Overpleaded Opposition Supports DJ Motion

Because the Opposer's claims were so elaborate in setting out claims for infringement and dilution (to the point of argument typically found in a cease and desist letter, or for that matter, in a legal brief) the court found that the DJ plaintiff had a reasonable apprehension that the Opposer (defendant) would file suit against the plaintiff for trademark infringement and dilution. Accordingly the court denied defendant's motion to dismiss the case for lack of subject matter jurisdiction. To understand why the district court ruled as it did, it is important to remember the purpose of the opposition system, and the limited jurisdiction of the TTAB, the reviewing body hearing oppositions. The opposition system permits members of the public (who otherwise have standing) to seek review in the TTAB of the decision of the Examining Attorney that: 1) a use-based application should proceed to registration, or 2) an intent-to-use based application should be cleared for registration subject only to the applicant's timely statement of use compliance. The opposition system enables members of the public with, inter alia, prior registration rights of their own, to challenge the Examining Attorney's determination that a later-filed application does not conflict with an opposer's earlier registration right. It also enables those with prior unregistered rights (which the PTO had no jurisdiction to consider at the examination level) to assert prior rights vis-'-vis the applicant. While there are other bases for oppositions, very often, as in this case, an opposer urges that an applicant's mark sought to be registered is too close to the opposer's earlier-used and registered mark for related goods or services. (If the mark has already been registered, the party asserting superior rights or otherwise attacking the registration is entitled to file a Petition to Cancel, which, procedurally, operates in all key respects as does an Opposition. 15 U.S.C. '1064.)

Because of the limited jurisdictional scope of the TTAB, a total victory for an opposer means that the mark it has opposed will not be allowed to register. The TTAB has no jurisdiction to enjoin anything ' the TTAB cannot stop the applicant from using the mark it has barred from registration. It has no jurisdiction to award monetary damages. Its jurisdiction stops at the registrability decision. Nor do the district courts, if presented with a lawsuit for infringement following a plaintiff's successful opposition in the TTAB, simply adopt the TTAB's Opinion. Indeed the district court in Neilmed cited Goya Foods, Inc. v. Tropicana Products, Inc., 846 F. 2d 848, 853-54 (2d Cir. 1988), noting that the outcome of the PTO proceeding does not affect the legal determination of the infringement claim; the district court must still independently decide issues of validity, priority of marks, and likelihood of consumer confusion. For these reasons, applicants whose marks are opposed do not always have any real and reasonable apprehension that they will be subject to liability on the basis of the opposition alone. For a number of strategic business reasons, many oppositions are deliberately filed without any demand to the applicant that it cease and desist use of the mark sought to be barred from registration.

Where did this Opposer step over the line? The background is as follows. The DJ plaintiff had filed a trademark application to register a stylized version of 'NEILMED'S SINUS RINSE A COMPLETE SALINE NASAL RINSE KIT,' ('Sinus Rinse') for use in connection with 'pharmaceutical preparations for the treatment of nasal and sinus ailments.' The Examining Attorney, satisfied with the application, passed it along for publication for opposition, the next step in the trademark registration process. Defendant timely filed a Notice of Opposition, alleging ' inter alia ' that the mark sought to be registered was similar or identical to Opposer's earlier, competing mark, a stylized form of 'SINUCLEANSE,' ('SinuCleanse') for allegedly competing goods, namely, medical devices to open and irrigate nasal passages.

The statutory requirements for an Opposition are set forth in 15 U.S.C. '1063 (a): 'Any person who believes that he or she would be damaged by the registration of a mark upon the Principal Register, including as a result of dilution under section 43(c) may ' file an opposition ”

