It’s not every day you’re presented with the unique opportunity of seeing and hearing the Chief Justice of the United States Supreme Court live in your own backyard, thanks very much Caleb!

Tuesday was that day, Chief Justice John G. Roberts, Jr. was here in Minneapolis for the 2018 Stein Lecture at the University of Minnesota’s Northrup Auditorium, as the Star Tribune reported.

SCOTUSBlog had this to say about the Chief Justice’s remarks. To listen to a recording of the event, to a sell out crowd of 2,700, check out MPR’s coverage, here.

Others reporting on this event don’t appear to care about trademarks as much as we do, so this may be the only place you’ll learn about Justice Roberts’ remarks relating to trademarks.

As you can imagine, knowing the vast body of legal subject matter confronted by the Supreme Court, clearly my ears perked up in hearing Justice Roberts utter the word “trademark” five times!

Moderator Robert Stein, former University of Minnesota Law School Dean, asked Chief Justice Roberts whether any highly technical subject matter might be unsuited for the Court to decide.

My mind went to the creation of the CAFC in 1982, specifically designed to hear all federal district court patent appeals, yet the Supreme Court has repeatedly reversed the CAFC since 2005.

Justice Roberts never mentioned the CAFC, instead he waxed a bit about trademark expertise:

“My answer, I think is, no, because usually no matter how complex and involved the legal issue, the case may seem, it implicates a broader legal question about, you know, the statute may be complicated, but the question is going to be, well, how do you go about reading the statute, what sources do you look at in a particular case. We don’t take technical legal cases because we like technical legal cases. They’re usually because they implicate a broader question. When I was practicing law, this is a speech I gave a lot of times, because I was not an expert in any area of the law. I like to think of myself as somebody who was good arguing in a particular court, in the Supreme Court, and so I’d have to, you know, convince someone who comes in with an important trademark case, who could hire the world’s leading expert in trademark law, or me.  And, I would tell them, look, the Supreme Court does not think your case is a big deal for trademark law. It thinks your case is a big deal for how regulations relate to the statute, how particular provisions in the statute should be read. So, you need somebody who, you know, can look at it in that broader perspective that the justices do, and you know, I would say, half of the time, they would say, well, I actually want somebody who knows something about trademark law, and that was understandable, but, then it would be, and, you know, they would get there in front of the Court, and they’re too expert in trademark law, and the justices just aren’t that interested in a lot of those nuances, and sometimes they would just be speaking over each other.”

My ears also perked up with Justice Roberts’ remarks about the Court’s fewer decisions:

“We have particular criteria for the cases we want to take. Obviously, if any court finds an Act of Congress unconstitutional, we will take it, we think as a matter of comity to the branches across the street, we should be the ones to say that, if any court is . . . .”

Do you see where I’m going with that remark, dear readers? I’m thinking about Erik Brunetti.

As you will recall, presently before the Supreme Court, is whether to hear the Brunetti case, and the issue presented in Brunetti is:

“Whether Section 2(a) of the Lanham Act’s prohibition on the federal registration of ‘immoral’ or ‘scandalous’ marks is facially invalid under the free speech clause of the First Amendment.”

Given the clarity of Justice Roberts’ statement, “if any court finds an Act of Congress unconstitutional, we will take it,” I’ll be amending my prediction otherwise, since the CAFC did just that, in Brunetti.

There are plenty of good reasons for the Court to decide the constitutionality of the “scandalous” and “immoral” language, separate and apart from the disparagement language found to violate the First Amendment in Tam (here, here, here, here, here, and here).

If the Court does hear Brunetti, let’s hope Section 7 of the Lanham Act — the provision expressly noting that federal registrations are issued “in the name of the United States of America” — won’t be some uninteresting and ignored “nuance” of trademark law to the justices.

