Hetronic International Inc v. Hetronic Germany GMBH et al
Filing
514
ORDER re the geographic scope of the permanent injunction. Telephonic Scheduling Conference set for 12/13/2021 02:00 PM before Judge Stephen P. Friot (as fully set out in this order). Signed by Judge Stephen P. Friot on 12/3/2021. (llg) Modified on 12/3/2021 (llg).
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
HETRONIC INTERNATIONAL,
INC.,
Plaintiff,
-vsHETRONIC GERMANY, GmbH,
et al.,
Defendants.
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Case No. CIV-14-650-F
ORDER
On October 27, 2021, the court held a telephonic conference with counsel
as to matters relevant to the geographic scope of the court’s permanent injunction.
Although it was the court’s intention at that conference to set a date for a hearing
with respect to that issue, the court, after discussion with counsel, concluded that
additional briefing was necessary. Specifically, the court requested briefing as to
“what the plaintiff has to prove to establish it ‘currently markets or sells products’
in any given country.” Doc. no. 509. Both parties have complied. Doc. nos. 511
and 512.
In its briefing, plaintiff addresses “what activities constitute ‘market[ing]
or sell[ing][,]’” and specifically, “what activities constitute ‘market[ing].’” Doc.
no. 511, ECF p. 5; p. 6 n. 1. Plaintiff submits that “it ‘markets’ its products when
it offers its products for sale in a given country, whether through a website,
resellers, international tradeshows, or major electronic publications.” Id. at ECF
p. 5. For its definition, plaintiff relies upon a Supreme Court case, Asgrow Seed
Co. v. Winterboer, 513 U.S. 179 (1995), which involved alleged violations of the
Plant Variety Protection Act of 1970 (PVPA), 7 U.S.C. § 2321, et seq., in
connection with sales of protected seeds. The central question in the case was
whether “the [defendants’] planting and harvesting were conducted ‘as a step in
marketing’ [plaintiff’s] protected seed varieties for growing purposes.” Id. at
186-87. Because the PVPA did not define the term “marketing,” the Supreme
Court, following precedent, gave the term its ordinary meaning. Id. at 187.
According to the Court, the word “ordinarily refers to the act of holding forth
property for sale, together with the activities preparatory thereto . . . The word
does not require that the promotional or merchandising activities connected with
the selling be extensive.” Id. at 187. Plaintiff points out that the Lanham Act
likewise does not define the term “marketing.” It maintains that the Supreme
Court’s approach to the definition of “marketing” is consistent with the dictionary
definitions of the term. Specifically, it cites Black’s Law Dictionary (9th ed.
2009), which defines the term as “[t]he act or process of promoting and selling,
leasing, or licensing products or services[;]” and Merriam-Webster Online,
https://www.merriam-webster.com/dictionary/market, which defines the term as
“expos[ing] for sale in a market[;]” and finally, Oxford English Dictionary (3d ed.
Dec. 2000), https://bitly/3CwkI1n, which defines the term “[t]o sell in a market;
to bring or send to a market; . . . to place or establish (a product) on the market.”
Plaintiff points out that many lower courts have looked to the ordinary definition
of the term when determining whether a party has “marketed” a product.
Plaintiff maintains that Asgrow conclusively resolves the question before
the court, and accordingly, the “only fact [it] must show to merit an injunction in
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a given country is that it offers its product for sale to customers in that country.”
Doc. no. 511, ECF p. 8. Plaintiff asserts that the Tenth Circuit’s remand order
recognized that “marketing” and “selling” are “two distinct inquiries.”
Id.
(emphasis omitted). Thus, plaintiff posits that it “can show entitlement to an
injunction if it sells to a specific country; but it can also show entitlement to an
injunction if it offers to sell, even without proof of an ensuing sale.” Id. (emphasis
in original). Plaintiff maintains that it need not show that “it has superior
trademark rights in each country” for entitlement to an injunction. Id., ECF p. 20.
Defendants respond that “[w]hat the plaintiff must prove is that which
satisfies the [Tenth Circuit’s] central reason for reversing the injunction: the
issuance of an injunction that reached beyond ‘[the] Lanham Act – the statute
upon which the district court relied . . . .’” Doc. no. 512, ECF p. 1 (quoting
Hetronic International, Inc. v. Hetronic Germany GmbH, 10 F.4th 1016, 1046 (10th
Cir. 2021)). In the end, defendants contend, the court’s injunction “must find
‘support’ in the Lanham Act.” Id. Defendants point out that the Tenth Circuit
explained in its decision that plaintiff “isn’t entitled to injunctive relief in markets
it hasn’t actually penetrated.” Id., ECF p. 2 (quoting Hetronic, 10 F.4th at 1047,
emphasis in original).
