territory such as the whole of the United States, its territories and possessions.
On the contrary, 35 U.S.C. § 261 specifically authorizes the assignment of an exclusive right under a patent to the whole or any part of the United States. Cases interpreting this section hold that such an assignment by the patentee is not a violation of the anti-trust laws. See, Dunlop Company, Ltd. v. Kelsey-Hayes Co., 484 F.2d 407 (6th Cir. 1973); Brownell v. Ketcham Wire & Manufacturing Co., 211 F.2d 121 (9th Cir. 1954) and Deering, Milliken & Co., Inc. v. Temp-Resisto Corp., 160 F. Supp. 463 (S.D. N.Y. 1958), aff'd. in part, rv'd, in part on other grounds, 274 F.2d 626. Consequently, the mere grant of an exclusive license under a patent to the whole of the United States is not an illegal territorial restriction.
b. Tying of Products or "Tie-in" arrangement.
A "tying arrangement" in violation of 15 U.S.C. §§ 1-7 is an agreement by one party to sell one product but only on the condition that the buyer also purchases a different product, or at least agrees that he will not purchase the product from any other supplier. Northern Pacific Railway Co. v. U.S., 356 U.S. 1, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1948); See also, Bell v. Cherokee Aviation Corp. 660 F.2d 1123 (6th Cir. 1981).
The defendants allege that an anonymous representative from S & R called an unnamed employee of Ishmael's on an unspecified date and allegedly stated that S & R would only sell Ishmael Trivial Pursuit games as part of a "larger package".
Fed.R.Civ.Pr. 56(e) makes it clear that the party opposing a motion for summary judgment cannot rest upon the mere allegations of his pleading; he must come forward with admissible evidence or affidavits based on personal knowledge to demonstrate a triable issue of fact.
The allegation that a tying arrangement exists, supported only by inadmissible hearsay evidence, does not meet the requirements of Rule 56(e). No affidavit by the unnamed employee was submitted by the defendants, although the defendants had ample time to procure such an affidavit and ample notice that such an affidavit (or admissible evidence) should have been forthcoming. (See, eg., DE #54; p. 4).
The defendants allege that there exists a price-fixing scheme between Horn Abbot and S & R whereby Horn Abbot has the right to approve the prices of the games which S & R sells. This alleged price-fixing arrangement is purportedly contained in the exclusive license agreement. (TR. pp. 37-38).
The Court has read and examined the exclusive license agreement submitted at the hearing in this cause. There is no provision contained therein which even remotely suggests that Horn Abbot has the right to approve prices.
IV. " Genuine" "Parallel" or "Grey Market" Goods
Notwithstanding their other defenses and claims, the defendants mainly rely on their argument that the exclusive licensee of a trademark can not prevent the importation and sale in the United States of identical goods originating outside the United States from the foreign licensor. Only one court in this district has published a decision on this issue,
however, that ruling does not apply to the case at bar for the reasons enumerated herein.
The precise legal issue before the Court may be stated as: Whether the exclusive licensee of trademark rights throughout the United States has the right to exclude from importation and sale in the United States identical goods originating outside the United States from the foreign licensor and imported into the United States by a third party, where the licensor is itself prohibited from importing and selling those goods in the United States? A review of the existing case law compels this Court to answer in the affirmative.
The notion that a trademark owner in this country may prohibit the importation and sale in the United States, of identical goods (usually called "parallel" or "grey market goods") purchased abroad is based on the principle of territoriality. This principle evolved from a series of cases beginning with A. Bourjois & Co. v. Katzel, 260 U.S. 689, 43 S. Ct. 244, 67 L. Ed. 464 (1923). In that case, the plaintiff, a New York corporation purchased a French company's entire United States' business for face powder, including the United States' registered trademark "Java". The face powder sold by the plaintiff was made by the French company in France but packed in the United States by the plaintiff. The defendant purchased the face powder on the open market in Europe, imported the face powder in its original boxes and resold the face powder in the United States.
In ruling that the plaintiff could bar the importation and resale in the United States of the French face powder, the Supreme Court stated:
It is said that the trademark here is that of the French house and truly indicates the origin of the goods. But that is not accurate. It is the trademark of the plaintiff only in the United States and indicates in law, and, it is found, by public understanding, that the goods come from the plaintiff although not made by it. . . . It stakes the reputation of the plaintiff upon the character of the goods. (emphasis added).
Id. at 692, 43 S. Ct. at 245. See also, Perry v. American Hecolite Denture Corp., 78 F.2d 556 (8th Cir. 1935). Recently, courts addressing the issue have relied on this principle of territoriality in ruling that the owner of United States' trademarks may bar importation and sale in the United States of "genuine" or identical goods manufactured abroad. Bell & Howell: Mamiya Co. v. Masel Supply Co., 548 F. Supp. 1063 (E.D. N.Y. 1982); Osawa & Co. v. B & H Photo, 589 F. Supp. 1163 (S.D. N.Y. 1984).
In Osawa, the district court emphasized the notion of the territoriality of trademarks and the need for protecting them. Judge Leval reasoned that the essential function of a trademark is
to symbolize the domestic good will of the domestic mark-holder so that the consuming public may rely with an expectation of consistency on the domestic reputation earned for the mark by its owner, and the owner of the mark may be confident that his goodwill and reputation (the value of the mark) will not be injured through the use of the mark by others in domestic commerce.