You searched for Trademark appeal

Results for "Trademark appeal"

Oh, Fudge. TTAB Finds Curse Word Fails to Function as Trademark

by Sarah Bro | Sep 8, 2022 | Trademarks

The US Patent & Trademark Office (PTO) denied registration of several US trademark applications for the mark FUCK, even though the applicant had overcome a prohibition on the registration of “immoral or scandalous” trademarks as a violation of the First Amendment in the Supreme Court’s 2019 decision in Iancu v. Brunetti. The applicant also had previously secured registration of the mark FUCT. The PTO nevertheless denied registration on grounds that the familiar curse word did not function as a trademark. In re: Brunetti, Ser. Nos. 88308426; 88308434; 88308451; 88310900 (TTAB Aug. 22, 2022) (Bergsman, Dunn, Lebow, Administrative Trademark Judges).

The Trademark Trial & Appeal Board (Board) issued a precedential decision affirming the PTO’s refusal to register the FUCK mark for a variety of goods and related services, including cellphone cases, sunglasses, jewelry, watches, bags and wallets. The Board found that the word FUCK expresses well-recognized sentiments and that consumers are accustomed to seeing the word in widespread use by many different sources. As a result, the word failed to create the commercial impression of a source indicator and therefore failed to function as a trademark to distinguish the goods from others.

BACKGROUND

Artist and entrepreneur Erik Brunetti applied to register the mark FUCK in relation to a wide variety of wearable goods, electronics accessories and related retail, marketing and business services in 2019 while his appeal to the Supreme Court regarding the FUCT mark was still pending. When the Supreme Court issued its decision, the FUCK applications were removed from suspension and could no longer be refused on grounds that the mark comprised “immoral or scandalous” material. The PTO examining attorney re-examined the applications and refused registration on the so-called “failure to function” ground, finding that the mark was a term that did not function as a trademark to indicate the source of the applicant’s goods or services and to identify and distinguish them from others. Brunetti appealed to the Board.

In response to Brunetti’s argument that there was no statutory basis for a failure to function refusal, the Board made clear that the PTO is statutorily constrained to register a mark on the Principal Register “if and only if it functions as a mark.” Matter that does not operate to indicate the source or origin of the identified goods or services and distinguish them from those of others does not meet the statutory definition of a trademark and may not be registered. The Board reminded applicants that not every designation adopted with the intention that it perform a trademark function necessarily accomplishes that purpose.

Matter may be merely informational and fail to function as a trademark if it is a common term or phrase that consumers are accustomed to seeing used by various sources to convey ordinary, familiar or generally understood concepts or sentiments. The critical inquiry in determining whether a proposed mark functions as a trademark is how the relevant public perceives it.

The Board described the Examining Attorney’s evidence supporting the failure to function [...]

Continue Reading

Rebuttal Presumption of Irreparable Harm Still Alive When Assessing Trademark Preliminary Injunctions

by Amol Parikh | Aug 25, 2022 | Trademarks

In one of the first decisions to construe the Trademark Modernization Act of 2020 (TMA), the US Court of Appeals for the Third Circuit found that a district court properly applied the TMA’s rebuttal presumption of irreparable harm when it denied a trademark owner’s motion for a preliminary injunction. Nichino America, Inc. v. Valent U.S.A., LLC, Case No. 21-1850 (3rd Cir. Aug. 12, 2022) (Bibas, Matey, Phipps, JJ.)

Nichino and Valent sell pesticides for farming. Since 2004, Nichino has offered a trademarked product known as CENTAUR. Valent trademarked a competing product called SENSTAR in 2019, giving it a logo resembling CENTAUR’s colors, fonts and arrow artwork. Both pesticides are used in the same geographic areas against many of the same insects, and both are sold to farmers through distributors. SENSTAR is a liquid and uses a unique combination of two active chemicals. It costs $425 per gallon and ships in cases containing four one-gallon containers. CENTAUR is manufactured as a solid and sold by the pallet, with each pallet containing 622 pounds of pesticide packed into bags and cases. CENTAUR costs $24 per pound.

