Injunctions in Trademark Cases Must Take Into Account Totality of the Circumstances

Can a U.S. trademark owner sue a foreign defendant for trademark infringement where the defendant has only intended to use (but not yet actually used) the allegedly infringing mark in the United States? The Ninth Circuit recently answered this question in the affirmative, but found the issuance of an injunction under such circumstances to require separate consideration.

In La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., No. 12-15985, 2014 U.S. App. LEXIS 15166 (9th Cir. Aug. 6, 2014), the owner of the U.S.-based LA QUINTA hotel chain brought a trademark infringement claim under the Lanham Act against the owner of a Mexican hotel company using the mark QUINTA REAL in Mexico. The Mexican company operated eight luxury hotels throughout Mexico, but had no hotels in the United States. Its plans to develop a luxury hotel in the U.S. under the QUINTA REAL name consisted of entering into two letters of intent (one in 1994 and the other in 2007), neither of which ultimately materialized. In contrast, the plaintiff La Quinta Worldwide had opened several hotels in Mexico under the LA QUINTA name.

The Mexican company argued the court lacked subject-matter jurisdiction on the ground the letters of intent were not sufficient to constitute a “use in commerce” under the Lanham Act. The Ninth Circuit rejected this argument on the ground the “use in commerce” element of Lanham Act Sections 32 and 43(a) goes to infringement and is not a jurisdictional requirement. Rather, Section 39(a) of the Lanham Act broadly grants federal subject-matter jurisdiction over “all actions arising under this chapter.”

With respect to the likelihood of confusion between the marks LA QUINTA and QUINTA REAL, the Ninth Circuit affirmed the district court’s finding that a likelihood of confusion existed. In reviewing the district court’s grant of a permanent injunction, however, the Ninth Circuit found the district court failed to adequately consider the equities of enjoining the defendant from using the QUINTA REAL mark in the U.S. while the plaintiff would remain free to use the LA QUINTA mark in Mexico. The Ninth Circuit said this consideration was pertinent to whether a permanent injunction against the defendant in the U.S. was fair and equitable in light of all the circumstances. It accordingly vacated the injunction and remanded to the district court for further consideration of this issue.