Brief for the Petitioners — Steele v. Bulova Watch Co.

LIBRARY _

“SUPREME COURT, U.S.

SUPREME COURT OF THE UNI

OCTOBER TERM 1952

. e

“NO. 38

- os SIDNEY STEELE, et al, PeTiTIONERS:

versus.

. BULOVA. WATCH COMPANY, INC.

.

2

7

* ON WRIT OF CERTIORARI TO - |

‘THE UNITED STATES COURT OF APPEALS :

7 FOR THE FIFTH CIRCUIT

‘BRIEF FOR THE ith a

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an Se

.

' GRADY Bassert,

ri 1501 Alamo, National Building, -

Ce Set San Antonio 5, ‘Téxas.-

/ HERBERT ~ DAvIs, eS

ies 904 Alamo National; ‘Building,

San Antonio 5, Texas. eae ”

W. L MATTHEWS,

. 1501 Alamo National Building,

Ee - San Antonio 5,. Texas. > oa

Attorneys for Petitioners.

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Statutes Involved 0.02.0): Pea ee eee

Speciwucaion of Error... ee

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Summary of Argument : SAN TEND AERIAL? MH TEAS he De AA 9

Argument... pie Eire Fi tets Snare Meant Saeed. Se 10-23

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3 CITATIONS

CASES: » ape ee ® ; |

American Banana Co. v. United Fruit Co., |

213 U. S. 347, 53 L. Ed. 826... Ae Oe ens | 1

Blackmer v. United States , 284 U, s. 421, 7

be SE ER 7 | Recta eb At, Aare edad SNR ciation ee

_ Brown vy. Duchesne, 19 ie. 183, fs L.Ed, 696" 46

Cuba Railread Company vy, Cc rosby,, 222.U. S. 473,

OW ta BG. SIG Be ees Ea el eta bso he INS |

r ~ Dowagiac Manufacturing Company v. Minnesota

Moline Plow Co., 235 U. S. 641, 59 L. Ed. 398 in

‘Hanover Star Milling Co. vy. Metcalf, 240 U.S. 403,

60:L. Ed. 713. a et Ker Ae

Ingenohl v. Olsen & Co., 273 U. 'S. 541, 1 a Ed. 762... 3

Marshall v..Turnbull, 34 Fed. 827... ae

- Sandberg v. McDonald, 248 U. S. 185, 63 L. ‘Ed. 200. 18

Slater v. Mexican National Railway Company, 194

U. 8. 120, 48 L. Ed..900......... 24

The People v. McLeod, 1 Hill 377, N. ¥. C ‘am.

L. Rep. 164 3 dd

The Schooner Exe hange v. M’Faddon, 7 C r. 114, :

3 L. Ed. 287 ae 15

United States v. Bowman, 269 b. S. 94, 67 L. Fd. 1492.19

STATUTES:

11 Corn Juris. Vol 63. Section 11 , ae

Lanhgm Trade-Mark- Act. 15 a, S;G.,

| Sees, 1951-1127 | : Nf

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SUPREME COURT. OF THE UNITED STATES

. OCTOBER TERM 1952

NO. 38

‘SIDNEY STEELE, et al, PETITIONERS

versus

-BULOVA WATCH COMPANY, INC.

<< _2

Ogee >

ON WRIT OF CERTIORARI TO.

THE UNITED STATES COURT OF APPEALS |

: FOR THE FIFTH aaupicaet

BRIEF FOR THE PETITIONERS

OPINIONS

The majority opinion of the Court of Appeals (R. 389)

and the. dissenting opinion of Judge Russell (R. 399) are-

reported in 194 F. 2d.567-573. The findings of fact and

conclusions of law of the District Court are peinted in the

. record at pages 238-240.

aman ipinen

JURISDICTION

The judartent of the Court of Appeals was entered on

- February 21, 1952. Petition for rehearing was filed |

March 7, 1952 and order denying the same was entered |

March 18, 1952. Petition for -Certiorari was filed April

Zi. 1952 and was granted June 2, 1952, Jurisdiction of this

ésurt rests on 28 U.S.C. 1254 (1).

STATUTES INVOLVED

The Lariham Trade-Mark. Act, the Act of July 5, 1946,

60 Stat. 427, incorporated in 15 U.S.C. Sees. 1051- 1127. The

interpretation of no specific provisions of this Act is in-

volved but its applicability to marks registered and used

only within the Republic of Mexico is the question at issue.

"SPECIFICATION OF ERRORS

The question presented and ‘urged arise upon the

following errors of the Court of Appeals:

1. The Court erred in holding that the Lanham Trade-

4 ) Mark Act (15 U.S.C. Sec. 1051 et seq.) prescribes standards

“at fair competition to be observed by all ‘nationals of the

United States in the Republic of Mexico and throughout

the world and hence forms He basis for a court of the

“United States to enjoin the use of a trade-name held ‘unde~

a grant from the Republic of Mexico and used solely within

the’ Republic of Mexico in the internal commerce of that

Nation.

