## Facts

- Japan Telecom, Inc. was a California company operating in the Los Angeles area for about fourteen years, selling and installing telephone and computer networking equipment and acting as a sales agent for MCI.
- Japan Telecom America Inc. entered the U.S. market as the U.S. subsidiary of a large Japanese telecommunications carrier and primarily sold telecommunications transmission services (long-distance voice and data).
- Both companies operated in Southern California and used the “Japan Telecom” name in some form.
- Japan Telecom, Inc. alleged that Japan Telecom America’s use of the name caused consumer confusion and constituted trade name infringement and unfair competition under federal and California law.
- Japan Telecom America asserted an affirmative defense of unclean hands, arguing that the plaintiff’s name was primarily geographically deceptively misdescriptive because it suggested a Japanese origin or affiliation that the plaintiff lacked.
- Japan Telecom, Inc. offered evidence that “Japan” in local business names often signaled service to the Japanese-speaking community rather than geographic origin, creating a dispute over consumer perception.

## Issues

1. Whether the plaintiff’s use of “Japan Telecom” was primarily geographically deceptively misdescriptive in a way that constituted unclean hands barring relief.
2. Whether any alleged deceptiveness in the plaintiff’s name bore an immediate and necessary relation to the subject matter of the infringement and unfair-competition claims.
3. Whether summary judgment on the unclean-hands defense was proper given disputed facts about deception and consumer understanding.

## Decision

- The Ninth Circuit reversed the grant of summary judgment for Japan Telecom America and remanded.
- The court held the record did not establish, as a matter of law, that the plaintiff had unclean hands.
- The court concluded that factual disputes remained regarding whether the plaintiff’s name was deceptive to consumers and whether any alleged deception was sufficiently related to bar the plaintiff’s claims.

## Legal Principles

- Unclean hands is an equitable defense available in Lanham Act cases, but it is narrow and requires plaintiff misconduct that directly relates to the transaction or conduct at issue in the suit.
- A mark’s potential characterization as “primarily geographically deceptively misdescriptive” for registration purposes does not automatically prove inequitable conduct sufficient to bar enforcement in an infringement action.
- Summary judgment on unclean hands is improper where material fact disputes remain about consumer perception, actual deception, and the connection between the alleged misconduct and the relief sought.

## Conclusion

The Ninth Circuit held that unclean hands could not bar the plaintiff’s trademark and unfair-competition claims on summary judgment where the alleged geographic deceptiveness of the plaintiff’s name and its relation to the asserted injury depended on disputed questions of consumer understanding and marketplace effect.


Japan Telecom, Inc. v. Japan Telecom Am., Inc., 287 F.3d 866 (9th Cir. 2002)