Saleh v. Sulka Trading Ltd.

Background

Abdul Rehman Karim Saleh sued Sulka Trading Ltd. and A. Sulka Trading Company Limited under the Declaratory Judgment Act, a federal law allowing courts to declare the parties’ legal rights when there is an actual controversy. Saleh had applied to the United States Patent and Trademark Office for the SULKA mark and alleged that he planned to manufacture and sell SULKA-branded apparel and other goods in the United States.

The defendants owned five U.S. trademark registrations for SULKA. In 2018, their attorneys told Saleh that the defendants had recently sold SULKA neckties, had plans to sell additional goods, and wanted Saleh to abandon his trademark applications and avoid conflicting use of the mark. In 2019, an Indian trademark submission characterized that correspondence as a warning that Saleh’s use would infringe the defendants’ rights. That language was later removed. After the Indian submission, Saleh told the defendants that arrangements had been made to sell SULKA goods in the United States and that he intended to begin offering them on September 2, 2019. The defendants did not respond.

This was Saleh’s second request for declaratory relief concerning the dispute. In a prior related proceeding, the court had dismissed his request for lack of subject-matter jurisdiction because there was no justiciable controversy. The Court of Appeals affirmed that decision.

Motion and Legal Standard

The defendants moved under Federal Rule of Civil Procedure 12(b)(1), which permits dismissal when the court lacks subject-matter jurisdiction. They argued that the Declaratory Judgment Act required an actual controversy and that none existed. Alternatively, they asked the court to decline to hear the declaratory-judgment action even if jurisdiction existed.

For a declaratory-judgment claim involving possible trademark infringement, the plaintiff had to show a course of conduct demonstrating a definite intent and apparent ability to begin using the mark. The plaintiff also bore the burden of establishing jurisdiction by a preponderance of the evidence. The court could consider evidence outside the complaint and was not required to draw every reasonable inference in Saleh’s favor.

Court’s Analysis

The court concluded that the Indian trademark proceeding did not create a sufficiently concrete U.S. controversy. The relevant language in the original Indian submission was merely a characterization of correspondence that had already been considered in the prior related proceeding. The court also noted that, after Saleh informed the defendants of his plans to sell in the United States, the defendants did not threaten litigation. Any possible future litigation remained too indefinite to establish an actual controversy under the Declaratory Judgment Act and Article III of the Constitution.

The court further found that Saleh had not demonstrated a definite intent and apparent ability to commence use of the mark in the United States. Saleh stated that he had invested more than $60,000, conducted market research, contacted suppliers and manufacturers, purchased the sulka-phulka.com domain name, arranged for website design, and registered with online sales platforms. But he supplied no records verifying many of those arrangements and gave no adequate details showing that he was ready to ship products to U.S. customers. His statements that he expected to sell through Amazon and had initiated use of several online platforms were too broad and forward-looking to establish imminent ability to use the mark in U.S. commerce.

The court also found that the website did not materially strengthen Saleh’s position. The defendants identified several problems with the site, including copied template material, an outdated copyright notice, apparent use of internet clip art, and a delayed shipment. Saleh acknowledged some issues and attributed the delayed shipment to a programming error. The court did not need to decide whether the website was a sham. Even accepting Saleh’s explanations, the website was not compelling evidence that he was ready to immediately use SULKA in U.S. commerce.

Ruling

Judge Loretta A. Preska granted the defendants’ motion to dismiss without prejudice because the court lacked subject-matter jurisdiction: no justiciable controversy existed between the parties. The court did not reach the separate question of whether it should exercise discretionary jurisdiction over the declaratory-judgment action. The court stated that amendment would not be futile if Saleh could provide verifiable information about his U.S.-directed business activities. It permitted him to file an amended complaint by August 19, 2020, and stated that if he failed to do so, the dismissal would come with prejudice.