2010 International Law Update, Volume 16, Number 10 (October)

2010 International Law Update, Volume 16, Number 10 (October)

Legal Analyses published by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com. 

ALIEN TORT CLAIMS ACT (ACTA)

Second Circuit holds that, in ATCA cases alleging violations of customary international law, courts must determine scope of tort liability by customary international law itself; corporate liability for its own wrongdoing is not a universally recognized norm of customary international law

The Plaintiffs in the following case are residents of the Ogoni Region of Nigeria; they claim that Dutch, British, and Nigerian corporations (Defendants) violated the law of nations while exploring oil resources. The Defendants allegedly  sought the help of the Nigerian Government to overcome resistance to the oil exploration. Plaintiffs seek damages under the Alien Tort Claims Act, 28 U.S.C. 1350 (ATCA), claiming that, with Defendants’ active support. Nigerian military forces had mistreated and even killed Ogoni residents who opposed the foreign exploitation.

In 2002, the Plaintiffs filed the present lawsuit in a New York federal court. Defendants moved to dismiss based on Sosa v. Alvarez‑Machain, 542 U.S. 692 (2004). Upwards of 4 years later, the district court dismissed certain of Plaintiffs’ claims about Defendants’ conduct that it deemed insufficiently defined in customary international law (CIL). The holding included aiding and abetting property destruction, as well as extrajudicial killing. The district court, however, declined to dismiss certain other claims, such as crimes against humanity and torture.

The district court certified its entire order for interlocutory appeal, and Plaintiffs’ cross‑appeal ensued. The U.S. Court of Appeals for the Second Circuit affirms but, however, orders the dismissal of all of Plaintiffs’ claims against the corporate Defendants.

In brief, Plaintiffs’ lawsuit may proceed only if the ATCA provides jurisdiction over tort actions brought against corporations under CIL. While corporations may be liable for various wrongs under domestic law, it does not follow that they are liable under CIL (and therefor the ATCA). CIL has steadfastly declined to hold corporations liable for violations of the law of nations. The ATCA does not specify who is liable; it imposes liability only for a “violation of the law of nations.” 28 U.S.C. 1350. The ATCA leaves the nature and scope of potential liability to CIL

“In Sosa the Supreme Court instructed the lower federal courts to consider ‘whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor such as a corporation or individual.’ Sosa, supra at 732 n. 20. That language requires that we look to international law to determine our jurisdiction over [ATCA] claims against a particular class of defendant[s], such as corporations.” [127].

“... [W]e have little difficulty holding that, under international law, Sosa, and our three decades of precedent, we are required to look to international law to determine whether corporate liability for a ‘violation of the law of nations,’ 28 U.S.C. 1350, is a norm ‘accepted by the civilized world and defined with a specificity’ sufficient to provide a basis for jurisdiction under the ATCA, Sosa, supra at 725.’ We have looked to international law to determine whether state officials, see [Filartiga v. Pena‑Irala, 630 F.2d 876, 880 (2d Cir.1980)], private individuals, [see [Kadic v. Karadzic, 70 F.3d 232, 239‑241 (2d Cir.1995)], and aiders and abettors, [see [Presbyterian Church of Sudan v. Talisman Energy, Inc., 582 F.3d 244, 258‑259 (2d Cir. 2009)] can be held liable under the ATCA. There is no principled basis for treating the question of corporate liability differently. Like the issue of aiding and abetting liability, whether corporations can be liable for alleged violations of the law of nations ‘is no less significant a decision than whether to recognize a whole new tort in the first place.’ [Presbyterian Church, 582 F.3d at 259.] It is, therefore, a decision properly made only by reference to customary international law.” [130‑131].

The Court then goes on to determine whether corporate liability is a norm of customary international law, and finds that it is not. The sources of international law recognized in Article 38 of the Statute of the International Court of Justice (ICJ Statute) do not reveal a rule that corporations are liable for violations of the law of nations.

As for international tribunals, none has ever held a corporation liable for a violation of the law of nations. The Court notes that the London Charter, which established the International Military Tribunal at Nuremberg, granted the Tribunal jurisdiction over natural persons only. For example, the German company I.G. Farben benefited from slave labor, but only executives of the company were charged at Nuremberg. Also the Rome Statute of the International Criminal Court (ICC) limits jurisdiction to natural persons.

The Court then sums up its analysis: “The ATCA provides federal district courts jurisdiction over a tort, brought by an alien only, alleging a ‘violation of the law of nations or a treaty of the United States.’ 28 U.S.C. § 1350. When an ATCA suit is brought under the ‘law of nations, also known as ‘customary international law,’ jurisdiction is limited to those cases alleging a violation of an international norm that is ‘specific, universal, and obligatory.’ Sosa, supra at 692 ... .”

