Full opinion text
MEMORANDUM OPINION FACTS ROGER D. FOLEY, Chief Judge. Plaintiff Wells Fargo & Company, a California corporation (the Bank), is engaged in business in the United States and various foreign countries. The Bank uses registered trade names, trademarks and service marks comprising in whole or in part the name “Wells Fargo”. The Bank is involved in banking services, trust services, toy manufacturing, restaurant services and the travel agency business and has registered trade-marks to cover these services. Plaintiff Baker Industries, Inc., a Delaware corporation (Baker), owns and has registered the “Wells Fargo” trademark for the armored car business, i. e., the transportation of money and valuables. The defendant Wells Fargo Express Company is a Nevada corporation, incorporated September 1, 1961. The complaint was filed on September 18, 1970, alleging that the defendant is infringing on the Bank’s and Baker’s trade-marks, all of which have been registered under the Lanham Act, 15 U.S.C. §§ 1051-1127. The plaintiffs also allege unfair competition. The plaintiffs allege that the defendant uses the name “Wells Fargo Express Co.” in its American and foreign business activities and that the defendant has registered the plaintiffs’ trade-mark and trade name in various foreign countries. Plaintiffs allege that the defendant has appropriated the trade-mark without their consent, that this use by the defendant confuses the public, that this use is likely to ultimately dilute their property rights in the registered trade-mark, that this use causes the plaintiffs irreparable harm and that the use unjustly enriches the defendant. Both plaintiffs seek to enjoin the defendant from infringing their registered trade-marks and from using the words “Wells Fargo” in the United States or in foreign nations. Plaintiffs also seek an accounting for damages and profits, an order directing the destruction of labels, etc., in defendant’s possession which bear the name “Wells Fargo”, and costs. The defendant’s answer of May 20, 1971, alleges that it was a dormant corporation from its September 1, 1961, incorporation until 1968 and that it has never sold or offered for sale any goods or services. The defendant alleges that it changed its name from Wells Fargo Express Co. to Modern Research, Inc., on October 7, 1970, three weeks after the complaint was filed, so the lawsuit is therefore moot. The defendant, as Modern Research, Inc., alleges that it always has been, and presently is, engaged only in the business of research and development (inventing), which activity is not covered by either plaintiff’s trade-mark registration and which is not a part of either plaintiff’s business. The defendant further contends that the plaintiffs’ trade-mark is not very strong and has been weakened by the extensive use in commerce of the words “Wells Fargo” by several other companies and by the use of the words by both plaintiffs, which are unrelated companies. The defendant alleges that the scope of protection afforded such a weak mark is narrow, indeed. The defendant further alleges that the plaintiffs are without clean hands since this suit is brought as a misuse of judicial machinery in order to obtain discovery for use in foreign suits. The defendant’s answer contains a counterclaim for treble damages under the United States antitrust laws and the Nevada civil conspiracy laws. On December 22, 1971, the plaintiffs filed an amended complaint which alleged trade-mark infringement and unfair competition against the original Nevada defendant and the newly added additional defendant Wells Fargo Express Company, A. G., a Lichtenstein corporation. Service was made by mail to a foreign address, supposedly relying on Nevada’s long-arm statute to confer jurisdiction. The newly added defendant has never made an appearance. The following is a brief history of the Nevada defendant. The defendant was incorporated on September 1, 1961, by Mr. Wilkinson, Sr., now deceased. Mr. Wilkinson, Jr., is now the president of the defendant, Modern Research. Mr. Wilkinson, Sr., decided that he wished to name the corporation Wells Fargo Express Co. Mr. Wilkinson, Sr., was aware of the San Francisco Bank of the same name, but a check with the Secretary of State of Nevada revealed that the name Wells Fargo Express Co. was available as a corporate name in Nevada. The defendant apparently remained dormant as a corporate shell until October 14, 1968, at which time the defendant opened a bank account. On this date the Nevada defendant corporation was apparently sold to the Lichtenstein corporation. The Lichtenstein corporation owned the Nevada defendant corporation until November 2, 1970, when the stock was purchased by Mr. Jacobs, the attorney for the defendant Modern Research. Apparently the defendant Modern Research is still owned by Mr. Jacobs. On December 13, 1968, the defendant hired its first employee, Mr. Anthony Germano, who was hired to run an office and write checks. On January 1, 1969, offices were rented at 120 East Flamingo Road. On March 7, 1969, Ronald C. Davies, an inventor, was hired. On October 13, 1969, the assets of the defendant Wells Fargo Express Co. of Nevada were sold to Wilky Research and Development Corporation, a wholly owned subsidiary of Salem Electronics, Inc., a publicly owned and publicly traded company. Salem Electronics, a U. S. holding company which is now known as Salem Industries, is owned by the Lichtenstein corporation. So, on October 13, 1969, the assets of the Nevada corporate defendant were sold by the Lichtenstein corporation to a subsidiary of Salem Electronics, which is also owned by the Lichtenstein corporation. This just being a shuffle of ownership among subsidiaries, apparently the Lichtenstein corporation actually owned the defendant Nevada corporation until it was sold to Mr. Jacobs on November 2, 1970. Before the Nevada defendant's assets were sold to Wilky Research and Development Corporation (owned by Salem) and after the sale the inventor, Mr. Davies, was busily working on various prototypes. On August 20, 1970, Baker advised the Nevada defendant by letter that the use of the words “Wells Fargo” constituted an infringement of registered trade-marks. On September 22, 1970, the Bank and Baker filed the original complaint charging the Nevada defendant with trade-mark infringement and unfair competition. On October 7, 1970, the defendant Wells Fargo Express Co. of Nevada changed its name to Modern Research, Inc. On October 13, 1970, Wilky Research and Development Corporation defaulted on its note to Modern Research, so the assets (the prototypes and the employment contract of Mr. Davies) went back to the Nevada defendant. Modern Research paid Wilky Research $400 and simply acquired the assets, as well as the corporate shell, of Wilky, so that on October 13, 1970, Wilky Research was acquired by, and became a subsidiary of, Modern Research of Nevada, which was still owned by the Lichtenstein corporation. Then, on November 2, 1970, Modern Research and its subsidiary, Wilky Research, were purchased by Mr. Jacobs, the present owner of the stock. The following facts are well substantiated in the discovery materials and are deemed admitted by the defendant Modern Research for the purposes of its summary judgment action which is before this Court. It is the position of the defendant Modern Research that even admitting all of these facts, it is entitled to summary