2. The Court erred in holding -that a United States.

District Court°has pgwet to apply the laws of the United-

States and enjoin the use of and thus nullify and cancel

Mexican National Trade- Mark No, 33602, adjudicated by

the Courts of Mexico to validly grant to Petitioner, Sidney

i

a

oni hnnee

Steele, the right to use the name “Bulova” in the Republic

of Mexico as a trade-name for watches, the evidence show-

ing that watches bearing the name are assembled and

stamped with the name in Mexico and sold only in the

internal commerce of Mexico.

3. The Court erred in holding that the mere fact that

Sidney Steele is an American citizen and the Trial Court

‘acquired jurisdiction by service of process on him, gave

the Trial €ourt power to apply the laws of the United

States to his alleged acts of competition in Mexico in the

face of the fact that his use of the name “Bulova” solely

in the interffal commerce of the Republic of Mexico was. in

accordance with a trade-mark granted under Mexican law

and adjudicated to be valid by the Mexican Courts.

4, The Court: erred in holding that the panchass by

Sidney Steele of unbranded watch cases and watch dials

from manufacturers and jobbers in the United States

furnished a basis for the granting of an injunction against

Petitioners, because the purchase of such unbranded cases

and dials does not violate any right of Bulova Watch Com-

pany protected by law and does not justify nor tend to

justify an injunction by a United States Court against the

use in the Republic of Mexico of the trade-mark granted

: under the laws of ‘Mexico.

STATEMENT

Bulova Watch Company, Inc,, filed this suit on June

13, 1949 in the United States District Court at San Antonio,

‘Texas, seeking a permanent injunction against the use by

Sidney Steele of the name “Bulova” and a decree requir- -

ing cancellation of his duly granted Mexican National

Trade-Mark No. 33602 covering the name “Bulova” for

~ use in Mexico on Swiss watches. (R. 1-8)

Do

“Steele answered, stating that on December 5, 1933; he

was granted Mexican National Trade-Mark No. 3360: cov-

ering the name “Bulova” for use in connection with the sale

of Swiss watches of all classes (R. 260) and that he had’

been engaged in selling Swiss watches imported from

Switzerland in Mexico. under said trade name sincé 1933;

‘that his right te use the same in connection with the. sale

of Swiss watches in Mexico had been twice adjudicated by

the Mexican courts in actions brought by- Bulova Watch

Company and its agent; and that all of the transactions in

watches bearing the name “Bulova” occurred within the

Republic of Mexico and were in accordance with and sanc-—

tioned by the law of the Republic of Mexico and that the

laws of the United States were, wholly. inapplicable there- —

to. (R. 8-15). | .

The District Court, based. on undisputed evidence, made

the following findings of fact,’ none of which were set

aside or altered by the Circuit Court:

“1. The Defendant Sidney Steele is now and has been

since 1933 engaged in the business of selling watches sole-

ly in the Republic of Mexico from his sole and only place

of business located in Mexico City. The Defendant Sid-

ney Steele has no place of business in the United States

and does not engage in the sale of watches or other goods

within the United States or any of its territories. The

Defendant Sidney Steele does not compete in the sale of

watches in the United States or in any territory subject

to its jurisdiction. (R.: 238):

ane Note of the acts of the Defendant Sidney Steele

in placing the name ‘Bulova’ on the face or works of watches

or in the sale of watches bearing said name were done or

- performed within the United States or any of its territories,

but were/ /done and performed solely within the Republic

of Me wie o Where the Defer dant, Steele assembles, marks

on fe

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‘

——

and sells all of the w vatches bearing the name ‘Bulova’ w hich

are assembled, marked and sold by him. .(R. 238).

“3. The Defendant Sidney Steele. procures all of the

works of the watches sold by him solely from manufac-

turers of watches in Switzerland. None of the works of

watches imported by him into. Mexico from Switzerland.

have the ‘Bulova,’ name stamped or engraved on them,

said name being placed thereon by said Defendant at his

place of business in Mexico City and not elsewhere. The

Defendant Steele procures all’watch cases and watch dials

used by him in his business in Mexico City from Switzer-

‘land except for some watch cases and watch dials which

‘are procured from manufacturers or jobbers in the United

States. None of the watch cases or watch dials purchased

in the United States or in Switzerband have the ‘Bulova’

name stamped or engraved thereon, such name being placed

on watch dials by the Defendant Sidney Steele-at his place

of business in Mexico City and not elsewhere. . (R. 238).

“4. .On December 5; 1933, there was granted to S.

Steele, Y. Cia., Ss. A., the predecessor in title of Sidney

Steele, Mexican National Trade-Mark No. 33602, purporting

to grant the right to use the name ‘Bulova’ in the Republic

of Mexico as a trade name for w atches, and the Defendant

Sidney Steele’s asserted right to use said name. is based

on said Mexican trade-mark, which has been the subject

of litigation between the Plaintiff Bulova Watch Com-

pany, Ine., and the Department of: National Economy

and the Director of National Property of the Republic of

Mexico in eases before the Mexican courts in which De-

fendant Sidney Steele was a party, and the Plaintifz. has

. hot up te this time been successful in such litigation. At

the present time there 48 a Suit or proceeding bending in|

Mexico with reference to ihe right as between Plaintiff

and the Defendant Sidney Steele to use the ‘Bulova’ name

male

on watches: assembled and sold’ by said Defendant in a Ne

ico.” (R. 239).