Defendants thus assert that “[u]nder the statute relied
upon--the Lanham Act--plaintiff must demonstrate ‘use in commerce’ of the
trademarks in each territory in question.” Id., ECF p. 2. The Lanham Act,
defendants point out, defines the term “use in commerce” as the “bona fide use of
a mark in the ordinary course of trade” and “a mark shall be deemed to be in use
in commerce” when “it is placed in any manner on the goods . . . and . . . the goods
are sold or transported in commerce.” Id. (quoting 15 U.S.C. § 1127, emphasis
omitted). Defendants assert that plaintiff seizes on the language “markets or sells
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its products” that forms only part of the Tenth Circuit’s direction. In so doing,
defendants contend, plaintiff urges the court to ignore the language of the Lanham
Act and its plainly worded “use in commerce” requirement. Defendants posit that
plaintiff’s argument then leads to citation of cases that have nothing to do with
the Lanham Act and provide no meaningful guidance. In sum, defendants contend
that “[f]or each country in which [p]laintiff claims to have trademark rights,
[p]laintiff must prove entitlement to trademark protection under the Lanham Act.
Plaintiff must show ‘use in commerce’ in each such country and for each
trademark.” Id., ECF p. 6.
Defendants are correct that the Tenth Circuit stated that plaintiff “isn’t
entitled to injunctive relief in markets it hasn’t actually penetrated.” Hetronic, 10
F.4th at 1047. In support of its statement, the Tenth Circuit quoted from a Fourth
Circuit case, Emergency One, Inc. v. American Fire Eagle Engine Co., Inc., 332
F.3d 264, 269 (4th Cir. 2003), wherein the Fourth Circuit stated: “[E]ven the
owner of a federally registered mark—who enjoys the presumption of nationwide
priority—is not entitled to injunctive relief except in the area actually penetrated
through use of the mark.” Hetronic, 10 F.4th at 1047 (internal quotation marks
omitted, citation, and footnote omitted).
But as plaintiff also points out, the Tenth Circuit at the end of its discussion
with respect to the permanent injunction specifically stated: “Accordingly, we
narrow the injunction to the countries in which [plaintiff] currently markets or
sells its products.” Hetronic, 10 F.4th at 1047. The Tenth Circuit, by use of the
word “or,” indicates that there are two distinct inquiries—markets or sells. The
Tenth Circuit does not define “markets,” and the term “marketing” is not
addressed by the Lanham Act. The court therefore finds that the term should be
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given its ordinary meaning. And the court follows the definition as set forth by
the Supreme Court in Asgrow. However, as stated below, plaintiff will have to
show that it has actually penetrated a market through marketing or selling its
product.
The court notes that the language from Emergency One—“[not] entitled to
injunctive relief except in the area actually penetrated”—comes from another
Fourth Circuit case, Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, 43
F.3d 922, 932 (4th Cir. 1995). In that case, the Fourth Circuit stated:
Under the Lanham Act, the senior owner of a federal
registration has superior priority over all junior users,
but a court will enjoin the junior user only if the
registrant is likely to enter, or has entered, the junior
user’s trade territory. As a leading commentator has
explained, ‘the registrant has a nationwide right, but the
injunction remedy does not ripen until the registrant
shows a likelihood of entry into the disputed territory .
. . . [The junior user’s] use of the mark can continue only
so long as the federal registrant remains outside the
market area.’ 2 J. Thomas McCarthy, McCarthy on
Trademarks § 26.14[1] at 26-52 (3d ed. 1992) [now 5 J.
Thomas McCarthy, McCarthy on Trademarks and
Unfair Competition § 26.33 (5th Ed. December 2021
Update)] (citing Dawn Donut Co. v. Hart’s Food Stores,
Inc., 267 F.2d 358 (2d Cir. 1959). This Court applied
this rule in Armand’s Subway, Inc. v. Doctor’s
Associates, Inc., 604 F.2d 849, 849-50 (4th Cir. 1979),
in which the court reasoned:
After the Lanham Act, nationwide
protection was extended to registered
marks, regardless of the area in which the
registrant actually used the mark, because
under 15 U.S.C. 1072 registration
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constituted constructive notice to
competing users. Dawn Donut Co. v.