judgment as a matter of law because of lack of jurisdiction and/or failure to state claims upon which relief can be granted. The defendant had the name Wells Fargo Express Co. listed in the yellow pages of the Las Vegas telephone directory under the category “Research and Development”. The defendant concedes the listing but does not concede the fact that this listing is advertising. The defendant has stationery printed with its corporate name on it and used approximately twenty sheets. The defendant leased an automobile under its corporate name. At the Flamingo Road office of the defendant, the corporate name was on the door and on the building directory. Ron Davies, the inventor, purchased electronic supplies. The defendant had a checking account with the corporate name imprinted on the checks. During the period between the hiring of Ron Davies and the sale of the assets of the defendant to Wilky (Salem), the plaintiffs allege that the defendant, through Mr. Davies, was developing various products to be sold through Salem. But the defendant disagrees and says the affidavits show that even before the formal sale of the defendant’s assets to Wilky, the parties involved in the sale had already informally agreed to the sale and all persons concerned thought Mr. Davies was already working for Salem and his inventions would be owned by Salem and promoted by Salem. But the defendant is willing to concede that prior to the formal sale of its assets to Salem, the defendant was developing various products which were to be sold through Salem. But the defendant states that even admitting this fact for the summary judgment motion, the defendant should still succeed as a matter of law. The plaintiffs also allege that the defendant’s products were carried into other states to promote them and that the products were shown to various people in Las Vegas in an attempt to sell them. Again, the defendant disputes this fact and claims that the products belonged to Salem and all persons involved believed that they belonged to Salem and not to the defendant. But the defendant is willing to concede for the purposes of his summary judgment that the defendant’s products were carried into other states in a futile attempt to promote them and the products were shown to various individuals in Las Vegas. The defendant claims that these prototypes did not have the corporate name on them and that as a matter of law these circumstances do not constitute trade-mark infringement or unfair competition. (Defendant’s factual concessions, summary judgment oral argument, Tr. June 8, 1972, pp. 54, 57, 58.) Plaintiffs allege that the defendant negotiated for the purchase of real estate on the Las Vegas Strip in anticipation of building a resort hotel. The affidavits of the plaintiffs (Heath Dep. Tr. 5-6) and the defendant (Marcus Dep. Tr. 64-65) are directly contradictory with regard to whether the negotiations were in the name of Wells Fargo or in the name of Salem. But, for the purpose of the summary judgment motion, the defendant concedes that the negotiations to purchase the real estate were in the name Wells Fargo, and the defendant again argues that as a matter of law there was no trade-mark infringement or unfair competition. JURISDICTION There are two jurisdictional aspects which will be dealt with separately. First is the jurisdictional question of whether the United States trade-mark and unfair competition laws are to be given extraterritorial application. The second jurisdictional question deals with the domestic trade-mark infringement and unfair competition allegations. Also, aside from reliance on 28 U.S.C. § 1338, which confers jurisdiction on the Federal District Courts for Lanham Act proceedings, the plaintiffs have also relied on 28 U.S.C. § 1332, which requires diversity and the jurisdictional amount. A. Jurisdiction over Foreign Activities— Lanham Act The plaintiffs have amassed numerous documents which show various foreign-based organizations using the name Wells Fargo for different activities throughout the world. The position of the plaintiffs appears to be that the use of the name Wells Fargo by numerous foreign organizations is causing the plaintiffs grave injury to their worldwide good will and will prevent the plaintiffs from expanding into international markets. The plaintiffs have registered trade-marks in the United States and do not approve of the foreign use of “their” trade-mark. Therefore, the plaintiffs seek to enjoin the defendant from using the name Wells Fargo in any foreign country and seek to have the existing foreign registrations allegedly belonging to the defendant removed as a violation of the Lanham Act. The plaintiffs’ position is logical only if the Lanham Act of the United States is given world-wide effect. The plaintiffs can complain about the international injury to “their” good will only if their right in the Wells Fargo name is also international. That is hardly the posture of the law. Registration in the United States gives protection in the United States; if the plaintiffs seek international protection, they must register the mark in the foreign countries where the protection is needed. The plaintiffs have shown that the Nevada defendant was owned by the Lichtenstein corporation. The plaintiffs have also alleged that the numerous organizations throughout the world which are using the name Wells Fargo are related in some way to the Lichtenstein corporation. Therefore, the plaintiffs reason, since the Nevada defendant is somehow remotely related to the foreign organizations using the name Wells Fargo in purely foreign activities, the Nevada defendant is liable for these foreign activities of the foreign relatives because the foreign relatives are infringing the plaintiffs’ United States trade-mark. The plaintiffs have not explained how one domestic subsidiary could be responsible for the acts of other foreign subsidiaries, or even how the domestic subsidiary could be held responsible for the acts of the foreign parent corporation (Lichtenstein). A parent corporation may be liable for the acts of a subsidiary, but a subsidiary is not responsible for the acts of a parent, especially when the parent is a foreign parent and the.acts being done by the foreign parent are legal in the foreign country where they are taking place. But even if the plaintiffs could find a way to make the Nevada defendant liable for the acts of the numerous foreign organizations using the name Wells Fargo, the plaintiffs still would run into the problem of the extraterritorial application of the Lanham Act. If one were to assume arguendo that the Nevada defendant is the identical corporation that is making extensive foreign use of the name Wells Fargo, the Lanham Act would still not apply to the purely foreign activities of the defendant which are legal in those foreign countries. Under the above hypothesis, the plaintiffs would have personal jurisdiction over the defendant for the foreign activities, but that does not mean that the Lanham Act would apply to the foreign activities. Throughout the briefs the plaintiffs fail to distinguish between personal jurisdiction over a defendant who is engaging in foreign activities and the subject matter jurisdiction over those foreign activities. The plaintiffs have argued that because the Nevada defendant may be somehow related to the foreign activities by way of common parenthood from the Lichtenstein corporation, this