' Based upon the above: findings, the Trial Court made

the following conclusions of Taw:

“1. The Court concludes that as a matter of

law the alleged acts of unfair competition complain-

ed of by Plaintiff were and are done and performed

wholly outside of the jurisdiction and control of the

Government and laws, both State -and Federal, of.

the United States and outside of the territorial juris-

‘diction and powers of this Court.

“2. The Court concludes ‘that as a matter of

law the acts and conduct complained of relate to the

internal commerce of the Reptblic of Mexito, solely

within the jurisdiction and control of the Courts

andthe laws of the Republic of Mexico. .

“3. “The Court concludes as a matter of law

- that it is without .autherity or jurisdiction to set

aside or otherwise annul the Mexican trade-mark

under which Defendant asserts the right to use the

‘Bulova’ name.’ Ch. 239-40).

!

The following i is a brief history of the litigation: j in Mex-

ico Which preceded the filing of this suit:

On February iF 1946, thirteen years after the granting :

of the Mexican trade- -mark to Sidney. Steele, Bulova Watch

Company commenced an administrative proceeding before

the Director of ‘Industrial Property “for a declaration of

falsification, imitation and illegal use of the trade-mark

‘Bulova’.” The: petition in this 1946 case raised . sub-

stantially the same issues as the petition filed in the Dis-

trict Court at San Antonio, Texas in the instant case.

(R. 262-266). : ;

The Director General ‘of Industrial Property of the Re-

public of Mexico denied the petition on the ground that

it was barred by a 3-year limitation provision of Mexican

&

a ‘ ae

law (R 286 and 383) ‘and that “the proofs rendered do

not carry the conclusion that the trade-mark ‘Bulova’ was),

fotoriously. known in this country on a date of the regis-

e try of such trade-mark. ” (R. 286).° The “declaration of

nullity” sought by Bulova Watch Company was in all things

denied. (R. 293). eS Pa ee

This action was-reviewed bY the District Court for the

- Federal District, Mexico City, and a decree was entered

#

reversing the above-mentioned decree of the Director Gen-

eral of Industrial Property (R. 321-327). The judgment

of the District Court was appealed by Sidney Steele and the

Director of Industrial Property to the Supreme Court of

Mexico, (R. 327-333) and on June 24, 1948 the Supreme

Court of Mexico reversed the. judgment of the District

Court and affirmed the decree of the Director cf Industrial

Property, the Supreme Court. declaring that the “judg-

ment entered in the injunction suit to which this catise

refers is revoked. ””. .(R. 346-358) .

Thus, the administrative decree of, the Director | of

industriat Property sustaining the validity of the ES

ed trade-nafie “Bulova” and Sidney Steele’s right to the

use-of the name was. finally adjudicated against Bulova

Watch ‘Company by: the Supreme Court of Mexico. The

issues in the instant case: were involved fn ‘that case and

were. adjudicated against _ Bulova Watch Company and in

favor of Stedle. : | ae

On September 8, 1948, Bulova Watch Cabaae com-

‘menced a proceeding in the Federal’ District Court in Mex-

ico City against the Director General of Industrial Prop-

erty, alleging that the Director General had. granted and: /

subsequently revoked an authorization in favor of Bulova’s

agent to deal in imported watches under the name “Bul-

ova.” Sidney Stoble was named’ “the third prejiidiced

party in the suit.’ (R_! 360) ’ *The Plaintiff prayed for an

—

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“ae

@

injunction against the action of the Director General o€ -

Industyial Property in revoking an official communication

- of December 30, 1946, recognizing the agent’s right to the

use of the name “Bulova” in Mexico an Watches which he

_ desired to import and sell. (R. 363). -This injunction was

~

denied on. the authority: of “the final judgment of the Su-

preme Court of Justice of the Nation,” again affirming

the right of Sidney Steele to use the trade-name under the °

grant from the: Director General of Industrial Property.

(R, 367-9). — me, eaceas

On September ii, 1948, Sidney Steele commenced an

action before the Director of Industrial Property seeking

a declaration of illegal use of his Trademark No. 33602

named “Bulova” by Bulova Watch Company, Ine. (R. 379),

and answer. was filed in such administrative’ action on Oc- .

tober 20; 1948. AR, 381- =)...

Bulova Wateh. Company, having been unsuccessful in

attacking the trade-mark grant to Steelé in the courts of

Mexico, decided to attempt to re- commence the litigation -

in the American courts and claim that the validity of the

Mexican trade- mark and the right to use the same in Mex- |

ico is gov erned by the laws of the United States and par-

ticularly the Lanham Trademark Act.

penny of the fact situation involved and furnished a

The instant suit based on the above theory, was filed

in the District Court at San Antonio on June 13, 1949.

(R. 1)..-The decision of the trial court dismissing * the -

_ case antl the basis: thereof has been set out above.