Nichino sued Valent for trademark infringement and sought a preliminary injunction against SENSTAR’s launch, arguing that Valent’s use of the SENSTAR mark would create confusion among consumers. The district court found that Nichino narrowly demonstrated that its infringement claim would likely succeed but explained that “there is not an abundance of evidence of likelihood of confusion” between the products. As part of its injunction analysis, the district court applied the TMA to presume Nichino would suffer irreparable harm without an injunction. However, the court noted that the presumption was rebuttable. The court credited Valent’s evidence of a sophisticated consumer class that makes careful purchases and noted the lack of any evidence of actual consumer confusion. The court also found that Nichino failed to proffer any affirmative evidence that it would suffer irreparable harm. Accordingly, the district court found that the presumption of irreparable harm was rebutted, and therefore denied the injunction request. Nichino appealed.

Nichino argued that the TMA precluded the district court from finding no irreparable harm. The Third Circuit, however, found that the district court “admirably navigated” the TMA’s rebuttable presumption by finding that Valent rebutted the presumption and Nichino did not independently show irreparable harm. The Court explained that the three-step process for applying the TMA’s rebuttable presumption requires the following:

The court must assess the plaintiff’s evidence only as it relates to a likelihood of success on the merits.
If the plaintiff’s evidence establishes likely trademark infringement, the TMA is triggered, and the burden of production shifts to the defendant to introduce evidence sufficient for a reasonable factfinder to conclude that the consumer confusion is unlikely to cause irreparable harm.
If a defendant successfully rebuts the TMA’s presumption by making this slight evidentiary showing, the presumption has no further effect.

The Third Circuit found that the district court correctly followed this three-step analysis in finding that Valent rebutted the TMA’s [...]

Continue Reading

Holdover Trademark Licensee Status Can’t Do Heavy Lifting on “Exceptionality”

by Brennen Baylor | Aug 4, 2022 | Trademarks

The US Court of Appeals for the Sixth Circuit addressed issues of enhanced remedies in a dispute regarding the sale of weightlifting equipment beyond the expiration of a licensing agreement between the involved parties. Pointing to the different standard required to prove a violation and damages, the Court ultimately reduced a trademark infringement award to about a quarter of the amount initially awarded. Max Rack, Inc. v. Core Health & Fitness, LLC, et al., Case No. 20-3598 (6th Cir. July 14, 2022) (Cole, Rogers, Murphy, JJ.)

In 2006, Max Rack exclusively licensed its patents and trademarks relating to weightlifting racks to Star Trac Strength. Core Health subsequently acquired Star Trac and its licensing agreements. The final patent covering the Max Rack equipment expired on November 21, 2015, thereby terminating the licensing agreements between Max Rack and Core Health. The agreements permitted Core Health to sell any remaining Max Rack units for six months following expiration of the license.

Following expiration of the licensing agreements, Max Rack learned that Core Health failed to update web pages, marketing materials and owner’s manuals to reflect the termination of Core Health’s affiliation with Max Rack. Core Health’s failure to scrub references to “Max Rack” extended to third-party sellers’ websites advertising Core Health’s competing “Freedom Rack” product using the Max Rack name. Core Health also sold 271 more units manufactured as Max Racks after the license expired, 238 of which were sold during the six-month grace period. Of the remaining 33 units, 24 were sold after the six-month window had closed, and nine were alleged to have had their labels changed from Max Rack to Core Health’s Freedom Rack. Core Health further failed to pay Max Rack royalties for any of the 271 sales made after the license expired.

Max Rack brought two federal claims under 15 U.S.C. §§ 1114(1)(a) and 1125(a)(1)(A), alleging trademark infringement and unfair competition. Max Rack also brought three claims under Ohio’s Deceptive Trade Practices Act, alleging that Core Health passed off the Max Rack as its own machine and caused a likelihood of confusion regarding the source of the machine and regarding Core Health’s affiliation with the Max Rack trademark. The jury awarded Max Rack $1 million in damages and $250,000 in Core Health’s profits. Ruling on post-trial motions, the district court overturned the $1 million damages award for lack of evidence of any consumer confusion but enhanced the $250,000 award to $500,000 and further awarded Max Rack attorneys’ fees. Both parties appealed.

