Court Tosses Iranian Aircraft Lawsuit

     (CN) – A federal court in Washington, D.C. dismissed a trademark infringement suit brought by a rotocraft manufacturer in Texas against Iran and two Iranian aircraft manufacturers it claimed copied its helicopter design.
     The court acknowledged that Iran had copied the “Bell 206” and that its manufacturers had marketed it to foreign buyers at an air show near the country’s coast and in global trade catalogs.
     However, it did not have jurisdiction over Iran because Bell had failed to show that the infringement had an immediate effect on the U.S. economy.
     Bell Helicopter Textron sued Iran, Iran Manufacturing Company and Iran Helicopter Support & Manufacturing Company in 2006 for trademark infringement, dilution and tarnishment, claiming its military aircraft manufacturers copied its “Bell 206” design and renamed it the “Shaheed 278.”
     The Iranian manufacturer also used Bell’s trademarked design to build a military helicopter called the “Shaheed 285,” according to the original lawsuit.
     Bell insisted that international customers would confuse the two aircrafts.
     The U.S. District Court for the District of Columbia found Iran and its manufacturers in default when they failed to show up for a hearing in 2009. Based on testimony from Bell’s witnesses, the hearing court determined, without elaborating, that Iran’s violation had damaged the U.S. economy.
     In 2011, the court awarded Bell $22.5 million in damages and sent Iran notice of the default judgment.
     Almost one year later Iran filed a motion to vacate on the grounds that the D.C. court lacked jurisdiction under the Foreign Sovereign Immunities Act.
     Bell argued that the commercial activity exception under the Act applied to its case and justified the court’s jurisdiction over Iran.
     According to the Supreme Court, a direct effect “follows as an immediate consequence of the defendant’s activity” and that the FSIA does not grant jurisdiction over foreign sovereigns if the damage is remote or speculative.
     To support its direct effect theory, Bell highlighted that Iran’s helicopter was an infringement of a design owned by a U.S. company.
     “Here, it has not been shown that the infringing aircraft were marketed in the United States,” U.S. District Judge Amy Berman Jackson wrote in a 24-page ruling.
     “Indeed, defendant’s helicopters could not be sold in America at all since they did not meet the strict certification requirements,” Judge Jackson noted.
     Bell alleged that the increase in helicopters meant a decrease in prices, devaluing its aircrafts in the world wide market.
     “Even if the court were to adopt plaintiffs’ explanation of how they were harmed because it is economically sound, that would only get the plaintiffs as far as establishing that a financial loss occurred, which, the D.C. Circuit has been clear, does not in itself constitute a direct effect in the United States,” Jackson wrote.
     Adding: “Plaintiffs’ involvement in Iran ended in 1979, at the time of the Iranian Revolution, so the only harm to the company in the United States is financial loss.”
     Finally, Bell argued that customers in America would be confused by the similarity between its helicopters and Iran’s counterfeits.
     A Bell helicopter customer who was shown a picture of a “Shaheed 278” testified in court “that once he read the caption underneath the picture, he was no longer confused as to the source of the helicopter’s origin.”
     The witness also made it clear that Iran’s helicopters “would not be able to meet American or European certification requirements so they could not enter the domestic stream of commerce.”
     “In the Court’s view, this testimony strongly suggests the existence of two markets – a market for aircraft that meet the exacting certification standards imposed in North America and Europe, and a Third World market for less expensive products that do not meet those standards. And it supports the notion that the counterfeit items could be passed off as Bell’s, but not necessarily in the United States,” Jackson wrote.
     Bell could not establish that Third World countries buy its helicopters. It simply stated that “‘countries that Bell can sell to’ might buy the Iranian version of the aircraft based on its appearance.'”
     The court concluded that Bell failed to establish any activity by Iran that caused a direct effect in the United States and dismissed the default judgment for lack of subject-matter jurisdiction.

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