The Court of Appeals reversed the ataasin ‘of the

basis for the granting of the relief sought by Bulova Watch

C ompany. :

suMMARY OF ARGUMENT

Yl. Steele’s right . use the “Bulova” name is baad

upon Mexican National \Trade-Mark No. 33602 granted to -

him in 1933 under Mexican law. He ‘sed the. name ‘in

Mexico continuously until 1946, a period of 13 years, be-

fore any challenge of his right. to use the name was made -

by Buleva Watch Company. This challenge culminated

in a decision of the Supreme ( Court of Mexico’ affirming

~ Steele’s right to the reg istered trade- mark “Bulova” in:

Mexico: which right was again affirmed by the ‘District |

Court for the Federal District in g@948. Under these facts

the courts of the United States should not enter a decree

canceling or issue an injunction nullifying the Mexican

trade-mark used only in the internal. commerce of Mexi-

¢o. | | | :

The legal basis for’ the relief” sought by Bulova ’

Watch Company is the laws of the United States, and par-/

ticularly the Lanham Trade-mark Act, This “Act forbids

unfair competition only in interstate and foreign commerce

» and is’ inapplicable to the trade-mark granted. to Steele”

under Mexican law which is used solely in the internal

commeree of Mexico. ;

3. The fact that Steele: is a naturalized citizen of the

United States does not require him while engaged in the

- business of selling ‘watches in the internal ecommerce of

‘Mexico to conform to the Lanham Trade- mark Act or any:

of the other laws of ‘the United, States regulating inter-

state and foreign commerce. _ There is nothing in the Lan-

"ham Trade-mark Act to indicate an intent on the part of

Congress that it should apply to American citizens engaged

in local commerce in foreign countries. In the absence of

an express legislative provision making the Act applicable

to citizens engaged in local trade in foreign countries the

. Act shicaia not be construed to apply to sueh foreign local

“activities. :

4. -The a by Steele of unmarked and-unbranded

- watch cases and watch, ‘dials from manufacturers. and job-

bers in the United States infringes no right of Bulova

Watch Company and violates no duty owed by ‘Steele to.

stid Company or anyone else. The: ‘purchase of unbranded

and unmatked watch dials ‘in the U nited States is irrelevant

to the right’ of Bulova Watch- ‘Company to annul and cancel

the Mexican trade-mark granted. to Steele under which he

uses the “Bulova” name on watches branded and sold sole-_ .

- ly within the Republic of Mexico in- the internal commerce

of said country, :

Since Bulova Watch Company desires to enter into

ponte eh in the internal commerce of- the Republic “A

Mexico with Steele and others in the sale of watches,

should 1 so’ in accordance with the laws of Mexico, a

the adn inistrative’ and judicial acts. thereunder. Its reme-

.dy -in. the instant case is under Mexican law before the. ad-

ministrative agencies ‘and courts. of Mexico and not under

the laws of the United States or in its courts. ‘

ARGUMENT

a

The majority opinion in the Court ef Appeals does not

discuss, and apparently the majority of the Court did not

_ consider, the true basis on which the Trial Court acted in

this case.

The Trial Court found that Steele’s claim of right to

ise the “Bulova” name was fourided on a grant of such

right by competent Mexican authority under the laws of

Mexico and that Bulova: ‘Watch Company was seeking the

decree of a court of the United States setting aside this of

ficial’ Mexican grant. The title of es Mexican

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wae onal ay

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Trade-Mark No-33602 shows that it is a “grant” of the

“exclusivé ownership” of the “use of the word ‘Bulova’ ”

to cover watches. (R. 260),

Bulova Watch Company contends thrat it should be pro-

. tected in.the use of the “Bulova” name in the Republic of

Mexico ‘by the courts of the United States in accordance

with the common law principles and the trade-mark stat-

utes of the United States.) The Company does not allege

_ or contend that Mexico ee “common law” country. It

is; of course, a “civil law” jurisdiction where exclusive

rights to the use of trade- marks are obtained only by regis-

tration and grant in accordance with statutors“or * ‘code”

law. Mexican National Trade Mark No. 53602" ‘ranted

to Steele under Mexican code lay fs not subject to can-

- Cellation or to nullification exceptSander and in accardance

with the provisions of the Law of Industrial Prop

the Republic of Mexico. *

The courts of the United States shquid no mote cancel

and nullify the right to use a trade- -name or trade-mark

granted in Mexico under Mexican law than should the

Mexican courts cancel rights grantetd or acquired under -

the laws of the United States to use a trade-mark or trade-

name in the United States. This was the view of the Trial

Court in the instant case.’ It -held that, as a court ef the

United States, it “is without authority or jurisdiction to

set aside or otherwise annul the Mexican ‘trade- mark.”

(R. 240).

Marshall v. Turnbull, 34 Fed. 827, is a decision illustrat.

ing this principle. In that case the Circuit Court. for the

Eastern District of New' York dismissed a suit seeking. an

injunction against the assertion of rights in ah asphalt

_ Jake on an island in the mouth of the. Orinoco River _in——

* Venezuela. The Court first held (32 Fed* 124) that in- °

junctive relief might properly be granted since the Court

arty of

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a ee

had jurisdiction over the Defendant as a person and was

in a position to enforce its decree against him. However,

on reconsideration the Court held that the relief sought was

in. derogation of aggant and official acts ‘of the government

of Venezuela, and that the Coyrt was without authority

to grant such relief. ‘In deciding the case the Court said:

- “A naked injunction is asked for against him -°

on the ground that his title is void because Venez-

uglan officials acted improperly in creating it.

