Trademark rights are territorial and ownership of a mark in one country generally provides no advantage when enforcing the mark in another country. This is particularly true in the United States where enforceable trademark rights arise from actual use of a mark in U.S. commerce, under what is referred to as the Territoriality Rule. If a foreign company has yet to use its mark in U.S. commerce, the Territoriality Rule can have the surprising and inequitable effect of precluding it from enforcing its mark against copycats in the U.S., even when the foreign company's mark is well-known abroad and in the U.S. While the Territoriality Rule is rooted in the commonsense idea that if a mark is not used in U.S. commerce, then U.S. consumers will not encounter it, globalization has rendered the rule anachronistic. Indeed, economic integration, increased travel and the Internet have changed the playing field. It is now very possible that U.S. consumers will recognize well-known brands used exclusively overseas and erroneously assume that a copycat in the U.S. is associated with the overseas brand owner. Accordingly, and contrary to the Territoriality Rule, proof of actual use in U.S. commerce should be unnecessary to underpin an infringement action involving a well-known mark. It is the reputation of a demonstrably well-known mark that should be protected and that reputation should be considered sufficient to create enforceable rights in a well-known foreign mark. Otherwise, foreign companies' successful marks are at risk of infringement in the U.S. by parties who could copy, use and seek to register the marks, preempting the foreign company in the U.S. market and leaving the foreign owner without reliable recourse.
By way of example, consider the case of a hypothetical well-known mark for a luxury pastry maker dating back to the late 1800s, originating and based in Paris, long used in connection with what have been widely recognized as the best macaroons in the world with more than 15,000 macaroons sold each day. The pastry maker and its signature stores began in Paris and then expanded, under the well-known mark, to several other countries, but it is not used in U.S. commerce. Nevertheless, Americans have had extensive exposure to the mark over the years, through among other things travel, gifts, magazines, newspapers and Internet publications, general word-of mouth and publicity and popular U.S. movies and television shows featuring luxury lifestyles, such as "Gossip Girl." Even in these circumstances, due to the U.S. requirement that a mark must be used in U.S. commerce to be enforceable, a third party could conceivably adopt the well-known mark in connection with pastries in the U.S., leaving the owner without reliable recourse for the infringement of its well-known mark in the U.S.