We have had a number of significant trademark-related decisions handed down in 2015, including two from the U.S. Supreme Court and several from the U.S. Court of Appeals for the Federal Circuit and other Circuit Courts. Going forward, these rulings will impact how parties protect their trademark assets, including in particular the strategies that parties will need to employ to maximize their likelihood of success in litigation.
II. The Supreme Court Provides Guidance Regarding The Impact Of TTAB Rulings And The Role Of Juries In Determining Tacking
After a 10-year hiatus from trademark law, the Supreme Court this year issued two decisions addressing trademark issues. In one case, the Supreme Court provided guidance regarding the impact of TTAB rulings in subsequent district court litigation. Another case addresses the role of juries in determining whether “tacking” is warranted. The second case will have a narrower impact going forward simply because tacking arises less frequently. Nevertheless, it is notable that the Supreme Court issued two trademark rulings in a single year, particularly because another trademark issue – when is a case “exceptional” under the Lanham Act – may make its way to the Supreme Court in the next few years if the Circuits split as to how this provision should be construed and applied in litigation.
We address each of the Supreme Court’s rulings below, first summarizing the background of the case, followed by an explanation of the strategic impact of the ruling.
A. B & B Hardware: TTAB Rulings Really Do Matter
In B & B Hardware, Inc. v. Hargis Indus., Inc.
, 135 S.Ct. 1293 (2015), the owner of the “SEALTIGHT” trademark sued the owner of the “SEALTITE” mark for trademark infringement and related claims. The parties engaged in a “labyrinthine” struggle spanning almost 20 years that included infringement litigation in which two separate juries entered verdicts and appeals were taken three times to the Eighth Circuit, as well as Opposition proceedings before the Trademark Trial and Appeal Board (“TTAB”). Id.
at 1301. “The full story could fill a long, unhappy book.” Id.
B & B began using the SEALTIGHT trademark in 1990 in connection with fasteners used in the aerospace industry. Id.
at 1301. B & B filed an application to register the mark that same year, and received a registration on October 12, 1993. In the interim, during 1992, Hargis began selling a line of self-drilling and self-tapping screws used in the building industry, using the SEALTITE mark, and in 1996 applied to register the mark. B & B filed an Opposition in the TTAB, arguing that Hargis’ mark was confusingly similar to B & B’s registered mark. Id.
at 1301. As the Supreme Court noted, despite the differences between the aerospace and construction industries, “both aerospace and construction engineers prefer fasteners that seal things tightly. Accordingly, both B & B and Hargis want their wares associated with tight seals.” Id.
B & B’s Opposition spawned
The TTAB ultimately ruled that Hargis’ SEALTITE mark could not be registered due to the likelihood of confusion with B & B’s registered SEALTIGHT trademark. Id.
at 1301-02. The TTAB based its decision on a review of the DuPont
factors, of which the TTAB found “similarities of the marks” and “similarity of the goods” to be the most critical factors in its analysis of the parties’ competing marks. Id.
at 1302. Hargis did not appeal the ruling to either a district court or the U.S. Court of Appeals for the Federal Circuit.
While the Opposition was pending before the TTAB, B & B had sued Hargis for trademark infringement. Id.
The TTAB issued its likelihood of confusion ruling before the district court addressed the issue, and B & B argued that the TTAB’s ruling precluded Hargis from contesting likelihood of confusion in the district court. Id.
The district court rejected B & B’s argument, reasoning that the TTAB is not an Article III court, and allowed the issue to be decided by a jury. Id.
The jury found in Hargis’ favor, concluding that there was no likelihood of confusion. Id.
B & B appealed to the Eighth Circuit. Id.
The Eighth Circuit accepted that an agency ruling can form the basis for issue preclusion but, nevertheless, affirmed the jury’s decision for three reasons: (i) the TTAB uses different factors than the Eighth Circuit for evaluating likelihood of confusion; (ii) the TTAB, according to the Eighth Circuit, placed too much emphasis on the appearance and sound of the parties’ competing marks; and (iii) Hargis bore the burden of proof before the TTAB, whereas B & B bore the burden of proof in the district court litigation. Id.
The Supreme Court reversed in a 7-2 decision.
