IP News

Federal Circuit

Cuban Company Has Standing to Request Trademark Cancellation

On June 4, 2014, a unanimous panel of the Federal Circuit, comprising Judges Rader, Taranto and Hughes, issued an opinion in Empresa Cubana del Tabaco v. General Cigar Co., Case No. 2013-1465, finding that Empresa Cubana del Tabaco (Cubatabaco) had standing to request cancellation of General Cigar's trademarks, despite the prohibition on property transfers to Cuban companies under the Cuban Assets Control Regulations (CACR), 31 CFRR Part 515.

Cubatabaco owns the COHIBA mark in Cuba and uses it in the cigar industry worldwide except the United States, where they are prohibited from selling their products by CACR. Slip op. at 2'3. General Cigar uses the COHIBA mark within the U.S. for the same purpose. Id. at 3. Cubatabaco sought to register the COHIBA mark in the U.S. in 1997, as well as cancel General Cigar's registrations. Id. at 3. Citing the cancellation application as grounds for likelihood of confusion with General Cigar's registrations, USPTO denied registration. Id.

Cubatabaco then initiated legal proceedings against General Cigar in both the Trademark Trial and Appeal Board (TTAB) and the U.S. District Court for the Southern District of New York. Id. at 4. A lengthy litigation ensued wherein the district court enjoined General Cigar's use of the mark, finding that General Cigar had abandoned the mark and Cubatabaco had since gained ownership of the mark under the famous marks doctrine. Id. The Second Circuit reversed, finding that granting injunctive relief would allow a transfer of property impermissible under CACR. Id. at 4'5.

When proceedings resumed before the TTAB, General Cigar moved for summary judgment, arguing that Cubatabaco lacked standing and issue and claim preclusion. Id. at 6. The Board agreed and granted the motion. Id. Cubatabaco appealed and the Federal Circuit vacated the decision, noting that under the Lanham Act, anyone who believes that they will be damaged by the registration of a mark has a statutory cause of action to request cancellation. Id. at 7. Cubatabaco has a reasonable belief that General Cigar's registrations harm them, evidenced by UPTSO's refusal to register their mark based on a likelihood of confusion. Id. The panel also found no issue preclusion because the issues raised by Cubatabaco were either not addressed by, not necessary to, or not identical to those raised in the Second Circuit. Id. at 10'14. Further, the panel found that claim preclusion did not apply because the Second Circuit never reached the merits of the cancellation claim, and the underlying transactional facts were different. Id. at 14'15. For example, the earlier action involved a transfer of property, whereas a cancellation proceeding does not. Id.

Supreme Court

High Court Agrees to Consider the Preclusive Effect of TTAB's Decisions

On July 1, 2014, the Supreme Court granted certiorari in B & B Hardware, Inc. v. Hargis Indus., Inc., 716 F.3d 1020 (8th Cir. 2013) cert. granted, 2014 WL 2931843 (U.S. July 1, 2014), a decision by a divided panel of the Eighth Circuit comprising Judges Shepard and Loken in the majority, and Judge Colloton dissenting. U.S. No. 13-352, cert. granted, 2014 WL 2931843 (U.S. July 1, 2014). The majority opinion, authored by Judge Shepard, affirmed the district court's rulings that a prior Trademark Trial and Appeal Board (TTAB) finding of likelihood of conclusion had no preclusive effect on the district court infringement action. Id.

B&B manufactures and sells a fastener product used in the aerospace industry under the “Sealtight” mark. B & B, 716 F.3d at 1022. Hargis manufactures a line of self-drilling and self-taping screws used in the metal building industry under the name, “Sealtite.” Id. The two companies have been engaged in litigation for the past 15 years. Id. Following a jury trial in the Eastern District of Arkansas finding Hargis did not infringe, B&B appealed to the Eighth Circuit, arguing that a prior TTAB decision concerning the likelihood of confusion between the two marks should be given preclusive effect. See, Id.