Court therefore has personal jurisdiction over all of the foreign organizations and ipso facto has subject matter jurisdiction under the Lanham Act for all of the foreign activities. That is not the law. There are several cases which explain why the Lanham Act would not apply to the foreign activities of the defendant even if, in fact, the foreign organizations could be linked to the defendant. At this point of the analysis, disregard the alleged domestic trade-mark violations, they are unrelated to the foreign activities. The concern is with the foreign activities which the plaintiffs attempt to hold the defendant responsible for and which are alleged to be in violation of the plaintiffs’ United States trade-mark rights. Before discussing the cases, there are some general jurisdictional and conflicts principles which will make the decisions more easily understandable. As stated in Callmann Unfair Competition Trademarks and Monopolies, Third Edition (hereafter Callmann), Volume 4, page 865: “Classically, the jurisdiction of each sovereign state is limited to its own boundaries. In the first instance, therefore, any challenge to the legality of an act will be determined by reference to the law of the sovereignty within which it was committed. It is an equally classical tradition that jurisdiction over the person can only be asserted if the defendant is subject to the judicial process of the sovereignty. Assuming personal jurisdiction, action normally lies for conduct which occurred in the sovereignty, although, in some instances, action will also lie for an act committed outside its bounda-» ries, if the act would be illegal in both sovereignties or at least where it was effected. “If the law of the place where the wrong was consummated, i. e., where it had its effect, recognizes no cause of action in tort, recovery should not be available in any other jurisdiction. If, on the other hand, a cause of action does lie at the place of the wrong, it should be recognized by the courts of other sovereignties — wherever jurisdiction can be obtained — even if the substantive law of the forum might be different. Thus, if the court has jurisdiction over the parties and the matter in controversy, it should apply the foreign law, unless, of course, such law is inherently offensive to the local public policy.” The three pertinent cases which deal with the question of whether a United States court may enjoin trade-mark infringement occurring in foreign countries are: Steele, et al. v. The Bulova Watch Co., Inc., 344 U.S. 280, 73 S.Ct. 252, 97 L.Ed. 252 (1952); Vanity Fair Mills Inc. v. T. Eaton Co., Inc., 234 F.2d 633 (2d Cir. 1956), cert. den., 352 U.S. 871, 77 S.Ct. 96, 1 L.Ed.2d 76 (1956); Ramirez and Feraud Chili Co. v. Las Palmas Food Co., Inc., 146 F.Supp. 594 (D.C.S.D.Cal.1956), affirmed per curiam, 245 F.2d 874 (9 Cir.). In the Bulova case, defendant Steele was an American citizen who registered the word “Bulova” as a trade-mark in Mexico in his name. Defendant Steele imported watch cases and faces from the United States into Mexico and affixed the name “Bulova” to the watches he assembled in Mexico. While defendant’s sales were restricted to Mexico, nevertheless purchasers of defendant’s watches brought the watches into the United States and caused injury to the reputation of the plaintiff Bulova Watch Company when these watches were presented for repair under the warranty. The District Court granted a motion to dismiss, the Fifth Circuit reversed, and the Supreme Court affirmed the Fifth Circuit and held that the complaint stated a claim upon which relief could be granted. In reaching this decision, the Supreme Court relied on the facts that defendant Steele was an American citizen and therefore amenable to the powers of the United States even for acts committed abroad, and that acts committed abroad by this United States citizen had a substantial effect on the commerce in the United States. The question of defendant Steele operating under a valid Mexican trade-mark was rendered moot by the cancellation of the Mexican trade-mark by the Bulova Watch Company after the decision of the Fifth Circuit and before the decision of the Supreme Court. The Vanity Fair case involved a suit brought in New York by a United States corporation that had registered the trade-mark “Vanity Fair” in the United States, and thereafter sought to enjoin a Canadian corporation from using in Canada the trade-mark “Vanity Fair”. The Second Circuit affirmed the dismissal of the complaint by the District Court on the ground that the Court lacked jurisdiction as it related to the Canadian trade-mark. In an extensive discussion of the territoriality of trademarks and conflict of law principles, the Second Circuit stated that trade-mark laws of one country have no extraterritorial effect, and that in actions for unfair competition the wrong occurs where the act of passing-off takes place. In reviewing the Lanham Act to determine whether it should be given extraterritorial effect, the Vanity Fair court, interpreting Bulova, said it was quite obvious that “the rationale of the Court (in Bulova) was so thoroughly based on the power of the United States to govern ‘the conduct of its own citizens ... in foreign countries when the rights of other nations or their nationals are not infringed’, that the absence of one of the above factors (that defendant was a foreigner and the legal owner of the mark in the foreign country) might well be determinative and that the absence of both is certainly fatal”. 234 F.2d at 642. (Emphasis supplied.) The plaintiff in Vanity Fair, just like the Bank and Baker in the instant case, also asserted that the International Convention for the protection of Industrial Property (Paris Union), 53 Stat. 1748 (1883, as revised 1934), provided for extraterritoriality of the trade-mark laws of each member nation. The Second Circuit concluded that “the Convention is not premised upon the idea that the trade-mark and related laws of each member nation shall be given extraterritorial application, but on exactly the converse principle that each nation’s law shall have only territorial application”. 234 F.2d at 640. The third case, Ramirez, which was decided after Vanity Fair, involved a fact situation quite similar to the Bulova case. The defendant was an American citizen and an American corporation which counterfeited plaintiff’s labels in America and shipped the labels to Mexico where they were affixed to canned goods of inferior quality to that of plaintiff’s. These canned goods bearing the defendant’s counterfeited label were then transported into the United States, thereby harming plaintiff and causing a substantial effect on commerce in the United States. The Ninth Circuit on appeal affirmed the decision of the District Court granting plaintiff’s motion for preliminary injunction. The District Court commented that the jurisdictional base in the Ramirez case was greater than was evident in the Bulova case, since in Ramirez the defendants were American citizens and an American company and they carried out infringement of the plaintiff’s trade-mark in the United States by counterfeiting the labels in the United States. The Vanity Fair ease is mentioned in the Ramirez decision, and the Ramirez court does not reject the statement of the law in the Vanity Fair case. One commentator, Oliver, in 51 Am.Jur.Int’l.L. 380 (1957), studied the Bulova case and concluded that three