First, the Court easily confirmed that an agency decision can form the basis for issue preclusion, rejecting all of Hargis’ arguments that construing the Lanham Act to allow preclusive effect of a TTAB ruling would be unconstitutional. Id.
at 1302-05. Next, the Court dismissed Hargis’ arguments that TTAB decisions in particular should not be granted preclusive effect, finding that nothing in the Lanham Act’s text or structure indicates any intention by Congress to exclude TTAB decisions from having issue preclusive effect. Id.
at 1305-06. Finally, the Court confirmed that likelihood of confusion is the same for registration as it is for infringement and, therefore, the Court held that there is no reason why the TTAB’s decision regarding a mark’s registrability should not be granted preclusive effect. Id.
at 1306-10. Accordingly, the Court announced the following rule:
So long as the other ordinary elements of issue preclusion[] are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.
at 1310 (emphasis added).
2. Strategic Issues Arising From B & B Hardware
The Court recognized that “for a great many registration decisions [issued by the TTAB] issue preclusion obviously will not apply.” Id.
at 1306. As Justice Ginsburg explained in her concurring opinion, “[t]his is so because contested registrations are often decided upon ‘a comparison of the marks in the abstract and apart from their marketplace usage.’” Id.
at 1310 (quoting
6 J. McCarthy, Trademarks and Unfair Competition § 32.101, p. 32-247 (4th ed. 2014)). “When the registration proceeding is of that character, ‘there will be no [preclusion] of the likel[ihood] of confusion issues … in a later infringement suit’” because in an infringement suit the district court will consider how the parties’ respective marks are used and perceived in the marketplace. Id.
(amendments in original; quoting
McCarthy § 32.101, p. 32-247).
However, the closer that a registrant’s use of its mark in the marketplace is to the usage recited in its application, the more likely that a TTAB ruling will have preclusive effect in later district court litigation between the parties. As the Court noted, “[i]f a mark owner uses its mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue
as a district court in infringement litigation.” Id.
With the foregoing in mind, any party involved in an inter partes
proceeding before the TTAB – i.e.
, a Cancellation or Opposition – should consider whether it would be beneficial to link how it, or its opponent, uses a mark in the marketplace and how the mark is described in the application or registration. By doing so throughout the pleadings, a party may increase the likelihood that the TTAB’s decision will have preclusive effect in district court litigation. Of course, this works in both directions – the TTAB may reject the party’s arguments, leaving the party wishing that it had followed the opposite strategic path and distinguished the mark’s usage in the application from its marketplace usage in order to avoid issue preclusion. Thus, parties and their counsel need to give careful consideration to these issues.
Cost will likely play a significant part in such strategic analyses. On the one hand, Cancellations and Oppositions are significantly less expensive than district court litigation, and the TTAB’s decision may be appealed. On the other hand, administrative procedures such as Cancellations and Oppositions are not tried to a jury, whereas fact issues in district court litigation may be presented to a jury (if not decided by the district court in summary judgment). Moreover, district court litigation may allow for damages, whereas the successful outcome of a Cancellation or Opposition is that the challenged mark is removed from the Principal Register, which the district court can also order.
Finally, the issue of whether a district court would stay litigation pending the outcome of a Cancellation or Opposition should be considered. As an initial matter, it is rare that a district court will stay litigation pending a decision from the TTAB. There are several reasons for this reluctance, including: (i) neither a Cancellation nor an Opposition will resolve issues of common law trademark rights – these proceedings only address whether the mark at issue should remain (or be placed upon) the Principal Register; and (ii) the accused infringer can file a counterclaim seeking cancellation of the mark at issue, so that the district court can address the issue within the context of the pending litigation, rather than shelving an active litigation. However, B & B Hardware
may provide ammunition for a party seeking to stay district court litigation, particularly when, as discussed above, it can be shown that the TTAB proceeding will have preclusive effect because the usage of the mark in the marketplace (i.e.
, the district court’s concern) is similar, or preferably identical, to the usage of the mark as described in the registration (i.e.
, the TTAB’s concern). The more that it can be shown that these usages collapse into the same thing, the more likely it is that a district court will be willing to stay litigation.
