## Facts

- American Circuit Breaker Corporation (ACBC) owned the U.S. STAB-LOK trademark for circuit breakers.
- Schneider Canada owned the STAB-LOK trademark in Canada; its subsidiary, Federal Pioneer Limited (Pioneer), manufactured STAB-LOK breakers.
- Pioneer manufactured black-cased breakers for ACBC (U.S. market) and gray-cased breakers for itself (Canadian market).
- ACBC and Pioneer had an agreement barring Pioneer from selling its gray breakers in the United States.
- Oregon Breakers, Inc. and Stephen Reames bought gray STAB-LOK breakers from a Canadian third-party supplier and imported and resold them in the United States without ACBC’s consent.
- ACBC sued under the Lanham Act and related trademark theories based on unauthorized importation and domestic resale.
- After the district court denied ACBC’s partial summary judgment motion, the parties stipulated that (1) the gray breakers were “genuine” and (2) there were no material differences between the gray and black breakers aside from casing color.
- The district court entered final judgment incorporating the stipulation and dismissed ACBC’s claims; ACBC appealed.

## Issues

1. Whether a trademark owner can prove Lanham Act infringement based on unauthorized importation and resale of gray-market goods when the goods are genuine and not materially different from authorized domestic goods.
2. Whether a contractual restriction on a manufacturer’s U.S. sales can substitute for proof of likelihood of consumer confusion under the Lanham Act against a third-party importer/reseller.

## Decision

- The Ninth Circuit affirmed the judgment for Oregon Breakers and Reames.
- The court held ACBC could not establish likelihood of confusion as a matter of law given the stipulation that the imported breakers were genuine and not materially different.
- The court rejected treating the upstream contractual sales restriction, standing alone, as establishing trademark infringement absent likely confusion.

## Legal Principles

- Lanham Act trademark infringement requires proof of a likelihood of consumer confusion.
- In gray-market disputes, the presence of “material differences” between authorized domestic goods and imported goods is a key basis for finding likely confusion.
- Where gray-market goods are genuine and lack material differences from authorized goods, unauthorized importation and resale generally does not create actionable confusion under the Lanham Act.
- Contractual limits in a distribution or manufacturing agreement do not, without more, create Lanham Act liability for a third party where the trademarked goods themselves do not mislead consumers as to source or quality.

## Conclusion

Because the parties stipulated that the imported STAB-LOK breakers were genuine and not materially different from ACBC’s authorized breakers, ACBC could not show likely consumer confusion, and its Lanham Act claims were properly dismissed.


Am. Cir. Breaker Corp. v. Or. Breakers, Inc., 406 F.3d 577 (9th Cir. 2005)