Federal Treasury Enterprise Sojuzplodoimport v. SPI Spirits Ltd.

11-4109-cv
Fed. Treasury Enter. v. SPI Spirits Ltd.
United States Court of Appeals
FOR THE SECOND CIRCUIT
August Term, 2011
(Argued: June 11, 2012 Decided: August 5, 2013)
Docket No. 11-4109-cv
FEDERAL TREASURY ENTERPRISE SOJUZPLODOIMPORT, AND OAO “MOSCOW
DISTILLERY CRISTALL,”
Plaintiffs-Appellants,
ZAKRYTOE AKTSIONERNOE OBSCHESTVO, “LIVIZ,”
Plaintiff,
–v.–
SPI SPIRITS LIMITED, SPI GROUP SA, YURI SHEFLER, ALEXEY OLIYNIK, ALLIED
DOMECQ INTERNATIONAL HOLDINGS B.V., ALLIED DOMECQ SPIRITS & WINE
USA, INC., DBA ALLIED DOMECQ SPIRITS, USA, WILLIAM GRANT & SONS USA,
WILLIAM GRANT & SONS, INC., SPIRITS INTERNATIONAL B.V., FKA SPIRITS
INTERNATIONAL N.V.,
Defendants-Appellees.
B e f o r e:
MCLAUGHLIN, CABRANES, AND CARNEY, Circuit Judges.
Plaintiffs-appellants, a government-chartered Russian entity and its licensee,
allege that defendants-appellees infringed certain registered trademarks
related to the Russian vodka known as “Stolichnaya,” in violation of Section
32(1) of the Lanham Act, 15 U.S.C. § 1114(1)(b). The District Court dismissed
their claims for want of statutory standing to sue. On appeal, plaintiffs argue
that their interests in the trademarks are sufficient under the Act to
prosecute these claims. Acknowledging that the Russian Federation is the
owner of the Marks, plaintiff FTE nonetheless contends that it is entitled to
sue for the Marks’ infringement because the Russian Federation “entrusted”
it with care of the Marks, and it is either the Russian Federation’s “assign” or
“legal representative.” See id. § 1127. Cristall has derivative standing, they
argue, as FTE’s exclusive licensee for Stolichnaya vodka in the United States.
Plaintiffs further maintain that they are entitled to proceed because the
Russian Federation has “ratified” their suit. Because we conclude that
plaintiffs have not alleged facts sufficient to support their suit in the claimed
capacities, we AFFIRM the decision of the District Court.
KATHLEEN M. SULLIVAN (Marc L. Greenwald,
Jonathan Oblak, on the brief), Quinn Emanuel
Urquhart & Sullivan, LLP, New York, NY
(John B. Quinn, David W. Quinto, David H.
Bromberg, Quinn Emanuel Urquhart &
Sullivan, LLP, Los Angeles, CA, Redwood
Shores, CA, on the brief), for Plaintiffs-
Appellants.
EUGENE D. GULLAND (Oscar M. Garibaldi,
Bingham B. Leverich, Hope Hamilton, Kerry L.
Monroe, on the brief), Covington & Burling
LLP, Washington, DC (Emily Johnson Henn,
Michael C. Nicholson, Covington & Burling
LLP, Redwood Shores, CA, New York, NY, on
the brief), for Defendants-Appellees Spirits
International B.V., SPI Spirits Limited, SPI
Group SA, Yuri Shefler and Alexey Oliynik.
DAVID H. BERNSTEIN (Michael Schaper, on the
brief), Debevoise & Plimpton LLP, New York,
NY, for Defendants-Appellees Allied Domecq
International Holdings B.V. and Allied Domecq
Spirits & Wine USA, Inc.
2
EDWARD T. COLBERT, Kenyon & Kenyon LLP,
Washington, DC (Michelle M. Marsh, Kenyon &
Kenyon LLP, New York, NY, on the brief), for
Defendants-Appellees William Grant & Sons
USA and William Grant & Sons, Inc.
SUSAN L. CARNEY, Circuit Judge:
Plaintiffs-appellants the Federal Treasury Enterprise
Sojuzplodoimport (“FTE”), a state-chartered entity of the Russian Federation,
and OAO “Moscow Distillery Cristall” (“Cristall”), FTE’s exclusive licensee
(FTE and Cristall together, “plaintiffs”) appeal from the judgment of the
District Court (Daniels, Judge) dismissing their claims for trademark
infringement against defendants SPI Spirits Limited and other related
individuals and corporations (together, “defendants”). Plaintiffs’
infringement claims rest on a theory that defendants misappropriated and,
since the early 1990s, have made unauthorized commercial use in the United
States of certain United States-registered trademarks related to
“Stolichnaya”-brand vodka (the “Marks”).1 Plaintiffs maintain that
defendants’ asserted title to the Marks is invalid, and that defendants’ use of
the Marks infringes the rights of the Marks’ purported true owner, the
Russian Federation. In this appeal, we examine whether plaintiffs
1
The original mark was registered in the U.S. Patent and Trademark Office in 1969
by a Soviet entity. The “Marks” also refer, however, to derivative marks registered
thereafter by or on behalf of the Soviet Union and others.
3
themselves have sufficient claim to the Marks to sue for infringement under
the Lanham Act (the “Act”).
We conclude that, under the operative provisions of the Act, FTE
is neither (1) the Russian Federation’s “assign” of the Marks (for it has not
been granted all relevant rights associated with the Marks by a duly executed
writing) nor (2) its “legal representative” (for the complaint provides no basis
to conclude that the Russian Federation is unable to pursue Lanham Act
remedies). See 15 U.S.C. § 1127. We further conclude that Cristall may not
sue, since its rights as a plaintiff are purely derivative of those held by FTE,
and FTE may not grant rights greater than its own. We reject plaintiffs’ joint
argument that they are entitled to proceed because the Russian Federation
has “ratified” their suit. Neither plaintiff, therefore, is entitled to sue for
infringement under 15 U.S.C. § 1114(1), and, accordingly, we AFFIRM the
District Court’s dismissal of plaintiffs’ Third Amended Complaint with
prejudice.
BACKGROUND
Having set forth the factual background of this case at length in
Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int’l N.V., 623 F.3d 61, 63-
66 (2d Cir. 2010) (“FTE II”), we address the facts here only insofar as they are
relevant to the legal issues implicated by this appeal. Because plaintiffs
4
challenge the District Court’s grant of a motion to dismiss plaintiffs’ Third
Amended Complaint (the “operative complaint” or “complaint”), the
description provided below is drawn primarily from the allegations set forth
in that document and from documents attached to it, incorporated in it by
reference, or otherwise relied on by plaintiffs in bringing suit. See ATSI
Commc’ns v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007).
1. The Trademarks
This dispute arises out of the contested ownership of American
trademarks related to “Stolichnaya” vodka, a well-known distilled spirit
originally made in Russia, and whose iconic Russian name can be translated
as “from the capital.”2 According to the complaint, “STOLICHNAYA brand
vodka has been owned either by the Soviet Union or by the Russian
Federation” for decades. Fed. Treasury Enter. Sojuzplodoimport v. Spirits
Int’l B.V., Third Am. Compl. ¶ 27, No. 04-08510 (S.D.N.Y. Feb. 22, 2011), ECF
No. 142 (“Am. Compl.”), J.A. 261. In the late 1960s, the Soviet Union, acting
through a state-run enterprise, registered a trademark in “Stolichnaya” with
the United States Patent and Trademark Office (the “USPTO”). Over the
subsequent decades, the USPTO issued other trademark registrations
2
The label of this brand of vodka includes a representation of the famous Hotel
Moscow (or “Hotel Moskva”), located in the heart of the capital, near the Kremlin.
5
relating to Stolichnaya to various entities.3
In 1990, as the Soviet Union collapsed, Evgeniy Filippovich
Sorochkin, the General Director of VVO-SPI (the Soviet enterprise then
holding the Marks), sought personally to acquire VVO-SPI’s assets, including
the Marks, through a new corporation. The corporation formed by Sorochkin
purported to privatize VVO-SPI. It then entered into a series of complex
transactions that ultimately vested all defendants with at least putative
interests in the Marks, either by license or assignment.4
In the early 2000s, the Russian Federation – as successor to
interests held by Soviet-created state enterprises – is alleged to have
discovered that Sorochkin and others had failed to comply with laws
governing the privatization of state assets when they conducted the relevant
transactions a decade earlier. In December 2000, a Russian court held that,
3
Related marks are also registered in foreign jurisdictions, but those do not concern
us here.
