United States District Court, S.D. New York
August 7, 2005.
ALMACENES EXITO S.A., Plaintiff,
EL GALLO MEAT MARKET, INC., GALLO MARKET, INC., RANDALL MEAT MARKET, INC., 2300 XTRA WHOLESALERS, INC., 3815-9TH AVENUE, INC., EL NENE MEAT & FOOD CORP., ASSOCIATED FOOD STORES, INC., JOSE RENE CARABALLO, RAFAEL MONTES DE OCA, LUIS NUNEZ, RAFAEL THEN, NELSON COLLADO, OSCAR NUNEZ, AND JOHN DOES 1-50, Defendants.
The opinion of the court was delivered by: JED RAKOFF, District Judge
In Empresa Cubana Del Tabaco v. Culbro Corp., 399 F.3d 462
(2d Cir. 2005) the Second Circuit left open "the question of
whether an entity that has not used a mark on products sold in
the United States can nonetheless acquire a U.S. trademark
through operation of the famous marks doctrine." Id. at 465. In
the instant case, the Court is obliged to answer the question,
and concludes that the answer is "No."
Plaintiff Almacenes Exito, S.A. ("Exito") claims to be the
"Wal-Mart of Columbia," see Complaint ("Compl.") ¶ 24, but does
not operate in the United States. It alleges that defendants,
operators of several small grocery stores in upper Manhattan and
the Bronx, see Compl. ¶ 29, infringed plaintiff's "EXITO"
trademark and engaged in unfair competition by, in effect,
pretending to be affiliated with Exito. Specifically, Counts 1-3
of the Complaint (the federal causes of action) allege false designation of origin and false
descriptions under § 43(a)(1) of the Lanham Act,
15 U.S.C. § 1125(a), trademark infringement under Article 6bis(1) of the
Paris Convention as implemented by § 44(b) of the Lanham Act,
15 U.S.C. § 1126(b), and violation of plaintiff's trade name rights
under Article 8 of the Paris Convention as implemented by § 44(g)
of the Lanham Act, 15 U.S.C. § 1126(g). Similarly, Counts 4-6 of
the Complaint (the state causes of action) allege trademark
dilution under New York General Business Law § 360-l and
trademark infringement and unfair competition under New York
common law. After defendants moved, under Rule 12(b)(6),
Fed.R.Civ.P., to dismiss all six counts, the Court, by Order
dated July 14, 2005, granted the motion with respect to Counts
1-3 and denied the motion with respect to Counts 4-6. This
Memorandum Order states the reasons for those
The facts as alleged in the Complaint are taken as true for the
purposes of this motion. Ricciuti v. New York City Transit
Authority, 941 F.2d 119, 123 (2d Cir. 1991). Exito is a
corporation organized and existing under the laws of the Republic
of Columbia. See Compl. ¶ 2. It owns the largest retail
superstore chain in the Republic of Columbia, with sales
exceeding $700,000,000 (U.S.) in 1999. See Compl. ¶ 23.
Plaintiff has used the trade name "EXITO" the Spanish word
for "success" throughout Columbia and Venezuela since 1949.
See Compl. ¶ 21. The distinctive EXITO mark appears in uppercase,
block, black lettering, with each letter set inside individual
yellow rectangular blocks that are outlined in black piping and
spaced slightly apart from one another. See Compl. Exs. 1 and
2. The EXITO mark has come to be known and recognized as a
designation of source throughout Latin America and by a high
percentage of the Hispanic population in New York City. See
Compl. ¶ 26.
Defendants own and operate a variety of local supermarkets in
predominantly Hispanic neighborhoods in upper Manhattan and the
Bronx, marketing groceries and fresh foods with a particular
emphasis on Latin American produce. See Compl. ¶¶ 28-29. Each
store features an exact replica of plaintiff's EXITO mark. See
Compl. ¶ 30. Defendants adopted the EXITO mark with intent to
cause consumer confusion and to capitalize on plaintiff's good
will. See Compl. ¶¶ 31-32.
