Japan Telecom v. Japan Telecom America

Japan Telecom, Inc. (plaintiff) was a California corporation and subsidiary of a small Japanese corporation. Japan Telecom was in the business of selling and installing telephone and computer networking equipment in the Los Angeles area, including acting as a sales agent for MCI, a well-known American long-distance telephone company. Incidental to those services, Japan Telecom also sold goods like telephones and network routers, but there was no evidence that Japan Telecom marked those goods with its company name. Japan Telecom America, Inc. (defendant) was the United States subsidiary of a large, Japanese telecommunications company and entered the relevant California market years after Japan Telecom. Japan Telecom America’s primary business was selling telecommunications transmission services, including long-distance telephone and data services. Japan Telecom asserted claims against Japan Telecom America for trade-name infringement and unfair competition under the Lanham Act and state law. On summary judgment, Japan Telecom introduced evidence that consumers might understand the word Japan in its name as referring to an ethnic community, not the country. Japan Telecom also argued that the word Japan was sometimes used in business names to communicate that the businesses catered to Japanese-speaking customers; to support this argument, Japan Telecom offered evidence of multiple local businesses with the word Japan in their names that were not affiliated with companies in Japan. The district court entered summary judgment in favor of Japan Telecom America, finding that Japan Telecom had unclean hands because its trade name was primarily geographically deceptively misdescriptive. Japan Telecom appealed.