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School’s Out: Trademark Settlement Agreement Enforceable

by Paul Devinsky | Apr 29, 2021 | Trademarks

Addressing issues relating to jurisdiction, contract enforceability and trademarks, the US Court of Appeals for the First Circuit concluded that two schools that used similar names had a valid and enforceable settlement agreement obligating one school to pay for the other to change its name. The Commonwealth School, Inc. v. Commonwealth Academy Holdings LLC, Case No. 20-1112 (1st Cir. Apr. 14, 2021) (Selya, J.)

It came to the attention of a Boston private school, The Commonwealth School (the School), that a more recently founded private school in Springfield, Massachusetts, was operating under a similar name, Commonwealth Academy (the Academy). In 2016, the School brought suit against the Academy under the federal Lanham Act, claiming that the School had a trademark on its “Commonwealth School” name, and that “Commonwealth Academy” infringed on that trademark. The parties entered into settlement mediation, and agreed that the School would pay the Academy $25,000 and in return the Academy would change its name to “Springfield Commonwealth Academy.”

The district court issued an order that a settlement was reached. Three years passed, and the Academy took steps to change its name in promotional materials and on its website. But the School would not pay the Academy because it claimed the Academy still had the “Commonwealth Academy” name appearing prominently on its students’ basketball jerseys. At a hearing to resolve the dispute, the district court reversed its earlier order: the parties had not actually reached a settlement agreement because there had been no “meeting of the minds” for contract formation, despite the other steps the Academy took to fulfill the agreement. The district court dismissed the case because neither party showed cause to reopen the case. The Academy appealed, arguing that the district court erred in refusing to enforce the settlement agreement.

The First Circuit addressed three main issues on appeal: (1) whether there was appellate jurisdiction to hear the appeal, (2) whether the district court had subject matter jurisdiction to hear the initial settlement agreement dispute, and (3) on the merits, whether the settlement agreement was a validly formed contract.

The First Circuit concluded it had jurisdiction to review the district court’s dismissal order. Generally, under the final judgment rule, only final decisions are appealable. But here, the order at issue was merely interlocutory, meaning it was issued during the course of litigation. The Academy claimed the order was in fact reviewable because the order resulted in the case’s dismissal, and thus it should fall under the merger doctrine exception, where interlocutory orders merge into final judgments. The Court considered this in the context of the School’s failure to prosecute, and whether the order actually fell under an exception to the exception – i.e., where a dismissal is based on a failure to prosecute, it does not fall under the merger doctrine. In its analysis, the Court considered the policy considerations underlying the merger doctrine: to preserve integrity of the final judgment rule by preventing any reward for bad faith tactics. Here, the School, as the [...]

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Pardon My French: France Wins Trademark Dispute Using Sovereign Immunity

by Joshua Revilla | Apr 8, 2021 | Trademarks

The US Court of Appeals for the Fourth Circuit reversed a district’s court denial of sovereign immunity under the Foreign Sovereign Immunity Act (FSIA) and remanded the case to be dismissed with prejudice, holding that France was immune from a trademark infringement claim in the United States brought by the former owner of the domain name France.com. France.com, Inc. v. The French Republic, Case No. 20-1016 (4th Cir. Mar. 25, 2021) (Motz, J.)

Jean-Noel Frydman and his company France.com, Inc. (collectively, Frydman) purchased and registered the domain name France.com and trademarked the name in the United States and in the European Union. In 2015, the Republic of France (RoF) intervened in an ongoing lawsuit between Frydman and a third party, asserting the exclusive right to the use of the term “France” commercially. The RoF also insisted that the use of “France” by a private enterprise infringed on its sovereignty. The Paris District Court agreed and ordered the transfer of the domain name to the RoF.

Frydman filed suit for trademark infringement, expropriation, cybersquatting and reverse domain name hijacking, and federal unfair competition in a Virginia district court against the RoF. The RoF moved to dismiss the claim based on the FSIA. The district court denied the motion, stating that the FSIA immunity defense would be best raised after discovery. The RoF appealed.