The Sixth Circuit sidestepped the fact-laden analysis to determine whether Core Health’s actions created a likelihood of consumer confusion, reasoning that the dispute related to the “holdover licensee.” Citing its own precedent and precedent from the Third, Fifth, Seventh and Eleventh Circuits, the Court applied a much more objective standard, finding that unauthorized use of a licensed trademark by a licensee after the license has expired is by itself sufficient to establish a likelihood of confusion in the mind of the consumer.

Although the Sixth Circuit used [...]

Continue Reading

Counterfeit Dealer Gets Smoked in Trademark Preliminary Injunction Proceeding

by Tessa Kroll | Jun 2, 2022 | Copyrights, Trademarks

The US Court of Appeals for the Ninth Circuit affirmed a preliminary injunction barring the defendant from selling counterfeit e-cigarette and vaping products bearing the plaintiff’s logo because the plaintiff’s psychoactive products were legal and could support a valid trademark. AK Futures LLC v. Boyd St. Distro, LLC, Case No. 21-56133 (9th Cir. May 19, 2022) (Kleinfeld, Fisher, Bennett, JJ.)

AK Futures manufactures e-cigarettes and vaping products, including delta-8 THC goods marketed under its “Cake” brand. Delta-8 THC is a psychoactive compound found in the Cannabis sativa plant, which encompasses both hemp and marijuana. The compound is similar in effect to delta-9 THC, the primary psychoactive agent in marijuana, but delta-8 THC is typically manufactured from hemp-derived cannabidiol (CBD). The cultivation and possession of hemp was legalized by the Farm Act in 2018.

AK Futures sued Boyd Street Distro, a Los Angeles purveyor of smoke products, for trademark and copyright infringement. Boyd Street sold virtually identical counterfeit Cake-branded e-cigarettes and vaping products containing delta-8 THC. At the time of suit, AK Futures had a registered copyright protecting its Cake logo—a stylized “C” overlaying a two-tier cake—and pending trademark applications for six marks incorporating the word “Cake” or the Cake logo for use in connection with e-cigarette products. The district court granted AK Futures’ motion for preliminary injunction. Boyd Street appealed.

On appeal, Boyd Street conceded the copyright claim, but argued that AK Futures could not own a valid trademark in connection with its e-cigarettes and vaping products because the sale of delta-8 THC was prohibited under federal law. In response, AK Futures argued that the 2018 Farm Act legalized delta-8 THC and products containing the compound.

The Ninth Circuit agreed that AK Futures’ use of the marks in commerce was lawful and could give rise to trademark priority. The Court found that the “plain and unambiguous” text of the Farm Act indicated that delta-8 THC products were lawful. The Farm Act removed “hemp” and “tetrahydrocannabinols in hemp” from Schedule I in the Controlled Substances Act, where “hemp” is defined as “the plant Cannabis sativa L. and any part of that plant, including . . . all derivatives, extracts, [and] cannabinoids . . . with a delta-9 concentration of not more than .3 percent.” The Court noted that the delta-9 THC concentration level was the only statutory metric for distinguishing marijuana from hemp, and that the terms “derivative, extract, or cannabinoid” were substantially broad. The Court thus concluded that “hemp” encompasses delta-8 THC products that contain no more than 0.3% delta-9 THC.

Boyd Street argued that the US Drug Enforcement Agency had interpreted the Farm Act as not applicable to delta-8 THC because it is “synthetically derived” and argued that US Congress never intended the Farm Act to legalize psychoactive substances. The Ninth Circuit perfunctorily dismissed these arguments based on the clear and unambiguous statutory language. Since the Cake-branded products allegedly contained less than 0.3% delta-9 THC, the Court held that AK Futures was likely to succeed in demonstrating that its [...]