Staying litigation will likely remain the exception rather than the rule because the TTAB is very quick to stay an action when related litigation is pending. See
37 C.F.R. § 2.117. Nevertheless, if the TTAB proceeding is initiated before the district court litigation, an accused infringer may have a better chance of staying later-filed litigation in view of B & B Hardware
. Therefore, when a party receives a cease-and-desist letter alleging trademark infringement, it should consider whether to preemptively file in the TTAB to increase the likelihood of staying later-filed litigation. In view of this potential strategy, parties enforcing their trademark rights need to consider whether to file a lawsuit before serving a cease-and-desist letter, perhaps including a copy of the complaint without formally serving it, to avoid a preemptive TTAB filing.
It is clear that B & B Hardware
has changed the strategic landscape of trademark enforcement and litigation. As with many Supreme Court cases, B & B Hardware
contains language and arguments that benefit both parties. The extent to which this case has a significant impact on how parties enforce their trademark rights and defend against allegations of infringement remains to be seen. However, parties facing these issues must consider the strategic implications of B & B Hardware
as set forth above, as well as related caselaw as it develops, before deciding how to proceed.
B. Hana Financial: The Jury Decides Whether “Tacking” Is Warranted
In Hana Financial, Inc. v. Hana Bank
, 135 S.Ct. 907 (2015), Hana Financial sued Hana Bank, alleging that Hana Bank’s use of the mark “HANA BANK” infringed Hana Financial’s “HANA FINANCIAL” trademark. Id.
at 910. Hana Bank responded by invoking the “tacking” doctrine to argue that it had priority based on its early use of the marks “HANA OVERSEAS KOREAN CLUB” and “HANA BANK.” Id.
The earlier “HANA BANK” mark was stylized and similar, though not identical, to the “HANA BANK” mark at issue in the litigation.
The doctrine of “tacking” allows a party to “clothe a new mark with the priority position of an older mark” when the marks are “legal equivalents” – i.e.
, the marks create the same, continuing commercial impression. Id.
at 909. The district court’s jury instruction, which the Supreme Court quoted, provides a useful explanation of the “tacking” doctrine:
A party may claim priority in a mark based on the first use date of a similar but technically distinct mark where the previously used mark is the legal equivalent of the mark in question or indistinguishable therefrom such that consumers consider both as the same mark. This is called ‘tacking.’ The marks must create the same, continuing commercial impression, and the later mark should not materially differ from or alter the character of the mark attempted to be tacked.
at 910. The jury found in favor of Hana Bank.
On appeal, the Ninth Circuit affirmed, explaining that “although tacking applies only in ‘exceptionally narrow circumstances’ … it ‘requires a highly fact-sensitive inquiry’ that is ‘reserved for the jury.’” Id.
(internal citations omitted). However, the Ninth Circuit acknowledged that the issue of whether tacking should be decided by a judge or a jury is the subject of a split among the Circuits, with the Federal and Sixth Circuits evaluating tacking as a matter of law. Id.
The Supreme Court initially considered that the general rule regarding tacking is whether the two marks – i.e.
, the allegedly infringing mark and the earlier mark to which the later mark is to be tacked – “‘create the same, continuing commercial impression’ so that consumers ‘consider both as the same mark.’” Id.
(citations omitted). The Court recognized that application of such a test “falls comfortably within the ken of a jury.” Id.
at 911. Accordingly, the Court affirmed the Ninth Circuit’s holding that whether two marks may be tacked for purposes of determining priority is a question for the jury. Id.
2. Strategic Issues In View Of Hana Financial
The Ninth Circuit and the Supreme Court correctly noted that tacking arises only in a narrow set of circumstances. However, it does come up from time to time, and the Circuit split regarding whether tacking is permissible in a given situation has now been resolved in favor of this being a fact issue. Thus, this ruling provides clarity for trademark owners considering whether to revise a trademark. To the extent that a trademark owner anticipates needing to rely on tacking to claim priority to an earlier version of its trademark, we now know that the availability of tacking is a fact, rather than legal question. This presents uncertainty insofar as juries deciding fact questions are typically less predictable than judges deciding legal issues, yet it also provides flexibility for the same reason. A jury may be more willing to accept that a revision is not so substantial as to cleave priority, whereas a judge considering the same issue as a matter of law may have been more rigid and allowed only a narrower range of revisions before cutting off priority. On balance, Hana Financial
likely will result in a somewhat broader application of the tacking doctrine, though, as the Supreme Court noted, this remains a narrow issue.