Last week, while I was preparing for and had the unique opportunity of arguing a real, live TTAB final hearing on the merits, outside the TTAB’s typical oral hearing location (because it was selected by the TTAB to be part of the ABA’s IPLSpring continuing education conference in Bethesda, Maryland), the Supreme Court issued its long-anticipated decision in B&B Hardware, Inc. v. Hargis Industries, Inc. Hopefully this explains my delay. SCOTUSblog coverage is here.

B&B Hardware is the case we sounded the alarm about last June:

“If the U.S. Supreme Court decides to follow the advice it recently sought and received from the U.S. Solicitor General (SG) of the Department of Justice, those of us who care deeply about the enforcement and protection of brands and trademarks could be facing a real paradigm shift.”

Well, the paradigm has now shifted, unless and until Congress steps up to clarify (perhaps at INTA’s urging) that it never intended to have un-appealed TTAB decisions (concerning likelihood of confusion and the right to register a trademark) replace the ability of a federal district court to decide for itself, likelihood of confusion and the right to use, in the context of a later-filed federal trademark infringement action.

The law of the Eighth Circuit before this decision recognized the distinct difference between the right to use a trademark and the right to register a trademark. It was predictable. It was black/white. Under no circumstances would a federal district court ever be bound by an earlier administrative decision of the TTAB. It fully recognized that the lower stakes of defending the right to register are not the same as the higher stakes of defending the right to use as part of a charge of trademark infringement (with the plaintiff’s ability to pursue both injunctive and monetary relief in federal court — remedies the TTAB has never provided and cannot provide, at least under current law, even after B&B Hardware).

In essence, it allowed for a brand owner and trademark applicant to value those distinct rights differently. Under the pre-B&B Hardware law, a brand owner and trademark applicant could put forward a modest defense against an opposer’s challenge to registration, knowing it didn’t need to pull out all the stops in its defense, because the burden remained on the opposer to file suit in federal district court if it actually wanted to threaten the trademark applicant’s right to use. So, until now, at least in the Eighth Circuit, there hasn’t been a risk of questioning the applicant’s modest defense approach in the TTAB — if the losing trademark applicant was later sued for trademark infringement, it could decide then to pull out all the stops, given the significantly higher stakes, and vigorously defend the right to use more like a bet-the-company lawsuit.

After B&B Hardware, however, despite the Court’s attempt to draw a narrow decision and limit the number of actual TTAB cases where preclusion will prevent a federal district court from deciding likelihood of confusion for itself, brand owners will now, ironically, be faced with the potential for a cottage industry of litigation over the now very gray questions of whether preclusion will, in fact, apply in their specific cases and as to what issues.

Over the past several days, many opinions on the groundbreaking decision have been shared, and what has emerged as an overwhelming consensus among, at least, outside trademark counsel for brand owners, are the following observations:

  1. The B&B Hardware decision is an important one and it will definitely impact trademark enforcement strategies going forward;
  2. The stakes involved in TTAB enforcement just went up, a lot — they no longer impact only the right to register, but the right to use too;
  3. The complexity, intensity, size of the record, and cost of seeing a TTAB decision through final hearing just went up;
  4. The losing party at the TTAB is more likely to appeal the adverse decision to federal district court for a de novo review; and
  5. Given all this, more brand owners may opt to suspend TTAB actions while they pursue all their claims in federal district court.

I’m looking more forward to hearing about what in-house, corporate trademark counsel think about the decision and how it will influence their trademark enforcement strategies. . . .

But, in the meantime, what no one seems to be talking about (yet) is how the Supreme Court’s B&B Hardware decision might impact the lingering concerns surrounding trademark bullying. (I haven’t seen anyone talking about Section 18 counterclaims as a creative response strategy either, but we’ll save that topic for another day).

Although trademark bullying concerns were not before the Supreme Court, it seems likely this decision scored a victory for those who might fall into the category of trademark bullies. And, as you may recall, a couple of years ago, the Supreme Court didn’t allow trademark bullying concerns to influence its interpretation of the laws in question there: Supreme Court Upholds Nike’s Promise to “Break the Wrist, and Walk Away”.