“No corporation has ever been subject to any form of liability (whether civil, criminal, or otherwise) under the customary international law of human rights. Rather, sources of customary international law have, on several occasions, explicitly rejected the idea of corporate liability. Thus, corporate liability has not attained a discernable, much less universal, acceptance among nations of the world in their relations inter se, and it cannot not, as a result, form the basis of a suit under the ATS.”

“Acknowledging the absence of corporate liability under CIL is not a matter of conferring ‘immunity’ on corporations. It is, instead, a recognition that the States of the world, in their relations with one another ... have determined that moral and legal responsibility for heinous crimes should rest on the individual whose conduct makes him or her ‘’hostis humani generis, an enemy of all mankind.’‘ Sosa supra at 732 ...”

“We do not know whether the concept of corporate liability will ‘gradually ripen[ ] into a rule of international law.’ Id. at 715, 124 S.Ct. 2739 ... It can do so, however, only by achieving universal recognition and acceptance as a norm in the relations of States inter se. For now, and for the foreseeable future, the Alien Tort Statute does not provide subject matter jurisdiction over claims against corporations.”

“To summarize, we hold as follows:

(1) Since Filartiga, which in 1980 marked the advent of the modern era of litigation for violations of human rights under the Alien Tort Statute, all of our precedents‑and the Supreme Court’s decision in Sosa, 542 U.S. at 732 n. 20 [124 S.Ct. 2739]‑require us to look to international law to determine whether a particular class of defendant, such as corporations, can be liable under the Alien Tort Statute for alleged violations of the law of nations.

(2) The concept of corporate liability for violations of customary international law has not achieved universal recognition or acceptance as a norm in the relations of States with each other. ... Inasmuch as plaintiffs assert claims against corporations only, their complaint must be dismissed for lack of subject matter jurisdiction.” [621 F.3d 149]

The Court concludes that the Plaintiffs failed to allege violations of the law of nations, and Plaintiffs’ claims thus fall outside the limited jurisdiction of the ATS.

The Court notes, however, that nothing in its opinion limits or forecloses lawsuits under the ATCA against individual perpetrators of violations of customary international law, including employees, officers, and managers of corporations. There may be criminal, administrative and civil actions against corporations based on laws other than customary international law.

The concurring judge agrees with the judgment but files a separate opinion. While agreeing that international law by itself does not impose liability on corporations or other private juridical entities, corporate liability is matter of “remedy” that international law leaves to the independent determination of each State. Here, the majority created a rule that exempts juridical persons from complying with international law.

Citation: Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 112 (2d Cir. 2010).

CRIMINAL LAW

Where Korean citizen was prosecuted for bribery in Korean court and later in U.S. federal court based on same facts, Fifth Circuit affirms U.S. conviction [1] because Convention on Combating Bribery of Foreign Public Officials in effect in both nations does not bar multiple prosecutions for same conduct and [2] because U.S. did not waive jurisdiction nor [3] has it adopted doctrine of international double jeopardy

Beginning in 2001, Gi‑Hwan Jeong, a citizen of South Korea, was successfully bribing two U.S. officials to obtain a $206 million contract relating to the U.S. Army and Air Force Exchange Service (AAFES) for his company, Samsung Rental Company, Ltd. (SRT). Under the contract, SRT would provide internet and other telecommunication services to U.S. military installations in South Korea.

Jeong came under investigation by U.S. and South Korean investigators. AAFES terminated the contract with SRT in 2007, and in 2008 a South Korean court convicted Jeong of bribing U.S. officials. The court sentenced him to time served (58 days) as well as to pay a fine of about $10,000.

That, however, was far from ending the U.S. investigation. The U.S. requested assistance pursuant to the Treaty Between the United States of America and the Republic of Korea on Mutual Legal Assistance in Criminal Matters, U.S.‑South Korea, November 23, 1993, S. Treaty Doc. No. 104‑1 (1995) [in force May 23, 1997]. The request acknowledged Jeong’s conviction and stated that the U.S. was not seeking to prosecute.

AAFES then invited Jeong to a meeting in Dallas, Texas, for a discussion. Jeong did in fact travel to the U.S. where the U.S. arrested him upon arrival. A Grand Jury then indicted Jeong for federal bribery under 18 U.S.C. 201(b)(1), conspiracy under 18 U.S.C. 371, and wire fraud under 18 U.S.C. 1343 and 1346.

Jeong moved to dismiss the indictment claiming that the U.S. lacked jurisdiction to prosecute him. In particular, he argued [1] that the federal bribery statute does not apply extraterritorially; [2] that the prosecution violates the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (December 17, 1997, S. Treaty Doc. No. 105‑433 (1998)) [in force February 15, 1999] (Convention) of the Organization for Economic Cooperation and Development (OECD); and [3] that Article 4.3 of the Convention bars multiple prosecutions for the same offense. Both the U.S. and South Korea are signatories to the Convention.