III.How The Supreme Court’s Octane Fitness Decision Addressing “Exceptional Cases” In The Patent Context Is Affecting Lanham Act “Exceptional Cases”
Both the Lanham Act and the Patent Act allow an award of attorneys’ fees to a prevailing party in an “exceptional case.” See
15 U.S.C. 1117(a) (i.e.
, Lanham Act Section 35(a)); 35 U.S.C. 285. The “exceptional case” provision is identical in the two statutes; indeed, Congress referenced the patent “exceptional case” statute when it enacted the trademark “exceptional case” statute. Id.
S.Rep. No. 93-1400, at 2 (1974), reprinted in
1974 U.S.C.C.A.N. 7132, 7133. Therefore, it is natural that courts have relied on patent-related “exceptional case” jurisprudence to construe the identical Lanham Act statute, particularly in determining when a case is “exceptional,” thereby warranting an award of attorneys’ fees. Id.
; Fair Wind Sailing, Inc. v. Dempster
, 764 F.3d 303, 314-15 (3d Cir. 2014) (noting that the court has “‘look[ed] to the interpretation of the patent statute for guidance’ in interpreting § 35(a)” of the Lanham Act, 15 U.S.C. 1117(a) (citations omitted)). The landscape of “exceptional cases” in patent litigation changed dramatically in 2014, and this change has begun making its way into trademark litigation. We anticipate that this will continue, and that all Circuits will adopt for trademark litigation the broader definition of when a case is “exceptional” that now controls in patent litigation.
The Supreme Court significantly broadened the meaning of an “exceptional case” in the patent context in 2014. See Octane Fitness, LLC v ICON Health & Fitness, Inc.
, 134 S.Ct. 1749 (2014). In Octane Fitness
, the Court rejected the Federal Circuit’s rigid two-part analysis for determining whether a case is “exceptional” for purposes of the Patent Act. Id.
at 1755. Instead, the Court relied on the plain and ordinary meaning of “exceptional,” including dictionary definitions and concluded:
[A]n ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances.
at 1756. Thus, the Court recognized that district courts are in the best position to determine whether a case is “exceptional” based on the district court’s experience with similar cases.
In that regard, the Court identified as relevant a nonexclusive list of factors that it had previously provided in the context of determining whether to award attorneys’ fees under a similar provision of the Copyright Act. The list includes “frivolousness, motivation [in bringing and continuing the suit], objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Id.
at 1756 n.6 (quoting Fogerty v. Fantasy, Inc.
, 510 U.S. 517, 534 n.19 (1994)).
In practice, this standard has played out in the patent litigation context as “district courts know it when they see it” – i.e.
, district courts know when a case should not have been filed because of substantive problems, or an argument should have been dropped, or the case dismissed entirely, once it was rendered untenable by a ruling (e.g.
, a claim construction ruling) or discovery of information that undermined the argument or case. Moreover, since Octane Fitness
, the Federal Circuit has consistently allowed district courts great latitude, rarely reversing a district court’s decision as to whether or not a case was “exceptional.” Accordingly, Octane Fitness
is often cited as one of the reasons that the number of patent litigation cases, and particularly “patent troll” litigation, has dropped steadily in 2015.
On the Lanham Act side, numerous district courts and at least two Circuit Courts have explicitly recognized that Octane Fitness
’s holding as to the meaning of “exceptional” applies equally in the trademark context. For example, in Fair Wind Sailing v. Dempster
, 764 F.3d 303 (3d cir. 2014), the Third Circuit addressed the first case to come before it after Octane Fitness
in which Lanham Act Section 35(a) was an issue. Previously, the Third Circuit had required a finding that the losing party had engaged in culpable conduct such as bad faith, fraud, malice, or intentional infringement. Id.
at 314 (quoting Green V. Fornario
, 486 F.3d 100, 103 (3d Cir. 2007)). Overruling more than two decades of caselaw, the Third Circuit “import[ed] Octane Fitness
’s definition of ‘exceptionality’ into [its] interpretation of § 35(a) of the Lanham Act.” Id.
at 315. Going forward, “a district court may find a case ‘exceptional,’ and therefore award fees to the prevailing party, when (a) there is an unusual discrepancy in the merits of the positions taken by the parties or (b) the losing party has litigated the case in an ‘unreasonable manner.’” Id.