The Fourth Circuit first determined, based on Supreme Court precedent, that sovereign immunity was a threshold question to be addressed “as near to the outset of the case as is reasonably possible” and not to be postponed until after discovery.

The Court next considered whether the RoF was immune to suit. The FSIA provides a presumption of immunity for foreign states that can only be overcome if the complaint provides enough information to satisfy one of the specified exceptions. Frydman argued that the commercial activity and expropriation exceptions applied.

The commercial activity exception removes immunity where a foreign state has commercial activity in, or that has a direct effect in, the United States. Essentially, a court must determine whether the actions of the foreign state are those of a sovereign or those of a private party engaged in commerce. The Fourth Circuit first identified that the actual cause of the injury at issue to Frydman was the French court’s ruling that the domain name belonged to the RoF, and found that all claims of wrongdoing by the RoF flowed form the French court’s decision. Additionally, even if it was solely the transfer of the domain name that harmed Frydman, and not the French court’s judgment, the transfer was still based on the French court’s judgment that provided the basis for RoF to obtain the domain name. Because the cause of action was based on the powers of a sovereign nation (the foreign judgment) and not the actions of a private citizen in commerce, the Fourth Circuit found that the commercial activity exception did not apply.

The Fourth Circuit next rejected Frydman’s assertion of the expropriation exception. This exception [...]

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Triple Trouble: Unauthorized Trademark Use among Organizations with Nearly Identical Name

by Tim Dunker | Apr 1, 2021 | Trademarks

The US Court of Appeals for the District of Columbia Circuit affirmed a district court ruling that the use of nearly identical marks by a military order, a related foundation and a funding organization was likely to cause confusion. Military Order of the Purple Heart Service Foundation, Inc. v. Military Order of the Purple Heart of the United States of America, Inc., Case No. 19-7167 (DC Cir. Mar. 16, 2021) (non-precedential).

This case involved a dispute among three entities: the Military Order of the Purple Heart of the United States of America, Inc. (Order); the Military Order of the Purple Heart Service Foundation, Inc. (Foundation); and the Military Order of the Purple Heart Service Foundation Holdings, LLC (Holdings). The Order provides charitable services to veterans, and the Foundation funds the Order’s operations. Holdings is owned by the Foundation and licensed the Order to use Holdings’ “Purple Heart” word mark in connection with charitable fundraising for specific approved projects. The funding agreement between the parties was made in 2016, and the use of the trademark was agreed to in 2017. Following a warning from the Foundation in 2018 that the Order’s funding might be reduced for 2019 because of financial problems, the Order began fundraising on its own, at times purposely diverting funds away from the Foundation while using the “Purple Heart” mark without Holdings’ permission.

The Foundation and Holdings sued the Order for breach of the 2016 funding agreement, breach of the 2017 licensing agreement, and trademark infringement. The Order filed its own suit for breach of the funding agreement. The cases were consolidated and the district court ruled that the Order’s use of the mark without permission violated the licensing agreement and two provisions of the Lanham Act. The Order appealed.

The DC Circuit agreed that the Order’s use of Holdings’ mark was in plain violation of the parties’ 2017 agreement. The agreement stated that the Order could use the mark “only in connection with charitable fundraising for specific projects that are approved by [Holdings] and are consistent with [the Order’s] mission statement.” Thus, the Order’s fundraising advertisements using the mark without permission were inconsistent with the agreement.

The DC Circuit also found that the Order’s use of the “Purple Heart” mark was likely to cause confusion. Not only are the names of these entities nearly identical, but the Order’s national commander admitted at trial that the public frequently confuses the Order and the Foundation. Citing its 1982 Foxtrap precedent, the Court concluded that consumer confusion is likely where the marks in issue are identical and the record contains evidence that the businesses are sufficiently related so as to be connected in the mind of the relevant public.