In other words, he, it is claimed, holds nothing, not

because what he took passéd (equita ably) through -

him to the Manoa Company, but because the Venez-

-uelan Government could give nothing. Turnbull's

position under this bill is no different from that-of

some stranger to whom the Venezuelan government .

might have conveyed the rights originally conceded

to Fitzgerald; and the court is asked to enjoin waste

upon, or interference with, property in a foresgn

country, because, as it is alleged, certain official

acts of the government of that. country (annulling

one concession and making a new one) are void.

Such relief cannot be administered on such ground.”

The trade-mark “Bulova” granted.to Steele under Mex-

ican law is a Mexican property right drawng its existence

and force from the laws of Mexico.. The use by Steele of

‘the name on watches assembled and sold by him in Mexico

constitutes the very essence of the right granted to him by

Mexican’ National Trademark No. 33602. To enjoin him:

‘from.the use of it is the same, thing as entering a decree

of cancellation of the registration and grant itself.

This point is stated with clarity and force by Judge

Russell in his dissent in the Court of Appeals as follows: _

“That which the sovereign has authorized and

judicially confirmed can not, when the acts arc per-

formed wholly within the territorial limits of such

“sovereign, be properly aici illegal and subject

to injunction by our Courts merely because the

perpetrator of such acts is an American citizen and

in persor subject to the jurisdiction, of American

Courts. *Cnsequently, when, on December 5, 1933,

the Mexican Director General of Industrial Property

granted to Steele the right to use the name “Bulova”

_in the Republic of Mexico as a tradename -for

watches (as found by the trial Judge upon undis-

puted evidence) the acts of Steele in Mexico in ac-

cordance with the grant were deren Especially

is this so when-it appears, as if does here, that his

right to the trade-mark was upheld in the Mexican

Court in the proceedings in behalf of appellant

seeking to set aside syich registered trade- mark in

which Steele was named asa party. . mest 100)

'The general rules with reference to the recognition of

trade-marks or trade-narnes are stated in Section 11 of the

Article on “Trade-marks, Trade Names and Unfair Com-.

petition,” in Volume 63, Corpus Juris, as folbws:

“One ‘person may own a particular trade-mark

in one country or jurisdiction and the‘same trade-

mark may belong to anot her person in another coun- .

_ try or jurisdiction, or the same trade-mark may

» belong to one person in one part-of a state and to

another person in another part of ‘the same state, or

‘ the trade-mark may be valid in one country and in-

valid in another.”

* * = @ > / e

“Our courts, do’ not decide what trade-marks

‘exist or do not exist in foreign countries, and the .

decision of a court of a foreign country as to the

existence or nonexistence of a irade-mark therein

will be given full force and credit in this country;

but such foreign decision will not, settle who is en-

titled to the trade- mark here. fe ,

The above rule was stated and applied ia Ingenoh! v.

Olsen & Co., 273 U.S. 541, 71 L. Ed. 762, in an opinion

*

i -

; cen y ra

written by Justice Holmes involving the recognition of a-

trade-rmark in the British colony of Hong Kong. Justice

Holmes put the matter tersely as follows:

i “A trade-mark started elsewhere would depend

for its protection in Honk Kong upon the law pre-

vailing in Hong Kong, and would confer no rights

“Ss except by’ the consent of that law.”

_ In the case of Hanover Star Milling Co. . Metcalf, 240

U. S. 403, 61 L. Ed. 713, Justice Holmes in a concurring

Opinion stated the power ef different states over the use

of trade- marks in their territory as follows:

Pa “But it never should he forgotten, ary in this.

* - ¢ase it is important to remember, that when a trade-

mark started in one state is recognized in another it

is Dy the authority of a new sovereignty that gives

its sanction to the right. The new sovereignty is

not a passive figurehead. ° It creates the right with-

in its jurisdiction, and what it creates it may condi-

tion, as by requiring the mark to be recorded, or it

may deny.”

_The Lanham Trade- mark Act does not contain any pro-

visions which attempt to extend the application of the Act

beyond the boundariés of the United ‘States. It forbids,

unfair competition and the'use of a trade-mark: in “com-

merce,” and defines the term ‘‘commerce” as all commerce

“which. may lawfully be regulated by Congress.” This,

Court has specifically held that Congress has no jurisdic-

tion beyond the boundaries. of the United States and its

possessions. Its power does not extend into the territorial

limits of a foreign nation and control acts pertaining to its

internak commerce or affairs. ‘

It is a fundamental concept of “international law, as” :

well as a matter of logic, that the government powers of ~

one sovereign nation de not extend inte and govern rights

within the territorial domain of another sovereign nation.

ee

a

\

cies —1l5—

In The Schooner Exchange v. M’ Faddon, 7 Cr. 44 at.

page 136, Chief Justice Marshall stated this fundamental .

principle as to the jurisdiction of courts and national au-

thority as follows: .

Berea jurisdiction of courts is a branch of that

which is possessed by the ,nation as an independent

“sovereign power, ; - :

“The jurisdiction of the nation within its own

territory is necessarily exclusive and absolute. It

is susceptible of no limitation not imposed by itself.

Any restriction upon it, deriving validity from an

external source, would imply. a diminution of its

sovereignty to the extent of the restriction, and

¢ an-investment of that sovereignty to the same ex-

tent in that power which could impose such re-

striction.