The Korean Ministry of Justice submitted a statement to the district court supporting Jeong’s motion to dismiss. It contended that the U.S. had not timely asserted jurisdiction to prosecute Jeong, as confirmed in the U.S. request under the Mutual Assistance Treaty; thus, the U.S. had effectively waived that right. The district court denied the motion [1] because federal bribery laws do in fact apply extraterritorially and [2] because the Convention does not bar multiple prosecutions. Jeong pleaded guilty but exercised his right to appeal the denial of his motion to dismiss. The U.S. Court of Appeals for the Fifth Circuit, however, affirms Jeong’s American conviction.

According to Jeong, the Convention bars a signatory party from prosecuting a foreign national whose alleged offenses had occurred abroad. Article 4.3 of the Convention provides that, when more than one jurisdiction can prosecute, the governments involved should—at the request of one of them—consult to determine the most appropriate jurisdiction for prosecution.

The Court of Appeals, however, disagrees. “We apply the traditional canons of interpretation to Article 4.3. ‘The interpretation of a treaty, like the interpretation of a statute, begins with its text.’... We must interpret the text ‘in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose.’ ... Only if the language of a treaty, when read in the context of its structure and purpose, is ambiguous may we ‘resort to extraneous information like [1] the history of the treaty, [2] the content of negotiations concerning the treaty, and [3] the practical construction adopted by the contracting parties.’ ... Finally, [4] we may not ‘alter, amend, or add to any treaty, by inserting any clause, whether small or great, important or trivial,’ for to do so ‘would be ... an usurpation of power, and not an exercise of judicial function.’ ...”

“Applying these canons, we conclude that the plain language of Article 4.3 does not prohibit two signatory countries from prosecuting the same offense. Rather, the provision merely establishes when two signatories must consult on jurisdiction. Article 4.3 states that two signatories with concurrent jurisdiction over a relevant offense must, ‘at the request of one of them,’ consult on jurisdiction.”

“The phrase ‘at the request of one of them’ is a dependent clause that conditions the consultation requirement upon the existence of a request. Where no such request is made, then, the ordinary reading of Article 4.3 is that consultation is not required. Jeong is, therefore, incorrect that the provision requires consultation in every instance of concurrent jurisdiction. In the case at hand, the record shows that neither the U.S. nor South Korea requested consultation on their concurrent jurisdiction to prosecute Jeong. That they did not consult on jurisdiction, therefore, does not violate Article 4.3.”

“Even if the U.S. and South Korea had been required to consult on jurisdiction, however, it would not follow that only one of the two nations could prosecute Jeong. Article 4.3 requires that consultation be made ‘with a view to determining the most appropriate jurisdiction for prosecution.’ Jeong argues that because the provision uses the singular, not plural, form of ‘jurisdiction,’ prosecution of an offense may be had in only one jurisdiction.”

“But this reading impermissibly engrafts additional requirements on the clause, and we may not ‘alter, amend, or add to’ the plain language of a treaty. ... The plain language of the clause provides that where consultation is required, the parties need only consult ‘with a view to determin[e]’_the jurisdictional question ‑‑ they need not actually answer it. And, most significantly, the provision requires nothing more than consultation upon request; it does not require any additional actions of the party countries.” [711‑712].

Alternatively, Jeong argues that the U.S. expressly and impliedly waived jurisdiction, and, therefore. the indictment is invalid. Again, the Court disagrees. “Implicit in Jeong’s argument is a presumption that although the U.S. and South Korea both had the right to prosecute him for his offenses, only one of the two countries was permitted to exercise that right. Operating under this [alleged] presumption, Jeong argues that the U.S. impliedly and expressly ceded its right of prosecution to South Korea.”

“In an omission fatal to his argument, however, Jeong fails to identify any source of domestic or international law that permits such a presumption. At the outset, we note that it is doubtful whether Jeong has recourse in domestic law. For instance, we have held that the Double Jeopardy Clause of the Fifth Amendment ‘only bars successive prosecutions by the same sovereign.’ U.S. v. Villanueva, 408 F.3d 193, 201 (5th Cir.2005); see also U.S. v. Martin, 574 F.2d 1359, 1360 (5th Cir.1978) (‘The Constitution of the U.S. has not adopted the doctrine of international double jeopardy.’) ... Double jeopardy thus does not attach when separate sovereigns prosecute the same offense, as here.”

“In addition, Jeong has not pointed us to any applicable international law that limits the U. S’s jurisdiction over the offenses in this case ‑‑ nor have we found any in our own research. There are three accepted sources of international law in the U.S.: [1] customary international law, [2] international agreement, and ]3] ‘general principles common to the major legal systems of the world.’ Restatement (Third) of Foreign Relations Law of the United States § 102(1) (1987) (hereinafter Restatement). ... The ‘exercise of jurisdiction by courts of one state that affects interests of other states is now generally considered as coming within the domain of customary international law and international agreement.’ Restatement ch. 2, intro. note.”

