Trademarks and Foreign Forum Selection Clauses

The task of deciding whether a forum selection clause should be given effect can be burdensome. A federal court must evaluate whether the clause is valid. It must interpret the clause to determine whether it is exclusive and covers the claims asserted. And it must assess whether the clause is enforceable under the test laid down by the U.S. Supreme Court in The Bremen v. Zapata Offshore Co. (1972). Analysis of these issues can easily run to seven or eight pages in a published decision.

In Giocar Am. v. Industrias Galfer S.A., the U.S. District Court for the District of Nevada (Judge James C. Mahan) was called upon to run this race. Overall, the court acquitted itself admirably. In the final stage, however, it stumbled when it enforced a forum selection clause choosing a foreign court that lacked subject-matter jurisdiction to adjudicate the plaintiff’s claims for trademark infringement.

Facts

Industrias Galfer S.A. (IG) is a Spanish company that manufactures brake discs and brake pads. In 2023, it entered into a written distribution agreement with Giocar America Inc. (Giocar), a Nevada company, to distribute IG’s products in the United States.  After IG terminated this agreement in April 2025, Giocar sued in federal court in Nevada. Giocar asserted causes of action for trademark counterfeiting and infringement, false designation of origin, false designation of geographic origin, deceptive trade practices, intentional interference with prospective economic advantage, and unfair competition. All of these acts were alleged to have occurred within the United States.

IG moved to dismiss for forum non conveniens based on a Spanish forum selection clause in the distribution agreement. Giocar argued that the clause was inapplicable for three reasons. First, it argued that the clause did not sweep broadly enough to cover the claims asserted. Second, it argued that the clause was not exclusive. Third, it argued that the clause was unenforceable because the chosen court in Spain lacked the ability to adjudicate its claims for trademark infringement.

Scope

The forum selection clause in the distribution agreement stated:

For any matter relating to the interpretation or performance of the Contract, the parties expressly waive their own jurisdiction, if any, and submit to the jurisdiction of the Courts and Tribunals of Barcelona.

Giocar argued that this language was too narrow enough to encompass its non-contractual claims. The court rejected this argument. It correctly held that the clause covered his claims for trademark infringement because the resolution of those claims would require “interpretation” of the agreement. It also correctly held that the clause covered his claims for false designation of origin, deceptive trade practices, and intentional interference because these claims related to the “performance” of the agreement. Although Giocar’s claim for false designation of geographic origin was held to fell outside the scope of the clause, the court ultimately dismissed this claim as well to avoid fragmented litigation proceedings.

Exclusivity

If the court had applied U.S. interpretive rules to assess whether the clause was exclusive, it probably would have concluded that it was not. U.S. courts generally presume that forum selection clauses are non-exclusive. This presumption may be rebutted if the clause contains language of exclusivity. This clause did not contain clear language that would rebut the presumption (though one could debate whether “expressly waive their own jurisdiction” is sufficient).

The court did not, however, apply U.S. interpretive rules to interpret the clause. It applied Spanish interpretive rules because the agreement contained a Spanish choice-of-law clause. Spanish courts generally presume that forum selection clauses are exclusive. Although this presumption may be rebutted if the clause contains language of non-exclusivity, the clause did not contain any clear language to this effect. As a matter of Spanish law, therefore, the court concluded that the clause was exclusive.

Enforcement

In the Ninth Circuit, consistent with the Supreme Court’s decision in Bremen, a forum selection clause is unenforceable as a matter of federal law if the party resisting enforcement can show that (1) the clause is invalid due to fraud or overreaching; (2) enforcement would contravene a strong public policy of the forum in which suit is brought, or (3) trial in the contractual forum will be so gravely difficult and inconvenient that the litigant will for all practical purposes be deprived of his day in court.

Overreaching. Giocar argued that the clause was unenforceable because (1) IG threatened to stop doing business with Giocar if Giocar refused to sign the distribution agreement, and (2) 95% of Giocar’s revenues came from the sales of IG products. The court rejected this argument. It pointed out that both IG and Giocar were sophisticated parties, that Giocar was able to successfully negotiate other issues, and that there was no evidence that choosing Spain as the forum was intended to unfairly preclude Giocar from asserting its legal rights.

Public Policy. Giocar contended that enforcing the clause would be contrary to a strong national public policy in favoring of adjudicating claims relating to U.S. trademark infringement or ownership in the United States. The court disagreed without providing much in the way of analysis.

Deprived of Day in Court. Giocar maintained that litigating the case in Spain would effectively deprive it of its day in court because Spanish courts lack the ability to adjudicate claims for trademark infringement that arise within the United States. The court also rejected this argument. It reasoned that, on the facts, presented, a Spanish court would not have to resolve the issue of who owned the U.S. trademark. Instead, it would merely have to determine the parties’ respective rights and obligations under the distribution agreement.

In reaching this conclusion, the court distinguished two prior decisions—dmarcian, Inc. v. dmarcian Europe BV and Calzaturificio Rangoni S.p.A. v. U.S. Shoe Corporation—in which U.S. courts had held that foreign courts could not effectively adjudicate claims for trademark infringement occurring solely within the United States. The court held that these cases were distinguishable because neither involved a forum selection clause or a choice-of-law clause.

This is the one part of the opinion where I was skeptical of the court’s analysis. If a foreign court cannot adjudicate intellectual property claims arising solely under U.S. law—which is apparently the position taken by the Federal Circuit—then it seems to me that dismissing a case in favor of that court would have the practical effect of depriving the plaintiff of its day in court. Whether the contract contains a choice-of-law or a forum selection clause is neither here nor there.

Conclusion

The court ultimately granted IG’s motion to dismiss for forum non conveniens based on the Spanish forum selection clause. This outcome strikes me as correct so long as Spanish courts can actually adjudicate claims for trademark infringement arising under U.S. law. If the Spanish courts cannot adjudicate these claims, then the court erred. Sending a case to a court that lacks the power to hear it is the quintessential example of depriving a plaintiff of its day in court.