“All exceptions, therefore, to the full and com- - '

plete power ¥f a nation within its own territories,

niust. be traced up to the consent of the nation itself.

They cam flow from ho other legitimate source.” }

In The Beople v. McLeod, 1-Hill 377,.15 N. Y. Com. L.

. Rep. 164, the Supreme Court of: New York quoted the above

language of Chief Justice Marshall and said: “these are “not.

= rules of yesterday ; but have formed a part of the acknowl-

edged law of nations for nearly two thousand years.”

In American Banana Co..v: United Fruit Co., 213 U. 8.

347, 53 L. Ed. 826, the Court held that it was the universal |

rule “that the character of an_act as lawful or unlawful

must be determined wholly by the law, of the country where

the act is done,’’ and refused to apply the antitrust laws of

the United States in a suit etween two American. corpora-

tions based upon: activities in Panama and Costa Rica. In

its opinion the Court said: a

“For another-jurisdiction,. if it should happen

to lay hold of the actor, to treat “him according to

?

— {,

its own 1 notions rather than those of the place where

he did the axts, not only would be unjust but would

be an interference with the authority of another

sovereign, contrary to the comity of nations, which

_ the other state concerned. justly might resent. :

ee ee Fi

“The foregoing considerations would lead, in .

case of doubt, to a construction of any statute as

intended-tg be confined in its operation and effect

to the territorial limits over which the lawmaker

has general and legitimate power. ‘All legislation

is prima facie tergitorial, ; - Words having uni-

versal scope, such as ‘every ‘contract in restraint of :

' trade,’ “every sta we who shall monopolize,’ ete.,

will be taken, as ajmatter of course, to mean only

everyone subject ‘a such legislation, not all that the

_ legislator subsequently may be able to catch.”

In Brown v. Duchesne, 19 How. 183, 15 L. Ed. 595, it

was held that a United States patent could be infringed

only by acts done within the territorial boundaries of the _

United States. The opinieén was written by Chief Justice

Taney, and stated the basic principle with reference to the

territorial reach of acts of Congress as follows:

“But these Acts of Congress do not, and were .

- net intended. to, operate beyond the limits of the’

_ United States; and as the patentee’s right of prop-

erty and exclusive use is derived from them, they

cannot extend beyond the limits to which the law

itself is ‘confined. And the use of it ‘butside of the.

jurisdiction of the United States is not an infringe-

ment of his rights, and he has no claim to any

compensation for the profit or advantage the party

may derive from it.”

Cuba, Ratroat- Company v..Crosby, 222 U.S. 473, 56 L.

Ed. 274, involved the liability for personal injuries sdffered

by an employ ee while working for the defendant Railroad

/ —17--

in Cub&.. The court held that since the Lability, if amy.

arose under the law of Cuba and since the plaintiff pro-

_ duced no evidence as to what that law was, no presumption’

could be indulged in that it was the same as the law of the |

United States. On this point this Court said:

“But when an action is brought upon, a cause

arising outside of the jurisdiction, it always should.

be borne in mind that the duty of the court is not

to administer its notion of justice, but to enforce

an obligation ‘that has been. created by a different

WO ass The law of the forum is material only-

as setting a-limit of policy beyond which such |

obligations will not be enforced there. With very.

rare exceptions the liabilities of the parties to each

other are fixed by the law of the territorial juris-

diction within which the wrong is done and the

parties are at the time of doing it ..... That,

and that alone, is the foundation of their rights.”

The majority opinion of the Circuit Court, in holding

_that the Lanham Trade-mark Act covered the use by Steele

of the Mexican trade-mark within the Republic of Mexico

stated: “It would seem that in the Lanham’ Trade-mark

Act of 1946 the Congress intended to regulate interstate

and foreign commerce to the full extent of its constitutional

powers.” The majority opinion, based on this premise,

then proceeds to apply the Act as _though it related not

to the regulation of “interstate and foreign commerce”

but to be internal or domestic commerce of the Republic is

Mexico. igre AT

€

Chis illogical-application of the Act dealing with “‘inter-

state and foreign” commerce to local commerce in a foreign

country by the ‘majority of the Circuit Court is sought to be

justified by the fact that Sidney Steele is a naturalized

citizen of the United States,

>»

a

Laying aside for the moment the question as to whether

or not the Congress of the United States has power to

legislate with reference to the internal commerce of Mexico .-

(which power is denied in the decisions quoted above) let

us examine the question as to whether or not the Congress

in enacting the Lanham Trade-Mark Act evidenced any

intent to legislate with respect to such commerce or with

respect to citizens doing business in the internal commerce

of another country.

In Sandberg v. McDonald, 248 U. S. 185, 63 L. Ea. 200,

this Court held that employment contracts of foreign

seamen on foreign vessels in a foreign port were not in-

validated on account of conflicting with the acts of Congréss

relating to payment of seamen’s wages, and discussed the

territorial nature of legislative acts.as follows:

“Legislation is presumptively territorial and

confined to limits over which the lawmaking power —

has jurisdiction. American Banana Co. v. United

Fruit Co,, 213 U. S. 347, 357, 53 L. Ed. 826, 832 29

Sup. Ct. ten. 511, 16 Ann. Cas. 1047. In Patterson

v. The Eudora, supra, this court declared such.

legislation es to foreign vessels in United States

ports to be constitutional. We think that there is

nothing in this section to show that Congress in-

tended to take over the control of such contracts

and payments as to foreign vessels except while

they were in our ports. Congress could not prevent

the making of meh contracts in other jurisdictions.”