Can’t Camouflage Express Trademark Contract Terms

by Paul Devinsky | Mar 17, 2021 | Trademarks

Addressing a range of trademark licensing issues, including discretionary approval, exculpatory contract clauses and third party beneficiary standing, the US Court of Appeals for the Federal Circuit affirmed a lower court’s grant of summary judgment to the US Army, finding that the Army abided by the terms of a trademark licensing agreement with a brand management company that sold clothing bearing the Army logo. Authentic Apparel Grp., LLC v. United States, Case No. 20-1412 (Fed. Cir. Mar. 4, 2021) (Lourie, J.)

In a 2010 licensing agreement, the Army granted Authentic Apparel, a brand management company that licenses merchandise, a non-exclusive license to manufacture and sell clothing bearing the Army’s trademarks in exchange for royalties. The licensing agreement gave the Army sole and absolute discretion on whether to approve any products and marketing materials bearing the Army’s trademarks. The licensing agreement also included exculpatory clauses exempting the Army from liability for exercising this discretion. From 2011 to 2014, Authentic submitted 500 requests for product approval, and the Army disapproved of only 41. After a series of late or unpaid royalty payments, Authentic sent notice that it would not pay 2014 royalties. The Army then terminated the license to Authentic. In 2015, Authentic and its chairman, Ron Reuben, sued the US government for breach of contract of the licensing agreement. The alleged breaches included denial of the right to exploit the goodwill associated with the Army’s trademarks, refusal to permit Authentic to advertise its contribution to certain Army recreation programs, delay of approval for a financing agreement for a footwear line, and denial of approval for advertising featuring the actor Dwayne “The Rock” Johnson. The Court of Federal Claims granted summary judgment to the US government and dismissed Reuben as a co-plaintiff for lack of standing. Authentic appealed.

The two main issues on appeal were whether Authentic provided sufficient evidence to show there was a genuine dispute of material fact that the Army breached the terms of its contract or any implied duty of good faith, and whether Reuben was a third party beneficiary to have standing as a plaintiff to the suit.

As to the first issue, the Federal Circuit affirmed the lower court’s grant of summary judgment for the government because Authentic was unable to provide sufficient evidence that the Army breached the trademark licensing agreement. The Court found that:

The contracting parties contemplated the terms of the contract and voluntarily decided to include express language of broad discretionary approval and exculpatory clauses exempting liability for disapproval, and therefore they should be held to the express terms for which they bargained.

The Army did not act unreasonably or violate its duty of good faith and fair dealing in exercising its discretion because it did approve more than 90% of Authentic’s products.

Authentic’s argument that the Army’s discretion was too broad and restricted Authentic’s use of the trademarks to solely “decorative purposes” was without merit because (1) the Court was not evaluating the validity of the trademarks here, (2) Authentic still [...]

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A Shoe-In? Fleet Feet Gives Injunction Appeal the Moot Boot

by Cecilia Choy, Ph.D. | Feb 11, 2021 | Trademarks

The US Court of Appeals for the Fourth Circuit dismissed a preliminary injunction as moot where the enjoined party had discontinued the use complained of and had no future plan to restart it. Fleet Feet, Inc. v. Nike, Inc., Case No. 19-2390 (4th Cir. Jan. 26, 2021) (Diaz, J.) The Court denied the enjoined party’s request that it vacate the district court’s order granting the preliminary injunction despite mootness due to an ongoing litigation.

Fleet Feet is a retailer selling products related to running, including Nike merchandise. It is also a Nike competitor since Nike sells its own products. Fleet Feet obtained two trademark registrations, having already used both for years: “Running Changes Everything” in 2020, and “Change Everything” in 2015. In July 2019, Nike launched an advertising campaign with the tagline “Sport Changes Everything” scheduled to end at the February 2020 Super Bowl. Fleet Feet sued Nike for trademark infringement. The district court granted a preliminary injunction against Nike and set a $1 million injunction bond. The preliminary injunction order prohibited Nike from any use of the phrase “Sport Changes Everything” or any other designation confusingly similar to the Fleet Feet’s marks when advertising or selling goods and services. Nike discontinued its campaign two months before the scheduled end and appealed the preliminary injunction order.