The Complaint, however, does not allege that Exito ever
registered or used its mark either in New York or anywhere else
in the United States.*fn2 The question, then, is whether the
absence of such registration or use is fatal to any or all of
plaintiff's claims. It has long been a bedrock principle of federal trademark law
that registration or prior use of a mark in the United States is
a precondition to maintaining a cause of action for infringement
of the mark and the like. See, e.g., Trade-Mark Cases,
100 U.S. 82 (1879); United Drug Co. v. Theodore Rectanus,
248 U.S. 90 (1918); Hanover Star Milling v. Metcalf, 240 U.S. 403
(1916); Buti v. Impressa Perosa, S.R.L., 139 F.3d 98 (2d Cir.
1998); Person's Co. v. Christman, 900 F.2d 1565, 1568 (Fed.
Cir. 1990). Sometimes referred to as the "territoriality
principle," this principle provides that "priority of trademark
rights in the United States depends solely upon priority of use
in the United States, not on priority of use anywhere in the
world." J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition, § 29.2 at 29-6 (4th Ed. 2002).
Exito, however, argues that its claims, both state and federal,
fall within an exception to this requirement called the
"well-known or famous marks" doctrine. "Under the doctrine,
foreign marks are protectable even without use or registration
within the United States, where the mark is so `well known' or
`famous' as to give rise to a risk of consumer confusion if the
mark is used subsequently by someone else in the domestic
marketplace." De Beers LV Trademark Ltd. v. DeBeers Diamond
Syndicate Inc., 2005 U.S. Dist. LEXIS 9307 at *20 (S.D.N.Y. May
To the extent the doctrine is a creature of common law it may
support state causes of action, see infra, but it has no
place in federal law where Congress has enacted a statute, the
Lanham Act, that carefully prescribes the bases for federal
trademark claims. The Lanham Act nowhere specifies the well-known or famous marks
Plaintiff, however, argues that it is there by implication
because Article 6bis of the Paris Convention of 1883, an
international treaty to which both the United States and Columbia
are parties, specifies that the signatory nations
undertake, ex officio if their legislation so
permits, or at the request of an interested party, to
refuse or to cancel the registration, and to prohibit
the use, of a trademark which constitutes a
reproduction, an imitation, or a translation, liable
to create confusion, of a mark considered by the
competent authority of the country of registration or
use to be well known in that country as being already
the mark of a person entitled to the benefits of this
Convention and used for identical or similar goods.
These provisions shall also apply when the essential
part of the mark constitutes a reproduction of any
such well-known mark or an imitation liable to create
Paris Convention, Art. 6bis(1). Similarly, Article 8 of the
Paris Convention, on which plaintiff also relies, provides:
A trade name shall be protected in all the countries
of the Union without the obligation of filing or
registration, whether or not it forms part of a
Paris Convention, Art. 8. In turn, Section 44(b) of the Lanham Act provides that
[a]ny person whose country of origin is a party to
any convention or treaty relating to trademarks . . .
to which the United States is also a party. . . .
shall be entitled to the benefits of this section
under the conditions expressed herein to the extent
necessary to give effect to any provision of such
convention, treaty or reciprocal law, in addition
to the rights to which any owner of a mark is
otherwise entitled by this Act.
15 U.S.C. § 1126(b) (emphasis added).*fn4
argument goes, the Lanham Act provides a foreign plaintiff with
additional substantive rights created by the Paris Convention.