Continue Reading

Delay in Enforcing Trademark Measured from When Infringement Became Actionable

by Eleanor B. Atkins | May 26, 2022 | Trademarks

Addressing laches and progressive encroachment, the US Court of Appeals for the Eighth Circuit reversed and remanded a district court’s grant of summary judgment based on laches because the district court failed to “conduct a meaningful analysis” as to when the trademark infringement first became actionable. A.I.G. Agency, Inc. v American International Group, Inc., Case No. 21-1948 (8th Cir. May 13, 2022) (Loken, Gruender, Grasz, JJ.)

A.I.G. Agency (Agency) is a family-owned insurance broker in Missouri and American International Group, Inc. (International) is a large insurance company. Each company has used its version of an AIG trademark for decades. Agency first adopted the mark in 1958 while International began using AIG sometime between 1968 and 1970. In 1995, International sent a demand letter to Agency notifying it of International’s trademark registration and requesting that Agency cease use of the AIG mark. Agency responded that it had the right to use AIG in Missouri and Illinois because it had been using the trademark in those states long before International obtained its registration. In 2008, International again reached out to Agency demanding that it stop using AIG as a mark. Agency again asserted that it had the right to use the mark in Missouri and Illinois. International responded that it did not object to Agency’s use of AIG in St. Charles and St. Louis Counties in Missouri, but it would contest Agency’s use beyond that limited geographic scope.

Nearly a decade later, in 2017, Agency sued International for common law trademark infringement and unfair competition. International asserted that Agency’s claims were barred by laches and counterclaimed for trademark infringement, trademark dilution and unfair competition. Both parties moved for summary judgment, and the district court granted summary judgment for International, finding that Agency’s claims were barred by the doctrine of laches. Agency appealed.

The Eighth Circuit explained the difference between the equitable affirmative defense of laches (which is meant to bar claimants from bringing unreasonably delayed claims) and the doctrine of progressive encroachment (under which the period of delay in a trademark infringement case is measured not from when a claimant first learned of the allegedly infringing mark, but from when that infringement first became actionable). The Court explained that “[t]he doctrine [of progressive encroachment] saves trademark holders from being hoisted upon the horns of an inequitable dilemma—sue immediately and lose because the alleged infringer is insufficiently competitive to create a likelihood of confusion, or wait and be dismissed for unreasonable delay.” Here, Agency argued that it did not have an actionable and provable claim for infringement until 2012 when International changed its marketing strategy.

The Eighth Circuit found that the district court failed to “conduct a meaningful analysis” to determine when the infringement became actionable, noting that the district court found that laches barred the claims because “both parties have been using ‘AIG’ in the same markets for decades, each with full knowledge of the other’s activities.” The Court further criticized the district court for not employing a specific test to determine [...]

Continue Reading

Wild and Untamed Trademarks: Madrid Protocol Grants Right of Priority as of Constructive Use Date

by Katherine Pappas | Apr 28, 2022 | Trademarks

Addressing for the first time the question of enforceability of a priority of right in a trademark granted pursuant to the Madrid Protocol where the registrant’s actual use in commerce began after the allegedly infringing use, the US Court of Appeals for the Ninth Circuit found that the Madrid Protocol grants priority as of the constructive use date, but to prevail on an infringement action based on that superior right of priority, the registrant must still establish the requisite likelihood of confusion under the Lanham Act. Lodestar Anstalt v. Bacardi & Co., Case No. 19-55864 (9th Cir. Apr. 21, 2022) (Baldock, Berzon, Collins, JJ.)

Under the Madrid Protocol, applicants with trademarks in another country may obtain an “extension of protection” (generally equivalent to trademark registration) in the United States without needing to first use the mark in US commerce. Instead, the grant may be based on an applicant’s declaration of bona fide intent to use its mark in the United States.

In 2000 and 2001, Lichtenstein-based company Lodestar developed a brand of Irish whiskey called “The Wild Geese,” which was marketed in the US as “The Wild Geese Soldiers & Heroes.” Around 2008 and 2009, Lodestar developed the idea for the “Untamed” word marks, and in 2009 the US Patent & Trademark Office (PTO) accepted for filing two applications on behalf of Lodestar seeking extension of protection under the Madrid Protocol for the internationally registered “Untamed” word marks. The PTO published the marks for opposition, then granted the extensions of protection in 2011. In 2013, Lodestar developed a rum under The Wild Geese Soldiers and Heroes brand that used the Untamed word mark on the label. The rum was shown at the April 2013 Rum Renaissance Trade Show in Florida, where consumers sampled the rum. The rum was also featured in print advertisements associated with the trade show. But by June 2013, Lodestar had “decided to park the USA rum project as [it was] getting better returns in other markets.”