While summarized and quoted in part, the actual opposition was not attached to the district court's order denying defendant's motion to dismiss or cited in full. The opposition can be found at the PTO Web site as Opposition No. 911168470. It begins as follows: 'Applicant's proposed mark NEILMED'S SINUS RINSE A COMPLETE SALINE NASAL RINSE KIT (stylized) should not be registered because it is causing widespread actual confusion with [Opposer's] earlier and competing SinuCleanse' product.' A number of separate paragraphs set out likelihood of confusion factors that would be found in a typical Complaint for infringement. Moreover, some of these paragraphs include argument and case law, e.g. paragraph 20, which states: 'The test is not whether the marks can be distinguished when subjected to a side-by-side comparison, but rather whether the marks are sufficiently similar in terms of their overall commercial impressions that confusion as to the source of the goods or services offered under the respective marks is likely to result. The focus is on the recollection of the average purchaser, who normally retains a general rather than a specific impression of trademarks. See Sealed Air Corp. v. Scott Paper Co., 190 U.S.P.Q. 106 (TTAB 1975). Furthermore, although the marks at issue must be considered in their entireties, it is well settled that one feature of a mark may be more significant than another, and it is proper to give more weight to this dominant feature in determining the commercial impression created by the mark ' ' [further case law citation and legal argument follow in this paragraph, all in the same vein].

Paragraph 21 is also well in excess of an opposition pleading (or for that matter, a district court complaint for infringement). It states: 'Twelfth, substantial evidence points to the conclusion that Applicant's selection and attempted registration of Sinus Rinse (as stylized) is part of a campaign to intentionally and willfully deceive the public and free ride on Opposer's valuable goodwill. As shown in Figs. 1 and 2, Applicant has copied not only the overall commercial impression of Opposer's SinuCleanse' trademark, but it has also mimicked Opposer's original and distinctive light blue and white packaging colors and design. Applicant's intent in adopting its proposed mark adds yet more weight to a scale already tipped heavily in favor of a finding of likelihood of confusion.'

Is it any wonder that an Applicant, encountering such language, would have a reasonable apprehension that litigation would follow subjecting it to liability? The Neilmed opinion relies upon Ninth Circuit case law for the point that if the DJ plaintiff is actually using the allegedly infringing mark, as Neilmed Products itself was, the showing of apprehension 'need not be substantial,' relying upon Societe de Conditionment en Aluminum v. Hunter Engineering Co., 655 F. 2d 938, 944 (9th Cir. 1981).

In addition to finding an actual controversy, the court found that plaintiff had satisfied the additional factors set out in the U.S. Supreme Court in Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942) to support its decision to exercise jurisdiction, as well as the additional considerations that the Ninth Circuit may apply in such evaluations, found in Government Employees Ins. Co. v. Dizol, 133 F. 3d 1202, 1225 (9th Cir. 1998). These include whether the declaratory action will settle all aspects of the controversy, whether it will serve a useful purpose, whether it is being sought for procedural gamesmanship, or whether it will entangle the federal and state court systems. Just as the outcome of the Opposition does not relieve a district court from independently deciding an infringement action, '[d]efendant can bring an action for infringement regardless of the PTO's determination,' so that the DJ action would 'settle all aspects of the controversy' and 'serve a useful purpose in clarifying the legal relations at issue.'

Conclusion

What this case teaches is that an opposer (or cancellation petitioner) risks submitting itself to jurisdiction for a DJ action in wrapping its cease and desist letter in an opposition package. It also raises another point for thought. Where an auditor's letter seeks information about claims made against the client, it may under appropriate circumstances be prudent to consider whether an over-pleaded opposition should be disclosed.

Can a Notice of Opposition in the U.S. Patent and Trademark Office ('PTO') Trademark Trial and Appeal Board ('TTAB') give rise to an actual controversy under the Declaratory Judgment Act to support a trademark Applicant's federal declaratory judgment ('DJ') action against the Opposer? Generally, it can't ' or more accurately, it doesn't. But in Neilmed Products, Inc. v. Med-Systems, Inc., No. C 06-00964 (N.D. Cal. Jan. 10, 2007), the Northern District of California found that the Notice of Opposition pleaded detailed factors relevant to liability for trademark infringement and dilution. This enthusiastic overpleading did far more than state a claim as to why the applicant's mark should not be allowed to register, which is the TTAB's sole jurisdiction. It gave Applicant a reasonable basis to believe Opposer would sue it for infringement, thereby providing the jurisdictional basis for a DJ action.

