## Facts

- Dynascan owned multiple U.S. registrations for the COBRA trademark for electronic products, including cordless telephones; several registrations were statutorily incontestable.
- In 1985, Dynascan and Babbit entered an arrangement allowing Babbit to sell and market COBRA-branded cordless telephones in Latin America in exchange for royalties.
- By late 1986, counterfeit COBRA-branded products appeared in Latin American markets; Babbit urged Dynascan to take action with local authorities.
- Babbit alleged Dynascan misrepresented that it owned or had protectable COBRA trademark rights in certain Latin American countries, inducing Babbit’s payments and marketing efforts.
- Babbit later sourced cordless telephones directly from Hyundai (a Dynascan supplier) and applied COBRA marks without Dynascan’s authorization.
- Babbit imported phones into a U.S. foreign-trade zone, labeled them with COBRA marks, and coordinated foreign sales from its Florida office.
- Babbit sued for fraud and tortious interference; Dynascan counterclaimed for trademark infringement and breach of contract, including misuse of confidential supplier information.
- After a bench trial, the district court entered judgment for Dynascan on Babbit’s claims and on Dynascan’s counterclaims, including determinations addressing relevant foreign trademark law.
- On appeal, the Eleventh Circuit affirmed the judgment substantially for the district court’s stated reasons.

## Issues

1. Whether Dynascan made materially false, knowing misrepresentations about its foreign trademark rights sufficient to establish fraud.
2. Whether Dynascan’s conduct in asserting and protecting its trademark rights constituted tortious interference with Babbit’s business relationships.
3. Whether Babbit’s U.S.-based importation, labeling, and coordination of foreign sales using the COBRA mark constituted actionable trademark infringement despite foreign retail sales.
4. Whether Babbit’s direct sourcing from Dynascan’s supplier and unauthorized use of the COBRA mark breached the parties’ agreement and misused confidential information.

## Decision

- The Eleventh Circuit affirmed the district court’s judgment in full.
- Babbit failed to prove fraud because Dynascan’s statements about having protectable rights and available remedies in the relevant countries were not shown to be materially false or knowingly false.
- Babbit failed to prove tortious interference because Dynascan’s conduct was within legitimate enforcement of its own rights and interests.
- Dynascan prevailed on trademark infringement because Babbit used the COBRA mark without authorization in U.S.-connected commercial activities likely to cause confusion.
- Dynascan prevailed on breach of contract because Babbit bypassed authorized channels, used Dynascan’s supplier relationship and information, and applied the mark outside the agreement’s scope.

## Legal Principles

- A fraud claim based on representations about foreign trademark rights requires proof of a materially false statement and knowledge of falsity; representations consistent with foreign legal protection (including protection arising from use and available remedies) do not satisfy those elements.
- Good-faith assertion and enforcement of a party’s trademark and contractual rights is generally not tortious interference absent improper means or motive.
- U.S. trademark law may reach conduct with substantial domestic components—such as importation, labeling, and coordination of sales from the United States—even when retail transactions occur abroad.
- Unauthorized application of a registered mark to goods, coupled with exploitation of a trademark owner’s supplier relationships or confidential information, can support both infringement and contract liability.

## Conclusion

The Eleventh Circuit upheld a bench judgment for Dynascan, rejecting Babbit’s fraud and tortious interference claims and sustaining Dynascan’s infringement and contract counterclaims based on Babbit’s unauthorized, U.S.-connected use of the COBRA mark and its diversionary sourcing and conduct.


Babbit Elecs., Inc. v. Dynascan Corp., 38 F.3d 1161 (11th Cir. 1994)