IP Law Daily, TRADEMARK—E.D. Ky.: Allegedly infringing mark had not yet been used in U.S. commerce, (Sep 15, 2022)

By Donielle Tigay Stutland, J.D.

An American affiliate of a Canadian company had not yet “used” the mark NYLENIUM in U.S. commerce, so it could not infringe on registered mark NYLENE.

A Kentucky district court dismissed a trademark infringement action against a Canadian manufacturer’s American subsidiary and its executive officer, concluding that the American entity had not used its allegedly infringing mark in commerce in the United States. The court also did not have extraterritorial jurisdiction over the executive officer, a Canadian citizen, whose allegedly infringing actions took place in Canada (Polymeric Resources Corp. v. Pounds of Plastic, LLC, September 12, 2022, Van Tatenhove, G.).

Polymeric Resources Corporation brought a lawsuit for trademark infringement under the Lanham Act and Kentucky law, as well as for unfair competition against Pounds of Plastic, LLC and its corporate officer, Richard Pounds. Polymeric sought a declaratory judgment and injunction arguing that consumers are likely to confuse its registered mark “NYLENE,” which used in connection with its nylon resin products, with Pounds of Plastic’s mark “NYLENIUM,” also used for nylon resin products, which has been used by a Canadian affiliated entity of Pounds of Plastic since 2006.

Mr. Pounds was previously employed by Polymeric, and the related Canadian entity, Pounds of Plastic, Inc., has coexisted with Polymeric for years. However, the litigation began when the American entity filed an application with the USPTO seeking to register its NYLENIUM mark. Polymeric seeks a declaratory judgment and permanent injunction precluding both American Pounds of Plastic and Richard Pounds from using the NYLENIUM mark in the United States, asserting that its use is likely to cause consumer confusion with Polymeric’s NYLENE trademark.

Trademark infringement. The court began its analysis by noting the factors under the Lanham Act as well as under Kentucky law pertaining to a likelihood of consumer confusion. However, the court indicated that it need not analyze such factors, as the court concluded that American Pounds of Plastic had not “used” the NYLENIUM mark in commerce and that, as a result, no likelihood of confusion with NYLENE yet exists.

The court noted that both parties agreed that American Pounds of Plastic “has yet to start business operations at the Kentucky facility,” and has “made no sales of any products in the United States […] specifically, no sales under NYLENIUM.” Polymeric asserted that American Pounds of Plastic and Canadian Pounds of Plastic share a webpage, and that use of a trademark on a web page for advertising purposes constitutes “use in commerce” under the Lanham Act. However, the court found the facts proved otherwise. Both deposition testimony and meta-tags of the website persuaded the court that the website was for Canadian Pounds of Plastic and Polymeric had not proved that any advertisement on the website of NYLENIUM was on behalf of American Pounds of Plastic, and not solely on behalf of Canadian Pounds of Plastic. The court concluded that only the Canadian entity has advertised online using the NYLENIUM trademark.

The court also rejected Polymeric’s assertion that Mr. Pounds had used the NYLENIUM mark in email correspondence with other American companies on behalf of American Pounds of Plastic. The evidence showed that the inquiries of American prospective clients were before the formation of the American entity. The court dismissed Pounds of Plastic, LLC from the case, finding that all of the evidence showing the use of NYLENIUM in commerce related back to the Canadian entity, which was not a party to the suit.

Lanham Act liability of corporate officer. The court next looked at whether Mr. Pounds could be found individually liable as a corporate officer under the Lanham Act. The court concluded that Mr. Pounds must also be dismissed because the court does not have extraterritorial jurisdiction over a Canadian citizen. The court also indicated that most, if not all, of the corporate officer’s allegedly infringing conduct occurred on behalf of Canadian Pounds of Plastic while outside of the United States.

The court reviewed the Vanity Fair factors to determine whether the extraterritorial reach of the Lanham Act would apply to the actions of a foreign corporate officer, especially considering that officers may be deemed personally liable for trademark infringement. First, the court noted that Vanity Fair factor number one weighs against a finding of extraterritorial jurisdiction because Mr. Pounds is a Canadian citizen. With regard to the second factor, whether there is a conflict between the defendant’s trademark rights under non-U.S. law and the plaintiff’s trademark rights under U.S. law, the court acknowledged a circuit split. Nonetheless, the court noted that there is “an ongoing trademark dispute or other proceeding abroad” as Polymeric has also sued in Canada over the issue. As such, the court found this factor to be neutral. Looking at the third Vanity Fair factor, the court determined that Mr. Pounds’s conduct has not substantially affected American commerce and Polymeric failed to show that Mr. Pounds’s actions have substantially affected American commerce.

The Case is No. 3:20-cv-00013-GFVT-EBA.

Attorneys: Jeffrey Howard Handelsman (Greenblum & Berstein, P.L.C.) for Polymeric Resources Corp. Heather M. Hawkins (Taft, Stettinius & Hollister, LLP) for Pounds of Plastic, LLC.

Companies:Polymeric Resources Corp.; Pounds of Plastic, LLC, Pounds of Plastic, Inc.

Cases: Trademark KentuckyNews GCNNews