In 2012, Bacardi began developing the ad campaign “Bacardi Untameable.” Before launching the campaign, Bacardi ran a trademark clearance search that turned up Lodestar’s “Untamed” trademarks. From 2013 to 2017, Bacardi ran its “Bacardi Untameable” campaign. In response, Lodestar began promoting a then-nonexistent product “Untamed Revolutionary Rum” in an effort “to complement the Wild Geese Rum and also to combat Bacardi’s attempts to take over our Untamed mark.” In January 2015, the first Untamed Revolutionary Rum was sold to US retailers. In August 2016, Lodestar sued Bacardi for trademark infringement, arguing injury based on reverse confusion, as well as associated claims for unfair competition. The district court granted summary judgment in favor of Bacardi. Lodestar appealed.

The Ninth Circuit found that the district court erred on the threshold question of whether Lodestar’s Revolutionary Rum should be considered in the analysis of likelihood of confusion. The district court had found that the relevant products were those existing prior to launch of Bacardi’s campaign (excluding the later-created Revolutionary Rum). The Court found [...]

Continue Reading

First Sale Defense Bars Trademark Infringement Where Trademarked Component Is Adequately Disclosed

by Jodi Benassi | Apr 14, 2022 | Trademarks

A US Court of Appeals for the Ninth Circuit panel vacated a grant of summary judgment in favor of the plaintiff, holding that the first sale doctrine applies when a trademarked product is incorporated into a new product. Bluetooth SIG Inc. v. FCA US LLC, Case No. 21-35561 (9th Cir. Apr. 6, 2022) (per curiam).

Bluetooth SIG administers standards for Bluetooth technology. SIG owns and licenses the trademarks below to product manufacturers:

Fiat Chrysler Automobiles (FCA) makes cars that contain Bluetooth-equipped head units. The head units are made by third-party suppliers that have been qualified by SIG, but FCA has not taken steps to qualify the Bluetooth capabilities in its cars. FCA uses the SIG trademarks on its head units and publications.

SIG sued FCA under the Lanham Act for trademark infringement. In its defense, FCA asserted the first sale doctrine. Under the doctrine, the right of a producer to control the distribution of its trademarked product does not extend past the first sale of the product. For example, a purchaser who stocks, displays and resells a producer’s product under a producer’s trademark violates no trademark rights under the Lanham Act. The district court granted partial summary judgment for SIG on the first sale issue, finding that the first sale doctrine was inapplicable because FCA’s conduct went beyond “stocking, displaying, and reselling a product.” FCA appealed.

The Ninth Circuit found that the lower court erred when it took a narrow view of the Ninth Circuit’s 1995 decision in Sebastian Int’l, Inc. v. Longs Drugs Stores Corp., in which the Court stated that “it is the essence of the ‘first sale’ doctrine that a purchaser who does no more than stock, display, and resell a producer’s product under the producer’s trademark violates no right conferred upon the producer by the Lanham Act.” The panel noted that the Sebastian Court never purported to articulate the outer bounds of the first sale doctrine; instead it simply captured the unauthorized resale of genuine goods.

The Ninth Circuit explained that the first sale doctrine also applies when a trademark is used to refer to a component incorporated into a new end product as long as the seller adequately discloses how the trademarked product was incorporated. The Court cited to the 1925 Supreme Court precedent in Prestonettes, Inc. v. Coty, which effectively extends the first sale doctrine beyond the examples stated in Sebastian. In Prestonettes, the Supreme Court held that trademark law did not prohibit a manufacturer from using a trademark, not to indicate the goods, but to say that the trademarked product was a component in a product being offered as new and changed. The Ninth Circuit also noted its 1998 holding in Enesco Corp. v. Price/Costco, in which it found that the first sale doctrine protected a retailer that resold dolls in allegedly inadequate packaging to the extent the repackaging was disclosed. The Enesco Court explained that if the public was adequately informed that [...]

