La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V. - 762 F.3d 867 (9th Cir. 2014)

Rule:

Sections 32 and 43(a) of the Lanham Act both lay out claims for infringement. The "use in commerce" element of Lanham Act §§ 32 and 43(a) claims is not a jurisdictional requirement. Federal jurisdiction over trademark claims is granted by the Lanham Act, 15 U.S.C.S. § 1121(a), which confers broad jurisdictional powers upon the courts of the United States in conjunction with 28 U.S.C.S. § 1331. The Lanham Act grants federal subject-matter jurisdiction over all actions arising under this chapter, without regard to the amount in controversy or to diversity or lack of diversity of the citizenship of the parties. 

Facts:

Since 1968, plaintiff La Quinta Worldwide LLC has operated hotels and motels in the United States on its own and through franchise agreements, and it has long held trademarks for La Quinta in connection with motel services. About half of plaintiff’s hotels were operated by franchisees. Its franchise agreements required it to provide operational support, marketing, and training to its franchisees. Plaintiff also offered franchisees a non-compete geographic zone in which no other plaintiff’s hotel will be opened, and plaintiff agreed to ensure that there was no misuse or infringement that could harm franchisees' investment in the brand, and to maintain and enforce quality control standards. Defendant Quinta Real opened its first hotel in 1986 in Mexico, and today operates eight luxury hotels throughout Mexico. Defendant’s hotels were considered to be some of the most luxurious in Mexico. Its hotels offer a wide range of amenities, and about 40% of its hotel guests were from the United States. Like plaintiff, defendant has authorized third-party websites such as Expedia.com and Orbitz.com to promote and book reservations at its hotels.  Defendant planned to develop a luxury hotel in a major U.S. city. In 1994, it entered into a letter of intent to build a hotel in Texas, and this letter was publicized, although there was no indication of what the hotel would be called. Plaintiff filed the complaint two years after the date of defendant’s last letter of intent. The district court granted plaintiff a permanent injunction, concluding that a likelihood of confusion exists and that the permanent injunction factors listed in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006), favored plaintiff. This appeal followed where defendant raised four arguments. Defendant argued that the court lack subject-matter jurisdiction because its expressions of intent to open a hotel were not sufficient to show a "use in commerce" under the Lanham Act.

Issue:

Did the appellate court have jurisdiction under the Lanham Act?

Answer:

Yes.

Conclusion:

The court held that where the defendant expressed an intent to open a hotel, the appellate court had subject-matter jurisdiction over plaintiff’s Lanham Act claims because the use in commerce element of Lanham Act §§ 32 and 43(a) claims was not a jurisdictional requirement. Also, regarding plaintiff's trademark infringement claim, the district court correctly found a likelihood of confusion because plaintiff's mark was descriptive with significant secondary meaning and a large presence in the hotel marketplace, the marks were similar, and the parties used identical third-party travel sites. The court rejected defendant's laches defense because even if the laches period had run under the first step of analysis, the E-Systems factors did not favor barring plaintiff's suit. Thus, remand was warranted regarding the permanent injunction against defendant