Nike argued that the district court erred in its preliminary injunction factor analyses. But on appeal, the Fourth Circuit decided as a threshold matter that the end of Nike’s “Sport Changes Everything” campaign and its representation that there were no plans to use the term after the campaign rendered Nike’s appeal of the preliminary injunction “designed to interrupt that very campaign” moot. A case becomes “moot” when the “issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.” The Court found that Nike’s appeal of the preliminary injunction was nonjusticiable since there had been an event during the pendency of the appeal that made it impossible to grant effective relief to a prevailing party. Because of the conclusion of the 2020 Super Bowl and Nike’s representations that it did not plan to use the term afterwards, there was no possible relief to Nike based on the preliminary injunction’s interference with the campaign.

The Fourth Circuit disagreed with Nike that two issues remained live. First, Nike argued that the continued restraint on Nike’s speech due to the order’s prohibition of any confusingly similar designation to Fleet Feet continued to be a live issue. The Court explained that this was only a potential controversy, not a live controversy. Because Nike had not engaged in the speech barred by the order, had represented that it did not intend to do so in the future, and had not introduced any new slogans confusingly similar to Fleet Feet’s marks, no actual speech was threatened by the preliminary injunction.

Second, Nike argued that the potential recovery on the injunction bond was a live issue. Referring to the Supreme Court case Univ. of Tex. [...]

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No Appellate Jurisdiction to Review Post-Verdict Appeal of Previously Denied SJ Motion

by Paul Devinsky | Jan 21, 2021 | Trademarks
In a closely watched trademark/counterfeiting case, the US Court of Appeals for the Second Circuit affirmed a judgment for contributory infringement, award of permanent injunction and monetary damage award against a commercial landlord found to have been willfully blind to trademark infringement and counterfeiting occurring on its leased property. Omega SA v. 375 Canal, LLC, Case No. 19-969 (2d Cir. Jan. 6, 2021) (Menashi, J.) (Lohier, J., concurring in part, dissenting in part). The Court also concluded that it could not consider a post-verdict appeal on a legal issue raised in a denied summary judgment motion (i.e., whether the landlord needed to know of a specific vendor involved in the counterfeiting) when the appellant failed to file a timely notice of appeal and did not seek an interlocutory appeal or file a Rule 50 motion for judgment as a matter of law on the issue.

375 Canal LLC is a commercial landlord with properties in Manhattan, including 375 Canal Street. Omega SA is a watch company. Omega sued Canal for contributory trademark infringement, alleging that Canal had continued to lease space at 375 Canal Street to vendors despite knowing that the vendors were selling counterfeit Omega goods. After discovery, Canal moved for summary judgment, contending that Omega did not identify a specific vendor to which Canal continued to lease property despite knowing or having reason to know that the specific vendor was selling counterfeit goods. Omega argued that its primary theory of willful blindness did not require identification of a specific vendor. The district court denied Canal’s motion, agreeing that Omega was not required to identify a specific vendor.

The jury found that Canal had contributorily and willfully infringed Omega’s trademarks, and awarded $1.1 million in statutory damages. The district court amended the final judgment to include a permanent injunction prohibiting Canal from infringing and taking other actions with respect to Omega’s marks, even outside of 375 Canal Street. Canal appealed, arguing that the district court erred by not requiring Omega to identify a specific vendor that Canal knew or should have known was infringing Omega’s trademarks. Canal raised this argument by appealing the pre-trial order denying Canal’s motion for summary judgment and the jury instructions.

The Second Circuit dismissed Canal’s appeal of the summary judgment denial and affirmed the jury instructions on the merits. On Canal’s challenge to the summary judgment denial, the Court began with the premise that a party generally cannot appeal an order denying summary judgment after a full trial on the merits because of its interlocutory character, which is not within appellate jurisdiction. The denial of Canal’s summary judgment motion did not qualify for an exception allowing review, such as situations where Congress has provided for review of certain interlocutory decisions, or where the Supreme Court has construed certain denials of summary judgment, such as those on the basis of qualified immunity, as final decisions permitting review. But even if it had qualified, Canal would have been required to file a notice of appeal within [...]