So far as the Second Circuit is concerned, however, any
argument along these lines has effectively been rejected by that
Court's recent decision in Empresa Cubana, supra. For there,
although not reaching the precise question here presented, the
Second Circuit, in rejecting a similar argument relating to
unfair competition, expressly adopted the view of the Eleventh
Circuit in Int'l Cafe, S.A.L. v. Hard Rock Cafe Int'l Inc.,
252 F.3d 1274, 1277-78 (11th Cir. 2001) as follows:
We agree that Section 44 of the Lanham Act
incorporated to some degree the Paris Convention. But
we disagree that the Paris Convention creates
substantive rights beyond those independently
provided in the Lanham Act. As other courts of
appeals have noted, the rights articulated in the
Paris Convention do not exceed the rights conferred
by the Lanham Act. Instead, we conclude that the Paris Convention,
as incorporated by the Lanham Act, only requires
Int'l Cafe, 252 F.3d at 1277-78, quoted in Empresa Cubana,
399 F.3d at 484-85. See also Empresa Cubana, 399 F.3d at 484
("The Paris Convention requires that `foreign nationals be given
the same treatment in each of the member countries as that
country makes available to its own citizens,'" quoting Vanity
Fair Mills v. T. Eaton Co., 234 F.2d 633
, 640 (2d Cir. 1956),
cert. denied, 352 U.S. 817
(1956)). Since it is conceded that a
United States citizen who claimed to own the EXITO mark could not
bring a Lanham Act claim for infringement or the like against the
defendants here if he had neither registered the mark in the
United States nor made prior use of it in the United States, it
follows from the above-quoted language that the Second Circuit
has effectively concluded that a foreign owner of an EXITO mark
could not bring such an action either.
It is true that the Ninth Circuit in Grupo Gigante, as well
as at least two district courts in this district, see De
Beers, 2005 U.S. Dist. LEXIS 9307 at *19-20; Empresa Cubana Del
Tabaco v. Culbro Corp., 2004 U.S. Dist. LEXIS 4935 at *87-116
(S.D.N.Y. March 29, 2004) rev'd on other grounds,
399 F.3d at 465 (2d Cir. 2005), have recognized, on "policy" grounds, a
limited exception to the territoriality principle for a famous
marks doctrine (albeit an exception that they each define
differently). It is also true, as noted, that the Second Circuit
in Empresa Cubana expressly left open this possibility as well.
However, such a radical change in basic federal trademark law
may, in this Court's view, only be made by Congress, not the courts. Accordingly, since it is conceded that
plaintiff has not satisfied the territorial principle,
plaintiff's three Lanham Act claims Counts 1, 2 and 3 of the
Complaint must be dismissed.
The same, however, is not true of plaintiff's state law claims,
for the territoriality principle is part of federal law, not New
York state law, and New York has fully adopted the well-known or
famous marks doctrine as part of its common law. Indeed, it was a
New York case that first introduced the doctrine to modern law.
Maison Prunier v. Prunier's Restaurant & Care, Inc.,
288 N.Y.S 529 (N.Y. Sup Ct. 1936) (interpreting the Paris Convention as
applied to New York common law).
The Maison Prunier court's reliance on the Paris Convention
is not foreclosed by the Eleventh Circuit's ruling adopted by the
Second Circuit in Empresa Cubana. For, as quoted above, the
ruling was that the Paris Convention did not provide substantive
rights "beyond those independently provided in the Lanham Act."
Empresa Cubana, 399 F.3d at 485. Neither the Eleventh Circuit
in Int'l Cafe nor the Second Circuit in Empresa Cubana said
anything as to the Paris Convention's interplay with state common
law. Moreover, the Lanham Act has never been read to be
preemptive of state trademark and unfair competition law.
Defendants' remaining objections to plaintiff's state law
claims may be dealt with briefly. Given the very modest
requirements of notice pleading, Pelman v. McDonald's Corp.,
396 F.3d 508, 511 (2d Cir. 2005), the allegations of the
Complaint are sufficient to state a dilution claim under § 360-1 of the New York General Businnes
Law (Count 4), see Compl. ¶¶ 31, 32 and 34, and an
infringement claim under New York common law (count 5), see
Compl. ¶¶ 31, 32.
As for Count 6, which accuses defendants of "palming off" their
goods as those of plaintiff, it is settled New York law that the
marks need not be in competition with one another for a plaintiff
to succeed on such a claim. Maison Prunier, 288 N.Y.S. at 534.
Accordingly, plaintiff has alleged enough for this claim to
survive as well. See Compl. ¶¶ 31, 32.
Accordingly, the July 14, 2005 Order granting the motion to
dismiss with respect to Counts 1-3 and denying the motion with
respect to Counts 4-6 is hereby reaffirmed in all respects.