The court continued, “[i]mportantly, that discretion [to decide exceptionality] is not cabined by a threshold requirement that the losing party acted culpably. The losing party’s blameworthiness may well play a role in a district court’s analysis of the ‘exceptionality’ of a case, but Octane Fitness
has eliminated the first step in our two-step test for awarding fees under § 35(a) of the Lanham Act.” Id.
The court remanded the case so that the district court, “[w]ith its unparalleled knowledge of the litigation and the parties” could assess exceptionality in the first instance. Id.
Similarly, the Fourth Circuit recently rejected years of caselaw in which it had “defined the ‘exceptional’ case for purposes of § 1117(a) ‘as one in which the defendant’s conduct was malicious, fraudulent, willful or deliberate in nature.’” Georgia-Pacific Consumer Prods. LP v. von Drehle Corp.
, 781 F.3d 710, 719 (4th Cir. 2015) (quoting Retail Servs., Inc. v. Freebies Publ’g
, 364 F.3d 535, 550 (4th Cir. 2004)). In that context, “willful” did not mean merely that the defendant’s actions were volitional but, rather, that the defendant acted with the intent to infringe
the plaintiff’s trademark. Id.
Thus, the Fourth Circuit’s test for exceptionality in a Lanham Act case was particularly stringent before Octane Fitness
. Recognizing that the exceptional case provision in the Lanham Act is identical to the corresponding provision in the Patent Act, the court held that there was “no reason not to apply the Octane Fitness
standard when considering the award of attorneys fees under § 1117(a).” Id.
at 721 (citing Fair Wind Sailing
, 764 F.3d at 314-15). In addition to the factors set forth in Fair Wind Sailing
, the Georgia-Pacific
court noted that after Octane Fitness
, a Lanham Act case could be found exceptional when “there is otherwise ‘the need in particular circumstances to advance considerations of compensation and deterrence.’” Id.
(quoting Octane Fitness
, 134 S.Ct. at 1756 n.6). Like the Fair Wind Sailing
court, the Georgia-Pacific
court remanded the case to the district court to consider exceptionality in view of the new standard set out by Octane Fitness
. See also Slep-Tone Entm’t Corp. v. Karaoke Kandy Store, Inc.
, 782 F.3d 313, 317-18 (6th Cir. 2015) (remanding exceptional case issue with directions to “assess the applicability of Octane Fitness
before determining whether it is necessary to reassess if this case qualifies as extraordinary under § 1117(a).”).
While not all of the Circuit Courts have had an opportunity to consider the exceptionality of a Lanham Act case under Section 35(a) since the Supreme Court issued Octane Fitness
, it is notable that the two Circuit Courts that have done so, as well as all district courts that have done so, have recognized the applicability of the Octane Fitness
holding in the context of Section 35(a). There is no basis for believing that every Circuit will not apply the Octane Fitness
standard to determine whether a Lanham Act case is exceptional, warranting an award of the prevailing party’s attorneys’ fees. Accordingly, it is now significantly easier
, particularly in the Fourth Circuit and other Circuits where exceptionality was traditionally determined pursuant to a strict scheme, for a prevailing party to convince a district court that a case is exceptional, and practitioners need to analyze their arguments and tactics, both at the outset of a case and as the case progresses, through the lens of Octane Fitness
. Simply put, the new standard is “we know it when we see it” and practitioners need to be careful out there.
IV.The Federal Circuit Clarifies Intent To Use
A.You Have To Really Mean It, And Be Prepared To Prove it, When You Declare An Intent To Use A Mark
Prior to the Trademark Law Revision Act of 1988 (“TLRA”), the owner of a mark had to be using his mark when he applied for registration. See Aycock Eng’g, Inc. v. Airflite, Inc.
, 560 F.3d 1350, 1357 (Fed. Cir. 2009). The TLRA changed this requirement and allowed mark owners to apply for registration before they actually used the mark in commerce, so long as the owner had a “bona fide intention … to use [the] mark in commerce” in the future. 15 U.S.C. § 1051(b)(1); Lanham Act Section 1(b). While an applicant can file for registration of his mark based on an intention to use the mark in the future, he must in due course either (1) file a verified statement of actual use of the mark in commerce, or (2) convert his application to a use-based application. 15 U.S.C. § 1051(b)(3), (c), (d). Simply put, applicants must show that the mark is being used in commerce in order for the mark to be registered.
