The Trademark That Got His Goat

The cancellation involved two virtually identical marks, registered in 1996 and 2011, consisting of the outline of a building with a turf covered roof with live goats grazing. The dotted lines in the drawing indicated the location of the mark and were not a feature of the mark. The registrant had used this mark since 1973. The services covered by the mark were: 1) a restaurant (R.N. 2007624); and 2) a retail store selling gifts, food and other products (R.N. 3942832).

Aside from the unusual nature of the trademark and the novelty of the claims asserted about it, the salient issues were: 1) whether or not petitioner had standing to bring this case; and 2) whether or not the case stated a cause of action for either disparagement or functionality.

Procedural History

The procedural history of this case consists of three cancellation petitions (one of which was actually an amended version of the first cancellation) brought before the Trademark Trial and Appeal Board of the USPTO. In the first two, Bank represented the plaintiff, a photographer named Robert Doyle. Doyle v. Al Johnson's Swedish Restaurant & Butik, Inc., Cancellation No. 92054059, 101 U.S.P.Q.2D (BNA) 1780 (TTAB Feb. 10, 2012). Not willing to let sleeping goats lie, in the third cancellation Bank himself was the petitioner and ultimately the appellant. Bank v. Al Johnson's Swedish Restaurant & Butik, Inc., Cancellation No. 92069777 (T.T.A.B. 2018).

First Cancellation

In the first cancellation, Doyle argued that the goats on the roof damaged him personally: 1) by inhibiting him from taking pictures of goats on a grass roof and interviewing other persons on the subject; and 2) that the mark was functional because the goats on the roof were primarily a source of entertainment and, a bit of a stretch, because the sod roof helped to keep temperatures lower and the goats maintained the sod roof more cheaply than hiring outside maintenance would. Registrant filed a motion to dismiss on the basis that that Doyle lacked standing and failed to state a cause of action. In Registrant's view, Doyle did not present a real controversy or any reasonable potential for damages and therefore lacked standing.

The standing inquiry examined whether Doyle was "entitled to come before the Board and raise [the] question" of whether the registrations for the "Goats on the Roof" décor are functional. In the context of a cancellation claim under Section 2(e) of the Lanham Act, 15 U.S.C. §1052 (e), a "direct and personal stake" in the outcome most often means that the petitioner, at the very least, is in a position to use the registered mark for goods or services related to the goods or services in the registration. However, the Board recognized that this is not the only situation in which an Opposer or Petitioner may be able to show he/she will be damaged by the registration or continued registration of a mark. An Opposer or Petitioner need not prove existing damage, but must be able to show a reasonable belief that he/she will be damaged.

Doyle was not able to show that he would be personally damaged by continuation of exclusive use by the Registrant. Further, Registrant argued in a Motion to Dismiss that the fact that a restaurant décor might be protected even though it was attractive and appealing had already been established by the Two Pesos case and other restaurant and store layout cases. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992) (finding restaurant décor trade dress to be inherently distinctive). Doyle had not shown any necessity that a competitor or other party would improve their business or its efficiency by placing goats eating grass on its roof. The Board dismissed the Petition for lack of standing.

Second Cancellation

Doyle then filed a Motion to Amend the cancellation petition (the Second Cancellation), adding a claim that the goats of roof mark was functional. Respondent's lawyers filed a second Motion to Dismiss based on the failure to state a claim, stating that Doyle's allegations were "implausible and unbelievable" and that there was no real case or controversy, which is required to prevent unnecessary and vexatious litigation. The registrations did not prevent petitioner from taking pictures of sod-covered establishments with goats on the roof or interviewing people on their opinions on goats on roofs. There also was nothing to show any harm in not being able to eat in or buy gifts from an establishment which did not have grass-eating goats on the roof. In fact, the Board held, the very purpose of a trademark is to prevent others from using the mark — whether it's a word (DONNA KARAN for clothing) a symbol (NIKE Swoosh) or design (the GOLDEN ARCHES). Also, it had long been held that trade dress, including moving objects, such as the MGM Lion, could be a trademark. (Examples added by author.)

The Board recognized that Doyle need not be a competitor or a potential competitor, but he had neither alleged some real direct interest in the proceeding nor shown that he or any class of purchasers would be so damaged. Whatever subjective affront Doyle might feel, the Board found that there must be some objective rationale for that belief. It found that Doyle had no "reasonable basis in fact" to believe he would be damaged. Registrant's counsel also moved for sanctions on the basis that Doyle and attorney Bank had been involved in several other cases that had been deemed frivolous. The Board declined to order sanctions on the basis that the issue was now moot because the decision to dismiss had already been granted.

Third Cancellation

The third Cancellation was brought in 2018 several years after the Doyle cases, by none other than Doyle's lawyer Bank acting on his own behalf. Bank v. Al Johnson's Swedish Restaurant & Butik, Inc., Cancellation No. 92069777 (T.T.A.B. 2018). In a very brief petition against both "Goats on the Roof" registrations, Bank alleged that he believed that to use a living animal (as opposed to a depiction of an animal) as part of a trademark was demeaning of the type of animal used. Bank alleged that he, and numerous others, found the use of living goats offensive and that it denigrated "the respect, dignity, and worth of the animals." Citing the U.S. Supreme Court case Matal v. Tam, 137 S. Ct. 1744, 1764 (2017), decided after the Doyle cases, the Board held that disparagement was no longer a cause of action under the Lanham Act, striking down the claim that the mark denigrated the dignity of the animals or personally offended Bank.

