CopyC@ Pizzerias – D.C. Circuit affirms dismissal of &Pizza’s IP suit against foreign copycat

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In a case “test[ing] the limits of the extraterritorial application of the Copyright and Lanham Acts,” the D.C. Circuit affirms the dismissal of design-your-own pizza restaurant &pizza’s lawsuit against an Edinburgh-based copycat restaurant @pizza. The court finds that &pizza failed to allege sufficient facts demonstrating a sufficient connection to the United States such that either the Copyright Act or Lanham Act should apply to @pizza’s conduct. The case is IMAPizza LLC v. At Pizza Limited et al., No. 18-7168 (D.C. Cir. July 17, 2020).

Pizzerias an Ocean Apart

&pizza is a “create-your-own pizza” restaurant with locations along the East Coast of the United States. At Pizza is a United Kingdom corporation that operates a restaurant called @pizza in Edinburgh, Scotland. &pizza sued @pizza in the United States District Court for the District of Columbia, bringing copyright and trademark infringement claims. &pizza alleged that the founders of @pizza visited &pizza locations in the United States, taking photographs of the premises and studying them, to copy &pizza’s restaurants outside the United States. @pizza’s founders also allegedly downloaded copyrighted pictures of &pizza restaurants from websites operating on U.S. servers.

The district court dismissed &pizza’s complaint in its entirety, noting that while &pizza “eked out a prima facie showing of personal jurisdiction,” the facts alleged in the complaint arose outside the territorial reach of the Lanham and Copyright Acts.

A Closer Look

The D.C. Circuit affirmed the dismissal on appeal. Regarding the copyright claims, the court focused not merely on “whether At Pizza infringed IMAPizza’s ‘exclusive rights’ under the Copyright Act but whether [&pizza] has adequately alleged at At Pizza did so in the U.S.” Op. at 6. Neither act &pizza alleged - (1) @pizza downloading copyrighted pictures of &pizza restaurants from websites operating on servers located in the U.S. and (2) @pizza’s founders taking pictures of &pizza restaurants in the U.S. - constituted a sufficient nexus to conduct in the United States for the Copyright Act to apply. The actual downloading of any copyrighted images occurred outside the United States (even if they were transmitted from the United States) and “the Copyright Act does not create a right to prevent the taking of pictures of an architectural work ‘if the building in which the work is embodied is located or ordinarily visible from a public place.’” Op. at 9 (citing 17 U.S.C. § 120(a)).

Regarding the trademark claims, the court found that &pizza failed to plausibly allege an effect on United States commerce sufficient for a Lanham Act claim as “defendants here are foreign citizens; their business, which is ‘quintessentially local,’ operates solely in the U.K.; they neither purchased supplies from nor made sales to the U.S.” Op. at 13. That “some of the U.S. students and U.S. tourists who visit Edinburgh and purchase food there may be familiar with the &pizza restaurants in the U.S.” did not allege how any confusion by these U.S. tourists would affect pizza purchases in U.S. commerce. Op. at 12. Moreover, a single instance of confusion by an @pizza business partner and @pizza’s founders’ in-person research of &pizza in the United States likewise “did not allege some plausible effect - let alone a significant or substantial effect - upon U.S. commerce.” Op. at 15.

Key Takeaways

The D.C. Circuit readily acknowledged “the difficulty [&pizza] may encounter in trying to enter the U.K. market now that At Pizza has established a copycat restaurant there,” but advised &pizza that, had it made allegations showing At Pizza’s conduct affecting U.S. commerce, the company may have been more successful under the Lanham Act. This comes as no surprise as the Lanham Act has been applied to conduct outside the United States affecting U.S. commerce in certain instances.

The D.C. Circuit also intentionally left open the door concerning the proper inquiry for extraterritorial application of the Lanham Act because explicitly defining extraterritorial infringement presents challenges in an increasingly globalized and digitalized market. Nonetheless, American brands must always be capable of clearly explaining how infringing activity abroad causes harm and hits the bottom line at home in the United States.

With significant contribution from Imani Davis.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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