4
Defendants are individuals and corporations whose claimed title to the Marks – or
license to use the Marks – derives from the allegedly ineffective privatization of VVO-SPI.
Defendants are: Yuri Shefler and Alexey Olinik, the individuals who allegedly controlled
the private corporation that attempted to acquire VVO-SPI’s assets, including the Marks;
Spirits International B.V., formerly known as Spirits International N.V., to which Shefler
and Olinik purported to transfer the Marks; Allied Domecq International Holdings, B.V.
and Allied Domecq Spirits & Wine USA (together, “Domecq”), later assignees of the Marks;
SPI Group S.A., a corporation that has claimed ownership of the Marks, and SPI Spirits
Limited, both of which are part of the “SPI Group,” a group of companies allegedly owned or
controlled by Shefler and Oliynik; and William Grant & Sons, Inc. and William Grant &
Sons USA (collectively, “Grant & Sons”), distributors allegedly licensed by other defendants
to distribute vodka bearing the Marks in the United States.
6
under Russian law, VVO-SPI continued to exist as a public entity. As one
consequence of that holding, and pursuant to applicable Russian laws, the
Russian Federation then “withdrew the rights and property entrusted to
[VVO-SPI],” and gradually, through manifold legal and bureaucratic
maneuvers, re-assumed its rights, including the rights to the Marks. Am.
Compl. ¶ 132, J.A. 283.
FTE describes Russian law as prohibiting governmental bodies
from “conduct[ing] business activities.” Am. Compl. ¶ 133, J.A. 284. After
retrieving its rights to the Marks, therefore, the Russian Federation, acting
through its Ministry of Agriculture and Ministry of Property Relations,
formed FTE as a new state-chartered entity charged with (as alleged here)
“exploit[ing] the STOLICHNAYA trademarks” on behalf of the Russian
Federation. Id.; see also Am. Compl. ¶ 132, J.A. 283.
2. Formation of FTE
In a series of decrees issued over time, the Russian Federation
endowed FTE with certain rights. Centrally relevant here are three source
documents conveying those rights: (1) FTE’s Charter, which was adopted by
the Russian Federation in a March 2002 decree;5 (2) a July 2002 decree that
5
The Charter’s 2002 adoption followed a decree issued in late December 2001, which
created FTE and required the Ministry of Agriculture to craft a charter for the new
organization. The terms of the 2001 decree carry little substance.
7
governs FTE’s rights to various trademarks, including the original United
States-registered Stolichnaya Mark; and (3) a January 2005 decree that
addresses FTE’s right to prosecute suits in foreign courts.6
FTE’s Charter sets forth the “Purposes and Subject of Activities
of the Enterprise,” the “Property of the Enterprise,” and the “Rights and
Responsibilities of the Enterprise.” It does not, however, expressly mention
Stolichnaya or any of the Marks. Rather, the Charter advises generally that
FTE was established “for the purposes of organizing the manufacture of
products, . . . [and] wholesale and retail trade” of vegetables, fruits, spices,
coffee, tea, soft drinks, and “all types of strong . . . drinks” – a phrase that,
none dispute, includes vodka and other alcoholic beverages. Charter ¶ 10,
J.A. 416. The Charter also imparts to FTE the authority to organize the
“export and import of all types of strong . . . drinks” and to “us[e] in
accordance with established procedure the trade marks of strong drinks [and]
alcoholic products.” Charter ¶ 11(c),(i), J.A. 417. It entitles FTE to “protect[ ]
and restor[e] . . . the Russian manufacturers’ violated rights to trade marks of
any products.” Charter ¶ 11(j), J.A. 417.
6
In our review of these key documents and relevant Russian laws, we rely on
translations provided by the parties in the Special Appendix. The parties have not called to
our attention any material disputes as to the accuracy of those translations.
8
The Charter also outlines the relationship between FTE and the
Russian Federation, declaring that property “entrusted” to FTE, Am. Compl.
¶ 13, J.A. 259, “shall be in federal ownership,” but “shall be assigned [to FTE]
in accordance with established procedure for operative administration.”
Charter ¶ 13, J.A. 417. With respect to property “assigned” to it, the Charter
limits FTE’s authority. For example, in addition to the unexceptional
limitation that FTE “shall not be entitled to carry on activities which are not
provided for by [the] Charter,” FTE also is “not . . . entitled to alienate or
otherwise dispose of the property assigned [to it] except with the consent of
the federal executive authorities.” Charter ¶¶ 12, 17, J.A. 417.
In addition, the Charter retains for the “Government of the
Russian Federation” the right “to impound any property assigned to [FTE]
that is excessive, is not used at all or is not used in conformity with its
purpose.” Charter ¶ 18, J.A. 417. Finally, the Charter expressly
contemplates the possibility of “winding-up” FTE “in accordance with
established procedure by decision of the Government of the Russian
Federation and on other grounds contemplated by civil legislation of the
Russian Federation.” Charter ¶ 40, J.A. 420.
9
In contrast to the Charter, the July 2002 decree refers expressly
to the original United States-registered Stolichnaya Mark:7 it authorizes FTE
to “use and dispose (without the right to assign),” “in accordance with the
procedure established by the Ministry of Agriculture,” certain listed “alcoholic
and spirituous” marks, including the Stolichnaya Mark. July 2002 Decree
¶ 1, J.A. 423. It further directs that “the Ministry of Agriculture of the
Russian Federation . . . [will] develop and approve the procedure for the use
by [FTE] of the trade marks.” Id. ¶ 2.
Issued three years later, “in response to inquiries by foreign
courts,” the January 2005 decree was intended to “confirm[ ] FTE’s right to
sue in foreign courts in its own name to protect or recover the Russian[ ]
Federation’s rights to trademarks for alcoholic products [abroad].” Am.
Compl. ¶ 140, J.A. 285. It states that FTE is “charge[d]” with “represent[ing]
the interests of the Russian Federation in the courts on matters of recovery
and protection of the rights of the Russian Federation to the trademarks for
alcoholic products abroad,” and “to realize registration of the rights of the
Russian Federation to the mentioned trademarks abroad.” 2005 Decree ¶ 1,
J.A. 425. Of note for present purposes, it includes an express sunset
7
The July 2002 decree identifies the relevant trademark as: “‘Stolichnaya’ (label),
certificate No. 38388 dated 10 October 1969.” July 2002 Decree, List *6, J.A. 423.
10
provision, providing that its authorization will be valid only until January 1,
2006, id. ¶ 2, but FTE further alleges that unnamed “[s]ubsequent decrees,
the newest of which remains in force, have continued to confirm FTE’s
authority.” Am. Compl. ¶ 140, J.A. 285.
FTE has exercised its authority with regard to the Marks in a
number of ways, it alleges. Among other things, at an unspecified time, it
granted an exclusive license to Cristall to manufacture, for sale in the United
States, vodka and other products that bear the Marks. Further, FTE has
sued to enforce Stolichnaya trademarks, not only in the United States, but in
the Netherlands and other countries as well.
3. Procedural History
In October 2004, FTE sued defendants Shefler, Oliynik, and
Domecq in the United States District Court for the Southern District of New
York.8 In its original complaint, FTE asserted ten separate claims in the
nature of unfair competition and trademark or copyright infringement, some
under the Lanham Act, others under state common law, and one under
8
Initially, Obschestvo S Ogranichennoi Otvetstvennost’yu Chernogolovskii Zavod
Alkogol’noi Produkcii (“Ost Alco”), an FTE-licensed manufacturer, was a plaintiff in this
suit. Ost Alco transferred its interest to a second manufacturer licensed by FTE, Zakrytoe
Aktsionernoe Obschestvo (“Liviz”), which appears as a plaintiff in the above caption. As
plaintiffs explain the progression, “Liviz stopped pursuing this case while it was initially on
appeal, and FTE [then] licensed its current co-plaintiff Cristall.” Appellants’ Br. 5 n.1
(citations omitted).
11
Article 10 of the Paris Convention for the Protection of Industrial Property.
