Why the time has arrived to broaden protection of foreign trademarks in the United States and why it won't happen.

• Author: Ayer, Michel J.

1. INTRODUCTION II. BACKGROUND A. The Doctrine of Territoriality 1. The Lanham Act 2. The Early International Agreements a. The Paris Convention b The Madrid Agreement 3. The Madrid Protocol B. The Use and Intent to Use Doctrines III. ANALYSIS A. The Madrid Agreement B. The Madrid Protocol C Relief Under American Domestic Trademark Law IV. RECOMMENDATION V. CONCLUSION I. INTRODUCTION

   "[T]rademarks are unusual because the reputation of a product can reach a remote foreign market long before the owner of the mark for the product has begun or even had any opportunity to actually market there." (1) With the influx of immigrants to the United States, particularly from Latin America, many entrepreneurial early arrivals have appropriated brands of their homelands in setting up businesses in the United States. Additionally, savvy Americans are recognizing popular brands during their travels and employment abroad and using such brands upon their return to the United States without the origin-country firm's permission. "It may be unethical for a U.S. company to use a brand developed by a foreign firm outside of the U.S., but U.S. law doesn't make it illegal--unless the original brand has registered its trademark here." (2) With the increasing importance of an international economy, this situation raises the issue of whether it is time to change American trademark law to provide some increased level of protection to foreign firms whose brands are "unethically" used in the United States. "Globalization demands effective tools that extend trademark protection beyond national boundaries and the safeguard of intellectual property rights worldwide." (3) With an apparently ever increasing push towards regional "fair" trade, encapsulated by the North American Free Trade Agreement (NAFTA) (4) and the Central American Free Trade Agreement (CAFTADR), (5) this issue has special significance in regards to our Latin American neighbors, particularly Mexico. Although the United States participates in a global economy, our trade relationship with Mexico and other Latin American countries and their respective firms is increasingly important to our nation's economic health. (6) "Today, Mexico is America's second-largest trading partner, and we are Mexico's largest." (7)

   This Note reviews tile origins of American trademark protections, especially to non-domestic companies, examines the scope of the current situation in which foreign firms' marks are being unethically used by U.S. companies, and recommends possible solutions under U.S. and/or international legal regimes to provide adequate trademark protections to Latin American firms in today's international economy.

2. BACKGROUND

   The United States has long been the dominant economic power in the Western Hemisphere. (8) Much of that power comes via trade with our neighbors to the south. Mexico, (9) and other Latin American countries, (10) are vital components in the American economic machine. Traditionally, however, intellectual property rights have received only varying levels of respect by Latin American countries. Historically, all too often, American companies faced piracy of their marks south of the border and either had to purchase their marks back in those countries, engage in litigation in the courts of the Latin state, or withdraw from the market entirely. (11) Today, although such scenarios continue to be a legitimate concern for American firms, foreign firms from around the globe are increasingly finding that their marks have been "pirated" in the United States. (12) This situation leaves foreign firms to defend their marks under United States domestic law or possibly one of several international trademark regimes. (13)

   1. The Doctrine of Territoriality

      The traditional underpinnings of trademark law rest upon the doctrine of territoriality. (14) The doctrine of territoriality is incorporated both into the United States domestic trademark law, (15) and international trademark registration and protection regimes. (16) The concept of territoriality is not unique to trademark law as it is also one of the basic tenets for patent law. (17)

      1. The Lanham Act

         The primary backbone of United States trademark law is the Lanham Act. (18) "Within the Act, Congress recognized two primary intentions of trademark law: (1) to protect consumers by eliminating confusion about product sources; and (2) to protect trademark owners from competitors' attempts to trade off the investment and reputation of the original mark owner." (19) Along with other concerns, "[t]he unsatisfactory state of territorial rights at common law was one reason for the enactment of the Lanham Act." (20) The absence of a comprehensive doctrine of territorial rights under common law led to unpredictability from the courts in the protection of trademarks. (21)