Until recently, it was an open question whether a party could oppose registration of a mark on the basis that there was no bona fide intent to use the mark. The Federal Circuit has now confirmed that this is, indeed, an appropriate basis to challenge registration because “[a]n opposer is ‘entitled to rely on any statutory ground which negates [an applicant’s] right to the subject registration.’” See M.Z. Berger& Co., Inc. v. Swatch AG
, 787 F.3d 1368, 1375 (Fed. Cir. 2015) (quoting Lipton Indus., Inc. v. Ralston Purina Co.
, 670 F.2d 1024, 1031 (CCPA 1982) (citing Warth v. Seldin
, 422 U.S. 490, 501 (1975))); see also Aktieselskabet AF 21.Nov. v. Fame Jeans Inc.
, 525 F.3d 8, 21 (D.C. Cir. 2008) (holding the same).
Having decided that lack of a bona fide intent is an appropriate basis for an opposition, the court turned to the question of what “bona fide intention” means under Section 1(b) of the Lanham Act. Recognizing that there is no statutory definition of “bona fide intention,” the Federal Circuit held that “the applicant’s intent must be demonstrable and more than a mere subjective belief.” Id.
3McCarthy on Trademarks
§ 19.14, at 19.48 (“Congress did not intend the issue to be resolved simply by an officer of the applicant later testifying, ‘Yes, indeed, at the time we filed the application, I did truly intend to use the mark at some time in the future.’”)). “[W]hether an applicant had a ‘boda fide intent’ to use the mark in commerce at the time of the application requires objective evidence of intent.” Id.
at 1376. “Although the evidentiary bar is not high, the circumstances must indicate that the applicant’s intent to use the mark was firm and not merely intent to reserve a right in the mark.” Id.
This determination is to be made on a case-by-case basis considering the totality of the circumstances. Id.
It will be interesting to watch as the cases develop on this issue, particularly because it is such a fact-intensive inquiry. However, the Berger
case itself provides a good beginning point. In Berger
, the applicant filed an intent-to-use application for the mark “iWatch” for more than 30 goods, each of which belonged to one of three general categories, namely watches, clocks and goods related to clocks and/or watches (e.g.
, watch bands, clock dials). Id.
at 1370. Swatch opposed registration on the basis that the mark would be confusingly similar to its own “Swatch” mark and later added a claim that the applicant lacked a bona fide intent to use the mark at the time that it filed the application. Id.
During discovery, the applicant’s CEO testified that the applicant never intended for the mark to be used for any goods other than watches, and the paralegal who filed the application testified that the broad list of goods was “standard” and used to “leave all doors open.” Id.
at 1371. Moreover, the evidence relating to the “watch” category of goods was inconsistent and incomplete regarding the applicant’s intent to commercialize the “iWatch” mark on any watch-related goods. Id.
Of particular importance, the applicant’s documentary evidence consisted solely of documents relating to the prosecution of the application, rather than anything that would show a bona fide intent to commercialize a product in connection with the “iWatch” mark, e.g.
, a marketing plan created before the application was filed. Id.
The TTAB sustained Swatch’s opposition and refused registration of the “iWatch” mark. Id.
Based on Berger
, practitioners must recognize that one day they may have to produce objective evidence showing that a bona fide intent to use the mark in connection with all
goods and services identified in the application existed at the time that an intent-to-use application was filed. Thus, practitioners cannot use an intent-to-use application simply to reserve a spot for a mark (or goods or services). After Berger
, we anticipate that this issue will arise more frequently in opposition and cancellation proceedings, and may even give rise to inequitable conduct issues. Thus, practitioners should be prepared to address this issue and to produce the necessary evidence, including documents and testimonial evidence, to confirm that the requisite intent to use existed when the application was filed. To ensure that the evidence will be available if needed, applicants and practitioners should consider maintaining the relevant documents and information in the application file, even if they are not submitted to the PTO during prosecution. Failing to present sufficient evidence, or worse – presenting conflicting evidence as the applicant in Berger
did – will result in a registration being denied or cancelled.