“Jeong, however, has not cited any relevant international agreement or custom applicable here. Because Jeong has not identified ‑‑ nor does the record show ‑‑ a legal agreement between the U.S. and South Korea that would permit a conclusion of jurisdictional waiver in this case, we simply lack a basis in which to evaluate Jeong’s waiver claims. ...We must therefore conclude that Jeong’s waiver claim fails.” [712‑713].

Citation: United States v. Jeong, 624 F.3d 706 (5th Cir. 2010).

EUROPEAN UNION COPYRIGHT LAW

Although Calvin Klein, U.S. Plaintiff, challenged European registration of later trademark by Spanish company that manufactures same varieties of leather goods as Plaintiff’s, European Court of Justice upholds adverse ruling by trial court and holds that Spanish Defendant’s proposed new mark is so distinctively different that average EC consumer would be unlikely to confuse it with Plaintiff’s well‑established mark

In its appeal, Calvin Klein Trademark Trust (Plaintiff), incorporated in Wilmington, Delaware, USA, seeks to persuade the European Court of Justice (ECJ) to set aside the judgment of the General Court (GC) [formerly the Court of First Instance of the European Communities (EC)] dated May 7, 2009. The GC had dismissed Plaintiff’s action to overturn the decision of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM). By that decision, the OHIM Board of Appeal had rejected Plaintiff’s opposition to the application lodged by Zafra Marroquineros SL of Spain (Defendant) to register Defendant’s word mark: “CK CREACIONES KENNYA” as a valid EC trade mark.

(N.B. Council Trade Mark Regulation (EC) No 207/2009 of February 26 2009 (OJ 2009 L 78, p. 0001), in force as of April 13, 2009 has repealed Council Trademark Regulation (EC) No 40/94 of December 20, 1993. At the time of the activities involved here, however, Regulation 40/94 was still in effect and hence governs the present case.)

Article 8(1)(b) of Regulation No 40/94 provided as follows: “Upon opposition by the proprietor of an earlier trade mark, the trade mark applied for shall not be registered: ¼ (b) if, because of its identity with, or similarity to the earlier trade mark and the identity or similarity of the goods or services covered by the trade marks, there exists a likelihood of confusion on the part of the public in the territory in which the earlier trade mark is protected; ¼ the likelihood of confusion includes the likelihood of association with the earlier trade mark.”

Article 8(5) of Regulation No 40/94 provided that “upon opposition by the proprietor of an earlier trade mark within the meaning of paragraph 2, the trade mark applied for shall not be registered where it is identical with, or similar to, the earlier trade mark and is to be registered for goods or services which are not similar to those for which the earlier trade mark is registered, where in the case of an earlier Community trade mark the trade mark has a reputation in the Community and, in the case of an earlier national trade mark, the trade mark has a reputation in the Member State concerned and where the use without due cause of the trade mark applied for would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.”

Article 51(1)(b) of Regulation No 40/94 further provided as follows: “A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings, ¼ (b) where the applicant was acting in bad faith when he filed the application for the trade mark.” On October 7, 2003, the Defendant applied to the OHIM to register the word sign “CK CREACIONES KENNYA” as a valid EC trade mark.

The Defendants belong to Classes 18 and 25 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of June 15, 1957, as revised and amended. Class 18 includes leather and imitations of leather, and goods made of these materials and not included in other classes; animal skins; trunks and travelling bags; umbrellas, parasols and walking sticks; whips, harness and saddler. Moreover, Class 25 includes “clothing, footwear, headgear”.

On September 6, 2004, the Plaintiff filed its opposition to Defendant’s registration of the mark. Plaintiff’s opposition rested on all the goods and services covered by its earlier marks and opposed all the goods covered by Defendant’s trade mark application. On December 22, 2005, the OHIM rejected the opposition in its entirety. It found that there was no likelihood of confusion between the marks at issue for the relevant consumers. On March 29, 2007, the Second Board of Appeal dismissed the Plaintiff’s internal appeal.

By application lodged at the Registry of the General Court (GC) on May 29. 2007, Plaintiff, Calvin Klein, sued to annul the contested decision and for an order that OHIM should refuse to register Defendant’s proposed trade mark. Plaintiff relied on a single plea, alleging infringement of Article 8(1) and (5) of Regulation No 40/94. The GC dismissed the action by finding that the lack of similarity between the signs at issue stems from the visual, phonetic and conceptual differences between the signs.

As to the likelihood of confusion, the GC considered that it was inappropriate to conclude that there was a likelihood of confusion in the absence of any similarity between the marks at issue. The fact that the goods covered by the conflicting marks are identical does not alter that assessment. Moreover, although marks with a highly distinctive character on account of their reputation do enjoy broader protection, the recognition here of the reputation of the earlier marks cannot call into question the finding that the marks at issue create overall impressions which are too distinctive for it to be found that there is a likelihood of confusion.