factors must be present to justify the jurisdictional extension of that case: (1) Defendant’s conduct must have had a substantial effect on United States commerce; (2) defendant must be a United States citizen, as the United States has broad power to regulate the conduct of its citizens in foreign countries; (3) there must be no conflict with trademark rights established under the foreign law. Applying these principles to the present fact situation, the foreign activities of the foreign organizations are completely outside of the jurisdictional extension recognized as proper in the Bulova case. The plaintiffs have not shown (1) how the foregoing activities have a substantial effect on United States commerce; in fact, the plaintiffs allege that the injury is to their international good will. As discussed previously, the plaintiffs have not shown (2) that the foreign organizations and the Nevada defendant are in fact the same United States company, other than by the fact that the subsidiaries are of common parentage. Further, the plaintiffs have not shown (3) the requisite lack of conflict with trade-mark rights established under the foreign law; in fact, the plaintiffs admit that the foreign organizations have foreign trademarks and seek to have this Court eradicate them. It is obvious that even if the plaintiffs were able to establish the fact that the Nevada defendant is one and the same with the alleged foreign infringers, the Court would still lack subject matter jurisdiction under the Lanham Act because the purely foreign activities have no substantial effect on commerce in the United States and there would exist a conflict between the trade-mark laws of the United States and the trade-mark laws of the various foreign countries. B. Jurisdiction over Foreign Activities— Diversity Jurisdiction 28 U.S.C. § 1882 The plaintiffs, aside from Lanham Act jurisdiction, rely also on diversity jurisdiction to create in this Court the power to resolve the foreign infringement dispute. The plaintiffs correctly submit that, even assuming that the acts complained of are purely foreign and do not affect commerce regulatable by Congress, this Court, in the exercise of its diversity jurisdiction, having personal jurisdiction of the defendant, would apply the doctrine of lex loci delecti. Trade-mark infringement and unfair competition are torts and the extent of this tort liability is governed by the law of the place where the alleged wrong was committed. Callmann, Vol. 4, Sec. 100.2(a)(2). Applying conventional conflict of laws rules, a personal action for such a tort may be brought in any place where the requisite service upon the defendant may be had. As stated in Ortman v. Stanray Corp., 371 F.2d 154 (7th Cir. 1967), “If, however, such a (patent) right is tortiously invaded in the territory where it is protected, a claim for damages on this ground may well be brought in a foreign court having jurisdiction over the defendant.” It is therefore clear that if the plaintiffs could prove that the Nevada defendant is one and the same with the foreign organizations, and since the plaintiffs have served the Nevada defendant and thereby created personal jurisdiction in this Court, the Court has the power to decide the foreign infringement questions. But that does not mean that this Court would apply the Lanham Act. As explained previously, the portions of the complaint dealing with purely foreign activities carried on by foreign organizations do not state a claim arising under the laws of the United States. The plaintiffs seem to intimate that the diversity jurisdiction, coupled with the personal jurisdiction, will result in the application of United States trade-mark and unfair competition law to the foreign activities. That is not the law. In a diversity action, the Court must apply the law of the State of Nevada, including its eonflict-of-laws rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Nevada seems to follow the almost universal rule that the law governing a tort is the law of the place where the alleged wrong occurred, i. e., the law of the place where the passing-off occurred. In the instant case, the alleged foreign wrongs occurred in various foreign countries. Therefore, the law of the foreign countries would apply. Yet the plaintiffs have offered no foreign law and all of their arguments are applications of American law. In the Vanity Fair ease, dealing with the Canadian and American registration of the trade-mark “Vanity Fair” by two different companies, the Court, after deciding that there was not a claim arising under the laws of the United States, dealt with the diversity of citizenship jurisdiction and held that the doctrine of forum non conveniens was properly relied on by the District Court to dismiss the entire complaint. The Vanity Fair court relied on the fact that there was a foreign forum where the plaintiff could bring its suit, the fact that the foreign forum was better able to understand the foreign law which was applicable and the court was doubtful of its power to enjoin acts committed in other countries. The same considerations would justify this Court in refusing diversity jurisdiction in the instant case, especially since the ease is so complex and would involve the application of the laws of numerous foreign countries. It should again be emphasized that diversity jurisdiction would exist only if the Court had personal jurisdiction over the foreign organizations. Again, this would require the plaintiffs to show that the Nevada defendant is one and the same with the foreign organizations and the plaintiffs have not satisfactorily shown this. It is true that the Lichtenstein defendant was added as an additional defendant and named in the amended complaint, but the Lichtenstein defendant has not made an appearance and the plaintiffs have not shown how Nevada’s long-arm statute reaches this foreign organization. In any event, should the plaintiffs show the requisite personal jurisdiction over the foreign organizations, the Court should still refuse jurisdiction under the doctrine of forum non conveniens. Therefore to summarize, as to the portion of the complaint pertaining to trade-mark infringement and unfair competition occurring in foreign countries, the Court should dismiss because the plaintiffs have failed to state a claim arising under the Lanham Act, thereby depriving the Court of subject matter jurisdiction, and the Court should hold that diversity of citizenship jurisdiction is lacking over the foreign organizations because of lack of personal jurisdiction, or if personal jurisdiction could be shown to exist over the foreign organizations because of the Court’s personal jurisdiction over the Nevada defendant, the Court should refuse to exercise the diversity of citizenship jurisdiction by relying on the doctrine of forum non conveniens. Therefore the Court should grant the defendant’s original motion to dismiss, for lack of subject matter jurisdiction, that portion of the complaint which pertains to the alleged infringement perpetrated by foreign organizations in foreign commerce. c. Jurisdiction over Domestic Activities— Trade-Mark Infringement, Lanham Act Are the defendant’s domestic activities “in commerce” regulatable by Congress? A federal court has original jurisdiction under the Lanham Act, 15 U.S.C. §§ 1051-1127, for infringement of registered trade-marks if such infringement occurs “in commerce”. Commerce for the