Original Complaint (“Orig. Compl.”) ¶¶ 105-47, J.A. 69-77. In addition to
seeking defendants’ related profits and “FTE’s damages,” FTE requested a
declaratory judgment confirming its right to the Marks; rectification of the
U.S. trademark register to show FTE as the Marks’ holder; and cancellation
of “STOLICHNAYA-Related Marks.” Orig. Compl. at 35, J.A. 78.
Defendants moved to dismiss, arguing that FTE lacked statutory
standing to enforce the Marks and that defendant Domecq’s claimed rights in
the Marks had become “incontestable” under the Act.9 See 15 U.S.C. §
1065(1)-(4). The District Court granted defendants’ motion, agreeing that the
Marks had become incontestable and that therefore FTE’s challenge to the
validity of defendants’ assignment of the Marks to Domecq was barred. See
Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int’l N.V., 425 F. Supp. 2d
458 (S.D.N.Y. 2006) (“FTE I”), vacated in part by FTE II, 623 F.3d 61 (2d Cir.
2010). The District Court also considered and dismissed certain of FTE’s
common law claims. Id. at 473-76.
On appeal, our Court affirmed the District Court’s dismissal of
FTE’s common law claims, but vacated the dismissal of FTE’s Lanham Act
9
The status of “incontestability” serves, subject to certain qualifications, as
“conclusive evidence of the . . . registrant’s exclusive right to use the registered mark.” 15
U.S.C. § 1115(b).
12
claims. See FTE II, 623 F.3d at 63. In contrast to the District Court, we
concluded that the incontestability doctrine posed no obstacle to FTE’s
challenge to defendants’ claim of ownership in the Marks absent a
demonstration that defendants had received the Marks through a valid
assignment. Id. In a concurrent summary order, however, we found that –
despite additional briefing submitted at our request – the record remained too
sparse to determine whether, under Federal Rule of Civil Procedure 19,
additional parties required to be joined if feasible (in particular, the Russian
Federation) were missing from the litigation. In this regard, we observed
that – notwithstanding its literal grant to FTE of the right to “represent the
interests of the Russian Federation in the courts on matters of recovery and
protection of the rights of the Russian Federation to the trademarks for
alcoholic products abroad” – the January 2005 decree “on its face, does not
appear to be an obvious transfer of ownership . . . to FTE.” Fed. Treasury
Enter. Sojuzplodoimport v. Spirits Int’l N.V., 400 F. App’x 611, 614 (2d Cir.
2010) (summary order). The panel left it to the District Court on remand to
“determine, in the first instance, whether the required parties are before it.”
Id.In February 2011, FTE filed its third amended complaint. In it,
FTE added its “exclusive licensee,” Cristall, as a plaintiff, and Grant & Sons,
13
SPI’s new distributor, as a defendant. Defendants again moved to dismiss,
arguing that FTE – and, by extension, Cristall – lacked standing to sue under
the Lanham Act.
Looking to the Lanham Act’s requirement that a party be a
“registrant” to have standing to sue under Section 32(1), 15 U.S.C. § 1114(1),
and the Act’s definition of registrant as embracing the registrant’s “legal
representatives, predecessors, successors and assigns,” 15 U.S.C. § 1127, the
District Court agreed with defendants and held that plaintiffs lacked
standing under the Lanham Act. It concluded that FTE did not qualify as an
“assign” of the Russian Federation within the meaning of the Lanham Act,
finding insufficient the complaint’s allegation that FTE was “entrusted . . .
with” and granted the “exclusive right to use the Marks.” Am. Compl. ¶ 13,
J.A. 259. Reasoning that FTE’s Charter “indicates in clear and unambiguous
language” that FTE’s rights over the trademarks entrusted to it “are neither
tantamount to ownership, nor sufficient to permit Plaintiff FTE to exclude
the Russian Federation from taking action with respect to the Marks,” and
noting FTE’s concession that the Russian Federation – not FTE – owned the
Marks, the District Court found the grant inadequate for Lanham Act
standing purposes, because a trademark assignment requires the “sale or
transfer of all rights in the mark.” Fed. Treasury Enter. Sojuzplodoimport v.
14
Spirits Int’l B.V., No. 04 Civ. 0851, 2011 WL 4005321, at *6-7 (S.D.N.Y. Sept.
1, 2011) (“FTE III”) (emphasis added); see also Am. Compl. ¶ 136 (referring to
the Russian Federation’s “ultimate ownership of both FTE and the Marks”).
The District Court held further that FTE was not a “legal
representative” of the Russian Federation within the meaning of the Act. The
court explained that, although the January 2005 decree authorized FTE to
sue to protect the Marks on the Russian Federation’s behalf, the “plain and
ordinary meaning of the term ‘legal representative’” is one who appears on
behalf of a trademark owner that is “unable or incapable of representing itself
and enforcing its own rights.” Id. at *5. The court held that FTE had failed to
allege facts plausibly showing that it was somehow necessary for FTE to
pursue this litigation in its own name or that the Russian Federation was
unable to appear before the court. Id. at *5-6.
Judgment for defendants was entered on September 8, 2011.
This appeal followed.
DISCUSSION
I. Legal Framework
Standard of Review. We review de novo the District Court’s grant
of defendants’ motion to dismiss for want of statutory standing. See Lerner v.
Fleet Bank, N.A., 318 F.3d 113, 120 (2d Cir. 2003). On review, we accept “all
15
well-pleaded allegations in the complaint as true and draw[ ] all reasonable
inferences in plaintiff[s’] favor.” Bigio v. Coca-Cola Co., 675 F.3d 163, 169 (2d
Cir. 2012) (alteration and quotation marks omitted). To survive a motion to
dismiss, the complaint must plead “enough facts to state a claim to relief that
is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
A claim will have “facial plausibility” when the plaintiff pleads “factual
content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009).
Choice of Law. Although the Marks were developed in Russia
and are used around the world, plaintiffs’ claims in this suit derive from the
Marks’ registration in the United States. Therefore, United States law
provides the relevant framework for addressing whether plaintiffs are
entitled to bring suit under the Lanham Act. See Berni v. Int’l Gourmet
Rests. of Americas, Inc., 838 F.2d 642, 646 (2d Cir. 1988). To proceed under
the Act, a plaintiff’s “rights in the mark must be established with reference to
U.S. law.” Id. (concluding that former foreign shareholders in a United States
trademark registrant incorporated abroad lacked statutory standing to bring
a Lanham Act trademark infringement claim).
16
Plaintiffs contend, however, that “the rights transferred by the
charter [and other documents] must be determined under the law of the
Russian Federation,” and argue that FTE’s rights under Russian law are
sufficient to support their standing to sue here. Appellants’ Br. 22. For
support, they cite to our opinion in Itar-Tass Russian News Agency v.
Russian Kurier, Inc., 153 F.3d 82 (2d Cir. 1998), where we stated in a
copyright dispute involving a Russian plaintiff that “Russian law is the
appropriate source of law to determine issues of ownership of rights.” Id. at
90. Importantly, however, in Itar-Tass we declined to consider which law
determined the validity of an assignment of rights, id. at 90 n.11, and we
observed that “[u]nder United States law, an owner . . . may sue for
infringement in a United States court only if it meets the standing test” set
out by the Copyright Act, id. at 91. For our purposes here, then, Itar-Tass
supports plaintiffs’ view that Russian law may be relevant to this dispute.
But Russian law is only relevant in helping to determine the relationship
between FTE and the Russian Federation vis-a-vis the Marks. United States
law guides our determination of whether this relationship extends sufficient
rights to FTE for it to be characterized as an “assign” or “legal representative”
with standing to sue under Section 32(1) of the Lanham Act.
17
II. Lanham Act Standing
The Lanham Act was intended “to make ‘actionable the deceptive
and misleading use of marks’ and ‘to protect persons engaged in . . . commerce
against unfair competition.’” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S.
763, 767-68 (1992) (quoting 15 U.S.C. § 1127). Toward this end, the Act
provides separate causes of action for, among other things, infringement of
registered and unregistered trademarks. See 15 U.S.C. § 1114 (registered
trademark); id. § 1125 (unregistered trademark or trade dress); see also Two
Pesos, 505 U.S. at 767-68.