The Declaratory Judgment Act, 28 U.S.C. '2201 permits a federal court to 'declare the rights and other legal relations' of parties to 'a case of actual controversy.' An actual controversy has been viewed as requiring the DJ plaintiff to have a reasonable apprehension that it will be subject to liability.

This case came down only one day after No. 05-608 Medimmune, Inc. v. Genentech, Inc. , 549 U.S. __ (2007). There, the Supreme Court suggested that the seemingly settled 'reasonable apprehension of suit' test, which has long governed when DJ actions should be permitted, is irreconcilable with Supreme Court authority. Id. at n.11. While the Court in Neilmed did not have the benefit of the Medimmune authority, its opinion would, if anything, have been bolstered by the position expressed in Medimmune's footnote 11.

Because the Opposer's claims were so elaborate in setting out claims for infringement and dilution (to the point of argument typically found in a cease and desist letter, or for that matter, in a legal brief) the court found that the DJ plaintiff had a reasonable apprehension that the Opposer (defendant) would file suit against the plaintiff for trademark infringement and dilution. Accordingly the court denied defendant's motion to dismiss the case for lack of subject matter jurisdiction. To understand why the district court ruled as it did, it is important to remember the purpose of the opposition system, and the limited jurisdiction of the TTAB, the reviewing body hearing oppositions. The opposition system permits members of the public (who otherwise have standing) to seek review in the TTAB of the decision of the Examining Attorney that: 1) a use-based application should proceed to registration, or 2) an intent-to-use based application should be cleared for registration subject only to the applicant's timely statement of use compliance. The opposition system enables members of the public with, inter alia, prior registration rights of their own, to challenge the Examining Attorney's determination that a later-filed application does not conflict with an opposer's earlier registration right. It also enables those with prior unregistered rights (which the PTO had no jurisdiction to consider at the examination level) to assert prior rights vis-'-vis the applicant. While there are other bases for oppositions, very often, as in this case, an opposer urges that an applicant's mark sought to be registered is too close to the opposer's earlier-used and registered mark for related goods or services. (If the mark has already been registered, the party asserting superior rights or otherwise attacking the registration is entitled to file a Petition to Cancel, which, procedurally, operates in all key respects as does an Opposition. 15 U.S.C. '1064.)

Because of the limited jurisdictional scope of the TTAB, a total victory for an opposer means that the mark it has opposed will not be allowed to register. The TTAB has no jurisdiction to enjoin anything ' the TTAB cannot stop the applicant from using the mark it has barred from registration. It has no jurisdiction to award monetary damages. Its jurisdiction stops at the registrability decision. Nor do the district courts, if presented with a lawsuit for infringement following a plaintiff's successful opposition in the TTAB, simply adopt the TTAB's Opinion. Indeed the district court in Neilmed cited Goya Foods, Inc. v. Tropicana Products, Inc. , 846 F. 2d 848, 853-54 (2d Cir. 1988), noting that the outcome of the PTO proceeding does not affect the legal determination of the infringement claim; the district court must still independently decide issues of validity, priority of marks, and likelihood of consumer confusion. For these reasons, applicants whose marks are opposed do not always have any real and reasonable apprehension that they will be subject to liability on the basis of the opposition alone. For a number of strategic business reasons, many oppositions are deliberately filed without any demand to the applicant that it cease and desist use of the mark sought to be barred from registration.

Where did this Opposer step over the line? The background is as follows. The DJ plaintiff had filed a trademark application to register a stylized version of 'NEILMED'S SINUS RINSE A COMPLETE SALINE NASAL RINSE KIT,' ('Sinus Rinse') for use in connection with 'pharmaceutical preparations for the treatment of nasal and sinus ailments.' The Examining Attorney, satisfied with the application, passed it along for publication for opposition, the next step in the trademark registration process. Defendant timely filed a Notice of Opposition, alleging ' inter alia ' that the mark sought to be registered was similar or identical to Opposer's earlier, competing mark, a stylized form of 'SINUCLEANSE,' ('SinuCleanse') for allegedly competing goods, namely, medical devices to open and irrigate nasal passages.