purpose of the Lanham Act is defined in 15 U.S.C. § 1127 as meaning all commerce which may be lawfully regulated by Congress. The trade-mark infringement cause of action is created by the Lanham Act and the federal jurisdiction is also conferred by 28 U.S.C. § 1338(a) which states: “The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to trademarks . . . ” Putting aside the alleged foreign trade-mark infringement which was previously discussed, the discussion will now focus on the domestic activities of the Nevada defendant. Is the alleged infringement by the Nevada defendant “in commerce” regulatable by Congress so that the infringement is within the Lanham Act and within the jurisdiction of this Court? The plaintiffs take the position that the Nevada defendant’s infringing activities substantially affect their interstate activities and therefore the infringement is within commerce regulatable by Congress. The defendant argues that the alleged infringement is purely intrastate and has no effect on interstate commerce so that this Court lacks jurisdiction under the Lanham Act. A clear statement of the “in commerce” requirement is given in Franchised Stores of New York, Inc. v. Winter, 394 F.2d 664 (2d Cir. 1968): “It is true that prior to the enactment of the Lanham Act a federal remedy for trademark infringement would only lie if the infringing acts occurred in interstate commerce. See Dad’s Root Beer Co. v. Doc’s Beverages, Inc., 193 F.2d 77 (2d Cir. 1951); United States Printing & Lithograph Co. v. Griggs, Cooper & Co., 279 U.S. 156, 49 S.Ct. 267, 73 L.Ed. 650 (1929); Pure Oil Co. v. Puritan Oil Co., 127 F.2d 6 (2d Cir. 1942). However, by means of the Lanham Act the Congress sought to give trademarks nationally ‘the greatest protection that can be given them,’ S.Rep. 1333, 79th Cong., 2d Sess.1946, U.S.Code Cong. Serv.1946, p. 1277, and in order to effectuate that policy Section 45 of the Act, 15 U.S.C. Section 1127, significantly provides that the ‘word commerce means all commerce which may lawfully be regulated by Congress.’ The Supreme Court has liberally construed the ‘broadened commerce provisions’ of the Lanham Act and recognized their ‘sweeping reach.’ Steele v. Bulova Watch Co., 344 U.S. 280, 73 S.Ct. 252, 97 L.Ed. 252 (1952). “It has long since been established that the Congress by virtue of its power to ‘regulate Commerce * * * among the several States’ may regulate purely intrastate commerce which exerts a substantial effect on interstate commerce. See, e. g., Katzenbach v. McClung, 379 U.S. 294, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964). This interpretation has been widely followed in cases under the Lanham Act and federal subject matter jurisdiction has been upheld where an act of infringement though occurring in intrastate commerce has a substantial effect on interstate commerce. See Pure Foods, Inc. v. Minute Maid Corp., 214 F.2d 792 (5th Cir.), cert. denied 348 U.S. 888, 75 S.Ct. 208, 99 L.Ed. 697 (1954); Iowa Farmers Union v. Farmers’ Educational and Cooperative Union of America, 247 F.2d 809 (8th Cir. 1957); Lyon v. Quality Courts United, Inc., 249 F.2d 790 (6th Cir. 1957); Drop Dead Co. v. S. C. Johnson & Son, Inc., 326 F.2d 87 (9th Cir. 1963), cert. denied 377 U.S. 907, 84 S.Ct. 1167, 12 L.Ed.2d 177 (1964). A substantial effect on interstate commerce is present when the trademark owner’s reputation and good will, built up by use of the mark in interstate commerce, are adversely affected by an intrastate infringement. See Pure Foods, Inc. v. Minute Maid Corp., 214 F.2d 792 (5th Cir.), cert. denied 348 U.S. 888, 75 S.Ct. 208 [, 99 L.Ed. 697] (1954); Iowa Farmers Union v. Farmers’ Educational and Co-operative Union of America, 247 F.2d 809 (8th Cir. 1957); Lyon v. Quality Courts United, Inc., 249 F.2d 790 (6th Cir. 1957). See also Robert, Commentary on the Lanham Act, 15 U.S.C.A., Substit. VII, c. 22, 268-269 (1948); Developments in the Law, Trade-Marks and Unfair Competition, 68 Harv.L. Rev. 814, 882-883 (1955).” The Ninth Circuit has followed the same rationale in Maier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117 (9th Cir. 1968), cert. den., 391 U.S. 966, 88 S.Ct. 2037, 20 L.Ed.2d 879, where the court squarely held that jurisdiction was present for the sale by the defendant of an alcoholic beverage solely in intrastate commerce which could affect the interstate sale and reputation of plaintiff’s product and was therefore commerce which Congress could regulate. The court said, at 390 F.2d 120: “Black & White Scotch is a scotch whisky manufactured abroad [and] . sold in interstate commerce and is concededly a scotch of excellent reputation. It is fairly obvious therefore that the infringement of this mark by another alcoholic beverage tends to jeopardize the good name of Black & White Scotch, or at least so diminish the appellees’ ability to control and therefore sustain the excellent reputation of their scotch that it must have substantial effect on that trade-mark and its relation to interstate commerce.” The defendant relies on several Lanham Act cases in which the courts held that business essentially local in character is outside the scope of the word “commerce” as used in the Lanham Act. In these cases the complaint was dismissed because the infringing use by the defendant was purely intrastate. The courts cautioned that the requirement that there be interstate commerce must not be taken lightly since it is jurisdictional in nature. The defendant relies heavily on Fairway Foods v. Fairway Markets, 227 F.2d 193 (9th Cir. 1955), which is a Ninth Circuit case which is older than the Black & White Scotch case. The plaintiff in Fairway Foods was a wholesale grocery concern and was the owner of a federal registration for the trade-mark “Fairway”. The plaintiff supplied canned and packaged foodstuffs to over 1,250 “Fairway” stores in over one thousand cities and towns in many states, but not in California. The defendant operated a retail supermarket in Monterey Park, California, under the name “Fairway Market”. The plaintiff sued the defendant for trade-mark infringement and unfair competition. The Ninth Circuit held that the Lanham Act did not extend to purely intrastate activities and hence affords no remedies for infringement of a federally registered trade-mark where the acts were carried out purely intrastate. The Court held that there was no likelihood of confusion between a mid-west wholesaler and a grocer doing business only in a California city. In the cases relied on by the defendant for the proposition that purely intrastate transactions cannot be within the Lanham Act, the trade-marks involved were not of national prominence. For instance, in the Fairway case, no person in California (very few persons, anyway) had ever heard of the Fairway wholesaler in the midwest. The cases, like Fairway, dealt with a trade-mark that had only local prominence, so that infringement in another area would not have any effect and therefore would certainly not have a substantial effect on interstate commerce. But in the Ninth Circuit Black & White Scotch case, the Court emphasized the national prominence and national good will of the plaintiff in reaching the decision that the defendant’s purely intrastate infringing activities had a substantial effect on the plaintiff’s interstate business. The instant case is analogous to the Black & White Scotch case because the plaintiffs’ “Wells Fargo” trade-mark is