Without specifically using the term "functionality," Bank went on to state that the goats had entertainment value which increased the enjoyment of the customers and practical value in making it more "economically advantageous" to keep the grass cut. The Board found that entertainment value was not antithetical to a trademark's function in identifying source. It can be said that many trademarks have entertainment value, such as team mascots used at ball games, while at the same time they identify the team. Further, citing the earlier Doyle cases, The Board held that Bank had shown no real interest or likelihood of harm that would be required to show standing. In March 2019, the Board upheld the dismissal of the claim, but allowed the Petitioner two months to amend his Petition in order to claim any further elements that might establish standing. Petitioner did not take the opportunity to amend, and the dismissal was made final. Petitioner then filed his appeal to the Federal Circuit.

The Federal Circuit Court of Appeals

Standing

Section 14 of the Lanham Act, 15 U.S.C. §1064, grants standing to cancel a registration to "any person who believes that he or she is or will be damaged" by the registration of a mark. This is not a wholly unfettered license to object to a mark willy-nilly; rather, the objection must be grounded in some reasonable belief that the person, group or company making the claim will be damaged by a grant of registration or, as in this case, by continued registration. Standing is a question of law that the appellate court reviews from scratch. The belief that one is or will be damaged must have a reasonable, not solely subjective, basis. While most trademark cases are brought by competitors or someone who can show likely commercial harm, the court pointed out that this is not the only reason one can have standing. Often an interested group or individual who is not a competitor may have a valid reason to believe it will be harmed.

Probably some of the more "far out" of these decisions upholding standing where there was no commercial harm were cases that arose before the U.S. Supreme Court struck down the disparagement/scandalous clause of The Lanham Act as being unconstitutional. One such case relied on by Bank was Richie v. Simpson, 170 F.3d 1092 (Fed. Cir. 1988), in which the plaintiff claimed that registrations of the marks O.J. SIMPSON, O.J. and JUICE would be offensive not just to himself as a family loving man, but to many others, which he supported by signed petitions. The court found that Richie had shown an objectively reasonable basis as to why these marks should not be granted. There was a strong dissent as to the issue of standing and First Amendment rights. However, in the present case, the court held that the reliance on the Ritchie case was misplaced because of the 1999 Matal decision, which struck down disparagement as a cause of action in a trademark case, something that as a lawyer Bank should have known.

Disparagement/Offensive Marks

While it is often stated that standing is a completely separate procedural issue from a substantive cause of action, it is really not true in a trademark case because standing rests on whether or not the individual has a reasonable belief that he/she will be damaged, i.e., has a legitimate trademark claim. Bank claimed that he was offended because of the disparaging nature of the mark to the goats. He submitted nothing to support the fact that the mark disparaged the goats other than his personal belief. (Whether unlike humans, goats can even be disparaged could be a discussion for another time.) He did not allege any harm to the animals. Indeed, one might believe that the goats having readily available meals year-round were quite happy not needing to forage on their own. Further, Bank's reference to the entertainment value of the goats, evidenced by the restaurant's slogan "Come for the Goats, Stay for the Food," tended to contradict a disparagement argument. Obviously, most customers of the restaurant and gift shop found the goats charming. Further, as the lower cases had held, there was nothing to prevent Bank from taking pictures of goats on roofs or interviewing people regarding the goats. Similarly, Bank's argument that he would be deprived of visiting other establishments with sod roofs was unavailing — there is nothing to prevent others from having sod roofs, the trademark only restricts the use of sod roofs with grazing goats. It can be said that every trademark prevents use of the mark by others in the same or similar fields. In any event, his case was subsequent to Matal decision, which removed disparaging and scandalous issues as reasons to challenge a mark, so the issue was moot.

Functionality

With respect to functionality, Bank argued that the sod roof offered cooling in summer, and that the goats were more economical than hiring workers to cut the grass. While this may be a point well taken, it was much too tangential for the court to endorse. Functionality in one sense relates to whether or not the mark adds something significant to the workings or utility of a product or service. Registrant's mark did not advance the ability of the restaurant or its gift shop to function in any way. Frankly, in some ways, it might even be seen as a distraction. While the "Goats on the Roof" trade dress has eye catching appeal, so do the many other marks, such as COLONEL SANDERS or COCA-COLA. The Goats on the Roof mark was not functional in another sense because competitors in those businesses could be equally successful without putting sod and animals on their roofs.

While the court found that one need not be a competitor to show standing in a functionality case, it also held that one must be a competitor "engaged in the sale of the same or related goods or that it otherwise has a current or prospective right or interest in using the mark." This makes sense in that only one wanting to use the mark would have a real interest in showing functionality.

Award of Costs and Fees

Registrant sought and was granted its costs and attorney fees for the appeal, including all motions filed in connection with the appeal. The court granted Registrant's request in full because Bank had brought and lost three cancellation actions for lack of standing and had raised a disparagement claim which he know was based on an unconstitutional and stricken section of the Lanham Act. It also held that, as an attorney, Bank should be held to a higher standard and may have been well aware that his claims were frivolous.

Conclusion

It seems unlikely that Bank, who refers to himself on his website as "The Annoyance Lawyer" will be deterred by the result in this case. But perhaps, at least as to this matter, Doyle and Bank will give up beating a dead horse … or live goats.

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Mary Donovan is Of Counsel to Cowan Liebowitz & Latman. She was one of the very first Editors in Chief of The Intellectual Property Strategist.