United States District Court, S.D. New York
MEMORANDUM OPINION & ORDER
G. Gardephe United States District Judge
Charisma World Wide Corp, S.A. ("Charisma") brings
this suit for trademark infringement under the Lanham Act, 15
U.S.C. § 1125(a), against Avon Products
Inc.Charisma alleges that Avon directed its
Panamanian subsidiary to infringe Charisma's trademark in
Panama and, in furtherance of the infringement scheme,
brought a sham legal proceeding against Charisma in Panama
attacking Charisma's Panamanian trademark. (Cmplt. (Dkt.
No. 1) ¶¶ 23, 25) Avon has moved to dismiss under
Federal Rule of Civil Procedure 12(b)(6), arguing that
Charisma has not alleged a substantial effect en domestic
commerce sufficient to support the extraterritorial
application of the Lanham Act. (Def. Br. (Dkt. No. 18) at
For the reasons stated below, Avon's motion will be
is a Panamanian company that sells a wide variety of
women's cosmetics and personal care products, including
hand and body lotions, deodorants, and perfumed body talc and
powders, in Panama. Charisma's products are made almost
entirely from materials obtained from the United States.
(Cmplt. (Dkt. No. 1) ¶¶ 9, 16, 38) Charisma markets
its products with a trademark - "Charisma y Diseno"
- that it created and registered in Panama in 1990.
(Id. ¶ 15) Charisma distributes its trademarked
products through wholesale supermarkets, pharmacies, and
department stores in Panama. (Id. ¶ 17)
Charisma alleges that its trademarked products are
"frequently consumed by individuals of Panamanian
extraction residing, either temporarily or permanently,
within the United States, " and that its mark has
"a reputation for quality amongst Panamanians throughout
the world." (Id. ¶¶ 18-19) As a
result of the commercial and financial success of its
products, Charisma has entered into private
labelcontracts in other countries, including the
United States. (Id. ¶ 20)
a New York corporation that specializes in beauty, household,
and personal care products. (Id. ¶ 11) Avon
uses a direct sale business model in which Avon sales
representatives market its products door to door.
(Id. ¶ 12) Avon created a Panamanian subsidiary
in 1991, and has since opened multiple retail locations in
Panama. (Id. ¶¶ 22, 30-31)
alleges that Avon directed its subsidiary to infringe
Charisma's mark in Panama by selling competing products
with the mark "Charisma" in Panama. (Id.
¶¶ 23, 34; Id. Exs. C, D) Beginning in
2006, Charisma and Avon litigated Charisma's ownership of
its mark in the Panamanian courts. On April 16, 2013, the
First Judicial Circuit of Panama ruled in favor of Charisma.
(Id. ¶ 29) Charisma alleges that Avon
nonetheless continues to infringe Charisma's mark in
Panama. (Id. ¶¶ 30-31)
alleges that Avon's ongoing infringement and legal
challenge in Panama "negatively impact[ed] consumer
confidence and goodwill, " resulting in lost revenue to
Charisma and, correspondingly, reduced purchases of materials
from, and private label contracts with, U.S. companies.
(Id. ¶¶ 28, 38-39) Charisma also alleges
that Avon's "infringing retail efforts have caused
United States-based consumers to purchase the Panamanian Avon
Products, " resulting in a financial benefit to Avon
from its infringement. (Id. ¶¶ 30, 35-37)
RULE 12(b)(6) STANDARD
"To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
'state a claim to relief that is plausible on its
face.'" Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). "In considering a motion to
dismiss ... the court is to accept as true all facts alleged
in the complaint, " Kassner v. 2nd Ave. Delicatessen
Inc., 496 F.3d 229, 237 (2d Cir. 2007) (citing
Dougherty v. Town of N. Hempstead Bd. of Zoning
Appeals, 282 F.3d 83, 87 (2d Cir. 2002)), and must
"draw all reasonable inferences in favor of the
plaintiff." Id. (citing Fernandez v.
Chertoff. 471 F.3d 45, 51 (2d Cir. 2006)).
complaint is inadequately pled "if it tenders 'naked
assertion[s]' devoid of 'further factual enhancement,
"' Iflbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 557), and does not provide
factual allegations sufficient "to give the defendant
fair notice of what the claim is and the grounds upon which
it rests." Port Dock & Stone Corp. v. Oldcastle
Ne., Inc., 507 F.3d 117, 121 (2d Cir. 2007) (citing
Twomblv, 550 U.S. at 555).
considering a motion to dismiss for failure to state a claim
pursuant to Rule 12(b)(6), a district court may consider the
facts alleged in the complaint, documents attached to the
complaint as exhibits, and documents incorporated by
reference in the complaint." DiFolco v. MSNBC Cable
L.L.C.. 622 F.3d 104, 111 (2d Cir. 2010) (citing
Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d
Cir. 2002); Hayden v. Cty. of Nassau, 180 F.3d 42,
54 (2d Cir. 1999)).
EXTRATERRITORIAL APPLICATION OF THE LANHAM
43(a) of the Lanham Act provides for a civil action for
infringement of a trademark, including those not registered
in the United States, against
[a]ny person who .. . uses in commerce any word, term, name,
symbol, or device, or any combination thereof, or any false
designation of origin ... which ... is likely to cause
confusion, or to cause mistake, or to deceive as to the
affiliation, connection, or association of such person with
another person, or as to the origin, sponsorship, or approval
of his or her goods, services, or commercial activities by
15U.S.C. § 1125(a)(1).
'usual rule' is that a sale of trademark-infringing
merchandise that occurs in [a foreign country] will be
governed by [that country's] law, not United States
law." Aerogroup Int'l. Inc. v. Marlboro
Footworks, Ltd., 955 F.Supp. 220, 225 (S.D.N.Y. 1997),
affd, 152 F.3d 948 (Fed. Cir. 1998). However,
"[t]he Lanham Act may reach allegedly infringing conduct
that occurs outside the United States when necessary to
prevent harm to commerce in the United States." Atl.
Richfield Co. v. Arco Globus Im'l Co.. 150 F.3d 189,
192 (2d Cir. 1998) (citing Fun-Damental Too, Ltd. v.
Gemmy Indus. Corp., 111 F.3d 993, 1006 (2d Cir. 1997)).
[T]hree factors - the so-called "Vanity Fair
factors" - are relevant to whether the Lanham Act is to
be applied extraterritorially: (i) whether the defendant is a
United States citizen; (ii) whether there exists a conflict
between the defendant's trademark rights under foreign
law and the plaintiffs trademark rights under domestic law;
and (iii) whether the defendant's conduct has a
substantial effect on United States commerce.
Totalplan Corp. of Am. v.
14 F.3d 824
Fair Mills v. T. Eaton Co..
Steele v. Bulova Watch
344 U.S. 280
absence of... factors [i] or [iii] .. . 'might well be
determinative and ...the absence of both is certainly
fatal' to applying the Lanham Act to a citizen's
activities abroad." Aerogroup. 955 F.Supp. at
226 (quoting Vanity Fair. 234 F.2d at 643).
Moreover, the Second Circuit "has 'never applied the
Lanham Act to extraterritorial conduct absent a substantial
effect on United States commerce.'" Hong Leong
Fin. Ltd. (Singapore) v. PinnaclePerformance
Ltd.. No. 12 CIV. 6010 JMF, 2013 WL 5746126, at *4
(S.D.N.Y. Oct. 23, 2013) ...