Section 32(1) of the Act, 15 U.S.C. § 1114(1) – at issue here –
protects only registered trademarks. It provides a cause of action against any
person who “use[s] in commerce any . . . imitation of a registered mark . . .
likely to cause confusion, or to cause mistake, or to deceive.” Id. This cause
of action is available, however, only to “registrant[s]” of the trademarks at
issue, a term the Act defines as embracing the actual registrant’s “legal
representatives, predecessors, successors and assigns.” 15 U.S.C. § 1127. In
other words, only registrants – as statutorily defined – have “statutory
standing” to bring an action under Section 32(1). See Allen v. Wright, 468
U.S. 737, 751 (1984) (explaining that to have standing, “a plaintiff’s complaint
[must] fall within the zone of interests protected by the law invoked”). This
18
provision contrasts with Section 43 of the Act, which allows suits “by any
person who believes that he or she is or is likely to be damaged” by the
defendant’s actions. 15 U.S.C. § 1125(a)(1) (emphasis added). FTE’s standing
here – in this action under Section 32(1) – thus hinges on whether it has
alleged facts plausibly showing that it falls within the statute’s definition of
“registrant.”10 As FTE’s exclusive licensee, Cristall’s standing depends in its
entirety on FTE’s.
FTE acknowledges – as it must – that the Russian Federation is
the “true owner” of the Marks. See Am. Compl. ¶ 78, J.A. 270. It contends
nonetheless that it falls within the Act’s definition of “registrant.” First, it
asserts that the Russian Federation has “assigned” to it the Federation’s
ownership interest in the Marks. Second, and alternatively, it maintains that
it is the Russian Federation’s “legal representative” for purposes of pursuing
this infringement claim.
We note as an initial matter that in none of FTE’s complaints has
it expressly alleged that it is either an assign or a legal representative. FTE
10
The question whether a plaintiff has “statutory standing” under a particular
statute often overlaps with the question whether she has a cause of action under that
statute. Indeed, the Supreme Court has observed that it may be “exceedingly artificial to
draw a distinction between the two.” Steel Co. v. Citizens for a Better Environment, 523
U.S. 83, 97 n.2 (1998). Generally, however, the “cause of action” assessment concerns
whether “any plaintiff has a cause of action under the statute,” whereas the “statutory
standing” assessment concerns whether “this plaintiff has a cause of action under the
statute.” Id.19
argues, however, that the complaint’s allegation that “FTE is the only entity
with the right to use and dispose of the Marks,” Am. Compl. ¶ 136, J.A. 284,
is sufficient to establish statutory standing at this stage. Although it may be
peculiar that the relevant terminology does not appear in the operative
complaint, this absence is of course not fatal to plaintiffs’ standing
arguments, for we may perform a functional analysis to determine whether
the Act’s requirements are met. And at this stage, we may look not only to
the complaint but also to documents incorporated into the complaint by
reference and relied on by the plaintiffs in bringing suit. See Border v.
Cablevision Sys. Corp., 418 F.3d 187, 196 (2d Cir. 2005). Such documents
include the Charter and the 2002 and 2005 Decrees. In examining these
documents, we are mindful that any ambiguities should be resolved in
plaintiffs’ favor. See Subaru Distribs. Corp. v. Subaru of Am., Inc., 425 F.3d
119, 122 (2d Cir. 2005).
We first address whether FTE is an “assign” of the Russian
Federation with regard to the Marks, and conclude that it is not. Second, we
address the meaning of the phrase “legal representative” as used in the Act –
an issue that appears to be one of first impression among federal courts of
appeals – and conclude that the District Court correctly determined that this
term denotes not merely one whom an appointing entity designates its “legal
20
representative,” but requires in addition that the appointing entity be legally
unable to bring suit on its own behalf. Because FTE has not sufficiently
alleged that the Russian Federation is unable to appear in this litigation,
FTE is not a “legal representative” with standing to sue under Section 32(1).
A. FTE Is Not an “Assign” or its Equivalent under the
Lanham Act
Plaintiffs argue that FTE is an “assign” of the Marks because it
has been granted “exclusive rights” to the Marks, including the right “to use,
license and enforce the Marks” – in essence, maintaining that it is either a
true assign, or, as an exclusive licensee of the Russian Federation, it has
rights tantamount to those conveyed in an assignment. Appellants’ Br. 19.
Defendants retort that FTE’s rights to the Marks fall short of those required
to constitute an assignment for purposes of the Act. We think that
defendants have the better of the argument.
At least two requisites are inherent in the concept of assignment
under the Act: (1) the need for the relevant assigning document to be effected
“by instrument[ ] in writing duly executed,” 15 U.S.C. § 1060(a)(3); and (2) the
need for the assignment to transfer an ownership interest in the marks at
issue. Because the conveyance to FTE falls short on these measures, we
conclude that FTE is not an “assign” of the Russian Federation for statutory
21
standing purposes under the Act. We then turn to the question whether,
casting FTE as the Russian Federation’s exclusive licensee, FTE’s rights are
nonetheless tantamount to those of an assign. We answer that question, too,
in the negative.
1. “Duly Executed Instrument in Writing”
Section 10 of the Act declares, “Assignments shall be by
instruments in writing duly executed,” 15 U.S.C. § 1060(a)(3), and directs the
USPTO to “maintain a record of information on assignments,” id. § 1060(a)(5).
The various documents presented to support plaintiffs’ position
that FTE is an “assign” of the Russian Federation do not resemble an
assignment under United States law, even taking them flexibly and as a
cumulative whole. As discussed above, although the Charter refers generally
to “property assigned” to FTE,11 it does not expressly mention the Marks. The
July 2002 decree, which does refer to a Stolichnaya Mark, does not declare
that the Russian Federation is assigning anything to FTE; rather, the
document provides that the Russian Federation is conveying to FTE the
rights to “use and dispose” of one of the Marks, without any mention at all of
assignment, or transferring ownership, or the good will symbolized by the
Marks. J.A. 423.
11
Paragraph 16 provides in relevant part, “The sources of formation of the
Enterprise’s property shall be as follows: (a) property assigned to the Enterprise in
accordance with established procedure.” Charter ¶ 16, J.A. 417.
22
Although we do not here purport to set out a bright-line rule
requiring that Lanham Act assignments take a particular written form, we
note just how far the Charter’s (and the decrees’) language lies from the
unequivocal transfer of title and good will normally required to effectuate an
assignment of rights. Cf. Restatement (Second) Contracts § 324 (“It is
essential to an assignment of a right that the [assignor] manifest an intention
to transfer the right to another person without further action or
manifestation of intention by the [assignor].”).
Regulations issued by the USPTO reflect an expectation that
assignments will be clearly stated in writing, and the assigned marks
identified with specificity. Thus, to register a trademark assignment, the
USPTO requires that the assignee submit a cover sheet with information
including “[e]ach trademark registration number and each trademark
application number” or “a copy of the application or a reproduction of the
trademark.” 37 C.F.R. § 3.31(a)(4)(i). None of the documents at issue here
states that Russia has transferred title to the Marks to FTE, and only one
Mark is identified in any of the documents empowering FTE.
Although it may seem formalistic, the “writing requirement” is
rooted in real policy concerns. In the copyright context, the Ninth Circuit has
explained that the Copyright Act’s assignment-related writing requirement,
23
17 U.S.C. § 204(a), serves the ends of (1) ensuring that the owner of
intellectual property will not assign it inadvertently; (2) forcing parties to
determine the precise rights being transferred; and (3) enhancing
predictability and certainty of ownership. Effects Assocs., Inc. v. Cohen, 908
F.2d 555, 557 (9th Cir. 1990). Similarly, the predictability and certainty
arising from a clear writing assigning a trademark dovetail comfortably with
the standing requirements of Section 32(1). A clear writing effecting an
assignment signals to the parties and the world that the assign is the party
that owns the mark and is authorized to exclude others from use. There is no
such writing in the record before us, nor is such a writing adequately alleged
in the complaint.
2. Transfer of Ownership Rights in the Marks
Even if we were to treat the Act’s formal writing requirement as
potentially satisfied by aspects of the Charter and the 2002 and 2005 decrees,
those documents leave the Russian Federation with not only ownership, but
simply too great an operational interest in the Marks for us to consider the
Federation as having assigned the Marks to FTE for purposes of the Act.
According to one acknowledged authority in the field, an
assignment “is an outright sale of all rights in that mark.” 3 J. Thomas
McCarthy, McCarthy on Trademarks & Unfair Competition § 18:1 (4th ed.