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Fifth Circuit Says No Preliminary Injunction in Boozy Beverage Trademark Fight

by Sarah Bro | Dec 17, 2020 | Trademarks
The maker of BRIZZY-brand hard seltzer claimed that consumers would confuse a product branded VIZZY hard seltzer with its own. The United States Court of Appeals for the Fifth Circuit disagreed, however, and affirmed the district court’s denial of the preliminary injunction with an explanation as to how the plaintiff failed to demonstrate a substantial likelihood of success on the merits with respect to its trademark infringement claim. Future Proof Brands, L.L.C., v. Molson Coors Beverage Company, et. al., Case No. 20-50323 (5th Cir. December 3, 2020) (Smith, J.).

With a booming market for hard seltzers and ready-to-drink cocktails, it is no surprise that disputes over brand names of the bubbly alcoholic beverages have followed. After the district court denied Proof Brands’ request for a preliminary injunction against Molson Coors’ entry into that market, Proof Brands appealed. The Fifth Circuit issued a reminder that a preliminary injunction is “an extraordinary remedy which should not be granted unless the party seeking it has clearly carried [its] burden of persuasion,” and reviewed the district court’s denial of Future Proof’s request for an abuse of discretion. The Court further noted that under Planned Parenthood Ass’n of Hidalgo Cnty. v. Suehs, Future Proof must demonstrate four factors to obtain a preliminary injunction, namely: (1) a substantial likelihood of success on the merits, (2) a substantial threat of irreparable injury if the injunction is not granted, (3) that the substantial injury outweighs the threatened harm to the party sought to be enjoined and (4) that granting the preliminary injunction would not disserve the public interest. Concluding that Future Proof was unable to demonstrate a substantial likelihood of success on the merits of its trademark infringement claim, the court did not address the remaining three preliminary injunction factors.

Future Proof argued that in the course of determining whether there was a likelihood of confusion between the BRIZZY and VIZZY trademarks, the district court erred in analyzing the various factors, or “digits,” of consumer confusion used by the Fifth Circuit. The Court tackled each of the “digits” assessing the likelihood of consumer confusion, noting that even with “some errors,” the district court correctly concluded that Future Proof failed to show a substantial likelihood of success on its trademark infringement claim.

Starting with the type or strength of the trademark allegedly infringed factor, the Fifth Circuit disagreed somewhat with the district court and found the BRIZZY mark to be suggestive, rather than merely descriptive of “fizzy” beverages. Nevertheless, the Court noted that suggestive marks—like descriptive marks— are “comparatively weak” for purposes of a confusion analysis, and cited a number of third-party carbonated beverage brands sharing the common “-IZZY-” root to affirm its agreement with the district court that BRIZZY is a weak trademark. With a “weak” mark at issue, the Court found the similarity factor to weigh only marginally in favor of the injunction, especially given key differences between the product packaging and labels for the respective BRIZZY and VIZZY beverages.

Moving on to the defendant’s intent factor, [...]

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“You’ve Changed!”—New Trademark and TTAB Fees Incoming

by Sarah Bro | Dec 10, 2020 | Trademarks
Effective January 2, 2021, the United States Patent and Trademark Office (“USPTO”) is increasing and adding certain trademark and Trademark Trial and Appeal Board (“TTAB”) fees. The changes come after a nearly three-year fee status quo.

The following TTAB fees will increase anywhere from $25 to $200:

Petition to cancel filed through the Electronic System for Trademark Trials and Appeals (“ESTTA”) (now $600 per class);

Notice of opposition filed through ESTTA (now $600 per class);

Initial 90-day extension request for filing a notice of opposition, filed through ESTTA (now $200 per application);

Second 60-day extension request for filing a notice of opposition, filed through ESTTA (now $200 per application);

Final 60-day extension request for filing a notice of opposition, filed through ESTTA (now $400 per application); and

Ex parte appeal filed through ESTTA (now $225 per class).