Indeed, as to the likely unintended victory scored in B&B Hardware — the greater leverage to trademark opposers — this reality hasn’t gone unnoticed:

“With the Supreme Court’s ruling, companies that oppose another ‘s trademark in the TTAB and prevail on grounds of likelihood of confusion have a much greater chance of summarily running the table in a district court proceeding to enjoin the applicant’s marketplace use of the trademark.  The predicted result? Trademark opposers will have less of an incentive to amicably settle a trademark opposition and trademark applicants may have greater risk of losing the right to use their brand name in commerce.”

The unfortunate, but practical effect of the B&B Hardware decision is that trademark and brand owners who continue to value the right to register less than the right to use will now be more inclined to simply default at the TTAB and not litigate the likelihood of confusion issue at all, in order to avoid the possibility of preclusion, and to keep the onus on a trademark opposer to pursue infringement claims in federal district court if the opposer truly wants to challenge more than the applicant’s right to register. At least for the time being, absent help from Congress, the days are over, of putting in a modest defense in at the TTAB that simply compels the trademark opposer to prove its claims.

While it is true that a brand owner could still put in a modest defense of the TTAB opposition and take a de novo appeal if it miscalculated on the amount and type of evidence needed to convince the TTAB coexistence on the Principal Register is proper, the problem with the paradigm shift is that it puts the burden on the applicant to treat the appeal of a registration decision like a bet-the-company-lawsuit, and even more importantly, the onus has now flipped to the applicant to turn the dispute into a federal district court action, something I don’t believe Congress ever intended.

It seems reasonable to fear this will only embolden those who have a bloated view of their trademark rights. What do you think?

Every so often there is a moment when trademark types, marketing types and brand owners need to pay close attention to where the law could be headed. Today, I’m sounding the alarm.

If the U.S. Supreme Court decides to follow the advice it recently sought and received from the U.S. Solicitor General (SG) of the Department of Justice, those of us who care deeply about the enforcement and protection of brands and trademarks could be facing a real paradigm shift.

Contrary to what Intellectual Property Brief has reported, the U.S. Supreme Court has not yet decided to review the Eighth Circuit Court of Appeals decision in B &B Hardware, Inc. v. Hargis Industries, Inc. Instead, back in January, it invited the SG to express the views of the United States on whether it should hear the case. Those views were filed and expressed in the form of an amicus brief on May 23, 2014.

The SG’s amicus brief encourages the Supreme Court to review the case, and it seems likely the Court will do so. If so, let’s hope the Court is flooded with thoughtful amicus briefs to help it get this important issue right. At a minimum, INTA should weigh in as a friend of the court.

SCOTUSblog identifies the two issues to be:

“(1) Whether the Trademark Trial and Appeal Board’s finding of a likelihood of confusion precludes respondent from relitigating that issue in infringement litigation, in which likelihood of confusion is an element; and (2) whether, if issue preclusion does not apply, the district court was obliged to defer to the Board’s finding of a likelihood of confusion absent strong evidence to rebut it.”

Basically, the Court is being asked to decide the impact (if any), of a prior win or loss (on the issue of likelihood of confusion) at the TTAB, on a later federal district court trademark infringement case involving the same marks and parties.

Unfortunately, in addressing the substance of the issues, the SG’s amicus brief borrows liberally from the dissenting judge’s perspective in the Eighth Circuit decision, such that likelihood of confusion decided by the TTAB to determine registrability apparently is believed to be the same issue as likelihood of confusion decided by a federal court for purposes of infringement. They aren’t and they shouldn’t be, for reasons I’ll elaborate on in my next post on this topic.