24
2012) (emphasis added). Professor McCarthy further advises that an
“assignment” is “by definition . . . a legal document that transfers title to the
mark.” Id. § 18:7; see also id. § 18:15 (“After an assignment, the assignor has
divested itself of its trademark rights.”). Other commentators have echoed
this view. See, e.g., Siegrun D. Kane, Kane on Trademark Law § 21:1 (2011
ed.) (“A trademark assignment is a transfer of ownership. The trademark
owner (assignor) gives up all rights to the mark. Those rights are acquired by
the assignee, who stands in the shoes of the assignor.”); Restatement (Third)
of Unfair Competition § 34 (1995) (“The owner of a trademark, trade name,
collective mark, or certification mark may transfer ownership of the
designation to another through an assignment.”).12
Regulations promulgated by the USPTO similarly suggest its
expectation that a trademark assignment will effect a transfer of ownership.
Those concerning the issuance of a “[n]ew certificate on change of ownership”
require that “[t]he assignment or other document changing title must be
recorded in the [USPTO].” 37 C.F.R. § 2.171(a) (emphasis added).
12
In ICEE Distributors, Inc. v. J&J Snack Foods Corp., 325 F.3d 586 (5th Cir.
2003), the Fifth Circuit, citing to both the McCarthy and the Kane treatises, similarly
described the “assignment” of a mark as the “assignee step[ping] into the shoes of the
assignor . . . . [and thereby] acquir[ing] . . . all the rights and priorities of the assignor.” Id.
at 593 (emphasis added and internal quotation marks omitted). Other circuits have
endorsed the approach, also describing an assignee as “step[ping] into the shoes of the
assignor.” Carnival Brand Seafood Co. v. Carnival Brands, Inc., 187 F.3d 1307, 1310 (11th
Cir. 1999); Premier Dental Prods. Co. v. Darby Dental Supply Co., 794 F.2d 850, 853 (3d
Cir. 1986).
25
Finally, in the more specific context of standing under Section
32(1), Professor McCarthy concludes that both as a matter of statutory
interpretation and under general principles of trademark law, “only the
owner of the trademark is entitled to sue for its infringement.” 6 McCarthy
§ 32.3. And district courts in this Circuit have long held – and persuasively
reasoned – that a party is not an “assign” for standing purposes under the
Lanham Act unless that party owns the mark at issue.13
Our own case law on the subject is sparse, but we appear to have
accepted that a transfer of an ownership interest in a mark is a predicate to
standing for any putative “assign.” In DEP Corp. v. Interstate Cigar Co., 622
F.2d 621 (2d Cir. 1980), for example, we considered whether the exclusive
distributor of soap bearing a registered trademark could sue for infringement.
To determine whether the plaintiff had functionally been assigned the mark
at issue, we looked to the language of the distribution agreement. That
13
See Prince of Peace Enters., Inc. v. Top Quality Food Market, LLC, 760 F. Supp.
2d 384, 391 (S.D.N.Y. 2011) (“[L]icenses for particular uses, or other documents not
purporting to transfer ownership in the mark, are not assignments as the alleged assignor
has not parted with all rights.”); Calvin Klein Jeanswear Co. v. Tunnel Trading, No. 98
Civ. 5408, 2001 WL 1456577, at *4 (S.D.N.Y. Nov. 16, 2001) (“Where a licensing agreement
does not grant the licensee a property interest in the mark or otherwise assign to the
licensee the registrant-licensor’s ownership rights, the licensee, even if exclusive, cannot
enforce the mark under § 1114.”); Nordco A.S. v. Ledes, No. 95 Civ. 7753, 1997 WL 570546,
at *3 (S.D.N.Y. Sept. 15, 1997) (finding no valid assignment of trademark rights on the
ground that “there is no document conveying title or ownership of the trademark to [the
plaintiff]”); Silverstar Enters., Inc. v. Aday, 537 F. Supp. 236, 239 (S.D.N.Y. 1982) (“[A]n
assignment of a trademark is a transfer of the entire interest.”).
26
document provided that the plaintiff “shall not during the continuance of this
arrangement or thereafter have or claim any right whatsoever whether of
user or otherwise to or in any such trade marks, trade names or brands used
in connection with [p]roducts.” Id. (internal quotation marks omitted). We
found this express language dispositive, even if the plaintiff as an exclusive
distributor “has the greatest interest in bringing an infringement action.” Id.
at 624. The agreement “deni[ed] the [plaintiff] any property interest in the
trademark,” id. at 623, and we accordingly concluded that the plaintiff could
not bring a claim for infringement under Section 32(1).
FTE argues that these cases and authorities misinterpret the Act
insofar as they require that an “assign” obtain ownership of or title to a mark.
According to FTE, Congress could have limited standing under Section 32(1)
to trademark owners, as it did elsewhere in the Act, see 15 U.S.C.
§ 1125(d)(1)(A) (providing standing in cyberpiracy cases only to the “owner” of
the mark). Instead, Congress chose to enlarge standing for violations of
Section 32(1) to include a registrant’s “legal representatives, predecessors,
successors and assigns.” FTE maintains that this list of proper plaintiffs
includes entities that do not actually own the trademarks at issue, and so
ownership cannot be a sine qua non of statutory standing. Further, FTE
notes that Professor McCarthy – who elsewhere asserts that an assignment
27
amounts to “an outright sale of all rights in that mark” – also observes that
an “assignment is valid even though it may reserve certain rights of use of the
mark in the assignor.” 3 McCarthy § 18:8.
Here, however, we need not precisely delineate the bundle of
rights that a trademark assignment must extend to a purported assignee to
support the latter’s standing to bring a Section 32(1) suit. It is enough to say
that in this case, in consideration of all of the relevant authorities, too many
rights remain with the Russian Federation for it to be deemed to have
“assigned” the Marks to FTE.
Thus, the Charter expressly states that “[t]he property of the
enterprise shall be in federal [i.e., Russian Federation] ownership,” and that
the property shall be transferred to FTE only “for operative administration in
accordance with the laws of the Russian Federation.” Charter ¶¶ 13, 14, J.A.
417. FTE argues that, under Russian law, providing an assignment for
“operative administration” is tantamount to an assignment under the
Lanham Act. For example, FTE advises that article 113 of the Russian Civil
Code provides that the property of a “unitary enterprise” like FTE shall
“belong to that enterprise by right of economic jurisdiction or operative
management.” Special Appendix (“SPA”) 73 (emphasis added). Further,
parties that possess property by right of “operative administration” are
28
legally authorized under Russian Civil Code article 305, we are told, to defend
their possessory rights against the actual owner of the property. SPA 79.
Russian law, however, appears to be much more equivocal than
FTE suggests. Defendants point to provisions of the Russian Civil Code that
suggest strongly that “state unitary enterprises” are “not endowed with the
right of ownership.” Russian Civil Code art. 113(1), SPA 73. Further, Russian
law allows institutions within which “property has been consolidated by right
of operative management” to “possess, use, and dispose of this property
within the limits established by a law in accordance with the purposes of its
activity, the assignments of the owner of this property, and the designation of
this property.” Id. art. 296(1), SPA 76 (emphasis added).
Without purporting to tender a definitive reading of Russian law,
we can nonetheless observe that the Civil Code is consistent with the
limitations placed on FTE’s rights to the Marks by the Charter and decrees,
and does not so enhance FTE’s operational rights as to render it an assign
under United States trademark law. The Charter expressly prohibits FTE
from alienating or otherwise disposing of any property assigned to it by right
of operative administration, and allows the Russian Federation to impound
property transferred to FTE and to “wind-up” FTE. Similarly, the July 2002
decree provides that FTE has the right “to use and dispose (without the right
29
to assign)” the Marks, and states that any such use shall occur only “in
accordance with the procedure established by” agencies of the Russian
Federation. J.A. 423.
