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If at First You DuPont Succeed, Try a Different Factor

by Mike Baldwin | Jul 13, 2023 | Trademarks

The US Court of Appeals for the Federal Circuit remanded a Trademark Trial & Appeal Board decision, finding that the Board incorrectly analyzed several DuPont factors, improperly disregarded the DuPont factor regarding third-party registration on similar goods, permitted the opposer to succeed without a showing of identical marks for identical goods used in the marketplace and predicated its comparative analysis on the incorrect mark. Spireon, Inc. v. Flex Ltd., Case No. 22-1578 (Fed. Cir. June 26, 2023) (Mayer, Reyna, Dyk, JJ.)

Spireon filed a trademark application for the mark FL FLEX for use in connection with “[e]lectronic devices for tracking the locations of mobile assets in the nature of trailers, cargo containers, and transportation equipment using global positioning systems and cellular communication networks.” After the Examining Attorney approved the application, Flex opposed registration on grounds of priority and likelihood of confusion with Flex’s previously registered marks: FLEX, FLEX (stylized) and FLEX PULSE.

The Board sustained Flex’s opposition based on its analysis of the DuPont factors for evaluating likelihood of confusion. There are a total of 13 factors that together form the underlying factual findings upon which the legal conclusion of likelihood of confusion is made. Not all factors are relevant in every case.

In its consideration of the first DuPont factor (the similarity of the marks), the Board addressed the strength of Flex’s marks, including the marks’ conceptual and commercial strength. The Board weighed five marks—FLEX (in three relevant commercial contexts), LOAD FLEX VALUE FLEX—and concluded that the third-party evidence did not show that Flex’s marks were either conceptually weak or inherently distinctive. The Board then considered the similarity of the marks, analyzing Spireon’s FL FLEX against FLEX, FLEX (stylized) and FLEX PLUS (rather than the actual mark FLEX PULSE). The Board found the marks highly similar and concluded that the first DuPont factor supported a finding of likelihood of confusion. The Board also addressed three other DuPont factors that it considered relevant, but no others. Spireon appealed.

The Federal Circuit reversed. The Court found that the Board erred in not considering the sixth DuPont factor, “[t]he number and nature of similar marks in use on similar goods.” This factor requires an evaluation of conceptual strength and commercial strength. Conceptual strength focuses on the degree to which a mark is descriptive in that it “directly and immediately convey[s] some knowledge of the characteristics of products.” Commercial strength focuses on the “marketplace recognition value of the mark.”

The Federal Circuit explained the relevance of third-party registrations and their bearing on a mark’s conceptual strength, noting that the Board erred in assigning a low probative value to 15 composite marks of record. The Court explained that composite third-party marks are relevant to resolving the question of whether the “shared segment—in this case, ‘flex’—has a commonly understood” meaning in the pertinent field and to the crowded nature of the field in which the flex root is used. As the Court explained, proof of use or non-use is material because the sixth DuPont factor only considers [...]

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Personal Jurisdiction? Selling Products via Interactive Website Will Do It

by Cecilia Choy, Ph.D. and Hannah Hurley | Jul 13, 2023 | Trademarks

The US Court of Appeals for the Ninth Circuit reversed and remanded a district court’s dismissal for lack of personal jurisdiction, deciding that the sale of a product via an interactive website provides sufficient “minimum contacts” to support jurisdiction over a nonresident defendant in a state where the defendant causes the product to be delivered. Herbal Brands, Inc. v. Photoplaza, Inc., Case No. 21-17001 (9th Cir. July 5, 2023) (Graber, Clifton, Christen, JJ.)

Herbal Brands sells health, wellness, fitness and nutrition products directly to consumers and through authorized third-party retailers in Arizona. Photoplaza sold Herbal Brands products through two e-commerce storefronts without Herbal Brands’ permission. Herbal Brands sent three cease-and-desist letters, stating that Photoplaza’s sales harmed Herbal Brands in Arizona. Herbal Brands accused Photoplaza of trademark infringement and unfair competition under the Lanham Act, false advertising under the Lanham Act and tortious interference with contracts and business relationships under Arizona law. The district court granted Photoplaza’s motion to dismiss for lack of personal jurisdiction. Herbal Brands appealed.

The Ninth Circuit noted that Photoplaza failed to submit any evidence to contradict the jurisdictional allegations in the complaint. The Court found that under its three-part test, Photoplaza had sufficient minimum contacts with Arizona to warrant personal jurisdiction:

Photoplaza purposefully directed its activities at the forum.
Herbal Brands’ harm arose out of Photoplaza’s contacts with Arizona.
Exercise of jurisdiction over Photoplaza would be reasonable.

The second and third prongs of the Ninth Circuit’s test were easily resolved. Herbal Brands’ claimed harm rose out of and related to Photoplaza’s conduct of selling the products to Arizona residents. The Court referred to its 2004 holding in Schwarzenegger regarding a plaintiff’s burden to establish jurisdiction, whereupon the burden shifts to the defendants under the seven-factor balancing test of Freestream Aircraft (2018). The Court found that Photoplaza did not meet its burden to present a compelling case that exercising jurisdiction would be unreasonable.