Plaintiff Klein duly appealed to the ECJ which assigned its case to the First Chamber. The Plaintiff relies on two grounds; it contends that there was an infringement not only [1] of Article 8(1) of Regulation No 40/94 but also, [2] of Article 8(5) of that Regulation. The ECJ, however, disagrees and upholds the [GC’s] ruling. The following are edited excerpts from the ECJ’s opinion.

Para. 43. “As regards the first part of the first ground of appeal, Article 8(1)(b) of Regulation No 40/94 provides that, upon opposition by the proprietor of an earlier trade mark, the mark applied for is not to be registered if, because of its identity with. or similarity to, the earlier trade mark and the identity or similarity of the goods or services covered by the trade marks, there exists a likelihood of confusion on the part of the public in the territory in which the earlier trade mark is protected. According to that provision, such a likelihood of confusion includes the likelihood of association with the earlier trade mark.”

44. “According to the settled case‑law of the Court, the existence of a likelihood of confusion on the part of the public must be appreciated globally, taking into account all factors relevant to the circumstances of the case [Cites].”

45. “It is also apparent from settled case‑law that the global assessment of the likelihood of confusion, in relation to the visual, aural or conceptual similarity of the marks in question, must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components. The perception of the marks by the average consumer of the goods or services in question plays a decisive role in the global appreciation of that likelihood of confusion. The average consumer normally perceives a mark as a whole and does not proceed to analyze its various details. [Cites].”

46. “¼ [T]he similarity of the marks at issue must be assessed from the point of view of the average consumer by referring to the intrinsic qualities of the marks and not to circumstances relating to the conduct of the person applying for a Community trade mark.”

47. “It must therefore be held that, contrary to the [Plaintiff’s] submissions in the first part of its first ground of appeal, the [GC’s] analysis is not vitiated by an error of law due to the fact that it failed to take account of alleged wrongful conduct on the part of the trade mark applicant. While such conduct is a particularly significant factor in proceedings brought under Article 51(1)(b) of Regulation No 40/94 ‑‑ which is not at issue in the present appeal ‑‑ it is not, on the other hand, a factor that must be taken into account in opposition proceedings brought under Article 8 of that regulation. 48. It follows that the first part of the first ground of appeal must be dismissed as unfounded.”

49. “As regards the second part of that ground of appeal, alleging distortion of the facts, it should be noted at the outset that, under Article 225(1) EC and the first subparagraph of Article 58 of the Statute of the Court of Justice, an appeal lies on a point of law only. The [GC] [is a trial court of general jurisdiction and thus] has exclusive jurisdiction to find and appraise the relevant facts and to assess the evidence. The appraisal of those facts and the assessment of that evidence thus does not ‑‑ save where they distort the evidence ‑‑ constitute a point of law which is subject, as such, to review by the Court of Justice on appeal. [Cites].”

50. “The assessment of the similarities between the signs at issue is of a factual nature and, save where the evidence and facts are distorted, is not subject to review by the Court of Justice. Such distortion must be obvious from the documents on the Court’s file, without there being any need to carry out a new assessment of the facts and the evidence. [Cites].”

51, 52. “The [Plaintiff] has failed to produce any evidence which would make it possible to consider that the [GC] distorted the facts by finding, ¼that the lack of any similarity between the signs at issue stems from the visual, phonetic and conceptual differences between the signs. The [Plaintiff’s] argument that the distortion derives from the fact that the GC failed to take account of [Defendant’s] conduct must be disregarded since, ¼, that court was not required to take such conduct into account when carrying out its assessment. Accordingly, the second part of the first ground of appeal must be rejected as unfounded.”

53. “As regards the third part of the first ground of appeal, it should be noted, first, that, where there is no similarity between the earlier mark and the mark applied for, the reputation of, or the well‑known nature attaching to, the earlier mark and the fact that the goods or services concerned are identical or similar are not sufficient for it to be found that there is a likelihood of confusion between the marks at issue. [Cites].”

54. “In the judgment under appeal, the [GC] found that there was no similarity between the marks at issue. It stated, ¼ that the visual, phonetic and conceptual examination of the marks shows that the overall impression created by the [Plaintiff’s] earlier marks is dominated by the element ‘ck’ whereas that created by the trade mark applied for is dominated by the element ‘creaciones kennya’, concluding that the lack of similarity between the signs at issue thus stems from their visual, phonetic and conceptual differences.”

55. “In order to reach that conclusion, the [GC] carried out, ¼ an analysis forming part of the process the purpose of which is to determine the overall impression created by the marks at issue and to carry out a global assessment of the similarity of the marks. Thus, ¼ it conducted a detailed analysis of the mark applied for, taken as a whole, taking into account in particular how the average consumer perceives the mark. That analysis was followed, ¼ by an examination of the visual, phonetic and conceptual similarity of the marks at issue.”