In affirming the lower court's decision, the majority pointed out that while the TTAB relied on six of the 13 factors of the test for likelihood of confusion in In re E.I. DuPont DeNemours & Co., 476 F.2d 1357, 1361 (CCPA 1973) in denying registration to Hargis, the jury used a different set of six factors from the Eighth Circuit's own test in SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir.1980). B & B, 716 F.3d at 1025. The majority noted that the TTAB focused primarily on the sound and appearance of the marks. Id. The court then stated this might be appropriate in the context of determining registration, but it ignored a crucial part of such a determination in an infringement action: “the marketplace usage of the marks and products.” Id. They also pointed out that Hargis bore the burden of persuasion at the TTAB whereas B&B held the burden in district court. Id. at 1026.

In his dissent, Judge Colloton pointed out that modest differences in analytical approaches between circuits do not justify relitigating issues. Id. at 1029, (Colloton, J., dissenting). He also pointed out that the burden of proof was not material to the TTAB decision. Id. at 1026. He therefore would have given preclusive effect to the TTAB decision. Id. at 1030.

In its Petition for Writ of Certiorari, B&B asked the Court to consider whether the TTAB finding of likelihood of confusion should have precluded Hargis from relitigating that issue in an infringement action, and whether the district court should have given deference to that finding absent strong rebutting evidence. Pet. Writ Cert. at i, B & B Hardware, Inc. v. Hargis Indus., Inc., U.S. No. 13-352, cert. granted, 2014 WL 2931843 (July 1, 2014). The petitioners argued that preclusion has been applied in the Third and Seventh Circuits and would apply in the Second. Id. at 17'22. They also argued that deferential review would apply in the Fifth and Eleventh Circuits. Id. at 22'26. They further argued that this split among the circuits would be an invitation for forum-shopping. Id. at 28.

TTAB

TTAB Cancels Redskins Trademarks For Disparaging Native Americans

On June 18, 2014, a divided panel of the Trademark Trial and Appeal Board (TTAB) cancelled six trademarks held by the Washington Redskins as disparaging to Native Americans in Blackhorse v. Pro-Football, Inc., CANCELLATION 9204618, 2014 WL 2757516 (T.T.A.B. June 18, 2014). A.L.J. Kuhlke authored the opinion, and A.L.J. Bergman dissented.

A different set of Native American petitioners had brought a similar cancellation action before the Board in 1992, and the Board cancelled the marks as disparaging. Id. at 2. After years of litigation, that decision was ultimately reversed by the D.C. District Court and affirmed by the D.C. Circuit on the issue of laches, with neither court reaching the issues of disparagement. Id. at 3. See also, Pro-Football, Inc. v. Harjo, 565 F.3d 880 (D.C. Cir. 2009).

Given that the America Invents Act changed the jurisdiction of this case from the D.C. Circuit to the Fourth Circuit, the TTAB reconsidered the issue of laches. Blackhorse at 30. They held that laches does not apply in disparagement claims if petitioners are members of the group being disparaged for reasons of public policy. Id. at 31. They reasoned that because laches is an equitable defense, it is “difficult to justify a balancing of equities where a registrant's financial interest is weighed against human dignity.” Id. They further reasoned that even if laches could apply in disparagement actions, they would not apply here because none of the petitioners had unduly delayed in bringing the action. Id. at 33.

In order to succeed in a disparagement action, the petitioners must first show that the word has retained its primary meaning of “Native Americans.” Id. at 7. In this case, it was shown that “Redskins” still meant “Native Americans,” because the team had consistently sought to associate itself with Native American imagery. Id. at 8. The name had not gained a wholly independent meaning as a professional sports team. Id.

It was then necessary to show that a substantial composite of the referenced group found the term disparaging at the time of registration. Id. at 4-5. In determining this, the court used a wide variety of sources, ranging from expert reports, dictionaries, and newspaper articles to letters of protest and depositions of Native Americans. Id . at 10-28. The majority relied heavily on the declarations of the National Congress of American Indians (NCAI), an organization representing roughly one-third of Native Americans, which began protesting the respondent's use of the term in the 1960s. Id. at 26'29. Finding nothing in the Trademark Act that could justify registering a mark that offended one out of three members of a group, the majority cancelled the trademarks. Id. at 29.

In his dissent, ALJ Bergman was careful to point out that he was not suggesting that the mark was not disparaging at the time of registration, but that he felt that the petitioners had not met their evidentiary burden. Id. at 35, (Bergman, A.L.J., dissenting).

Howard Shire is a Partner at Kenyon & Kenyon and the Editor-in-Chief of this newsletter. Aryn A. Conrad is a Summer Associate with the firm.