Hart’s Food Stores, 267 F.2d 358, 362
(C.A.2, 1959). However, as held in that
case, the protection is only potential in
areas where the registrant in fact does not
do business. A competing user could use
the mark there until the registrant extended
its business to the area. Thereupon the
registrant would be entitled to exclusive
use of the mark and to injunctive relief
against its continued use by prior users in
that area. Ibid., 360, 365.
From this reasoning, the court concluded that ‘in no
case would [the party alleging infringement] be entitled
to injunctive relief except in the area actually penetrated
by [that party].’
Lone Star, 43 F.3d at 932 (emphasis added).
The Fourth Circuit in Emergency One included a footnote, footnote number
3, right after the language that the owner of a federally registered mark is not
“entitled to injunctive relief except in the area actually penetrated through use of
the mark.” 332 F.3d at 269. That footnote was omitted by the Tenth Circuit.
Footnote 3 quotes the language from Lone Star, that the owner of a registered
mark “‘has a nationwide right, but the injunctive remedy does not ripen until the
registrant shows a likelihood of entry into the disputed territory . . . . [The junior
user’s] use of the mark can continue only so long as the federal registrant remains
outside the market area.’” Id. at n. 3.
The “likelihood of entry into the disputed territory” language and other
language from Lone Star—“likely to enter” and “extended its business to the
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area”—in the court’s view, support the “markets or sells its products” criterion
used by the Tenth Circuit. While defendants rely upon the Emergency One’s
specific language “through use of the mark” to support its argument that plaintiff
must demonstrate “use in commerce” of the trademarks in each country, the court
is not persuaded that that language supports such argument. Further, the court
notes the Tenth Circuit did not include that language in its statement that plaintiff
“isn’t entitled to injunctive relief in markets it hasn’t actually penetrated.”
Hetronic, 10 F.4th at 1047. The court concludes that plaintiff need not show “use
in commerce” in each country and for each trademark. In other words, plaintiff
need not show it has superior trademark rights in a country to be entitled to an
injunction with respect to that country.
Accordingly, with respect to the geographic scope of the permanent
injunction, the court ORDERS as follows:
1. The geographic scope of the permanent injunction will include the
countries in which plaintiff currently markets or sells its products. This
requires plaintiff to have actually penetrated a market. For this purpose,
“currently” marketing or selling will include countries in which plaintiff
has marketed or sold relevant products1 within six months before the
hearing.
2. If a relevant product has not actually been sold to a customer in a market
(i.e., a country) within six months, then plaintiff will have to show that it
currently (i.e., within six months) markets a relevant product in that market.
1
“Relevant products” includes plaintiff’s products having the Hetronic mark, or Product Mark
or the Trade Dress (all as defined in the jury instructions in this case).
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This can be shown by proof of any of the following, occurring within six
months: (i) actual promotional activity in a country, relating to a relevant
product, or (ii) actual promotional activity directed specifically to one or
more identifiable potential customers in a country, relating to a relevant
product, or (iii) a web-based offering2 of relevant products.
3. In preparing for the hearing, and at the hearing, the parties would be welladvised to differentiate between countries in which products have been
marketed only via a web-based offering, and countries in which plaintiff
has marketed its products by more active means. The reason for this is that
the court intends to include in the permanent injunction both (i) countries
in which products have been marketed only via web-based offerings, and
(ii) countries in which plaintiff has marketed its products by more active
means. However, given the possibility that a reviewing court may conclude
that the permanent injunction should not include countries in which
products have been marketed only via web-based offerings, the court
wishes to separate the two categories with clarity sufficient to avoid the
necessity of yet another hearing.
4. For purposes of determining the scope of the permanent injunction,
“marketing” in a country does not require plaintiff to have superior
trademark rights in that country.
2
As used in this order, “web-based offering” means marketing via a webpage or website
through which a customer or potential customer could actually transact the purchase of a
relevant product, as opposed to a webpage or website with only passive presentation of productrelated information. A market is not “actually penetrated” by the mere existence of a webpage
or website with only passive presentation of product-related information.
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5. Plaintiff has the burden of proof with respect to all matters relating to the
geographic scope of the permanent injunction.
6. A telephonic scheduling conference will be held on December 13, 2021, at
2:00 p.m. Counsel should be prepared to discuss (i) the need for discovery
in preparation for the hearing, and (ii) the setting of a date for the hearing.
At the scheduling conference, the court will set a date for an initial
disclosure by Hetronic of (i) the countries as to which it plans to prove it
currently sells relevant products, and (ii) the countries as to which it plans
to prove it currently markets relevant products, as those terms are used in
this order.
DATED this 3rd day of December, 2021.
14-0650p112.docx
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