The statutory requirements for an Opposition are set forth in 15 U.S.C. '1063 (a): 'Any person who believes that he or she would be damaged by the registration of a mark upon the Principal Register, including as a result of dilution under section 43(c) may ' file an opposition ”

While summarized and quoted in part, the actual opposition was not attached to the district court's order denying defendant's motion to dismiss or cited in full. The opposition can be found at the PTO Web site as Opposition No. 911168470. It begins as follows: 'Applicant's proposed mark NEILMED'S SINUS RINSE A COMPLETE SALINE NASAL RINSE KIT (stylized) should not be registered because it is causing widespread actual confusion with [Opposer's] earlier and competing SinuCleanse' product.' A number of separate paragraphs set out likelihood of confusion factors that would be found in a typical Complaint for infringement. Moreover, some of these paragraphs include argument and case law, e.g. paragraph 20, which states: 'The test is not whether the marks can be distinguished when subjected to a side-by-side comparison, but rather whether the marks are sufficiently similar in terms of their overall commercial impressions that confusion as to the source of the goods or services offered under the respective marks is likely to result. The focus is on the recollection of the average purchaser, who normally retains a general rather than a specific impression of trademarks. See Sealed Air Corp. v. Scott Paper Co. , 190 U.S.P.Q. 106 (TTAB 1975). Furthermore, although the marks at issue must be considered in their entireties, it is well settled that one feature of a mark may be more significant than another, and it is proper to give more weight to this dominant feature in determining the commercial impression created by the mark ' ' [further case law citation and legal argument follow in this paragraph, all in the same vein].

Paragraph 21 is also well in excess of an opposition pleading (or for that matter, a district court complaint for infringement). It states: 'Twelfth, substantial evidence points to the conclusion that Applicant's selection and attempted registration of Sinus Rinse (as stylized) is part of a campaign to intentionally and willfully deceive the public and free ride on Opposer's valuable goodwill. As shown in Figs. 1 and 2, Applicant has copied not only the overall commercial impression of Opposer's SinuCleanse' trademark, but it has also mimicked Opposer's original and distinctive light blue and white packaging colors and design. Applicant's intent in adopting its proposed mark adds yet more weight to a scale already tipped heavily in favor of a finding of likelihood of confusion.'

Is it any wonder that an Applicant, encountering such language, would have a reasonable apprehension that litigation would follow subjecting it to liability? The Neilmed opinion relies upon Ninth Circuit case law for the point that if the DJ plaintiff is actually using the allegedly infringing mark, as Neilmed Products itself was, the showing of apprehension 'need not be substantial,' relying upon Societe de Conditionment en Aluminum v. Hunter Engineering Co. , 655 F. 2d 938, 944 (9th Cir. 1981).

In addition to finding an actual controversy, the court found that plaintiff had satisfied the additional factors set out in the U.S. Supreme Court in Brillhart v. Excess Ins. Co. of America , 316 U.S. 491 (1942) to support its decision to exercise jurisdiction, as well as the additional considerations that the Ninth Circuit may apply in such evaluations, found in Government Employees Ins. Co. v. Dizol , 133 F. 3d 1202, 1225 (9th Cir. 1998). These include whether the declaratory action will settle all aspects of the controversy, whether it will serve a useful purpose, whether it is being sought for procedural gamesmanship, or whether it will entangle the federal and state court systems. Just as the outcome of the Opposition does not relieve a district court from independently deciding an infringement action, '[d]efendant can bring an action for infringement regardless of the PTO's determination,' so that the DJ action would 'settle all aspects of the controversy' and 'serve a useful purpose in clarifying the legal relations at issue.'

Conclusion

What this case teaches is that an opposer (or cancellation petitioner) risks submitting itself to jurisdiction for a DJ action in wrapping its cease and desist letter in an opposition package. It also raises another point for thought. Where an auditor's letter seeks information about claims made against the client, it may under appropriate circumstances be prudent to consider whether an over-pleaded opposition should be disclosed.