We submit that the Lanham Aet is Srcncisioersais

~ territorial as to the persons and transactions covered by it.

There is nothing in the Lanham Trade-Mark Act to. indi-

cate any intention of Congress to make it: effective as to .

‘citizens of the United States engaged in the internal

commerce of Mexico or any other foreign country. The

provision of the Act stating tHat it supplies to “all commerce

Aan |

&

which may lawfully be vebilaied by Congress” | does not

deal with what “persons” the Act applies to, but to what

“commerce” the same applies. The commerce intended ta

be covered is clearly “interstate and foreign” commerce

and this provision of the law is. not susceptible to any

other construction.

There is nothing in the testes Act to indicate that

Congress intended to depart from the common sense

- principle generally applied to civil statues regulating com-

merce and trade and to adopt a new and unprecedented

principle that the same is to be applied to citizens of the

_ United States in their local businesses established in and

operated under the-!aws and customs of foreign countries.

There have been a few acts of Congress dealing with

matters relating to citizenship itself which Congress has

made specifically: applicable to. American citizens residing

abroad.

In Bhickes uv: United States, 284 U.S. 421, 76 L. Ed.

375, this Court sustained an act of Congress providing for

_the service of subpoenas upon Americah citizens residing

in foreign. countries; holding that this related to a duty

appertaining to citizenship. But in that case the Court .

stated that “the legislation of Congress, unless the contrary .

intent appears, is construed to apply only within the terri-

torial jurisdiction of the United States.”

‘ The Lanham Trade-Mark Act may be searched-in vain

for any expression of intent that it shall be applied on the

basis of American citizenship or that the Congress had

any intention that it would apply to rights arising under

| registered Mexican trade-names placed on articles sold

only in the Republic of Mexico. |

—- te’ mitell States v. Bowman, 260 U.S. 94, 67 L. Ed. 149,

th s Court discussed the extraterritorial! application of the

' ldws of the United Sates as follows:

a

—20—

“Crimes against private individuals or their

preperty, like’ assaults, murder, burglary, larceny,

robbery, arson, embezzlement, and frauds of al

_ kinds which affect the peace and good order of the

_ community, must, of course, be committed within .

- the territorial jurisdiction of the government where’ -

it may properly exercise it. If punishment: of them —

_is to be extended to_include those committed outside

of the strict territorial jurisdiction, it is natural for

Congress to say so in the statute, and faihrre to do

so will negative the purpose of Congress in, this

regard.” S : ees

As stated in the above ease, if, Congress intends an act i cals

to be applicable outside of the territorial jurisdiction~-of

the United States “it is natural for Congress to say so jn

the. statute, and failure ‘to “do so will negative the purpose -

of Congress in this. régard.” ‘Therefore; the faiture—of-

Congress to specifically provide in.the Lanham Trade-Mark

’ Act that it’ would apply to American nationals engaged in

_. the internal commerée of. foreign countries. negatives any eee,

inference that Congress intended it to so apply.

_ The last article of the Lanham Trade-Mark Act (Article

1127 U.S. Code) contains ‘a statement of the intent and .

purpose of the Act but, significantly, does not state that

it-is intended to apply to American nationals abroad or to

the internal commerce of other nations. Certainly if Con-

gress had any such novel ideg, in mind it would have been

noted in this or some other section of the Act and would .

have been the subject of debate or comment in Congress, °

| _ As stated by Judge Russell of the Court of Appeals in-

his dissenting opinion: Oe :

‘ “Under: even the broadest ‘interpretation of the

Lanham Aet, supra, it evidences no attempt to pre-

scribe a standard of fair competition for the Na-

‘tions of the world. | Its provisicns. are, and must be,

ZI

applicable to ‘territory within the reach of Con->

gressional power. Neither do its provisions so

compellingly; permeate the being, or saturate the

conscience, of an American Resident, doing business

in a foreign country, as to impose .a guilty stain

upon his acts there done in accordance with author-

ity erented by such puma? Be laws.” cR. 399).

The Sicisectiy opinion of the Court of Appéals comments

upon. the: facts that watches bearing the “Bulova” name

;. _Which were purchased in Mexico were brought into the

United States by the owners thereof and came to the atten-

tion of various watch dealers in the United States who sold

watches supplied by Bulova Watch Company. No conten-

tion is made that those watches were imported into the _

United “States to be sold in competition with watches

offered for sale by Bulova Watch Company. ;

The. undisputed ‘evidence in this case shows, and the

uncontested findings of -the “Trial Court are, that the .

. Defendant Steele has engaged in the business of: selling

- watches bearing the “Bulova” name “solely in the Republic °

of Mexico from his sole and only place of business located

in Mexico City”, and that Steele “does not compete in the

sale of watches in- the: United States or in any..territory

- subject . to its jurisdiction.” (R, 238). The fac? that

certain .owners of watches who. have purchased them in.