Federal Circuit

Cuban Company Has Standing to Request Trademark Cancellation

On June 4, 2014, a unanimous panel of the Federal Circuit, comprising Judges Rader, Taranto and Hughes, issued an opinion in Empresa Cubana del Tabaco v. General Cigar Co., Case No. 2013-1465, finding that Empresa Cubana del Tabaco (Cubatabaco) had standing to request cancellation of General Cigar's trademarks, despite the prohibition on property transfers to Cuban companies under the Cuban Assets Control Regulations (CACR), 31 CFRR Part 515.

Cubatabaco owns the COHIBA mark in Cuba and uses it in the cigar industry worldwide except the United States, where they are prohibited from selling their products by CACR. Slip op. at 2'3. General Cigar uses the COHIBA mark within the U.S. for the same purpose. Id. at 3. Cubatabaco sought to register the COHIBA mark in the U.S. in 1997, as well as cancel General Cigar's registrations. Id. at 3. Citing the cancellation application as grounds for likelihood of confusion with General Cigar's registrations, USPTO denied registration. Id.

Cubatabaco then initiated legal proceedings against General Cigar in both the Trademark Trial and Appeal Board (TTAB) and the U.S. District Court for the Southern District of New York. Id. at 4. A lengthy litigation ensued wherein the district court enjoined General Cigar's use of the mark, finding that General Cigar had abandoned the mark and Cubatabaco had since gained ownership of the mark under the famous marks doctrine. Id. The Second Circuit reversed, finding that granting injunctive relief would allow a transfer of property impermissible under CACR. Id. at 4'5.

When proceedings resumed before the TTAB, General Cigar moved for summary judgment, arguing that Cubatabaco lacked standing and issue and claim preclusion. Id. at 6. The Board agreed and granted the motion. Id. Cubatabaco appealed and the Federal Circuit vacated the decision, noting that under the Lanham Act, anyone who believes that they will be damaged by the registration of a mark has a statutory cause of action to request cancellation. Id. at 7. Cubatabaco has a reasonable belief that General Cigar's registrations harm them, evidenced by UPTSO's refusal to register their mark based on a likelihood of confusion. Id. The panel also found no issue preclusion because the issues raised by Cubatabaco were either not addressed by, not necessary to, or not identical to those raised in the Second Circuit. Id. at 10'14. Further, the panel found that claim preclusion did not apply because the Second Circuit never reached the merits of the cancellation claim, and the underlying transactional facts were different. Id. at 14'15. For example, the earlier action involved a transfer of property, whereas a cancellation proceeding does not. Id.

Supreme Court

High Court Agrees to Consider the Preclusive Effect of TTAB's Decisions

On July 1, 2014, the Supreme Court granted certiorari in B & B Hardware, Inc. v. Hargis Indus., Inc., 716 F.3d 1020 (8th Cir. 2013) cert. granted , 2014 WL 2931843 (U.S. July 1, 2014), a decision by a divided panel of the Eighth Circuit comprising Judges Shepard and Loken in the majority, and Judge Colloton dissenting. U.S. No. 13-352, cert. granted, 2014 WL 2931843 (U.S. July 1, 2014). The majority opinion, authored by Judge Shepard, affirmed the district court's rulings that a prior Trademark Trial and Appeal Board (TTAB) finding of likelihood of conclusion had no preclusive effect on the district court infringement action. Id.

B&B manufactures and sells a fastener product used in the aerospace industry under the “Sealtight” mark. B & B, 716 F.3d at 1022. Hargis manufactures a line of self-drilling and self-taping screws used in the metal building industry under the name, “Sealtite.” Id. The two companies have been engaged in litigation for the past 15 years. Id. Following a jury trial in the Eastern District of Arkansas finding Hargis did not infringe, B&B appealed to the Eighth Circuit, arguing that a prior TTAB decision concerning the likelihood of confusion between the two marks should be given preclusive effect. See, Id.

In affirming the lower court's decision, the majority pointed out that while the TTAB relied on six of the 13 factors of the test for likelihood of confusion in In re E.I. DuPont DeNemours & Co., 476 F.2d 1357, 1361 (CCPA 1973) in denying registration to Hargis, the jury used a different set of six factors from the Eighth Circuit's own test in SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir.1980). B & B, 716 F.3d at 1025. The majority noted that the TTAB focused primarily on the sound and appearance of the marks. Id. The court then stated this might be appropriate in the context of determining registration, but it ignored a crucial part of such a determination in an infringement action: “the marketplace usage of the marks and products.” Id. They also pointed out that Hargis bore the burden of persuasion at the TTAB whereas B&B held the burden in district court. Id. at 1026.