New TTAB fees are also taking effect. A $100 fee per application will apply for a second request for an extension of time to file an appeal brief in an ex parte appeal filed through ESTTA (and for any subsequent extension requests). A $200 per class fee will apply for appeal briefs in an ex parte appeal filed through ESTTA. A $500 per proceeding fee will apply to requests for oral hearings.

As before, there will be no fee for a first 30-day extension request for filing a notice of opposition filed through ESTTA. The USPTO will also begin issuing partial refunds for petitions to cancel in default judgments. These refunds, however, will be available only if the cancellation involves solely an abandonment or nonuse claim, if the defendant did not appear, and if there were no filings in the proceeding other than the petition to cancel.

Additionally, USPTO trademark and TTAB filings which can be and are submitted on paper will cost more than filing their electronic counterparts.

Other key USPTO trademark fee changes include the following: TEAS standard application, now $350 per class; TEAS Plus application, now $250 per class; the processing fee for failing to meet TEAS Plus requirements, now $100 per class; Section 8 or 71 declaration filed through TEAS, now $225 per class; petition to the Director filed through TEAS, now $250; and a petition to revive an abandoned application filed through TEAS, now $150. No fee will apply for an electronically filed Section 7 request to amend a registration before submitting a Section 8 or 71 declaration, as long as the filing serves only to delete goods, services, and/or classes in the request. There will, however, now be a fee assessed for deleting goods, services, and/or classes from a registration after submitting a Section 71 or 8 declaration, but before that declaration is accepted ($250 per class if filed through TEAS). Lastly, a letter of protest will now cost $50 per application.

While the changes outlined above are key, practitioners should be mindful of potential changes to all fees applicable to their specific situation and consult the USPTO’s Final Rule, available here, to ensure [...]

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Trademark Cancellation Is Appropriate Sanction for Misconduct

by Sarah Bro | Nov 4, 2020 | Trademarks
In upholding a grocery store chain’s standing to petition for cancellation of a US trademark registration, the US Court of Appeals for the Federal Circuit affirmed the Trademark Trial and Appeal Board’s (TTAB’s) express authority to impose cancellation of a trademark by default judgment as a sanction in a TTAB proceeding. Corcamore, LLC v. SFM, LLC, Case No. 19-1526 (Fed. Cir. Oct. 27, 2020) (Reyna, J.).

SFM owns US federal trademark registrations for the mark SPROUTS for use in connection with its retail grocery store services. SFM filed a petition to cancel Corcamore’s US trademark registration for the mark SPROUT for use in connection with vending machine services, alleging a likelihood of consumer confusion with SFM’s prior trademark rights. The TTAB denied Corcamore’s motion to dismiss the cancellation petition for lack of standing. Relying on Empresa Cubana del Tabaco v. General Cigar Co., the TTAB confirmed SFM’s standing based on its “real interest” in the cancellation petition and a “reasonable belief of damage” caused by the continued registration of Corcamore’s SPROUT trademark.

Following the TTAB’s denial of its motion to dismiss, Corcamore undertook a series willful, bad-faith procedural maneuvers that resulted in two separate sanctions. When Corcamore’s further procedural misconduct violated both sanctions orders, the TTAB entered default judgment cancelling Corcamore’s SPROUT trademark registration. Corcamore appealed.