of national prominence. The defendant’s Nevada activities may be purely intrastate in nature, but the infringement may substantially affect the plaintiffs’ national reputation. The Wells Fargo name is well known throughout the United States. The Court could take judicial notice of the national notoriety of the historic name owned by the plaintiffs. As in the Black & White Scotch case, the unrestrained use of the name Wells Fargo by the defendant, if proven, may tend to jeopardize the good name of the plaintiffs and diminish the plaintiffs’ ability to control their national reputation, thereby substantially affecting interstate commerce. The plaintiff Bank has offices throughout Northern California and several branches in the Lake Tahoe area and is well known in Nevada. The plaintiff Baker operates an armored valuables transportation line from Colorado to various California cities and traverses Nevada on the route. It is evident that a dilution in the value of plaintiffs’ trade-marks would have an effect on their interstate business and therefore substantially affect interstate commerce. Also, it should be recalled that the defendant conceded for the purposes of the summary judgment motion (summary judgment transcript, oral argument, June 8, 1972, pp. 54, 57, 58) that the products of the defendant were carried into other states for the purpose of promoting them and various persons traveled to Nevada to view the inventions. This concession apparently takes the defendant’s operations out of the purely intrastate category if the alleged promotion of the products is an infringing act. Therefore, the defendant’s alleged infringement, even if the activities were purely intrastate, are alleged to have a substantial effect on the interstate operations of the plaintiffs and hence the defendant’s activities are within “commerce” for the purposes of the Lanham Act. D. Jurisdiction over Domestic Activities, Unfair Competition. Under Lanham Act, Pendent Jurisdiction, 28 U.S.C. § 1338(b), Diversity Jurisdiction, 28 U.S.C. § 1332. Thus far, in the discussion of the Nevada defendant’s alleged infringing activities in the United States, the discussion has pertained solely to the plaintiffs’ Lanham Act trade-mark infringement claim. Now the discussion will deal with the plaintiffs’ unfair competition claims. The jurisdictional question dealing with the unfair competition claims is quite confusing and was difficult to discover because the Ninth Circuit is at variance with all other circuits and the parties to the suit failed to realize and discuss the jurisdictional problems involved. Aside from 28 U.S.C. § 1338(a) which, in addition to the Lanham Act, confers jurisdiction for the infringement of registered trade-marks, the plaintiffs rely on 28 U.S.C. § 1338(b) which is a codification of the Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148 (1933), pendent jurisdiction rule. 28 U.S.C. § 1338(b) states: “The district courts shall have original jurisdiction of any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the . . . trade-mark laws.” Thus, in the instant case, should the Court decide that the plaintiffs have stated a substantial claim under the trade-mark infringement portions of the Lanham Act, the Court would have pendent jurisdiction over the related unfair competition claims under 28 U.S.C. § 1338(b). But should the Court decide that the plaintiffs have failed to state a claim for trade-mark infringement under the Lanham Act, what happens to the unfair competition claims? The logical answer is that the Court would lack jurisdiction over the pendent unfair competition claims because there is nothing for it to be pendent to. In fact, that is the rule in all the circuits except the Ninth Circuit. The Ninth Circuit’s separation from the other circuits began with Stauffer v. Exley, 184 F.2d 962 (9th Cir. 1950), where the Court interpreted 28 U.S.C. § 1338(b) which had been newly added to 28 U.S.C. § 1338(a). The Court held that Section 1338(a) is a reaffirmation of the grant of jurisdiction in the Lanham Act and said “the purpose of § 1338(b) is to extend federal jurisdiction to the furthest possible extent”. The Court held that the Lanham Act gives federal jurisdiction only in cases involving interstate unfair competition. “If the . . . unfair competition ... is purely local and did not affect interstate commerce, we then have to look for federal jurisdiction in § 1338(b), or in diversity of citizenship”. Thus, the Ninth Circuit decided that the Lanham Act created a federal unfair competition cause of action whenever interstate commerce was involved. So, even if there was no trade-mark infringement, if the unfair competition cause of action involves interstate commerce the Court would have jurisdiction under the Lanham Act and would apply a federal Taw of unfair competition. A district court in the Ninth Circuit could dismiss the suit only if the trade-mark infringement action failed to state a claim and the unfair competition action failed to state a claim or involved purely intrastate commerce. The Ninth Circuit has wavered on the issue of whether the Lanham Act creates a federal cause of action for unfair competition, but the present law still seems to follow Stauffer v. Exley, as shown by the case of Volkswagenwerk Aktiengesellschaft v. Church, 256 F.Supp. 626 (D.C.S.D.Cal.1966), affirmed 411 F.2d 350 (9 Cir.): “Apparently the law of the Ninth Circuit is that the Lanham Act, and specifically 15 U.S.C. § 1126(h) provides a federal cause of action for unfair competition generally (if such competition affects interstate commerce), and independent of any related claim under the copyright, patent or trademark laws; the cases of Stauffer v. Exley (9 Cir. 1950), 184 F.2d 962, and Pagliero v. Wallace China Co., (9 Cir. 1952), 198 F.2d 339, are to this effect, although this conflicts with the Second and Third Circuits: American Auto Association v. Spiegel (2 Cir. 1953), 205 F.2d 771, cert. denied 346 U.S. 887, 74 S.Ct. 138, 98 L.Ed. 391, and L’Aiglon Apparel v. Lana, Lobell (3 Cir. 1954), 214 F.2d 649. “Two district court judges in California have declined to follow their court of appeals in the Stauffer and Pagliero cases, claiming that the statements in those cases are dicta. In the Ramirez ease, in which the opinion of Judge Mathes was adopted in its entirety by the Court of Appeals for the Ninth Circuit, Judge Mathes says flatly: ‘ * * * no federal cause of action is given by the [Lanham] Act for unfair competition generally.’ 