As many of you baseball fans surely know, “40/40” is a term reserved for ballplayers who have hit 40 home runs and stolen 40 bases in a single season. And, as many of you also know, while Boston Red Sox slugger David Ortiz (aka Big Papi) is capable of slugging 40+ home runs in any given baseball season, he has little chance of joining the “40/40” club. In fact, Ortiz has stolen a grand total of 10 bases in his 14 seasons in the big leagues. That, however, did not prevent Ortiz from opening a “Forty Forty” night club in his native Santo Domingo, Dominican Republic.
Unfortunately for Ortiz, rapper-turned-mogul (and big Yankees fan) Jay-Z (aka Big Pimpin’), through a Delaware entity, The Name, LLC, owns the “40/40” U.S. trademark registration covering, among other things, restaurant and bar services, and runs a series of sports bars under the banner The 40/40 Club. In response to Ortiz’s opening of his night club, The Name recently filed a complaint against Ortiz, his company, D. Ortiz por A and Albania Ortiz in the Southern District of New York.
In its complaint, The Name alleges that the Ortiz defendants, in bad faith, consciously, and without its authorization or consent, appropriated the value and goodwill associated with the “40/40” trademark in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114. The Name also claims that, through the Web sitehttp://www.fortyforty.net, the Ortiz defendants made false statements suggesting that they had the sponsorship or approval of The Name and thereby caused confusion and damage in the marketplace in violation of Section 43(a)(1)(A) of the Lanham Act, 15 USC § 1125(a)(1)(A). Finally, The Name alleges that the Ortiz defendants, through their website, registered, trafficked, and used a domain name that was “confusingly similar and dilutive” of the “40/40” trademark in violation of the Anti-Cybersquatting Protection Act, 15 USC § 1125(d). In addition to seeking monetary damages in excess of $5 million, The Name asked the court to bar usage of the “40/40” trademark and seeks transfer of the offending domain name.
A key issue in the case may be whether the court deems it appropriate to apply U.S. trademark laws extraterritorially to enjoin the conduct of a foreign national on foreign soil, as well as online. In the context of the Lanham Act, a three-point test, first enunciated by the Second Circuit in Vanity Fair Mills v. The T. Eaton Co. (2d Cir. 1956)), is used: (1) whether the defendants’ conduct has a substantial effect on United States commerce; (2) whether the defendant is a United States citizen; and (3) whether there is a conflict with trademark rights under foreign law. Courts will balance these factors in order to determine whether the “contacts and interests of the United States are sufficient to support the exercise of extraterritorial jurisdiction.”
At least two prongs of the Vanity Fair Mills test must be satisfied before courts will apply the Lanham Act extraterritorially. In the “40/40” case, the first step will be determining whether the defendants validly registered the term “Forty Forty” under Dominican law – if this is the case, there may be a conflict between United States and foreign law (i.e., the third prong of the test will be satisfied). However, at least one court has held that, “the citizenship of the defendant is the most significant factor in determining whether to apply the Lanham Act extraterritorially to a defendant’s foreign activities” (Aerogroup International, Inc. v. Marlboro Footworks, Ltd. (S.D.N.Y. 1997)). While Ortiz himself became anAmerican citizen in 2008, D. Ortiz C. por A is a Dominican entity; the citizenship status of Ortiz’s sister is unclear. Therefore, it will probably be necessary to determine if the Ortiz defendants’ use of the mark has the requisite “substantial effect” on US commerce.
Determining whether the first prong of the Vanity Fair Mills test is satisfied ultimately may be the most contentious aspect of the case. Courts have been reluctant to extend the reach of the Lanham Act to the actions that foreign defendants take abroad. A “substantial effect” has been found only in a few cases: where foreign activities created confusion among U.S. customers about the source of products sold in the U.S. (Sterling Drug Incorporated v. Bayer AG USA (2d Cir. 1994)), where infringing goods reentered the U.S. (Steele v. Bulova Watch Co., Inc. (U.S. 1952)), or where there was a danger of irreparable injury to a plaintiff’s goodwill and reputation (Calvin Klein Industries v. BFK Hong Kong. Ltd. (S.D.N.Y. 1989)).
In short, this case may turn out to be one for the trademark law books – that is, of course, if the case goes the distance. Big Papi has reportedly made an offer to settle the case. We will be sure to stay on top of future developments in the case.