On appeal, Corcamore alleged that the TTAB (1) erred in applying Empresa Cubana rather than the Supreme Court of the United States’ Lexmark v. Static Control framework in affirming SFM’s standing, and (2) abused its discretion in granting default judgment as a sanction. On the issue of standing, the Federal Circuit rejected the TTAB’s “unduly narrow” conclusion that the Supreme Court’s Lexmark framework was inapplicable, since Lexmark related to a claim of false advertising under § 1125(a) of the Lanham Act, while Empresa Cubana addressed the right to bring a cancellation proceeding under § 1064. The Federal Circuit concluded that Lexmark applied to § 1064 and § 1125(a) because both are statutory causes of action. Nevertheless, the Court found no meaningful substantive difference between the analytical frameworks for standing expressed in Lexmark and Empresa Cubana, and found that the Lexmark “zone-of-interests” proximate cause analysis and the “real interest” and “reasonable belief of damage” requirements under Empresa Cubana similarly provided a right to bring a cause of action. As such, the Court ultimately agreed with the TTAB’s conclusion that SFM’s pleaded allegations of a likelihood of consumer confusion based on a similarity of the parties’ SPROUTS and SPROUT trademarks, and their respective goods and services, were sufficient to demonstrate a reasonable belief of damage under Empresa Cubana and thus supported the right to challenge Corcamore’s registered trademark via cancellation.

With regard to the TTAB’s grant of default judgment, Corcamore did not challenge the TTAB’s express authority to grant default judgment as a sanction under 37 CFR § 2.120(h) and Fed. R. Civ. P. 37(b)(2). Instead, Corcamore argued that the TTAB had no factual or legal basis to enter default judgment in the first [...]

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The Naked Truth About Trademark Cancellation: Only Harm, No Proprietary Interest Required

by Christopher M. Bruno | Aug 5, 2020 | Trademarks
The US Court of Appeals for the Federal Circuit determined that a contracting party that contractually abandoned any proprietary interest in a mark may still bring a cancellation action if it can “demonstrate a real interest in the proceeding and a reasonable belief of damage.” Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC, Case No. 19-1567 (Fed. Cir. July 24, 2020) (Reyna, J.) (Wallach, J., dissenting).

Australian sold condoms with the marks NAKED and NAKED CONDOMS, first in Australia in early 2000, then in the United States in 2003. Two years later, Australian learned that Naked TM’s predecessor had registered a trademark NAKED for condoms in September 2003. Australian and Naked TM communicated by email regarding use of the mark for a few years. Naked TM contended that the parties reached an agreement; Australian disagreed and said no final terms were agreed upon. Australian filed a petition to cancel the NAKED trademark registration. Ultimately, and after trial, the Trademark Trial and Appeal Board (TTAB) concluded that Australian lacked standing because it had reached an informal agreement that Naked TM reasonably believed was an abandonment of any right to contest Naked TM’s registration of NAKED. Thus, the TTAB found that Australian lacked a real interest in the proceeding because it lacked a proprietary interest in the challenged mark. Australian appealed.

The Federal Circuit reversed. First, the Court clarified that the proper inquiry was a matter of proving an element of the cause of action under 15 USC § 1064 rather than standing. The Court explained that, contrary to the TTAB’s conclusion, “[n]either § 1064 nor [its] precedent requires that a petitioner have a proprietary right in its own mark in order to demonstrate a cause of action before the Board.” Assuming without deciding that the TTAB correctly determined that Australian had contracted away its rights, the Court found that fact irrelevant. Ultimately, even though an agreement might be a bar to showing actual damages, a petitioner need only show a belief that it has been harmed to bring a petition under § 1064.

The Federal Circuit found that Australian had a reasonable belief in its own damage and a real interest in the proceedings based on a history of two prior applications to register the mark, both of which the US Patent and Trademark Office rejected on the basis that they would have created confusion with Naked TM’s mark. The Court rejected Naked TM’s argument that Australian’s abandonment of those applications demonstrated there was no harm, instead concluding that Australian’s abandonment of its applications did not create an abandonment of its rights in the unregistered mark. Moreover, as a prophylactic rationale, the Court explained that Australian’s sales of products that might be found to have infringed the challenged registration also create a real interest and reasonable belief in harm.

Judge Wallach dissented. Although he agreed that the TTAB erred by imposing a proprietary-interest requirement to bring suit under § 1064, he disagreed that Australian properly demonstrated an alternative, legitimate interest—i.e., a belief [...]

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