As international gaming businesses seek to expand across borders, including by entering the online gaming market, many will no doubt focus on the different regulatory frameworks governing gaming among the different jurisdictions and will perhaps show sufficient foresight to clear or register the name under which they plan to operate. However, as shown by the recent decision, In re Casino de Monaco Trademark Litigation, 07 Civ. 4802 (S.D.N.Y. March 31, 2010), even the best established gaming companies can encounter difficulties if they do not carefully follow applicable U.S. trademark law.

There are perhaps few casino operators of longer standing than Société des Bains de Mer et du Cercle des Étrangers à Monaco (SBM), owner of the Casino de Monte Carlo, which dates back to 1866). However, in In re Casino de Monaco, the United States District Court for the Southern District of New York concluded that SBM possesses no rights in the United States in the claimed trademark CASINO DE MONACO and placed in doubt what rights, if any, it may have in the United States in the name CASINO DE MONTE CARLO. The court thus (i) granted summary judgment dismissing SBM's claim for trademark infringement arising from defendant PlayShare PLC's use of the name “Grand Monaco Casino” (subsequently renamed “Grand Mondial Casino”) for its online casino; (ii) canceled SBM's registration for the Casino de Monaco trademark, and (iii), without finally deciding the matter, held it unlikely that SBM could prove ownership in the United States of enforceable rights in the CASINO DE MONTE CARLO trademark.

United States law is generally clear that no trademark rights arise without actual use in commerce. Mere registration of the name CASINO DE MONACO, without use or a bona fide intent to use, conferred no rights. The court followed such generally accepted principles in concluding that SBM “does not provide goods or services in the U.S., so that it has no rights in the mark.” Slip op. at 17, citing ITC, Ltd. v. Punchgini, Inc., 482 F.3d 135, 155 (2008). The court also followed the ruling in Buti v. Impressa Perosa, S.R.L., 139 F.3d 98 (2d Cir. 1998) that mere advertising and promotion of services in this country do not constitute the rendering of services under an accompanying mark sufficient to warrant trademark protection.

It is well accepted that trademark rights are territorial, such that use of a mark in one country confers no rights in another country. See ITC Ltd., 482 F.3d at 155 (“[B]ecause a trademark has a separate legal existence under each country's laws, ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country. Rather, a mark owner must take the proper steps to insure that its rights to that mark are recognized in any country in which it seeks to assert them.”) Although the New York State Court of Appeals did conclude in ITC, Ltd. v. Punchgini, Inc., 880 N.E.2d 852 (N.Y. 2007), as a matter of New York State law (not federal law) that deliberate and literal copying of a mark having substantial recognition in New York could constitute “misappropriation” under some circumstances (even if the copied mark has not been used in commerce in New York), the court in In re Casino de Monaco declined to apply this state law doctrine. Indeed, even if the name Grand Monaco is similar to Casino de Monaco, it is plainly not a literal copy. Nor was SBM able to show the name had achieved any recognition (much less great renown) in New York (or anywhere).

Although SBM owned a U.S. registration for its claimed mark CASINO DE MONACO, the registration was not accompanied by any proof of actual use. Indeed, there was a claim in the case that the registration had been obtained fraudulently. Without going so far as to find fraud, the court held that the bare allegation of intent to use, unsupported by any evidence of use or intended use, was insufficient to sustain any rights in this country. Although the court did not cite all of the precedents presented in the parties' briefing, PlayShare had noted that under Honda Motor Co. v. Winkelmann, 90 U.S.P.Q.2d 1660 (T.T.A.B. 2009), a foreign applicant such as SBM that cannot offer any tangible proof of intended use on all of the goods for which it seeks registration fails to satisfy the required element of bona fide intent to use that a foreign applicant must meet.

As evidence of use, SBM also alleged that Casino de Monaco was a nickname for Casino de Monte Carlo. However, the court rejected such evidence as being based merely on “self-serving affidavits” of SBM' own officers or employees. Slip op. at 21. Said the court “[t]here is no real evidence that the claimed nickname/moniker/umbrella term that signifies Casino de Monaco has ever existed in the United States.” Id.

Because gaming is so highly regulated, a further issue (ultimately not addressed by the court) was whether unregulated use by SBM of either name, Casino de Monaco or Casino de Monte Carlo, in the United States would have been unlawful, therefore giving rise to no valid trademark rights. See, e.g., CreAgri, Inc. v. USANA Health Scis., Inc., 474 F.3d 626, 630 (9th Cir. 2007) (“use in commerce only creates trademark rights when the use is lawful.”). Rather, discrediting SBM's claimed evidence of use, the very fact that SBM had not used its claimed mark in this country showed it lacked any bona fide interest sufficient to maintain rights here.

Because of the ambiguity with which SBM pleaded rights in the claimed mark CASINO DE MONTE CARLO, the court reached no definitive conclusion if SBM owned any rights in the United States. However, reviewing the evidence of alleged commercial use of Casino de Monte Carlo (such as opening lines of credit or issuing “gold cards” to U.S. gamblers to go play in Monaco), the court noted that the “the activity in the record constitutes nothing more than promotional and advertising activity in the U.S.” Slip op. at 23. Citing Buti v Impressa Perosa (which held that mere advertising activity was insufficient to create trademark rights) the court questioned whether SBM could possibly show such rights — notwithstanding a prior favorable decision on the case, International Bancorp, LLC v. Societe de Bains de Mer et du Cercle, 329 F.3d 359 (4th Cir. 2003). Id. at 22 n. 9. The court also noted that SBM does not enjoy exclusive use of the name Monte Carlo for casinos in the United States. Because the very definition of a trademark is its ability to identify goods or services coming from a single source of origin, Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739, 743 (2d Cir. 1998) (the significance of a claimed trademark is its “ability to identify goods sold under it as coming from one particular source”), the court noted that SBM is involved in an ongoing dispute with MGM Mirage, operator of the Las Vegas Monte Carlo. Said the court: “[w]ithout some resolution, the mark CASINO DE MONTE CARLO can be reasonably construed as not ‘identifying one source of origin.'” Slip op. at 20.

In sum, In re Casino de Monaco is a clear warning, even to well-known casino and gaming enterprises, that in an international economy, naming one's business should not be treated as a game of chance. Especially as gaming increasingly goes online, defining territorial rights will become more and more challenging. It should not be left to a roll of the dice.