B.Services Are Used In Commerce When They Are Rendered, Not Just When They Are Advertised
The Federal Circuit recently aligned itself with other Circuits in holding that in the context of a service mark, “use in commerce” requires that the associated service actually be rendered, not just advertised. Couture v. Playdom, Inc.
, 778 F.3d 1379 (Fed. Cir. 2015). In Couture
, an individual registered the service mark “Playdom” based on an application claiming use of the service mark, as opposed to an intent-to-use application. Id.
at 1380. In support of the application, the owner had submitted a screen shot from his company’s single page website, which stated that the company “offer[ed] writing and production services for motion picture film, television, and new media.” Id.
However, no such services were actually rendered until several years after the application was filed. Id.
In the interim, Playdom, Inc. (a Walt Disney company) filed an application for the mark “Playdom.” Id.
When the prior “Playdom” registration was cited, Playdom, Inc. sought to cancel the earlier registration because the service mark had not been used as of the date of the application. Id.
The Trademark Trial and Appeal Board (“TTAB”) granted the cancellation petition, holding that the owner of the registration “‘had not rendered his services as of the filing date of his application’ because he had ‘merely posted a website advertising his readiness, willingness and ability to render said services,’ and the registration was therefore void ab initio
the TTAB’s ruling).
The Federal Circuit previously ruled that “[a]t the very least, in order for an applicant to meet the use requirement, there must be an open and notorious public offering of the services to those for whom the services are intended.” Id.
at 1381 (quoting Aycock Eng’g, Inc. v. Airflite, Inc.
, 560 F.3d 1350, 1357 (Fed. Cir. 2009)). But the applicant in Aycock
had not made an “open and notorious public offering of his … service to intended customers” and therefore the registration failed at that threshold step, without consideration for whether actual provision of the service was necessary. Id.
Thus, the Federal Circuit had not addressed whether the offering of a service, without the actual provision of a service, is sufficient to constitute use in commerce under Lanham Act § 45, 15 U.S.C. § 1127. Id.
The court initially noted that “[t]here is no such thing as property in a trademark except as a right appurtenant to an established business or trade in connection with which the mark is employed….” Id.
(quoting United Drug co. v. Theodore Rectanus Co.
. 248 U.S. 90, 97 (1918)). Based on this caselaw and the statutory text, the court held that a service mark is used in commerce, so as to support an application under Lanham Act § 1(a), only
when the service mark is used or displayed in connection with the related service and
the advertised services are rendered. Id.
at 1381-82; accord International Bancorp, LLC v. Societe des Bains de Mer et du Cercle des Estrangers a Monaco
, 329 F.3d 359, 361-66 (4th Cir. 2003) (reaching the same conclusion in the context of a litigation action); Sensient Techs. Corp. v. Sensory Effects Flavor Co.
, 613 F.3d 754, 759-63 (8th Cir. 2010) (same); Buti v. Impressa Perosa, S.R.L.
, 139 F.3d 98, 100-03 (2d Cir. 1998) (same).
Thus, practitioners must be certain that the services associated with a service mark have actually been rendered, and not just advertised, when filing a use-based application under Lanham Act § 1(a). If services were not actually rendered to a consumer, a resulting registration can be found void ab initio
, through a cancellation (or presumably an opposition) or in infringement litigation. On the other hand, a party accused of infringement or seeking to cancel or oppose a registration should take discovery to determine the actual first date of use – i.e.
, advertising the services in connection with the service mark and
the actual rendering of services to a consumer – to determine if the asserted service mark can be challenged.
V.There Is No Shortcut For Genericness – It’s The Forest, Not The Trees, That Matters
It is well-known that a mark is generic when relevant consumers primarily use or understand the term to refer to the genus of goods or services in question. Thus, for example, “polo shirt” has become the generic term for “a shirt with a collar and a few buttons at the neck that you put on by pulling over your head.” (See
merriam-webster.com/dictionary/polo%20shirt.) The Federal Circuit recently clarified that in considering whether a phrase such as “polo shirt” is generic, the whole phrase as perceived by consumers – not the individual words in isolation – must be considered. See Princeton Vanguard, LLC v. Frit-Lay North Am., Inc.
, 786 F.3d 960 (Fed. Cir. 2015).
