Fourth Circuit Rules that Foreign Company Must Appear in the USA for TTAB Testimony Pursuant to E.D.Va. Subpoena

In a surprising and dubious decision, a divided panel of the U.S Court of Appeals for the Fourth Circuit has ruled that a foreign corporation must obey a subpoena issued by the U.S. District Court for the Eastern District of Virginia, pursuant to a Rule 30(b)(6) notice in a TTAB proceeding, and must appear in Virginia to give trial testimony. Rosenruist-Gestao E Servicos LDA v. Virgin Enterprises Ltd., 85 USPQ2d 1385 (4th Cir. 2007), cert. denied, ___ U.S. ___ (May 27, 2008).


The procedural posture of the case is, to say the least, rather complicated. Applicant Rosenruist, a Portuguese corporation, filed an ITU application to register the mark VIRGIN GORDA for bags, umbrellas, and clothing. Virgin Enterprises opposed on Section 2(d) grounds. When its testimony period rolled around, Virgin sought to take Rosenruist's testimony under Rule 30(b)(6), but Rosenruist refused to appear voluntarily in the USA, Virgin filed a motion to compel, seeking a deposition of Rosenruist in Portugal. The Board denied the motion, noting that according to the TBMP, a foreign party may be compelled to appear for an oral deposition only through the procedures of the Hague Convention or via the issuance of letters rogatory to Portuguese authorities.

Virgin then served a Rule 30(b)(6) deposition subpoena on Rosenruist, seeking to depose a representative of Applicant. The subpoena was served in the USA on one of the Virginia-based lawyers designated by Rosenruist as its representative under 15 U.S.C. Sec. 1051(e), and it required the corporation to appear in McLean, Virginia. [Rosenruist did not challenge Virgin's right to seek trial testimony via Rule 30(b)(6)].

Rosenruist moved to quash the subpoena, arguing (1) that the district court lacked the authority to subpoena a foreign resident for a deposition in the USA, (2) that Virgin was seeking to circumvent proper TTAB procedures, and (3) that even if the subpoena were valid, service of the subpoena on counsel was ineffective. The district court denied the motion and then imposed sanctions on Rosenruist when it failed to attend the deposition. However, the district court denied Virgin's motion seeking to compel Rosenruist to produce a corporate designee for the deposition, because there was no individual residing within the district whom Rosenruist could designate as its witness. This ruling was based on the magistrate judge's conclusion that "witness," as used in 35 U.S.C. Sec. 24 [which grants district courts the authority to issue subpoenas in PTO proceedings], applies only to natural persons. The district court judge adopted the magistrate's ruling.

35 U.S.C. §24. Subpoenas, witnesses.
The clerk of any United States court for the district wherein testimony is to be taken for use in any contested case in the Patent and Trademark Office, shall, upon the application of any party thereto, issue a subpoena for any witness residing or being within such district, commanding him to appear and testify before an officer in such district authorized to take depositions and affidavits, at the time and place stated in the subpoena. The provisions of the Federal Rules of Civil Procedure relating to the attendance of witnesses and to the production of documents and things shall apply to contested cases in the Patent and Trademark Office.

The 4th Circuit panel majority noted that the validity of the subpoena (whether the district court had personal jurisdiction over Rosenruist) was not properly before the appellate court because Rosenruist did not appeal that issue.

The panel majority reversed the district court's ruling that the term "witness" in Section 24 encompassed only natural persons. As to the TTAB's procedures, the majority observed that the TBMP is not authoritative, but is merely a manual of useful information: it does not provide "authoritative interpretative guidance" for Section 24. The PTO Rules allow the use of 30(b)(6) depositions and permit the taking of trial testimony by oral examination. Thus Virgin was not seeking to expand the procedures provided by the PTO.

The court of appeals therefore reversed the district court's order denying Virgin's motion to compel Rosenruist to obey the subpoena, and it remanded the case to the district court for appropriate further action.

Dissenting Circuit Judge Wilkinson did not mince words in disagreeing with the majority view:

"The majority’s holding that this subpoena is enforceable is problematic for many reasons. It fails to properly apply the statute, 35 U.S.C. § 24, that is directly relevant to its decision, and it reaches a result that is bound to embroil foreign trademark applicants in lengthy, procedurally complex proceedings. It inverts longstanding canons of construction that seek to protect against international discord, and it disregards the views of the PTO whose proceedings 35 U.S.C. § 24 is designed to aid."

"... the bottom line is that the majority enforces the subpoena. In so doing, the majority creates a standard that is in fact a national one: the PTO is located in the Eastern District of Virginia; applications for trademark registration are filed there; and subpoena enforcement will frequently be sought in that district. Indeed, for any foreign corporation without a pre-existing United States presence, the majority’s decision will be controlling. For this reason, among others, I think this decision is unfortunate. The decision to extend the subpoena power under 35 U.S.C. § 24 to foreign companies situated similarly to Rosenruist is one that is plainly before this court, and its importance warrants full discussion."

Judge Wilkinson believes that the majority ignored that requirement of Section 24 that limits the court's subpoena powers to those "residing or being" with the judicial district. Applicant Rosenruist cannot be described as "residing or being" within the Eastern District of Virginia. The fact that Rosenruist filed a trademark application may be a contact with the jurisdiction, but it does not establish a physical presence or sustained contact akin to a presence there. And the appointment of a domestic representative is a contact too minimal to render a company subject to such judicial compulsion.

Moreover, Judge Wilkinson believes that the majority incorrectly interpreted the procedural posture of the case, and that the validity of the subpoena is a proper subject for review. The majority also ignored "cautionary canons of interest that apply to statutes bearing upon other nations' interests and international norms." And in interpreting the scope of Section 24, the majority ignored the views of "the most relevant expert agency" on the issue: the TTAB.

TTABlog comment: Wow! This case begs for en en banc hearing. It is difficult to believe that a foreign corporation can be forced by a federal court subpoena to appear for a deposition in the United States just because it filed a trademark application. I don't think Section 24 allows it, nor do I think that a federal court has the power.

Many questions come to mind: Will Rosenruit seek reconsideration en banc? Supreme Court review? Will the TTAB follow this ruling? Will it seek to have the language of Section 24 clarified by Congress? Will TTAB practitioners start cranking out Rule 30(b)(6) deposition notices at a furious clip? Who will write the definitive article analyzing this decision?


Text Copyright John L. Welch 2008.