In his dissent, Judge Colloton pointed out that modest differences in analytical approaches between circuits do not justify relitigating issues. Id. at 1029, (Colloton, J., dissenting). He also pointed out that the burden of proof was not material to the TTAB decision. Id. at 1026. He therefore would have given preclusive effect to the TTAB decision. Id. at 1030.

In its Petition for Writ of Certiorari, B&B asked the Court to consider whether the TTAB finding of likelihood of confusion should have precluded Hargis from relitigating that issue in an infringement action, and whether the district court should have given deference to that finding absent strong rebutting evidence. Pet. Writ Cert. at i, B & B Hardware, Inc. v. Hargis Indus., Inc., U.S. No. 13-352, cert. granted, 2014 WL 2931843 (July 1, 2014). The petitioners argued that preclusion has been applied in the Third and Seventh Circuits and would apply in the Second. Id. at 17'22. They also argued that deferential review would apply in the Fifth and Eleventh Circuits. Id. at 22'26. They further argued that this split among the circuits would be an invitation for forum-shopping. Id. at 28.

TTAB

TTAB Cancels Redskins Trademarks For Disparaging Native Americans

On June 18, 2014, a divided panel of the Trademark Trial and Appeal Board (TTAB) cancelled six trademarks held by the Washington Redskins as disparaging to Native Americans in Blackhorse v. Pro-Football, Inc., CANCELLATION 9204618, 2014 WL 2757516 (T.T.A.B. June 18, 2014). A.L.J. Kuhlke authored the opinion, and A.L.J. Bergman dissented.

A different set of Native American petitioners had brought a similar cancellation action before the Board in 1992, and the Board cancelled the marks as disparaging. Id. at 2. After years of litigation, that decision was ultimately reversed by the D.C. District Court and affirmed by the D.C. Circuit on the issue of laches, with neither court reaching the issues of disparagement. Id. at 3. See also, Pro-Football, Inc. v. Harjo, 565 F.3d 880 (D.C. Cir. 2009).

Given that the America Invents Act changed the jurisdiction of this case from the D.C. Circuit to the Fourth Circuit, the TTAB reconsidered the issue of laches. Blackhorse at 30. They held that laches does not apply in disparagement claims if petitioners are members of the group being disparaged for reasons of public policy. Id. at 31. They reasoned that because laches is an equitable defense, it is “difficult to justify a balancing of equities where a registrant's financial interest is weighed against human dignity.” Id. They further reasoned that even if laches could apply in disparagement actions, they would not apply here because none of the petitioners had unduly delayed in bringing the action. Id. at 33.

In order to succeed in a disparagement action, the petitioners must first show that the word has retained its primary meaning of “Native Americans.” Id. at 7. In this case, it was shown that “Redskins” still meant “Native Americans,” because the team had consistently sought to associate itself with Native American imagery. Id. at 8. The name had not gained a wholly independent meaning as a professional sports team. Id.

It was then necessary to show that a substantial composite of the referenced group found the term disparaging at the time of registration. Id. at 4-5. In determining this, the court used a wide variety of sources, ranging from expert reports, dictionaries, and newspaper articles to letters of protest and depositions of Native Americans. Id . at 10-28. The majority relied heavily on the declarations of the National Congress of American Indians (NCAI), an organization representing roughly one-third of Native Americans, which began protesting the respondent's use of the term in the 1960s. Id. at 26'29. Finding nothing in the Trademark Act that could justify registering a mark that offended one out of three members of a group, the majority cancelled the trademarks. Id. at 29.

In his dissent, ALJ Bergman was careful to point out that he was not suggesting that the mark was not disparaging at the time of registration, but that he felt that the petitioners had not met their evidentiary burden. Id. at 35, (Bergman, A.L.J., dissenting).

Howard Shire is a Partner at Kenyon & Kenyon and the Editor-in-Chief of this newsletter. Aryn A. Conrad is a Summer Associate with the firm.