The US Court of Appeals for the Second Circuit affirmed the dismissal of a complaint seeking a declaration of trademark abandonment, finding that the plaintiff (the co-owner of an online business that sells to customers in India and Thailand) was unable to demonstrate a case or controversy absent evidence that he was prepared to immediately bring his goods to market in the United States. Abdul Rehman Karim Saleh v. Sulka Trading Ltd., et al., Case No. 19-2461 (2d Cir. Apr. 30, 2020) (per curiam).
With a plan to expand his online SULKA- and PHULKA-branded apparel business to the United States, Abdul Rehman Karim Saleh filed US trademark applications for the marks, but was refused registration because of prior trademark registrations relating to the mark “SULKA” owned by Sulka Trading, a now-defunct luxury menswear brand. The parties exchanged correspondence on the matter, and Sulka Trading insisted that it continued to use the SULKA trademark in relation to ties and for an “imminent” new clothing line. Yet, Saleh brought an action seeking a declaratory judgment that the trademark had been abandoned.
The district court granted Sulka Trading’s motion to dismiss for lack of subject-matter jurisdiction, finding that Saleh did not demonstrate that he was prepared to immediately bring his goods to market in the United States so as to create a genuine controversy with Sulka Trading. Moreover, the district court determined that any activity purporting to demonstrate Saleh’s ability to use the mark in the United States occurred after the date of his original complaint filing, and noted that “post-complaint facts cannot create jurisdiction where none existed at the time of [the original] filing.” Saleh appealed.
Under Second Circuit precedent, in order to support exercise of jurisdiction over such a declaratory judgment action, Saleh was required to allege that he had “engaged in a course of conduct evidencing a definite intent and apparent ability to commence use of the marks on the product.” Saleh’s pleadings, however, chiefly concerned his business activities in India and Thailand, and the court wasn’t swayed by claims that he “could” quickly transition the burgeoning online business to service customers in the United States without demonstrating any active steps to do so. Readily acknowledging that a party’s business activities abroad might be relevant to a determination that the party is ready and able to expand into the United States, the Court nevertheless found Saleh’s purported plans to sell his goods in the United States “too vague and conclusory” to invoke federal jurisdiction under the definite intent and apparent ability test.
The Second Circuit emphasized that each case must be reviewed on its facts and business circumstances. The Court cited precedent in which a “definite intent and apparent ability” to use a trademark in the United States included efforts such as finding a US manufacturing partner, hiring a licensing agent, conducting consumer surveys and conducting pitch meetings. The Court noted that, in contrast, Saleh alleged only that he “might” use various shippers, payment processors and retailers to sells his wares in the United States without any tangible steps to effectuate those plans. The Court further noted that it wasn’t clear whether Saleh had even received samples of his final clothing products to be sold in India and Thailand. The Court found that Saleh’s conduct and allegations fell short of the quality of preliminary activity sufficient to raise a potential conflict with Sulka Trading in order to sustain declaratory judgment jurisdiction.
Practice Note: This case may be of particular importance to companies looking to protect and enforce their trademarks in the United States when confronted with a declaratory action for trademark abandonment by a non-US entity.