Not only do Russian law and the relevant decrees direct that the
Russian Federation retain formal title to the Marks, then, but they expressly
reserve to the Russian Federation certain rights that are generally inherent
in the concept of ownership. Thus, FTE has no right to assign the Marks
absent permission from the Russian Federation, and nothing that we have
been directed to in the governing documents suggests that FTE has been
conveyed a general right to exclude others from use of the Marks. See 1
McCarthy § 2:14 (“A Trademark is a Right to Exclude”). FTE has identified
no constraint on the Russian Federation’s authority to use the Marks itself if,
for example, the Federation determines in its sole discretion that the Marks
are not being used for their “proper purpose.” The Russian Federation also
appears free to withdraw FTE’s rights to use the Marks, and to grant others
similar rights. Although in the future we may find a trademark assignment
effective to confer standing where the assignment reserves certain rights in
the assignor, FTE has not cited any persuasive authority within or outside
our Circuit holding that a valid assignment of a trademark right can occur
when the putative assignor retains the right to rescind the trademark, to
30
grant a license for its use to others, or to exclude others from using the mark.
We decline to create such a rule here.
3. FTE’s Statutory Standing as an Exclusive Licensee
FTE argues further that even if the Russian Federation has not
actually “assigned” the Marks, FTE’s exclusive right to use the Marks in the
United States and abroad – in effect, an exclusive license – is sufficient to
support FTE’s statutory standing to sue under Section 32(1). Some district
court opinions appear to offer support for this argument. See, e.g.,
Telebrands Corp. v. Del Labs., Inc., 719 F. Supp. 2d 283, 293 (S.D.N.Y. 2010)
(holding that where an exclusive licensee has “broad rights to sell” a product
with a registered trademark “royalty free, [and] for a potentially unlimited
period” and does “not set forth any restrictions on [the licensee’s] ability to
enforce the trademarks,” the licensee has standing to sue for infringement
under Section 32(1)); Bliss Clearing Niagara, Inc. v. Midwest Brake Bond Co.,
339 F. Supp. 2d 944, 959-61 (W.D. Mich. 2004) (concluding that an exclusive
license that also extends “the right to pursue actions for infringement of the
mark” is sufficient to establish standing to sue for infringement).
But Congress could easily have included “licensee” or “exclusive
licensee” among the terms in 15 U.S.C. § 1127 that define a “registrant.” It
chose instead to limit standing to parties having a more specific set of
31
interests in the registered mark. A plaintiff therefore must show that its
“license” amounts, in fact, to an assignment to establish entitlement to sue
under Section 32(1). See 3 McCarthy § 18:5 (“Even though a contract states
that it is a ‘license,’ a court will not be governed by form, and the contract will
be upheld as an assignment of trademark rights if that is its actual legal
effect.”); 3-11 Gilson on Trademarks § 11.02(1)(b) (“Gilson”) (same). For the
reasons discussed above with respect to the putative assignment, see Part
II.A.1 & 2, plaintiffs’ allegations fall short here. As defined by United States
law, FTE is not, in fact, the “assign” of the Marks, and therefore may not sue
under Section 32(1) on that basis.
In addition, we observe that plaintiffs’ complaint does not allege
facts plausibly showing that FTE was granted an exclusive license to use or
enforce the Marks, and none of the relevant documents suggest the Russian
Federation’s intent to grant such an exclusive license. The complaint alleges
that FTE is “the only entity with the right to use and dispose of the Marks.”
Am. Compl. ¶ 136, J.A. 284. But that FTE was the only licensee when it filed
the complaint does not establish that it held an exclusive license, especially in
light of the absence of any suggestion of exclusivity in either the Charter or
the July 2002 decree. Moreover, the complaint does not appear to suggest
that FTE could exclude the Russian Federation from using the Marks, since
32
FTE acknowledges that its rights are limited by the Russian Federation’s
“ultimate ownership.” Id.
4. Special Considerations Concerning Foreign
Government Trademark Holders
Plaintiffs also contend that we should ignore these legal
restrictions on FTE’s rights to sue with regard to the Marks and instead look
generally to what we discern to be the policies underlying statutory
limitations on seeking damages for trademark infringement. In particular,
plaintiffs argue that policy interests in avoiding a multiplicity of suits are not
implicated in this case because the Russian Federation has agreed by letter
submitted to the District Court to be bound by this litigation.14 They urge
further that comity considerations compel our court to afford the Russian
Federation flexibility in determining how to protect its trademark rights and
therefore to recognize FTE as an assign.
14
In May 2011, presumably at FTE’s request, the Deputy Head of the Federal
Service for the Regulation of the Alcohol Market of the Russian Federation sent a brief
letter to the District Court declaring that the Russian Federation had empowered FTE to
bring this litigation and that “any final judgment on the merits of the claims for restoration
of the trademark Stolichnaya brought by FTE . . . will be for the Russian Federation the
final resolution of the court dispute with the defendants arising from the subject and
grounds set out by FTE . . . in the relevant complaint (i.e., will have for the Russian
Federation the same consequences as if the Russian Federation were a party to the
abovementioned proceedings).” Letter dated May 26, 2011 of V.V. Spirin to District Court,
J.A. 458-59.
33
We discuss some of these concerns in greater detail below, in the
context of the claim that FTE is the “legal representative” of the Russian
Federation. We agree that, in certain contexts, such policy considerations,
like the interest in avoiding a multiplicity of suits, may help to guide the
analysis of whether a party has standing to sue under the Act. Cf. Phoenix of
Broward, Inc. v. McDonald’s Corp., 489 F.3d 1156, 1164 (11th Cir. 2007)
(stating that the “risk of duplicative damages” is a factor to be considered in
deciding whether a plaintiff has standing to bring a false advertising claim
under Section 43 of the Lanham Act). But the Russian Federation is not a
party to this litigation, and a brief ad hoc letter to the Court from the current
Deputy Director of an administrative agency, asserting that the Federation as
a whole will in the future consider itself bound by the outcome of this
litigation does not, in our view, eliminate the risk of duplicative and
conflicting litigation. And even if such a letter did begin to assuage those
concerns, such policy interests could not override our statutory analysis here.
Further, we recognize that foreign states owning registered
trademarks for commercial use may face a number of different and even
challenging considerations in deciding how and when to enforce the rights
protected by their internationally-deployed marks. We do not speculate why
the Russian Federation settled on this particular arrangement with FTE as
34
the means of pursuing any rights it had in the Marks or in particular of
asserting its United States rights in the Marks. We observe, however, that
the Lanham Act – particularly in its provisions governing the “assignment” of
trademarks and those relating to statutory standing to sue under the Act –
sets out formal requirements aligned with the policies it is designed to
promote. Had the Russian Federation effected a valid assignment here, FTE
could sue under Section 32(1) as an “assign.” As the relationship between the
Russian Federation and FTE is now structured, however, it cannot, consistent
with the Act.
B. FTE Is Not a “Legal Representative” of the Russian Federation
for Purposes of the Act
We next consider whether FTE qualifies as a legal representative
under the Act. The District Court concluded that FTE had to satisfy two
conditions to achieve this status: “[A] party qualifies as a legal representative
under Section 32(1) of the Lanham Act if the party has the authority to
appear on behalf of the registrant/owner with respect to the
registrant/owner’s legal interests and the registrant/owner is unable or
incapable of representing itself and enforcing its own rights.” FTE III, 2011
WL 4005321, at *5 (emphasis in original). In this case, the District Court saw
no adequate basis in the complaint or in the law for concluding that the
35
Russian Federation is legally incapable of representing itself, and therefore
held that FTE did not qualify as a “legal representative.” Id.On appeal, FTE argues that the District Court interpreted the
term “legal representative” too narrowly when it required that the real party
in interest be legally incapable of representing itself. FTE submits that, as
used in the Act, the phrase “legal representative” should be construed to
include a “part[y] exercising another person’s rights over a trademark on that
person’s behalf.” Appellants’ Br. 37.
The interpretation of the phrase “legal representative” in the
Lanham Act context appears to present a question of first impression in the
federal courts of appeal. After review of the language and structure of the
Lanham Act and the district court opinions on point, and remaining mindful
of relevant comity concerns, we conclude that the District Court here correctly
interpreted the phrase. Because FTE has failed to allege facts plausibly
showing that it qualifies as a “legal representative,” it may not proceed in
that capacity.