In the meantime, it seems to me, both the SG and dissenting Judge Colloton fail to appreciate the very limited jurisdiction of the TTAB. For those of us who regularly practice before the TTAB, we know that the TTAB is not shy about reminding parties before it of this limited jurisdiction and that cases before the TTAB should not be litigated as if more is at issue than simply the right to register a trademark.

The TTAB’s Manual of Procedure sets forth this very limited jurisdiction quite clearly in TBMP Section 102.01:

“The Trademark Trial and Appeal Board is an administrative tribunal of the United States Patent and Trademark Office. The Board is empowered to determine only the right to register. The Board is not authorized to determine the right to use, nor may it decide broader questions of infringement or unfair competition. Similarly, the Board, being an administrative tribunal, has no authority to declare any portion of the Act of 1946, or any other act of Congress, unconstitutional.”

Indeed, back in 2007 when the TTAB introduced the new rules of practice, it reinforced the above, making very clear:

“Initial disclosure obligations should be easier to meet in Board cases than in civil actions. One reason is that the Board’s jurisdiction is limited to determining the right of a party to obtain, or retain, a registration. Moreover, the extent of available claims and defenses that may be advanced is not nearly as broad as in the district courts. In addition, the Board recognizes the impact of other issues relatively unique to Board proceedings. For example, a high percentage of applications involved in oppositions are not based on use of the applied-for mark in commerce but, rather, on intent to use, on a foreign registration or on an international registration. Further, certain precepts that govern analysis of issues raised by claims or defenses in typical Board cases effectively limit the Board’s focus. For example, in a [likelihood of confusion] case under Section 2(d) of the Trademark Act, 15 U.S.C. 1052(d), the Board focuses only on goods or services recited in identifications, and on the mark as registered or applied-for, irrespective of many actual marketplace issues.”

Baby trademark lawyers have been taught for decades that the right to register a trademark is separate and distinct from the right to use a trademark. Every day we clear marks for brand owners understanding the critical difference between these important rights.

It is not uncommon for a brand owner to be refused registration of a trademark based on another’s prior registration for a similar mark, but that doesn’t necessarily mean the brand owner’s use of the mark is infringing, or that it should be enjoined, or that monetary awards are appropriate for the continued use of the mark.

More on this to follow, but for the purposes of today, I’m not convinced that the TTAB’s likelihood of confusion decision about registrability ever should preclude a federal district court from deciding for itself the question of likely confusion for infringement purposes.

How do you come down on this issue?

Not every day does the United States Supreme Court weigh in on a topic impacting the trademark world, but it did so yesterday in Already, LLC v. Nike, Inc., a case illustrating what can happen when a trademark plaintiff wants to pull the plug and end the lawsuit it started in a walkaway (or as martial arts instructor Rex in Napoleon Dynamite might say, “break the wrist, walk away“).

Eight months into Nike’s trademark infringement lawsuit against Already (a footwear competitor and maker of “Sugars” and “Soulja Boys” shoes), Nike wanted out — this was also four months after Already counterclaimed against Nike, asking the court to invalidate the non-traditional trademark rights claimed by Nike in the appearance and design of the Nike Air Force 1 shoe.

To remove itself from the lawsuit, Nike voluntarily dismissed with prejudice its asserted trademark claims against Already. And, in an attempt to moot the counterclaim and prevent the court from ruling on Already’s trademark validity challenge, Nike issued the following expansive promise and covenant not to sue:

“[Nike] unconditionally and irrevocably covenants to refrain from making any claim(s) or demand(s) . . . against Already or any of its . . . related business entities . . . [including] distributors . . . and employees of such entities and all customers . . . on account of any possible cause of action based on or involving trademark infringement, unfair competition, or dilution, under state or federal law . . . relating to the NIKE Mark based on the appearance of any of Already’s current and/or previous footwear product designs, and any colorable imitations thereof, regardless of whether that footwear is produced . . . or otherwise used in commerce before or after the Effective Date of this Covenant.”