146 F.Supp. 594 at 603. That holding was followed in Panaview Door and Window Co. v. Van Ness (S.D.Cal.1954), 124 F.Supp. 329. “But the latest Ninth Circuit cases ignore the Ramirez and Panaview cases, and reiterate the position taken in Stauffer and Pagliero: ‘In holding that under the Lanham Act (15 U.S.C.A. § 1126) there had been created a substantive federal law of unfair competition wherever interstate commerce was involved, the Ninth Circuit differs from other circuits. Stauffer v. Exley, 9 Cir. 1950, 184 F.2d 962; Pagliero v. Wallace China Co., 9 Cir. 1952, 198 F.2d 339; * * * ’ ” The law becomes even murkier when the focus is upon the question of whether state or federal unfair competition law is applicable. Apparently, if the unfair competition claim involves interstate commerce so that the Court has jurisdiction under the Lanham Act without resorting to the pendent jurisdiction of Section 1338(b), a substantive federal law of unfair competition is applied. But if the unfair competition is purely intrastate so that it is pendent under Section 1338(b), then the state law of unfair competition is applicable. Callmann, Vol. 4, p. 365. But the morass thickens when the diversity of citizenship jurisdiction base becomes involved. Where diversity of citizenship exists, jurisdiction under Section 1338(b) adds nothing to, and fully coincides with, Section 1332, i. e., state unfair competition law would apply in either case. But what happens when the unfair competition claim is a federal claim under the Lanham Act because interstate commerce is involved and diversity of citizenship also exists? In a purely diversity case, state law would apply; in a purely federal unfair competition case, a federal law of unfair competition would apply. The resolution is found in the Volkswagenwerk case: “It seems fairly well settled in the Ninth Circuit that federal law should be applied to the issue of infringement of registered trademarks, but that state law should be applied to the claim of unfair competition, where diversity is one basis for jurisdiction. ‘ * * * the rule of Erie v. Tompkins [304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188] is applicable to the unfair competition issue raised under 1338(b) even though federal law is applicable to the “related claim under the copyright, patent or trademark laws.” ’ Kemart Corp. v. Printing Arts Research Lab., Inc. (9 Cir. 1959), 269 F.2d 375, 389; followed in Bliss v. Gotham Industries, Inc. (9 Cir. 1963), 316 F.2d 848, in which the court said, at page 853: (Emphasis supplied.) ‘ * * * Kemart being a diversity case, local law would apply regardless of whether the claim for unfair competition was “appended (by virtue of 28 U.S.C.A. 1338(b)) to its claim arising under the patent laws” or stood alone in the complaint.’ “Kemart was also followed in Neal v. Thomas Organ Co. (9 Cir. 1963, 325 F.2d 978, 983-984.” Therefore, if diversity of citizenship exists, the state law of unfair competition applies regardless of whether the unfair competition claim is a federal claim or a pendent state claim. So, the issue of whether or nor diversity of citizenship exists will determine the law to be applied, assuming that there is a difference between the federal substantive law of unfair competition and the Nevada law of unfair competition. The plaintiffs allege that diversity of citizenship under 28 U.S.C. § 1332 exists. If diversity jurisdiction exists, this Court would have jurisdiction over the unfair competition cause of action regardless of whether interstate commerce was involved. Plaintiff Bank is a California corporation which does business in California. Plaintiff Baker is a Delaware corporation with its principal place of business in New Jersey. The defendant is a Nevada corporation doing business in Nevada. Therefore, the requisite diversity exists if the jurisdictional amount can be met. The plaintiffs have alleged that more than $10,000 is the amount in controversy. The appropriate measure is stated in Moore’s Federal Practice, Vol. 1, p. 870: “Thus, in actions seeking to enjoin unfair competition the amount in controversy has been held to be the value of the right to be protected or the value to the complainant of the business or the good will to be protected”. A typical application of the rule occurred in Indian Territory Oil & Gas Co. v. Indian Territory Illum. Co., 95 F.2d 711 (10th Cir. 1938), cert. den. 305 U.S. 607, 59 S.Ct. 67, 83 L.Ed. 386 (1938), where the Court held: “The test, in determining the amount in controversy in a case of this kind presenting a continuing wrong to an established business growing out of unfair trade practices, is not the immediate pecuniary damages arising from the wrongful acts. It is the value of the business or the right to be protected; and business reputation or good will is an intangible asset to be taken into consideration in ascertaining the extent and value of the business or right.” Applying this rule to the instant case, it is clear that the plaintiffs’ value in the historic name “Wells Fargo” far exceeds the $10,000 jurisdictional amount. Therefore, this Court has diversity jurisdiction over the unfair competition claim. E. Summary of Jurisdiction over Domestic Activities Therefore, to summarize the jurisdictional issues with regard to the American activities of the Nevada defendant, this Court has jurisdiction under the Lanham Act and under 28 U.S.C. § 1338(a) for the trade-mark infringement claims because of either the interstate activities of the defendant or the defendant’s intrastate activities and the resulting effect on interstate commerce. This Court has jurisdiction over the unfair competition claims because of either (1) the Ninth Circuit rule recognizing a federal unfair competition cause of action apparently under 15 U.S.C. §§ 1126(h) or 1121 whenever interstate commerce is involved; (2) 28 U.S.C. § 1338(b) which allows pendent jurisdiction because the intrastate unfair competition is related to the trade-mark infringement claim; (3) diversity of citizenship under 28 U.S.C. § 1332. Since this Court has diversity jurisdiction, the Nevada law of unfair competition will apply regardless of the jurisdictional basis for the federal unfair competition claim. F. Trade-mark Infringemnt and Unfair Competition Claims in General Have the plaintiffs stated claims for relief of trade-mark infringement or unfair competition? The distinguishing characteristic of this area of the law is the confusion and lack of articulateness in explaining the numerous legal theories. The phrase “unfair competition” is a catchall used to identify various distinct concepts such as passing-off, dilution, confusion of goods, confusion of source, etc. To further confound the matter, it is often said that trade-mark infringement is just one part of the overall law of unfair competition. And conversely, it is said that the law of trade-mark infringement as it presently exists under the Lanham Act, is the same as common law unfair competition. The confusion generated by the use of the single term “unfair competition” to identify several distinct causes of action is abundantly evident in the briefs filed in the instant case. When the plaintiffs speak of unfair competition, they are apparently talking about the causes of action correctly known as dilution and confusion of source. But when the defendant refers to unfair competition, the cause of action referred to seems to be passing-off or confusion of goods, a cause of action which requires direct competition between the parties. Both the plaintiffs and the defendant speak as though the unfair competition that they are respectively talking about is the. only theory of unfair competition. The case law is not of much help. Often the courts use the term unfair competition to identify the cause of action before them and fail to clarify which theory of unfair competition is being dealt with. The result is an unwieldy assortment of case law and adequate authority for many contradictory propositions. Therefore, - the plaintiffs and defendant have adequate authority for their differing interpretation of “unfair competítion” or “trade-mark infringement”. The task of this Court is to decide if the plaintiffs have stated a cause of action under any of the prevailing theories of unfair competition. One must be chary of the defendant’s insistence that passing-off or