_ Mexico bring them into the United States does not create

a cause of action against Sidney Steele, nor does it con-

' stitute a wrong of which Bulova Watch Company can com-

plain. . Such collateral facts do not bear upon the question

-in this Case as to the right of an American court to cancel.

the registered Mexican trade-mark belonging to Steele and ._

his right to use the name on watches sold solely in the

__ internal commerce of Mexico,

—22—.

’ The majority opinion of the Court of Appeals also

_. comments upon the purchase by Steele of unbranded and >

unmarked watch cases and dials in the United States and:

the importation of the same ‘into Mexico. The opinion -

infers that’ these purchases constitute a wrong which may

‘be complained of by Bulova Watch Company and for some -

unexplained reason violate the Lanham Trade-Mark Act

and confer power on the courts of the United States to

enjoin Steeie’s use of the registered trade-mark in Mexico. .

Bulova Watch Company did not complain in its com-

plaint:in the Trial Court and cannot complain of the pur-

chase by Steele or anyone else of unbranded watch dials .

and watch ‘cases from’ American manufacturers and jcb-

“bers. Such ‘action infringes no right of Bulova Watch

Company and violates no duty owed by Steele to the Watch

_ Company, or anyone else. The relief which Bulova Watch .

Company seeks in this case is the cancellation and nullifica-

tion’by injunction of the Mexican Trade-mark under which

Steele places the “Bulova” name on watches at his place of

business in Mexico City. \ | eat: | oh

- . In Dowagiac . Manufacturing Company ~v. ‘Minnesota

Moline Plow Co., 235 U. S. 641, 59 L. Ed. 398, this Court

held that’a sale ixi Canada of grain “drills” or plahters

covered by a United States patent did not constitute an

infringement of the: patent, holding that the place of sale

and not the place of origin of the product was determinative —

of the question as to the application of the foreign law. In

its opinion this Court said: aes, + Lan

“Some of the drills, about 261, sold by the defen-

dants, were sold in Canada, no part of the trans-

_ action occurring within the United States, and as_

to them there could be no recovery of either profits

or damages. The right conferred by a patent under _

our law is confined tothe United States and its. -

territories (Rev. Stat. See. 4888, Comp. Stat. 1913, -

7 BB

Sec. 9428), and infrigement of this right cannot be’ _.

predicated of acts wholly done in a foreign country.

_ See United Dictionary Co. y. G. & C. Merriam Co.

208 U. S. 260, 265, 52 L. Ed. A78, 480, 28 Sup. Ct. —

Rep. 290. The case of Gould’s Mfg. Co. v. Cowing,

105 U. S. 253, L. Ed. 987, is cited as holding other-

wise, but is not in point. . There the defendant made

the infringing articles in the United States. Here,

while they were made by. the defendants. The

latter’s infringement consisted only in*selling the

driils after they passed out of the makers’ hands.

The place of sale is therefore of controlling im- -

pertance here.” ° 3

What alien Watch Company seeks to enjoin Steele

from.doing is the. placing of the word “Bulova” on the ~

watches. in the - Republic of Mexico. No injunction is’

‘sought in this case against his purchasing unbranded watch

cases and watch dials in the United States. The purchase

of unmarked watch dials and watch cases in the- United .

' States does not violate any of Bulova Watch Company’s —

legal rights and it therefore forms no basis for granting it

any relief against Steele,

The’ record in this case shows that Salove Watch ne

_* pany took no action with reference to Mexican National

Trade-Mark No. 33602 for approximately 13 yeurs after it

was granted ‘to Sidney Steele. and during such period

acquiesced in the usé of the name-by him in Mexico. The

record shows that ‘Bulova Watch Company commenced its

first action to set aside the trade-mark in February 1946

and was subsequently defeated in an attempt to nullify

_ the trade-mark in an action affirmed by the Supreme Court.

of Mexico. Under these facts, the Watch Company’s ~~

remedy, if any, is in the-courts of Mexico and under Mexi-

ean law -— not under the. Lanham Trade-Mark. Aet and in,

the courts, of the ‘United States.

Cease |

As stated by this sianes in, Slater v. Mexican National

Railway Company, 194 U. S. 120,48 L.ed. 900: Sacre

“The case is not one demanding extreme meas-

ures, like those where a tort is committed in an un,

civilized country. The defendant always can .be

found in Mexico, on the other side of the river, and

< it is to be presumed that the ceurts there are open to

the plaintiffs.”

2

The Bulova Watch Company apparently desires to aie

into competition with Steele and others in Mexico. We

submit that it should do so under Mexican law as applied

by the Mexican. courts and administrative agencies.

“CONCLUSION ,

For the reasons stated, it is respectfully submitted that

the judgment of the Court of Appeals should be reversed

and the judgment ‘of the Trial Court affirmed.

‘Respectfully submitted,

‘GRADY BARRETT, .

1501 Alamo National Building,

- San Antonio 5, Texas.

HERBERT DAVIS, ©

904 Alamo National Building,

San Antonio 5, Texas.

W. L:; MATTHEWs, |

1501 Alamo National Building, e

Vo, ae Antonio .5, Texas. .

. Attorneys for Petitioners.