Already was content to have Nike pull the plug on its trademark infringement claims against Already, but being “once bitten, twice shy,” Already nevertheless wanted to continue with its claim to invalidate the trade dress for Nike’s Air Force 1 shoe. To justify continuing with a one-way fight, Already expressed concern about investors who testified they would not invest in Already until Nike’s Air Force 1 design trademark was struck down. In fact, Already took its penchant to continue the fight to invalidate Nike’s trade dress all the way to the Supreme Court, being told by both the District Court and the Court of Appeals along the way, that the counterclaim could not go forward since there was no longer a justiciable case or controversy.

Chief Justice Roberts writing for the Supreme Court affirmed the Court of Appeals decision, agreeing that there was no longer an actual controversy between Nike and Already to justify further court involvement:

“Given our conclusion that Nike has met its burden of demonstrating there is no reasonable risk that Already will be sued again, there is no reason for Already to be so shy. It is the only one of Nike’s competitors with a judicially enforceable covenant protecting it from litigation relating to the Air Force 1 trademark. Insofar as the injury is a threat of Air Force 1 trademark litigation, Already is Nike’s least injured competitor.”

Already even attempted to play the “trademark bully” card in justifying a continued one way fight over the validity of Nike’s Air Force 1 trade dress registration:

“According to Already, allowing Nike to unilaterally moot the case ‘subverts’ the important role federal courts play in the administration of federal patent and trademark law. It allows companies like Nike to register and brandish invalid trademarks to intimidate smaller competitors, avoiding judicial review by issuing covenants in the rare case where the little guy fights back. Already and its amici thus contend that Already, ‘[a]s a company engaged in the business of designing and marketing athletic shoes,’ has standing to challenge Nike’s trademark.”

But the Court was not moved with the “trademark bully” concern or alleged justification:

“Already’s arguments boil down to a basic policy objection that dismissing this case allows Nike to bully small innovators lawfully operating in the public domain. This concern cannot compel us to adopt Already’s broad theory of standing.”

“First of all, granting covenants not to sue may be a risky long-term strategy for a trademark holder. See, e.g., 3 J. McCarthy, Trademarks & Unfair Competition §18:48, p. 18–112 (4th ed. 2012) (“[U]ncontrolled and ‘naked’ licensing can result in such a loss of significance of a trademark that a federal registration should be cancelled”); Sun Banks of Fla., Inc. v. Sun Fed. Sav. & Loan Assn., 651 F. 2d 311, 316 (CA5 1981) (finding that “extensive third-party use of the [mark was] impressive evidence that there would be no likelihood of confusion”). In addition, the Lanham Act provides some check on abusive litigation practices by providing for an award of attorney’s fees in “exceptional cases.” 15 U. S. C. §1117(a); cf., e.g., Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, Inc., 484 U. S. 49, 67, n. 6 (1987) (explaining that an award of litigation costs can protect “from the suddenly repentant defendant”).”

“Accepting Already’s theory may benefit the small competitor in this case. But lowering the gates for one party lowers the gates for all. As a result, larger companies with more resources will have standing to challenge the intellectual property portfolios of their more humble rivals—not because they are threatened by any particular patent or trademark, but simply because they are competitors in the same market. This would further encourage parties to employ litigation as a weapon against their competitors rather than as a last resort for settling disputes.”

“Already’s only legally cognizable injury—the fact that Nike took steps to enforce its trademark—is now gone and, given the breadth of the covenant, cannot reasonably be expected to recur. There being no other basis on which to find a live controversy, the case is clearly moot.”

So, it appears the Court agrees Nike has promised to “walk away” — I suppose it remains to be seen whether any wrists actually have been broken in the process.

For your further reading enjoyment, Marty Schwimmer’s Trademark Blog covered the original filing of Nike’s case back in July 2009, and more recently the SCOTUSblog did a nice write up on the case just prior to the oral arguments before the Supreme Court.

So, how do you think this decision will impact the ongoing trademark bullying discussion?