56. “¼ [T]he existence of a similarity between two marks does not presuppose that their common component forms the dominant element within the overall impression created by the mark applied for. According to established case‑law, in order to assess the similarity of two marks, it is necessary to consider each of the marks as a whole, although that does not rule out the possibility that the overall impression created in the mind of the relevant public by a complex trade mark may, in certain circumstances, be dominated by one or more of its components. It is only if all the other components of the mark are negligible, however, that the assessment of the similarity can be carried out solely on the basis of the dominant element.” [Cites]. In that connection, it is sufficient for the common component not to be negligible.”

57. “[I]t is clear, however, that the [GC] found, first, that the overall impression created by the mark applied for is dominated by the element ‘creaciones kennya’, on which the consumer concerned will to a very great extent focus his attention and, second, ,,, that the element ‘ck’ occupies only an ancillary position in relation to that element, which, in essence, amounts to a conclusion that the element ‘ck’ in the mark applied for is negligible.”

58. “Thus, having ruled out, on the basis of a properly conducted analysis, any similarity between the marks at issue, the [GC] correctly concluded, ¼ that, notwithstanding the reputation of the earlier marks and the fact that the goods covered by the marks at issue are identical, there is no likelihood of confusion between the marks.”

59, 60. “The third part of the first ground of appeal must therefore be declared unfounded. In those circumstance, the first ground of appeal must be rejected.”

61. “By its second ground of appeal, the [Plaintiff] criticises the G C for failing to have regard to Article 8(5) of Regulation No 40/94 by failing to examine the reputation of the earlier marks in the context of that provision.”

62. “The [GC] did err by stating, ¼ that the [Plaintiff] relie[d] on a single plea in law, alleging infringement of Article 8(1)(b) of Regulation No 40/94, whereas the application was also expressly based on infringement of Article 8(5) of that Regulation.”

63. “By stating that, since the marks at issue are not similar, there was no need to consider the reputation of the earlier marks, the GC erred in law. In the [Plaintiff’s] view, account should have been taken of the fact that Calvin Klein’s earlier mark, ‘cK,’ is well known in determining whether it should be afforded greater protection. The reputation of an earlier mark should be considered in the course of the assessment of the similarity between the marks at issue and not after similarity has been established.”

64. “¼ [Plaintiff] submits that, if the well‑known ‘cK’ marks were protected only when the letters ‘cK’ were used by third parties with the same mode of graphic representation, that would be tantamount to conferring on the well‑known mark CK a lower level of protection in practice than it would enjoy if it was not widely known. The fact that the ‘cK’ trade marks, along with other distinct graphic representations of those letters, are well known protects them against the use of the letters ‘CK’ in the fashion sector, since, in that sector, those letters are identified with ‘Calvin Klein,’ so that the use of those letters by a third party would lead to confusion by association.”

65. “OHIM contends that, ¼ the [GC] gave a correct ruling on the question of the reputation of the earlier mark. Since the signs at issue cannot be regarded as similar, Article 8(5) of Regulation No 40/94 is not applicable.”

66. “[Defendant] submits that the judgement under appeal refers to the reputation of the earlier marks. Recognising the reputation of the figurative element ‘CK’ in the earlier mark, the judgment under appeal then goes on to state that that reputation does not alter the fact that there is no likelihood of confusion between the marks at issue.”

 [Findings of the ECJ:] 67. “By its second ground of appeal, the [Plaintiff] complains, in essence, that the [GC] incorrectly confined its assessment to an analysis of Article 8(1) of Regulation No 40/94, without examining the [Plaintiff’s] arguments in the light of Article 8(5), and failed to take account of the reputation and well‑known nature which attaches to the earlier marks in carrying out the assessment required under Article 8(5) of Regulation No 40/94.”

68, 69 “It should be noted that, in order for Article 8(5) of Regulation No 40/94 to be applicable, the marks at issue must be identical or similar. Consequently, that provision is manifestly inapplicable where, as in the present case, the [GC] ruled out any similarity between the marks at issue. Accordingly, the second ground of appeal must be rejected as unfounded.” In conclusion, the European Court of Justice dismisses Plaintiff’s appeal.

Citation: Calvin Klein Trademark Trust v. Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM); Case C‑254/09; Celex No. 609J0254 (Eur.Ct.Just. [1st Chamber] Sept. 2, 2010).

FOREIGN LAW; DETERMINATION OF

In dispute over scope of international marketing of French coffee maker design, Seventh Circuit interprets Federal Rule of Civil Procedure 44.1 on proof of foreign law as allowing federal court in interpreting French contract to give greater weight to scholarly treatises on foreign law than to partisan expert testimony

Bodum USA, Inc. (Bodum) sued La Cafetiere, Inc. (La Cafetiere) in a U.S. district court in Illinois, alleging that La Cafetiere’s coffee maker violates Bodum’s common‑law trade dress for the Chambord design. The Chambord is a French‑press coffee maker in which hot water is mixed with ground coffee, and the user pushes down a rod with a mesh screen to separate the coffee grounds. There was a patent on the Chambord design, but it expired many years ago. Both the Chambord and the Cafetiere design are very similar.