1. Interpretation of the Phrase “Legal Representative”
In its broadest usage, the phrase “legal representative” may refer
simply to “[o]ne who stands for or acts on behalf of another.” Black’s Law
Dictionary 1416 (9th ed. 2009) (defining “representative”). Often, however,
36
its meaning may be more precise. It may refer, for example, to an “executor
or administrator” designated to act on behalf of a party who is incapable of
acting on his own behalf, Rock-Ola Mfg. Corp. v. Filben Mfg. Co., 168 F.2d
919, 922 (8th Cir. 1948) (interpreting a contract including the phrase “legal
representative”), or a trustee named to act on behalf of a party who, by law or
agreement, is unauthorized to represent his own interests, see In re Casco
Chem. Co., 335 F.2d 645, 651 (5th Cir. 1964) (concluding that a bankruptcy
trustee is a “legal representative” for purposes of Federal Rule of Civil
Procedure 60(b)). We must therefore look to the language and purposes of the
Lanham Act to construe the phrase “legal representative” for present
purposes.
The text and structure of the Lanham Act support defendants’
interpretation. Section 32(1) expressly restricts standing to the “registrant”
(which the Act expressly defines as the owner or, as we have said, his “legal
representatives, predecessors, successors and assigns”). 15 U.S.C. § 1127. By
contrast, Section 43 of the Act allows suits “by any person who believes that
he or she is or is likely to be damaged” by the defendant’s actions. 15 U.S.C.
§ 1125(a)(1) (emphasis added). To interpret the phrase “legal representative”
broadly would permit both the registrant of the trademark and his putative
“legal representative” to file separate suits against the same defendant for the
37
same infringing act – a result that seems inconsistent with Congress’s stated
intention to limit standing to the single “registrant” of the trademark under
Section 32(1) as opposed to the broad standing afforded plaintiffs suing under
Section 43. See Nat’l Licensing Ass’n v. Inland Joseph Fruit Co., 361 F. Supp.
2d 1244, 1255 (E.D. Wash. 2004) (“Although the term ‘legal representative’ is
not defined by the Act, [a broad construction] would be inconsistent with the
obvious intention to limit trademark infringement suits to those [who] have
or had ownership interests in the trademark and the historically restrictive
interpretation given to ‘registrant.’”).
Further, adopting FTE’s interpretation of “legal representative”
in this context – namely, that a “legal representative” includes “parties like
FTE that have been given rights conferring control over trademarks
ultimately owned by others,” Reply Br. 1 – would raise constitutional
concerns, thus militating against that interpretation. It is well established
that a party must demonstrate “injury-in-fact” to have constitutional
standing, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992), and
that such injury must be particular to the claim raised and the relief sought,
e.g., Davis v. Fed. Election Comm’n, 554 U.S. 724, 734 (2008). Applying
Lujan, we have held that an investment manager to whom investor-clients
had given power-of-attorney and significant authority over investment
38
decisions lacked constitutional standing to file a securities fraud claim on the
clients’ behalf. W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche LLP, 549
F.3d 100 (2d Cir. 2008) (“Huff”). In Huff we recognized that, consistent with
Supreme Court precedent in Sprint Communications Co. v. APCC Services,
554 U.S. 269 (2008), the “minimum requirement for an injury-in-fact is that
the plaintiff have legal title to, or a proprietary interest in, the claim,” even if
that title was not originally held by the plaintiff but was received through an
assignment made by the initial holder of the claim. Huff, 549 F.3d at 108.
We also recognized “a few . . . prudential exceptions to the ‘injury-in-fact’
requirement,” id. at 109, and we explained that these “exceptions permit
third-party standing where the plaintiff can demonstrate (1) a close
relationship to the injured party and (2) a barrier to the injured party’s ability
to assert its own interests,” id.; see also Kowalski v. Tesmer, 543 U.S. 125,
130-31 (2004).
FTE’s proposed interpretation of “legal representative,” however,
would extend standing to parties whose sole interest in a trademark-
infringement action is a contractually-derived right to bring the claim,
without owning the claim or having been assigned the claim, even if the
actual trademark owner is capable of bringing suit on her own behalf. To
ensure that our construction of the term “legal representative” avoids a
39
possible conflict with the requirements of Article III, we read it as requiring
the trademark holder’s legally-recognized inability to assert a claim for
infringement. Cf. Gollust v. Mendell, 501 U.S. 115, 125 (1991) (requiring
plaintiff in shareholder-derivative suit to maintain a stake in the outcome of
the litigation to avoid “serious constitutional doubt whether that plaintiff
could demonstrate the standing required by Article III’s case-or-controversy
limitation on federal court jurisdiction”).
FTE cites McClaskey v. Harbison-Walker Refractories Co., 138
F.2d 493 (3d Cir. 1943), in support of its argument for a broader reading of
the phrase. In McClaskey, the court examined whether, under the patent
laws, a sheriff could serve as the “legal representative” of a patent holder, and
therefore be empowered to transfer a patent through a creditors’ sale of the
patent holder’s assets. Id. at 494. The court permitted the sheriff to go
forward, concluding that “we can entertain no doubt that a patent may be
reached and sold by a creditors’ bill.” Id. at 495. FTE argues that because
the Third Circuit did not consider whether the patent holder was
“unavailable to bring suit,” the language “legal representative” in the context
of the Lanham Act need not be read to include such a requirement.
But McClaskey does not support FTE’s argument. The court’s
holding there turned on the analogy it drew between the sheriff and a
40
“trustee specifically appointed” by a court for the purpose of disposing of a
debtor’s property. Id. at 500. As we recognized in Huff, a trustee’s authority
to bring suit on behalf of a trust (or otherwise represent a trust) flows from a
special, legally-recognized obligation on the part of the trustee to protect the
interests of the trust, which – like the debtor and patent holder in McClaskey
– has become legally incapable of representing itself. See Huff, 549 F.3d at
109-10; see also Sprint, 554 U.S. at 287-88. In other words, even if we were
bound by McClaskey, that opinion merely illustrates that a third party may
serve as a “legal representative,” even where the represented party is
physically present, so long as the represented party is somehow disabled from
asserting the rights at issue. Cf. Sprint, 554 U.S. at 288 (finding that party
with “contractual obligation” to litigate claim has Article III standing in
situation where party was also assigned title to the claim).15
Finally, FTE argues that the District Court’s interpretation of
“legal representative” offends international comity by “ignor[ing] the
decisions made by a foreign sovereign to place trademarks and the
commercial operations associated with them in the hands of a state
enterprise.” Appellants’ Br. at 46. International comity is “a consideration
15
For the reasons stated above, we also find unconvincing a district court case that
FTE has identified holding to the contrary of our view. See Idaho Potato Comm’n v. Wash.
Potato Comm’n, 410 F. Supp. 171 (D. Idaho 1976).
41
guiding courts, where possible, towards interpretations of domestic law that
avoid conflict with foreign law.” Linde v. Arab Bank, PLC, 706 F.3d 92, 111
(2d Cir. 2013). Considerations of comity are not, however, matters of
“absolute obligation.” Id. (internal quotation marks omitted). Rather, the
concept of comity calls for an examination of “all of the relevant interests of
all of the nations affected by the court’s decision.” Id. (emphasis omitted); see
also Pravin Banker Assocs. v. Banco Popular Del Peru, 109 F.3d 850, 855 (2d
Cir. 1997) (“[E]xtending comity . . . is only appropriate if it is consistent with
United States government policy.”). Here, concern for international comity
does not overcome the United States’ interests in enforcing its own trademark
laws within its borders, or counsel the judicial creation of an exception to the
Lanham Act’s express requirements as consistently construed over time.
Foreign sovereigns desiring to avail themselves of the protections of United
States laws, particularly on commercial matters such as this, must observe
United States prerequisites unless Congress directs otherwise.
We thus conclude that to serve as a “legal representative” entitled
to bring suit under Section 32(1) on behalf of a trademark holder, a putative
plaintiff must demonstrate both its legal authority to represent the owner
and that the trademark holder is legally incapable of representing itself.
42
Applying that rule here, we observe that in neither the original
nor the operative complaint did FTE allege that the Russian Federation was
incapable of bringing this suit on its own behalf. FTE III, 2011 WL 4005321,
at *5. Indeed, on appeal, FTE appears to acknowledge that the Russian
Federation could appear in this suit; it now argues that the District Court
should have permitted the Russian Federation “to join or be substituted into
this action.” Appellants’ Reply Br. 27-28. Only an amicus brief submitted to
this Court on behalf of the Russian Federation contends that the Russian
Federation is unauthorized to appear in this litigation.16 Noting this
discordance between plaintiffs and amicus, we decline to accord significant
weight to the Federation’s argument both because it was not raised below and
because an amicus brief is “not a method for injecting new issues into an
appeal.” Universal City Studios, Inc. v. Corley, 273 F.3d 429, 445 (2d Cir.
