Use this button to switch between dark and light mode.

Experience a New Era in Legal Research with Free Access to Lexis+

NEC Elecs. v. CAL Circuit Abco

NEC Elecs. v. CAL Circuit Abco

United States Court of Appeals for the Ninth Circuit

December 1, 1986, Argued and Submitted -- Pasadena, California ; February 24, 1987, Filed

Nos. 86-6300, 86-6456

Opinion

 [***2056]   [*1507]  SNEED, Circuit Judge:

A Japanese manufacturer of computer chips, NEC Corporation (NEC-Japan), assigned its United States trademark rights to its California subsidiary, NEC Electronics [***2057]  (NEC-USA). Defendant, CAL Circuit Abco (Abco), engages in "parallel importation" of NEC-Japan's chips: it buys them abroad at the lower prices there prevalent, and then imports and sells them here. NEC-USA sued for trademark infringement under the Lanham Act. On pre-trial motions, the district court held for plaintiff and enjoined defendant from selling any more of the foreign-purchased chips. We denied defendant's emergency motion for a stay, but we granted expedited appeal and now reverse.

FACTS 

NEC-Japan is one of the world's largest manufacturers of computer chips, reporting sales of nearly  [**2]  $2 billion dollars in 1985. NEC-USA is a wholly-owned subsidiary whose control remains primarily vested in the parent; NEC-Japan directors constitute a majority of NEC-USA's board of directors. NEC-USA manufactures some computer chips at its own facilities in the United States, but imports ninety percent of the NEC chips it sells from the parent company.

In 1983, NEC-Japan, owner of the trademark "NEC" in this country and elsewhere, assigned all rights to the mark in the United States to NEC-USA, and duly registered this assignment with the federal Patent and Trademark Office. NEC-Japan continues to market its computer chips outside the United States, evidently at prices substantially lower than those charged here by NEC-USA. Defendant Abco buys these so-called "grey market" chips from a  [*1508]  foreign source, imports them, and sells them here in direct competition with NEC-USA. The parties have stipulated that Abco's chips are genuine NEC products.

NEC-USA sued Abco for trademark infringement under sections 32 and 43 of Lanham Act, 15 U.S.C. §§ 1114, 1125. 1 NEC-USA alleges that Abco's use of the "NEC" trademark confuses consumers who believe that Abco's sales are authorized by or connected  [**3]  to NEC-USA. The evidence indicates, and the district court found, that some purchasers from Abco mistakenly thought their chips were protected by NEC-USA's servicing and warranties. Based on consumer confusion of this sort, the court granted NEC-USA's motions for partial summary judgment and for a preliminary injunction. Abco appeals both orders.

Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.

810 F.2d 1506 *; 1987 U.S. App. LEXIS 2482 **; 1 U.S.P.Q.2D (BNA) 2056 ***

NEC ELECTRONICS, Plaintiff/Counter-Defendant/Appellee, v. CAL CIRCUIT ABCO, ALEX SANDEL, JASON BARZILAY, BENNY ALAGEM, Defendant/Counter-Claimant/Appellant; NEC ELECTRONICS, INC., Plaintiff/Counter-Defendant/Appellee, v. ALEX SANDEL, JASON BARZILAY, BENNY ALAGEM, MAURY FRIEDMAN, Defendant, NEC CORPORATION and NEC ELECTRONICS, INC., Counter-Defendant, and CAL CIRCUIT ABCO, INC., aka CAL-ABCO, Defendant/Counter-Claimant/Appellant

Prior History:  [**1]  Appeal from the United States District Court for the Central District of California, Consuelo B. Marshall, District Judge, Presiding, D.C. No. CV 85-1344-CBM, D.C. No. CV 85-1344-CBM.

CORE TERMS

trademark, manufacturer, sells, importation, abroad, chips, computer chip, subsidiary, genuine, rights, Lanham Act

Civil Procedure, Appeals, Appellate Jurisdiction, Interlocutory Orders, Summary Judgment, Appellate Review, General Overview, Judgments, Partial Summary Judgment, Remedies, Injunctions, Preliminary & Temporary Injunctions, Standards of Review, Abuse of Discretion, Standards of Review, Clearly Erroneous Review, Business & Corporate Compliance, Federal Unfair Competition Law, False Designation of Origin, Elements of False Designation of Origin, Trademark Law, Trademark Counterfeiting Act, Civil Actions, Lanham Act, Trademark Cancellation & Establishment, Registration Procedures, Counterfeiting, Types of Commercial Transactions, Sales of Goods, Trademark Enforcement by US Customs, Importation and Recordation of Gray Market Goods, Trade Dress Protection, False Advertising, Buyer's Damages & Remedies, Conveyances