Continue Reading

“TRUMP TOO SMALL” Trademark Decision Leaves Big Questions

by Sarah Bro | Mar 10, 2022 | Trademarks

Revisiting jurisprudence touching on the Lanham Act and the First Amendment from the Supreme Court’s decisions in Matal v. Tam and Iancu v. Brunetti, the US Court of Appeals for the Federal Circuit held that applying Sec. 2(c) of the Lanham Act (which bars registration of a trademark that consists of or comprises a name of a particular living individual without their written consent) may, in certain instances, unconstitutionally restrict free speech in violation of the First Amendment. In this instance, the Federal Circuit found that the Trademark Trial & Appeal Board’s (Board) refusal to register the trademark “TRUMP TOO SMALL” for use on t-shirts involved content-based discrimination that was not justified by a compelling or substantial government interest. In re: Steve Elster, Case No. 20-2205 (Fed. Cir. Feb. 24, 2022) (Dyk, Taranto, Chen, JJ.)

Steve Elster filed a US trademark application in 2018 for the mark “TRUMP TOO SMALL” (a reference to a 2016 Republican presidential primary debate exchange between then- candidate Donald Trump and Senator Marco Rubio (R-FL)) for use on shirts. The US Patent & Trademark Office (PTO) examining attorney, and subsequently the Board, refused registration of the mark on grounds that it clearly referred to former President Trump, and that Elster did not have written consent to use former President Trump’s name in violation of Sec. 2(c) of the Lanham Act. Sec. 2(c) requires such consent when a trademark identifies a “particular living individual.” Elster argued that his trademark aimed to convey that some features of former President Trump and his policies were diminutive and appealed the Board’s holding that Sec. 2(c) is narrowly tailored to advance two compelling government interests, namely, protecting an individual’s rights of privacy and publicity and protecting consumers against source deception.

The Federal Circuit started with a brief primer on relatively recent decisions in which the Supreme Court found certain provisions of Sec. 2(a) to be improper viewpoint discrimination because they barred registration of trademarks that were disparaging or comprised of immoral or scandalous matter. The Federal Circuit found that while neither Tam nor Brunetti resolved Elster’s appeal pertaining to Sec. 2(c), the cases did establish that a trademark represents private, not government, speech entitled to some form of First Amendment protection, and that denying a trademark registration is akin to the government disfavoring the speech being regulated. The Court then examined whether Sec. 2(c) could legally disadvantage the specific “TRUMP TOO SMALL” speech at issue in Elster’s case, and whether the government has an interest in limiting speech on privacy or publicity grounds if that speech involves criticism of government officials.

The Federal Circuit did not decide the matter on whether a trademark is a government subsidy, avoiding the somewhat varying opinions of the Supreme Court on that issue. Instead, the Federal Circuit found that Elster’s mark constituted speech by a private party for which the registration restriction must be tested by the First Amendment. Regardless of whether strict or intermediate scrutiny is applied [...]

Continue Reading

This .SUCKS: Trademark Applications for Identical Characters Is a No-Go

by Jodi Benassi | Feb 10, 2022 | Trademarks

The US Court of Appeals for the Federal Circuit affirmed a Trademark Trial and Appeal Board (Board) decision affirming the US Patent and Trademark Office’s (PTO) refusal to register two trademark applications for “.SUCKS.” In Re: Vox Populi Registry Ltd., Case No. 21-1496 (Fed. Cir. Feb. 2, 2022) (Lourie, Dyk, Stoll, JJ.)

Vox is a domain registry operator that maintains the master database of all domain names registered in each top-level domain. Vox filed two trademark applications for identical characters, one as a standard character and the other as a stylized form of .SUCKS, as shown below.

The PTO refused Vox’s applications on the grounds that, when used in connection with the domain services, each failed to function as a trademark. Vox appealed to the Board. The Board concluded that .SUCKS, whether as a standard mark or in the stylized form, would not be perceived as a source identifier. Vox appealed the Board’s decision only with respect to the stylized form of .SUCKS.

