Co. in the U.S. District Court for the Southern District of New York, alleging trademark infringement and unfair competition in both the U.S. and Canada.
- Eaton filed a motion to dismiss, arguing the court lacked subject-matter jurisdiction over the Canadian claims and was an inconvenient forum.
- The district court dismissed the complaint in its entirety, holding that it lacked subject-matter jurisdiction over the Canadian issues and, alternatively, that it was an inconvenient forum for those claims.
- The district court granted leave for Vanity Fair Mills to file an amended complaint stating only its American claims.
- Vanity Fair Mills chose to stand on its original complaint and appealed the dismissal to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Does the Lanham Act grant a U.S. district court subject-matter jurisdiction to hear claims of trademark infringement and unfair competition committed by a Canadian corporation within Canada, where the Canadian corporation holds a presumably valid Canadian trademark registration for the mark in question?
Opinions:
Majority - Waterman, Circuit Judge.
No. The Lanham Act's remedies should not be given extraterritorial application against a foreign citizen acting under a presumably valid trademark in their home country. The court's reasoning rested on three main points. First, the International Convention for the Protection of Industrial Property (Paris Union) operates on the principle of national treatment, meaning each member nation applies its own territorial laws to foreign nationals; it does not grant U.S. law extraterritorial reach. Second, the Supreme Court's decision in Steele v. Bulova Watch Co., which did apply the Lanham Act extraterritorially, is distinguishable. The Bulova court emphasized three factors: (1) a substantial effect on U.S. commerce, (2) the defendant being a U.S. citizen, and (3) the absence of a conflict with foreign law. Here, while the first factor may be present, the defendant is a Canadian citizen and, crucially, holds a presumably valid Canadian trademark, creating a direct conflict with Canadian law. The court found the absence of the second two factors to be 'fatal' to the plaintiff's claim. Finally, U.S. district courts should not determine the validity of trademarks granted by foreign governments, as doing so would invite conflict with the administrative and judicial officers of those nations. Therefore, the complaint did not state a claim under U.S. law for the acts committed in Canada.
Analysis:
This decision significantly limits the extraterritorial reach of the Lanham Act by establishing key conditions for its application abroad. It distinguishes the precedent set in Steele v. Bulova Watch Co., creating a de facto test that emphasizes the defendant's citizenship and the existence of a valid foreign trademark registration. The ruling solidifies the principle that trademark rights are territorial and reinforces international comity by requiring that challenges to foreign trademark validity be brought in the courts of that foreign nation. This precedent makes it more difficult for U.S. companies to sue foreign competitors in U.S. courts for infringement that occurs entirely within the foreign competitor's home country.
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