confusion of goods is the only form of unfair competition. As will be seen, the defendant, in its motion for summary judgment, speaks only to the passing-off cause of action and completely disregards the other prevailing theories of unfair competition. Before discussing the various theories of unfair competition, a few words about the distinction between trade-mark infringement and unfair competition. The term trade-mark infringement refers to a violation of the Lanham Act, specifically 15 U.S.C. § 1114. For trade-mark infringement to exist there must have been a validly registered federal trade-mark, trade name or service mark. A Section 1114 infringement basically covers the two theories known as confusion of goods and confusion of origin. The cause of action known as dilution is probably outside of Section 1114 trade-mark infringement and is therefore known as unfair competition. If a trade-mark is not registered, then the causes of action known as confusion of goods and confusion of source are a part of the law of unfair competition, rather than trademark infringement. Therefore, trademark infringement and unfair competition both cover the same acts and the same technical causes of action, but they are distinguished by the fact of whether or not the trade-mark is registered and therefore within Section 1114. To summarize and hopefully clarify, a cause of action for confusion of goods and a cause of action for confusion of source can be either trade-mark infringement or unfair competition, depending on whether the mark is registered; a cause of action for dilution is always a part of unfair competition. The above summary is a general rule and cases to the contrary can be found. The main point is that the various theories of unfair competition are the same, regardless of whether they are called trade-mark infringement or unfair competition, and the Court should not become bogged down by distinguishing between the different labels because there is ample authority for practically any view. Callmann, Vol. 3, pp. 928 through 931, explains the various theories: “Anomalous though it may seem, no act can be labeled a trademark infringement without more. Whether or not the court will recognize an infringement depends upon the scope of protection to which the trademark is entitled under common and statutory law, and this question is ultimately determined by the singular approach of the immediate tribunal. Therefore, the validity and nature of the mark for which protection is sought must be determined before the issue of infringement can be properly resolved. (Emphasis supplied.) “An acid test of infringement could be distilled out of a formula which recognizes that the trademark serves three distinct and separate purposes: (1) It identifies the product and its origin, (2) it guarantees the product’s unchanged quality, and (3) it advertises the product. Injury to the trademark in any of its offices as an identifying, guaranteeing or advertising device should suffice to constitute an infringement thereof. These three functions — of different importance at different times, in different lines of business and for different articles— are correlative. The classical trademark function, that of identification, has molded the development of the law of trademarks. The importance of the guarantee function has been somewhat overestimated, while the function of advertisement still awaits full recognition and an adequate place in the law. “As set forth in greater detail in another chapter, a court may proceed upon any one of several acceptable premises in granting trademark protection. First, a trademark may be protected because of the trademark statute under which it is registered. Second, a trademark may be protected on the theory of unfair competition if the plaintiff and the defendant are in fact competitors. Third, where the litigants are not in actual competition with each other, the court may grant protection on the theory of ‘unfair dealing’. And; fourth, protection may always be predicated on the theory which recognizes the - mark as property. “Federal statutory protection is confined to the registered trademark; it protects the plaintiff against a defendant’s use of his mark, or an imitation thereof, in interstate commerce if such use is likely to cause confusion or mistake or to deceive purchasers. The test of infringement in such cases is the likelihood of confusion. * * * “Under the theory of unfair competition, any trademark or similar device adopted by the plaintiff, registered or not, will be protected against its use by a competitor in violation of the rules of fair competition if such use does injury to the plaintiff. “The theory of unfair dealing would protect all trademarks against injury, even if attributable to a noncompetitor, if his conduct can be characterized as a breach of prevailing usages or ethical standards of fair dealing. This doctrine puts greater emphasis upon the so-called unfairness than upon competition. It tacitly assumes, of course, that certain rules of fair dealing are applicable to all, and it does not depend upon proof of a relationship between the disputants which justifies judicial intervention. By hypothesis, this approach has a general applicability; it is, for instance, always ‘unfair’ to conduct one’s business in violation of the ordinary law of torts. * * * “Under the fourth theory, which recognizes the trademark as a property right distinct unto itself, the interest of any plaintiff in his property could be accorded protection. * * * “Although many decisions can be cited in support of each theory, the courts have not always drawn the lines precisely. Such terms as ‘unfair competition’ and ‘confusion’ have been bandied about in opinions involving neither competition nor confusion within the meaning of those terms under the Trade-Mark Act of 1905. Dilution might have been a more appropriate operative concept. Modern decisions do, however, evidence a trend which sparks a modest optimism that our courts will, in the future, do more justice to the nature of a trademark, even though there is little reason to anticipate any greater judicial willingness to accept theoretical exactitude.” The above material is a general statement of the entire area of unfair competition and/or trade-mark infringement. To avoid confusion, remember that whether a mark is protected under the Lanham Act for trade-mark infringement or whether it is protected without the Act under unfair competition depends only upon whether the mark was federally registered; the theory of protection could be the same under either. The next quotation from Callmann, Vol. 3, pp. 538 through 548, pertains to trade-mark infringement under the Lanham Act. As will be seen, the Lanham Act protects against confusion of goods and confusion of business or source. “It is the gravamen of an action for trademark infringement that the defendant’s use of a trademark similar to the plaintiff’s created a likelihood of confusion. The similarity of the trademarks is the potential source of such confusion and, in this context, exact similitude is not a sine qua non. Even trademarks that are not Siamese twins may, in general appearance or impression, be sufficiently similar to suggest a likelihood of confusion. “Under the Act of 1905, two basic types of confusion were recognized: Confusion of goods and confusion of businesses. The Lanham Act broadened the concept by jettisoning the premi