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Ninth Circuit:
Use of Another’s Trademark in Connection With Selling Stock Doesn’t Violate Latham Act
Judges Agree That Equities Don’t Constitute ‘Goods’ or ‘Services’; Collins Says Majority’s Definition of ‘Goods’ Is Too Restrictive
By a MetNews Staff Writer
A Japanese software company that, in the course of selling shares of its stock in California, used a trademark registered in the United States by an intellectual property law firm cannot be held liable in an action for infringement, the Ninth U.S. Circuit Court of Appeals held yesterday, explaining that remedies under the Lanham Act are available only where there is the pirating of another’s mark in connection with providing goods or services—and equities, it declared, are neither.
Senior Circuit Judge Sidney R. Thomas authored the majority opinion, in which Circuit Judge Kim McLane Wardlaw joined. Circuit Judge Daniel P. Collins wrote a concurring opinion in which he rejected the majority’s definition of goods as being restricted to items that are “movable” or “tangible.”
District Court Judge Trina L. Thompson of the Northern District of California on Oct. 18, 2023, dismissed the action by LegalForce RAPC Worldwide, P.C. (“LegalForce USA”), headquartered in Santa Clara County, against the Tokyo-based LegalForce, Inc. (“LegalForce Japan”). Thompson noted:
“Here, Plaintiff failed to cite to any legal authority that advertising or selling equity of a private company is connected to a sale of goods or services….And at the hearing., Plaintiff conceded that it could not find case law in its favor.”
Thomas’s Opinion
In his opinion affirming Thompson’s dismissal for failure to state a claim, Thomas, a former chief judge, wrote:
“The district court correctly held that LegalForce Japan has not used LegalForce USA’s mark ‘in connection with’ goods or services, and therefore LegalForce USA failed to state a claim for which relief could be granted….LegalForce Japan’s use of the LEGALFORCE mark to advertise and sell equity does not satisfy this requirement.”
He explained:
“Equity is not a ‘good’ for purposes of the Lanham Act, because it is not a movable or tangible thing.”
Thomas noted that Uniform Commercial Code §2-105 defines “goods” as “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than...investment securities.” He also quoted Black’s Law Dictionary as saying that goods are “tangible or movable personal property other than money.”
The senior judge continued:
“Equity is also not a service for purposes of the Lanham Act. Equity is not ‘performance of labor for the benefit of another,’ because there is no ‘another’ involved.”
LegalForce Japan does provide legal software services, he said, but added that those “services are all outside the United States, so the Lanham Act cannot apply to them.”
Collins’s View
Collins agreed that “a company’s own equity or stock shares do not count as a ‘good’ or ‘service’ it offers to customers in the market for purposes of the Lanham Act” and that “Plaintiff’s Lanham Act claims therefore fail as a matter of law.”
Differing with the majority, he said it is not “necessary to import, into the Lanham Act, the particular definition of ‘goods’ that is used in § 2-105 of the Uniform Commercial Code and Black’s Law Dictionary.” Elaborating in a footnote, he said:
“I am not entirely sure that I know what may follow from the majority’s limitation of the Lanham Act to goods that are ‘movable’ or ‘tangible,’…and I am also not sure that I understand why securities (which may take the form of physical or electronic certificates) do not qualify as either ‘movable’ or ‘tangible.’ (Indeed. § 2-105’s express exclusion of ‘investment securities’ from its general definition of ‘goods’ seemingly suggests that they otherwise would be covered by that definition.) The majority does not explain what its ‘movable’ or ‘tangible’ test entails, or why securities fail that test. Nor does the majority explain how its undefined test is consistent with, for example, our recognition that purely electronic files, such as computer software, qualify as ‘goods’ for purposes of the Lanham Act.”
The case is LegalForce RAPC Worldwide v. LegalForce. Inc., 23-2855.
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