2001).17
16
The “Institute of Legislation and Comparative Law under the Government of the
Russian Federation” has moved for leave to file a brief as amicus curiae in support of
plaintiffs-appellants, and has spoken to these questions in its amicus brief. That motion is
GRANTED.
17
In any event, as defendants argue, Russian law may not bar the Russian
Federation from suing in its own capacity. The Russian Civil Code provides, among other
things, that the owner of property “may demand the elimination of any violations of his
right even though these violations are not combined with deprivation of possession.”
Russian Civil Code art. 304, SPA 78. Although the same chapter extends similar rights to
parties who have claim to the property “by right of . . . operative management,” id. art. 305,
SPA 78-79, nothing in the Code appears to prohibit the true owner – in the case of the
Marks, the Russian Federation – from bringing suit to assert its rights. Indeed, the alleged
43
In sum, since plaintiffs have failed sufficiently to allege that the
Russian Federation is unable to appear in this litigation, FTE is not the
Russian Federation’s “legal representative” for the purpose of bringing suit
under Section 32(1) of the Lanham Act.
C. The Russian Federation Has Not “Ratified” This Suit under Fed.
R. Civ. P. 17 Sufficiently to Avoid Joinder
FTE argues finally that even if it would ordinarily be unable to
sue on its own for infringement of the trademarks at issue, its suit here
should be permitted to proceed because the Russian Federation, as the real
party in interest, has “ratified” the litigation by virtue of the May 2011 letter
cited above. We cannot agree.
Federal Rule of Civil Procedure 17(a) provides that “[a]n action
must be prosecuted in the name of the real party in interest,” but that
[t]he court may not dismiss an action for failure to prosecute in
the name of the real party in interest until, after an objection, a
reasonable time has been allowed for the real party in interest to
ratify, join, or be substituted into the action. After ratification,
joinder, or substitution, the action proceeds as if it had been
originally commenced by the real party in interest.
To ratify a suit, the real party in interest must “(1) authorize continuation of
the action and (2) agree to be bound by its result.” ICON Grp., Inc. v.
Mahogany Run Dev. Corp., 829 F.2d 473, 478 (3d Cir. 1987); see also Charles
infringement may cause different damages to the Russian Federation than to FTE.
44
Alan Wright, Arthur R. Miller, Mary Kay Kane, Richard L. Marcus, 6A Fed.
Prac. & Proc. § 1555 (3d ed. 2013).
Even accepting, based on the May 2011 letter (see supra, note 14)
that the Russian Federation endorses FTE’s authority to bring this suit and
is willing to be bound by this litigation – propositions that we have
questioned – plaintiffs cannot deploy Rule 17 to bypass the standing
requirement of Section 32(1), which permits only “registrants” to bring
actions for infringement of registered marks. The Rules Enabling Act, 28
U.S.C. § 2072(b), provides that the Federal Rules of Civil Procedure “shall not
abridge, enlarge or modify any substantive right.” Recently, a plurality of the
Supreme Court instructed that we should consider a rule “substantive” for
the purposes of the Rules Enabling Act if it “alters the rules of decision by
which the court will adjudicate those rights.” Shady Grove Orthopedic
Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431, 1442 (2010) (plurality
opinion) (alterations and internal quotation marks omitted). A rule is
“procedural,” in contrast, if it “governs only the manner and the means by
which the litigants’ rights are enforced.” Id. (internal quotation marks
omitted).
In this case, to extend standing to FTE through “ratification”
under Rule 17(a) would do more than alter “the manner and the means” for
45
enforcing the Russian Federation’s rights. Id. at 1442. To enlarge standing
in this way would extend the entitlement to sue to a new party that is
otherwise unauthorized under the statute at issue to bring suit to enforce
whatever rights it may claim. Indeed, it would endow FTE with a right that
is not now available at all to non-registrants under Section 32(1). Such a
decision would amount to an improper expansion of the substantive rights
provided by the Act. Stichting Ter Behartiging Van De Belangen Van
Oudaandeelhouders In Het Kapitaal Van Saybolt Int’l B.V. v. Schreiber, 407
F.3d 34, 49 (2d Cir. 2005) (“The procedural mechanisms set forth in Rule
17(a) for ameliorating real party in interest problems may not, under the
Rules Enabling Act, 28 U.S.C. § 2072(b), be employed to expand substantive
rights.”); see also Parisi v. Goldman, Sachs & Co., 710 F.3d 483, 488 (2d Cir.
2013) (noting that the availability of a class action mechanism under Rule 23
cannot create a right to sue but rather “presupposes the existence of a claim”).
Our Court previously rejected an argument similar to that of FTE
in the context of the Copyright Act. See Eden Toys, Inc. v. Florelee
Undergarment Co., 697 F.2d 27 (2d Cir. 1982), superseded on other grounds
by Fed. R. Civ. Proc. 52(a). Because the copyright holder had purportedly
ratified the suit under Rule 17, the plaintiff in Eden Toys maintained that it
too had standing to pursue a copyright action even though it had not
46
registered the copyright. Declining to adopt that position, we explained:
“While Federal Rule of Civil Procedure 17(a) ordinarily permits the real party
in interest to ratify a suit brought by another party, the Copyright Law is
quite specific in stating that only the ‘owner of an exclusive right under a
copyright’ may bring suit.” Id. at 32 n.3 (citations omitted).18 Similar
reasoning requires us to reject FTE’s contention here.
D. Dismissal of Remaining Claims
We also affirm the District Court’s decision to dismiss Cristall’s
trademark infringement claims. In support of its asserted statutory standing
to sue, Cristall alleges only that it obtained from FTE “the exclusive right to
produce STOLICHNAYA vodka for sale in the United States.” Am. Compl.
¶ 6, J.A. 257. Its damages may be different from FTE’s for any proven
infringement, but Cristall’s interest in the Marks is entirely derivative of
FTE’s. Because FTE lacks statutory standing to bring this trademark
infringement claim, so does Cristall. We thus affirm the District Court’s
18
We also reject FTE’s argument that we should remand the case to the District
Court to permit FTE to add the Russian Federation as a plaintiff through “joinder” or
“substitution” under Rule 17(a). FTE has had ample time since 2004, when the original
complaint was filed, to join the Russian Federation as a party and has failed to do so. As
early as July 2005, defendants argued that FTE’s complaint should be dismissed for failure
to join the Russian Federation. Further, as described above, our October 2010 summary
order expressed concerns about whether the Russian Federation should be joined in this
litigation, see 400 F. App’x at 614, and yet the Third Amended Complaint did not add the
Russian Federation as a plaintiff. It is simply too late.
47
dismissal of Cristall’s Claim 1 (federal trademark infringement) and Claim 2
(contributory trademark infringement).
As to Claim 3 (declaratory judgment of ownership), Claim 4
(rectification of the trademark register), and Claim 5 (cancellation of register
under Section 37 of the Lanham Act), asserted by both FTE and Cristall, we
conclude that the District Court properly held that, absent Lanham Act
standing to sue for infringement, plaintiffs also lack standing to seek these
remedies, which the District Court termed “ownership-bolstering” relief
under the Lanham Act. See McCarthy § 30:110 (“Lanham Act § 37 assumes a
properly instituted and otherwise jurisdictionally supportable action
involving a registered mark.”).
Finally, we affirm the District Court’s decision not to exercise
supplemental jurisdiction over plaintiffs’ related state law misappropriation
claim (Claim 6). We review that decision for abuse of discretion. Spiegel v.
Schulmann, 604 F.3d 72, 78 (2d Cir. 2010) (per curiam). Absent a basis for
adjudicating the federal claims, it was well within the District Court’s
discretion to go no further.
CONCLUSION
To summarize: for the reasons stated above, plaintiff FTE is
neither an assign of the Russian Federation nor the Federation’s legal
48
representative under the terms of the Lanham Act. It may not sue under the
Act as an exclusive licensee, and the document plaintiffs tender as reflecting
the Russian Federation’s ratification of the suit does not entitle plaintiffs to
proceed. Because Cristall’s rights are derivative of FTE’s, it too lacks
standing under the Act.
The decision of the District Court is AFFIRMED.
49