A “trade dress” is a distinctive appearance that enables consumers to identify a product’s maker, and is a form of protectable trademark. While the Chambord design is not registered as Bodum’s trademark, common‑law marks may be enforced under both 15 U.S.C. 1125(a) (part of the Lanham Trademark Act), and the Illinois Uniform Deceptive Trade Practices Act (815 ILCS 510/2(a)).

From the mid‑1950s through 1991, the French company Societe des Anciens Etablissements Martin S.A. (Martin) was marketing the Chambord. When Bodum’s Holding Company acquired Martin under a contract in French that seemed to provide that one of the related companies, Household Articles, Ltd. (Household), a British company, had limited distribution rights. Under the Agreement, however, Household was never [1] to sell a French‑press coffee maker in France, [2] to use the Chambord trade name, and [3] to use any of Martin’s distribution channels for 4 years.

In response, Household argued that the Agreement allows it to sell its coffee maker anywhere in the world, except in France, as long as it does not use the Chambord designation. The District Court agreed and gave summary judgment to Household. Bodum appealed. The U.S. Court of Appeals for the Seventh Circuit, however, affirms.

While the Agreement appears to grant Household the right to distribute similar products as long as certain conditions are met, Bodum contends that, under French law, the parties’ intent prevails over the written word. Article 1156 of the French Civil Code provides that “One must in agreements seek what the common intention of the contracting parties was, rather than pay attention to the literal meaning of the terms.”

Bodum presented an affidavit that it understood the Agreement to mean that Household could sell the coffee maker only in the United Kingdom and Australia. In support, it presented the testimony of a French law professor, which Household countered with two expert statements of its own.

“Although Federal Rule of Civil Procedure 44.1 provides that courts may consider expert testimony when deciding questions of foreign law, it does not compel them to do so ‑‑ for the Rule says that judges ‘may’ rather than ‘must’ receive expert testimony and adds that courts may consider ‘any relevant material or source’. Judges should use the best of the available sources.”

“The Committee Note in 1966, when Rule 44.1 was adopted, explains that a court ‘may engage in its own research and consider any relevant material thus found. The court may have at its disposal better foreign law materials than counsel have presented, or may wish to re‑examine and amplify material that has been presented by counsel in partisan fashion or in insufficient detail.’”

“Sometimes federal courts must interpret foreign statutes or decisions that have not been translated into English or glossed in treatises or other sources. Then experts’ declarations and testimony may be essential. But French law, and the law of most other nations that engage in extensive international commerce, is widely available in English. Judges can use not only accepted (sometimes official) translations of statutes and decisions but also ample secondary literature, such as treatises and scholarly commentary.”

“It is no more necessary to resort to expert declarations about the law of France than [1] about the law of Louisiana, which had its origins in the French civil code, or [2] about the law of Puerto Rico, whose origins are in the Spanish civil code. No federal judge would admit ‘expert’ declarations about the meaning of Louisiana law in a commercial case.”

“Trying to establish foreign law through experts’ declarations not only is expensive (experts must be located and paid) but also adds an adversary’s spin, which the court then must discount. Published sources such as treatises do not have the slant that characterizes the warring declarations presented in this case. Because objective, English‑language descriptions of French law are readily available, we prefer them to the parties’ declarations.” [628‑9].

In this case, the French Civil Code Article 1156 requires courts to ascertain the parties’ common intention. Both parties provided differing opinions as to their [original] understanding. Household provided the Agreement’s negotiating history, which French law considers a more reliable indicator of intent than the litigants’ later self‑serving declarations.

The negotiating history is clear. The various drafts of the Agreement show that first there was a prohibition against Household distributing Martin’s products. The later draft changed to allow Household to sell in any markets where it does not compete with Bodum. The final version permits Household to sell the coffee maker anywhere except in France, as long as it does not use the Chambord designation and Martin’s supply channels for 4 years.

The Cour de Cassation (France’s highest civil tribunal) has concluded that a clear and precise contract must not be ‘denatured’ by resort to one party’s declaration of intent. See Jacques H. Herbots, ‘Interpretation of Contracts’ in The Elgar Encyclopedia of Comparative Law 334‑35 (2006); Cass. 2e civ., March 8, 2006, Bull. Civ. II, No. 66. Article 4 of this contract is clear and precise as it stands; the negotiating history shows that it means what it says.”

“And we are not the first court to reach this conclusion. Bodum and another of Household’s subsidiaries [have] litigated in Denmark. Relying heavily on the negotiating history, the Court of Randers concluded, in a judgment dated February 8, 2008 (Case FS 40‑6066/2007), that Article 4 means exactly what the district judge held in this litigation. The Court of Randers reached its judgment under French law (which a choice‑of‑law clause in the contract requires). The judgment was affirmed by the Western Danish High Court on May 12, 2009 (Appeal No. V.L. B‑0329‑08, Ref. No. 138212).”