On appeal, the Federal Circuit noted that although Vox did not appeal the rejection of the standard character application, it spent much of its opening brief arguing that the standard character functions as a mark. As such, the Court reviewed the Board’s decision with respect to the standard character mark .SUCKS under the substantial evidence standard. Substantial evidence “means only such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” The Court found that substantial evidence supported the Board’s finding that consumers will view .SUCKS as only a non-source identifying part of a domain name, rather than as a trademark. The Court cited evidence reviewed by the Board, including Vox’s website, online articles and advertisements showing that .SUCKS refers to a product rather than as an identifiable provider or service. Ultimately, the Court found that the Board reasonably weighed the evidence.

The Federal Circuit next addressed the question of whether the stylized design of .SUCKS is registerable. The Court found no error in the Board’s analysis of whether the stylized form creates a separate commercial impression, where “all of the characters in the mark are the same height and width and are merely displayed in a font style that was once mandated by the technological limitations of computer screens.” Because the stylized design was not inherently distinctive, the Court rejected Vox’s application, thus affirming the Board’s decision in full.

Appeal Shuttered for Lack of Finality

by Paul Devinsky | Jan 27, 2022 | Trademarks

The US Court of Appeals for the Eighth Circuit held that it lacked jurisdiction under 28 U.S.C. § 1291 and therefore dismissed an appeal of a district court decision staying a federal action pending state court litigation between the parties. Window World Int.’l, LLC et al. v. O’Toole et al., Case No. 21-1108 (8th Cir. Jan. 7, 2022) (Loken, Colloton, Benton, JJ.).

Window World International owns registered trademarks for the marketing of exterior remodeling products, such as custom-made vinyl windows. Window World distributes products through 200 independently owned and operated franchisees, including Window World of St. Louis, Inc. and Window World of Springfield-Peoria, Inc., companies co-owned by James T. Lomax III (collectively, the Lomax parties). Window World sublicenses its franchisees to use its trademarks.

In January 2015, the Lomax parties and other Window World franchisees sued Window World in the North Carolina Business Court. The Lomax parties alleged that Window World failed to make franchise disclosures required by federal and state law. They also asserted claims of fraud and breach of contract. In April 2019, the Lomax parties sent letters to Window World customers making several misrepresentations about Window World’s product warranty. Window World commenced action in federal court, asserting causes of action under the Lanham Act for false advertising, trademark infringement, unfair competition and dilution of a famous mark.

The Lomax parties moved to dismiss for failure to state a claim or stay the federal action pursuant to the Supreme Court’s 1976 decision in Colorado River Water Conservation Dist. v. US, which held that the interests of effective judicial administration may lead a federal court to reject taking jurisdiction in a case involving a concurrent state proceeding. Window World opposed the dismissal and stay requests. The district court dismissed several of Window World’s claims but ruled that it had a plausible trademark infringement and unfair competition claim and denied dismissal as to those claims. The district court also stayed the federal action pending determination of the scope of the claims regarding the protected marks in the North Carolina litigation. Window World appealed.

The Eighth Circuit found that the issued stay order was neither a final order under 28 U.S.C. § 1291 nor a collateral interlocutory order that may be appealed. As a result, the Court dismissed the appeal for lack of jurisdiction. In doing so, the Court explained that an order staying civil proceedings is interlocutory and not ordinarily a final decision for purposes of § 1291. However, if the stay effectively ends the litigation, then the order is final and jurisdiction under § 1291 is proper. Here, the Court concluded that the lower court’s stay was not a final order because the order contemplated further litigation in federal court. Additionally, the stay was not a final order merely because it had the practical effect of allowing a state court to be the first to rule on common issues. Therefore, the Court concluded that the stay order was not appealable as a final order and dismissed the appeal.

Older Posts »

« Newer Posts

BLOG EDITORS

Paul Devinsky

Amol Parikh

BLOG EDITORS

STAY CONNECTED

TOPICS

ARCHIVES

RECENT POSTS