         While the adoption of the Lanham Act provided a comprehensive and organized regime for the registration of trademarks across the entire territory of the United States, (22) it does nothing to alter the general rule that "the exclusive rights of a trademark owner do not extend beyond the territory of a political subdivision, be it a country or a smaller unit within a country." (23) Thus, the doctrine of territoriality has resulted in each country developing and maintaining its own trademark laws and enforcement mechanisms. (24) Accordingly, under the Lanham Act, foreign firms can only protect their trademarks in the United States by satisfying similar requirements to those of domestic registrants, (25) and the rights of a U.S. trademark holder cannot, under the Lanham Act, be enforced abroad. (26) Additionally, as the territoriality principle led to the creation of separate regimes in each country, it also led to the creation of multiple international agreements to facilitate protection of trademarks across borders.

         For example, in Grupo Gigante S.A. de C.V. v. Dallo & Co., a Mexican company, Grupo Gigante, operated a large chain of grocery stores in Mexico under the name "Gigante," dating back nearly 30 years. (27) The firm registered the "Gigante" name as a trademark in Mexico in 1963 and maintained a current registration thereafter. (28) By 1991, Grupo Gigante had over 100 stores in Mexico, including two in Tijuana, just across the border from San Diego, California. (29) In August of that year, an American company opened a grocery store under the name "Gigante Market" in San Diego. (30) Initially, although Grupo Gigante knew of the American firm's use of the "Gigante" in its store's name, Grupo Gigante did nothing about it as it was unprepared to enter the American market at that time. (31)

         Several years later, Grupo Gigante decided it was time to enter the American market and registered the "Gigante" mark with the state of California; the American firm did the same one month later. (32) One year later, Grupo Gigante opened its first store in the United States and the American firm immediately sent Grupo Gigante a cease-and-desist letter. (33) Grupo Gigante responded by filing suit against the American firm for trademark infringement under the Lanham Act, and the American firm counterclaimed, asserting "superior right to the mark in Southern California." (34)

         The United States District Court for the Central District of California held that Grupo Gigante's earlier use in Mexico entitled it "superior claim to the mark in Southern California," (35) despite the fact that the American company had used the mark in commerce in southern California for several years before Grupo Gigante opened its first store north of the border, essentially recognizing the famous mark exception to the doctrine of territoriality. (36) However, on appeal, the United States Court of Appeals for the Ninth Circuit vacated the judgment and remanded the case, holding that foreign firms must satisfy an additional burden, demonstrating a higher level of recognition or fame than is required of domestic firms claiming secondary meaning, (37) essentially giving preference to the firm that first used the "Gigante" name in commerce in the United States. (38) The court's recognition of the use within the United States as opposed to Mexico is consistent with common understanding of the Lanham Act's limits. (39)

      2. The Early International Agreements

         The underpinning doctrine of territoriality upon which the Lanham Act rests is also the basis for the vast majority of international agreements regarding trademark rights. The Paris Convention for the Protection of Industrial Property of 1883 and the Madrid Agreement Concerning the International Registration of Marks of 1891 rest upon the doctrine of territoriality. (40) These two agreements continue in force and are the reference point or basis for numerous other international intellectual property agreements. (41)

         1. The Paris Convention

            The Paris Convention was the "first international effort to standardize and simplify the protection of intellectual property rights" among nations. (42) The underlying purpose of the Paris Convention is to ensure that mark holders of any member country will be treated equally by the respective countries, that foreign citizens will not be prejudiced against when they seek trademark protection in other member countries. (43) "The Convention is not premised upon the idea that the trademark laws of each member nation shall be given extraterritorial application, but on exactly the converse principle that each nation's law shall have only territorial application." (44) Accordingly, the Paris Convention fails to create anything that resembles an international trademark, instead reinforcing the concept of national territoriality. (45)

         2. The Madrid Agreement

            The Madrid Agreement, in partnership with the more recent Madrid Protocol, functions to create a "special union" between nations under the Paris Convention. (46) The purpose of the Agreement is to create an international registration system for marks that would ease the...