Selah loses Appeal against Sulka Trading lacking intent to engage in the markets of US
Date Published: Jun 21, 2021
Abdul Rehman Karim Saleh, the Plaintiff-Appellant is an individual living in Thailand and is a co-owner of an online apparel business, selling items under the name “SULKA” and “PHULKA”, to a clientele, majorly based in India and Thailand. Sulka Trading Ltd. and A. Sulka and Company Limited (collectively, “Sulka Trading”), being the Defendants- Appellees, are United Kingdom based organisations and remain to be the successors of prior business entities that used the mark “SULKA” in the United States and related foreign commerce, for various goods. As valid registrations, Sulka Trading own five trademark registrations for “SULKA” in the United States. Mr. Saleh had, out of prospective business functions, entered into a partnership with an Indian individual, and along with the person, planned to manufacture and market apparels and other goods, under the trademark “SULKA”. In that prospect, Mr. Saleh wished to expand his business functions with his products, under the mark “SULKA”, to the United States market and in that spirit applied for the registration of his mark “SULKA” to the USPTO under the premise that Sulka Trading had ceased business functions under this name, thus believing them to have abandoned said mark. On informing Sulka Trading about the intention to use the marks and their insistence on claiming that the mark was still in active use, Selah brought an action against Sulka Trading in the United States District Court for the Southern District of New York (“District Court”), seeking declaratory judgement in their favour, that the trademark of “SULKA” had been abandoned,. The District Court dismissed the suit, in favour of Sulka Trading, by resonating with their motion that Selah’s motion lacked subject-matter jurisdiction and the allegations made therein did not present the preparedness on their part to bring his goods immediately to the market in United States. Selah then appealed against the District Court ruling in the United States Court of Appeals for the Second Circuit, and argued that he could make the transition within the United States market quickly, since it was an online business. However, as per the Appellate Court, Selah’s motion lacked definitive evidence and intent to engage in course of conduct for initiating business within United States, basis the contended marks. Therefore, the Appellate Court affirmed the district court’s dismissal of motion.
Mr. Saleh, with his working experience spanning Bangladesh, Singapore and Malaysia, along with Mr. Harsh V. Rungta, an Indian resident, attempted to begin with a business of marketing apparel under the marks “SULKA” and “PHULKA”, in early 2018. Their initial clientele was majorly based in Thailand and India. In August 2018, Saleh wrote to A. Sulka and Company Limited, Sulka Trading Ltd.’s parent company and conveyed that Saleh intended to enter the United States market with various apparel and accessories, under the mark “SULKA”, which in the United States, is associated with a presently defunct luxury menswear brand. However, the registrations for various “SULKA” marks is held by Sulka Trading, as per the USPTO. Saleh’s correspondence with Sulka Trading asserted that the mark had not been used by them in the U.S. market for several years and appears to have been effectively abandoned, thus, requesting Sulka Trading to voluntarily cancel their subsistence within the “SULKA” mark, in order to allow Saleh to initiate function therewith. In response, Sulka Trading claimed that the brand SULKA had been in continuous use, with respect to neckties and their sale in the United States and eventually, planned to expand into a wider line of clothing under the same brand. Therefore, the mark being of great value to Sulka Trading, they refused to cancel their subsistence within it. In that spirit, Sulka Trading asked Saleh to confirm that keeping the above submissions in mind, they shall not go ahead with the use of SULKA mark and asked them to abandon their pending U.S. and Thai applications to get “SULKA” registered. Further, in September 2018, Saleh requested proof of use of SULKA marked products, as having been sold in recent years, which was complied with by Sulka Trading immediately, providing sales invoices of SULKA mark-bearing neckties from 2016-17, along with a reiteration of request that Saleh amicably resolve any potential conflict by withdrawing their U.S. and Thai based SULKA mark registration applications. To this, Saleh adhered to their stance, stating that Sulka trading had abandoned their use of the SULKA mark and were attempting to “potentially jeopardise” Saleh’s intended expansion into the U.S. market, the launch of which they were actively preparing for. Saleh also expressed their willingness to discuss and “amicable solution of the matter”.
Following the above exchange, Saleh filed a lawsuit in October 2018, seeking a declaratory judgement against Sulka Trading that they had last any subsistence in the SULKA mark. The same was substantiated by an allegedly “concrete plan” of expanding business functions and ambit thereof, within the United States market, which was evidence by the pending application with the USPTO, with respect to registration of the “SULKA” mark by Saleh. Sulka Trading tried to dismiss the motion that Saleh’s business plans were “unspecified” and were too vague to incite and actual controversy, which would be capable of exercising subject-matter jurisdiction. It was then stipulated by the parties that Saleh would be allowed to file the ‘First Amended Complaint’ or FAC, in order to address the highlighted deficiency. Within the FAC, Saleh provided more details of the plans and explained how he had partnered with Mr. Rungta and that the two of them, in pursuance of this business plan, had:
- Applied for registration of the “SULKA” mark within Thailand, India and United States,
- Created a website: ‘sulka-phulka.com, that offered “SULKA” branded apparel for sale within India and Thailand,
- Registered other related domain names,
- Sold to a customer in India, an unspecified number of t-shirts,
- Contracted with unnamed manufacturer s of apparel and shipping services, for propagating business under the “SULKA” mark,
- Contracted with multiple online retail sales portals like Amazon, E-bay, etc, to offer for sale “SULKA” products, in India and Thailand.
- Claimed that wished to expand to the United States market and described plans to configure website to accept orders from United States, by arranging with payment processors like PayPal and tying up with current shipper to ship orders to U.S.
Sulka Trading renewed motion to dismiss on the grounds that the FAC had again not cured lack of a genuine controversy.
The District Court granted Sulka Trading’s motion to dismiss, stating that Saleh’s intention/desire to use the mark in United States was too “hypothetical” to create a controversy and therefore, did not warrant a declaratory judgement, in any way. This was substantiated by the fact that no reliance could be placed on present business activities in Thailand and India, since the same does not create jurisdiction in the United States. Additionally, it was noted by the District Court that “almost all of Saleh’s activity of purportedly demonstrating his imminent ability to use the SULKA mark in the United States occurred after he filed the [initial] Complaint.” Therefore, these activities were not relevant since “post-complaint facts cannot create jurisdiction where none existed at the time of original filing”.
Saleh then appealed to the Second Circuit, or the Appellate Court to dismiss the District Court’s dismissal of motion on the ground of lack of subject- matter jurisdiction in granting a declaratory judgement. The Appellate Court observed that there lacked an “actual controversy” within Saleh’s motion, so propounded. The same was resonated in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007), where the Appellate Court observed: An action seeking declaratory relief satisfies the case-or-controversy requirement, and thus permits the exercise of federal jurisdiction, if the dispute is “definite and concrete, touching the legal relations of parties having adverse legal interests” and is “real and substantial,” such that it “admit[s] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.” Therefore, as observed in line thereof, the Appellate Court observed that the complaint as raised by Saleh, does not establish a justiciable case or controversy. The Court observed that to claim a declaratory judgement action, Saleh was required to plead that he “has engaged in a course of conduct evidencing a definite intent and apparent ability to commence use of the marks on the product”, as held in Starter Corp., 84 F.3d at 595. It must be displayed by Saleh that he is prepared to sell the “SULKA” mark products in the United States. Therefore, reiterating the findings of District Court, that Saleh’s submitted plans of expanding his “SULKA” marked products to the U.S. market, had not been executed even to “some effect”, disqualifies the FAC from meeting the necessary burden.
The Appellate Court, thus, affirmed the judgement of the District Court in all respects.