, the manufacturer of “Pretzel Crisps” filed an application to register the mark PRETZEL CRISPS for “pretzels.” Id.
at 962. The Examining Attorney refused to register the mark on the Principal Register because it was merely descriptive, so Princeton Vanguard (1) amended its identification of goods to recite “pretzel crackers”; (2) disclaimed “pretzel” apart from the mark as a whole; and (3) requested registration on the Supplemental Register. Id.
Registration on the Supplemental Register was subsequently granted. Id.
Several years later, Princeton Vanguard applied to register the mark PRETZEL CRISPS on the Principal Register, claiming that the mark as a whole had acquired distinctiveness through use in the marketplace. Id.
Frito-Lay filed an Opposition to the application, as well as seeking to cancel the registration on the Supplemental Register, arguing that the term PRETZEL CRISPS is generic or, alternatively highly descriptive. Id.
at 962-63. The Trademark Trial and Appeal Board (“TTAB”) sustained Frito-Lay’s Opposition and granted its petition for cancellation. Id.
at 963. The Board found that “pretzel crisps” is a compound term, rather than a phrase, and on that basis considered each of the terms individually and found them to be generic. Id.
The Federal Circuit reversed.
The Federal Circuit initially noted that “[t]he critical issue in genericness cases is whether members of the relevant public primarily use or understand the term sought to be protected to refer to the genus of goods and services in question.” Id.
at 965 (quoting H. Marvin Ginn Corp. v. Int’l Ass’n of Fire Chiefs, Inv.
, 782 F.2d 987, 989-90 (Fed. Cir. 1986)). The court further noted that “determining a mark’s genericness requires a two-step inquiry: First, what is the genus of goods or services at issue? Second, is the term sought to be registered or retained on the register understood by the relevant public primarily to refer to the genus of goods or services?” Id.
(quoting Marvin Ginn
, 782 F.2d at 990.) Rather than simply applying this test, the TTAB believed that it had to first determine whether the mark was a compound term or a phrase because, according to the TTAB, the Marvin Ginn
test applies only to phrases, whereas the constituents of a compound term should be analyzed individually. Id.
The Federal Circuit rejected any notion that a “short-cut” is available when the mark at issue is a “compound term.” “The problem with the [TTAB’s] analysis is that there is only one legal standard for genericness: the two-part test set forth in Marvin Ginn
Thus, to determine whether a mark is generic, the mark must be considered as a whole
regardless of whether its constituents standing alone would be generic in connection with the relevant genus of goods or services. Id.
at 966-67. Thus, practitioners must be careful when assessing the genericness of a mark to consider the entire mark, as it is perceived by the relevant public – the “forest” – and to not focus on the constituent terms – the “trees.”
The Federal Circuit also discussed relevant types of evidence that can be considered in connection with a genericness analysis. Specifically, the court explained that “evidence of the public’s perception may be obtained from ‘any competent source, such as consumer surveys, dictionaries, newspapers and other publications.’” Id.
at 969 (quoting In re Northland Aluminum Prods., Inc.
, 777 F.2d 1556, 1559 (Fed. Cir. 1985)). The court further noted that it has “recognized that ‘consumer surveys may be a preferred method of proving genericness.’” Id.
(quoting BellSouth Corp. v. DataNational Corp.
, 60 F.3d 1565, 1570 (Fed. Cir. 1995)). Thus, while consumer surveys are not necessary, when they are available they are a particularly strong form of evidence to show genericness (or lack thereof).
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
Justices Scalia and Thomas dissented. B & B Hardware
, 135 S.Ct. at 1310-18.
The Court explained that, “subject to certain well-known exceptions, the general rule is that ‘[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.” Id.
at 1303 (citing
Restatement (Second) of Judgments § 27, p. 250 (1980)).
Of course, as the Court noted, when it is warranted a judge may decide the issue on a motion for summary judgment or for judgment as a matter of law. Id.
In a companion to Octane Fitness
, the Supreme Court held that a district court’s determination of exceptionality, or lack thereof, in the patent context is subject only to the deferential abuse of discretion standard on appeal. See Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.
, 134 S.Ct. 1744 (2014). The same standard will apply to a district court’s determination of whether a case is exceptional under the Lanham Act’s “exceptional case” provision.