Sengoku Works Limited v. RMC International, Limited

Between 1982 and 1985, Sengoku Works Limited (Sengoku) (plaintiff), a Japanese company, sold kerosene heaters in the United States through a combination of companies, including C.C.I., a company partially owned by Cort Clark. These heaters bore the trademark “Keroheat”. Clark subsequently founded RMC International Limited (RMC) (defendant), which obtained federal registration of the Keroheat mark in 1992. Between 1985 and 1994, RMC was the exclusive importer and seller of Sengoku-manufactured heaters, which bore the Keroheat trademark. Pursuant to the RMC-Sengoku distribution arrangement, RMC’s name appeared on all products and packaging and it handled all marketing, advertising, complaints, and returns. However, Sengoku controlled the heaters’ quality and uniformity, and other dealers attributed the Keroheat mark to Sengoku. Allegedly believing that Sengoku was not responding adequately to alleged quality problems, RMC began importing and selling Keroheat-marked heaters manufactured by a Korean company. Sengoku sued RMC in federal court for, among other things, trademark infringement. In its defense, RMC argued that it—not Sengoku—owned the Keroheat trademark. Sengoku responded that, as the manufacturer, it necessarily owned the trademark. The district court granted Sengoku’s request for a preliminary injunction prohibiting RMC from selling the Korean-made heaters with the Keroheat trademark. After a jury trial, Sengoku was awarded one dollar in damages on its trademark claim. The district court also ordered the cancellation of RMC’s registration of the Keroheat trademark and entered a permanent injunction against RMC using the mark. RMC appealed.