“It would make no sense to create an international conflict about the interpretation of this contract. Denmark is a civil‑law nation, and a Danish court’s understanding and application of the civil‑law tradition is more likely to be accurate than are the warring declarations of the paid experts in this litigation.” [630‑1].

Citation: Bodum USA, Inc. v. La Cafetiere, Inc., 621 F.3d 624 (7th Cir. 2010).

RICO STATUTE

In litigation by U.S. company over majority ownership of Russian oil company stock, Second Circuit confirms that RICO statute does not apply extraterritorially based on Supreme Court’s recent bright‑line test formulated in Morrison v. Nat’l Austl. Bank Ltd.

Norex Petroleum Limited (Norex) alleged that several companies and individuals (Defendants) engaged in a massive racketeering scheme to control the Russian oil company Yugraneft. As a result, former majority shareholder Norex became a minority shareholder. While most of the alleged acts took place in Russia, Defendants allegedly committed some constituent acts in the U.S., such as mail and wire fraud, as well as money laundering.

Norex filed the complaint in New York federal court based on the Racketeer Influenced and Corrupt Organization Act, 18 U.S.C. § 1961 et seq. (RICO). After some procedural gyrations, the Defendants jointly moved to dismiss. The district court found that it lacked jurisdiction under RICO, and granted the motion. Norex appealed. The U.S. Court of Appeals for the Second Circuit, in a per curiam opinion, holds that RICO lacks a clear congressional statement of extraterritorial reach, thus barring Plaintiff’s RICO claims.

The issue here is whether a U.S. court has jurisdiction in a RICO case where the conspiracy involves primarily foreign actors and foreign conduct. While this case was under consideration, the Supreme Court issued Morrison v. Nat’l Austl. Bank Ltd., 130 S. Ct. 2869 (2010). In Morrison, the Supreme Court rejected the “conduct and effect” test that the Second Circuit had previously been applying to determine a statute’s extraterritorial application. Absent a clear Congressional expression of its intent to grant a statute extraterritorial application, a statute lacks this reach. Id. at 2877.

“[W]e find [that] the district court erred in dismissing Norex’s first amended complaint for lack of subject matter jurisdiction. Rather, the analysis of RICO’s extraterritorial reach must be conducted under the auspices of Fed. R. Civ. P. 12(b)(6). [...]”

“Morrison wholeheartedly embraces application of the presumption against extraterritoriality, finding that ‘unless there is the affirmative intention of the Congress clearly expressed to give a statute extraterritorial effect, we must presume it is primarily concerned with domestic conditions.’ Id. at 2877‑78 ... The Morrison Court rejected various tests devised over the years to divine a statute’s extraterritorial application in favor of a bright line rule: ‘[w]hen a statute gives no clear indication of an extraterritorial application, it has none.’ Id. at 2878.”

“Our Court’s precedent holds that ‘RICO is silent as to any extraterritorial application.’ ... While Norex urges us to consider this statement dicta, we cannot do so. The finding that RICO is silent as to its extraterritorial application is a key holding of the opinion, because it is only upon finding RICO silent as to its extraterritorial application that the [Second Circuit] turned to its now‑abrogated analysis of RICO’s extraterritorial application under the conduct and effects test. ...”

“Even if we were to revisit [the Second Circuit [former] precedent], Norex’s arguments are unavailing. First, Norex argues that RICO § 1962(a)‑(d) applies to ‘any enterprise which is engaged in, or that activities of which affect, interstate or foreign commerce.’ ... Morrison forecloses that argument, noting that ‘we have repeatedly held that even statutes that contain broad language in their definitions of commerce do not apply abroad.’ Supra at 2882.”

“ Morrison similarly forecloses Norex’s argument that because a number of RICO’s predicate acts possess an extraterritorial reach, [it follows that] RICO itself possesses an extraterritorial reach. Id. at 2882‑83 ... Finally, contrary to Norex’s claims, simply alleging that some domestic conduct occurred cannot support a claim of domestic application. ‘[I]t is a rare case of prohibited extraterritorial application that lacks all contact with the territory of the United States.’ Id. at 2884. The slim contacts with the United States alleged by Norex are insufficient to support extraterritorial application of the RICO statute.” [32‑33].

In sum, under Morrison, the proper inquiry is whether the complaint states a claim for which a U.S. court can provide relief, not whether a U.S. court has subject matter jurisdiction to hear the claim. Further, Morrison holds that a statute applies only domestically absent an express intention by Congress of extraterritorial effect. Because RICO is silent as to any extraterritorial reach, it only applies domestically.

Citation: Norex Petroleum Ltd. v. Access Industries, Inc., 631 F.3d 29 (2nd Cir. 2010).