The bulk of the Ninth Circuit’s decision focused on the first prong (purposeful availment), which applies when “a case sounds in tort,” such as claims of trademark infringement, false advertising and tortious interference with business relationships, each of which requires an intentional tortious or “tort-like” act. Referring to the effects test from the 1984 Supreme Court decision in Calder v. Jones, the Ninth Circuit explained that Photoplaza purposefully directed its activities toward the forum if it (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that Photoplaza knew was likely to be suffered in the forum state. Related to the Calder test’s first and third prongs, Photoplaza’s product sales to Arizona residents were intentional acts, and the cease-and-desist letters informed Photoplaza that its actions caused harm in Arizona.

Regarding the “express aiming” prong, the Ninth Circuit explained that when a website itself is the only jurisdictional contact, the analysis turns on whether the site had a forum-specific focus or whether the defendant exhibited an intent to cultivate an audience in the forum. The Court explained that [...]

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First Rule of the PTAB? Play by the Rules

by Christian Tatum | Jun 22, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed two Patent Trial & Appeal Board decisions holding the challenged claims unpatentable as obvious, even though the Board declined to consider evidence of antedating and found that the claims lacked written description support. Parus Holdings, Inc. v. Google LLC, Case Nos. 22-1269; -1270 (Fed. Cir. June 12, 2023) (Lourie, Bryson, Reyna, JJ.)

Parus Holdings owns two patents related to an interactive voice system to request information from a voice web browser. Google (among others) petitioned for inter partes review (IPR) of the patents.

During the IPR proceedings, the Board found that a publication (Kovatch) was prior art to the challenged patents. In reaching that decision, the Board declined to consider Parus’s arguments and evidence of an earlier conception and reduction to practice because they were only presented via incorporation by reference in violation of 37 C.F.R. § 42.6(a)(3). The Board ruled that Parus failed to meet its burden of production on antedating.

The Board also found that the publication of the application to which Parus’s challenged patents claimed priority (Kurganov-262) was prior art because the common specification failed to provide written description support for the challenged claims. Parus appealed the Board’s decision, raising two main arguments.

First, Parus contended that the Board erred when it declined to consider Parus’s arguments and evidence on antedating. Parus argued that § 42.6(a)(3)’s prohibition on incorporation by reference did not warrant the Board’s decision because Parus, as patent owner, need not have submitted a response at all. Parus also argued that the Federal Circuit’s 2017 decision in Aqua Products mandates that the Board consider all record evidence, regardless of the manner of presentation. The Federal Circuit rejected Parus’s arguments in turn.

Regarding Parus’s violation of the incorporation by reference rule, the Federal Circuit explained that Parus had assumed an affirmative burden of production when it chose to submit a response to antedate Kovatch. Along with that burden came other responsibilities, such as complying with the US Patent & Trademark Office’s (PTO) rules and regulations, including § 42.6(a)(3). The Court further explained that this burden of production could not be met without some combination of citing evidence with specificity and explaining the significance of the cited material. Parus did neither.

The Federal Circuit also rejected Parus’s argument that the Board is required by law to review all evidence in the record. The Court clarified that, while its Aqua Products holding requires the Board to decide all issues properly before it, nothing in Aqua Products requires the Board to review evidence or issues not introduced or introduced in violation of the Board’s rules. As the Court noted, “[t]he burden of production cannot be met simply by throwing mountains of evidence at the Board without explanation or identification of the relevant portions of that evidence. One cannot reasonably expect the Board to sift through hundreds of documents, thousands of pages, to find the relevant facts.”

Parus also argued that the Board exceeded its statutory authority under 35 U.S.C. [...]

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Quack, Waddle and Duck: Order That Grants Injunctive Relief Is an Injunction

by Kavya Rallabhandi | Jun 15, 2023 | Trademarks

The US Court of Appeals for the Fourth Circuit vacated and remanded a district court ruling, finding that the district court failed to properly apply the Federal Rules of Civil Procedure (FRCP) in granting injunctive relief. Wudi Industrial (Shanghai) Co., Ltd. v. Wong et al., Case Nos. 22-1495; -1662 (4th Cir. June 5, 2023) (Gregory, King, JJ.) (Rushing, J., dissenting). The dissent argued that the district court simply entered a permissible order enforcing a settlement agreement between the parties.

The FRCP outlines the necessary criteria and steps for courts to grant injunctive relief. FRCP 52(a)(2) requires courts to state the findings and conclusions that support their actions. FRCP 65(d) requires courts to state the reasons why the injunction was issued, state the injunction’s terms specifically or describe the restrained/required act(s) in detail. Per the Supreme Court’s Ebay test, a party seeking injunctive relief must demonstrate the following:

It has suffered an irreparable injury.
Remedies available at law, such as monetary damages, are inadequate to compensate for that injury.
Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted.
The public interest would not be disserved by an injunction.

Wudi Industrial competes with Wai L. Wong and his business entity GT Omega Racing (collectively, GTOR) in marketing video gaming chairs and other products. GTOR challenged Wudi’s GTRACING trademark registration in a cancellation proceeding at the Trademark Trial & Appeal Board, alleging that the mark encroached on GTOR’s earlier use of GT OMEGA RACING. The Board ruled in favor of GTOR, and Wudi initiated a first appeal at the district court. The parties subsequently entered into a concurrent-use agreement that assigned to Wudi the right to use the GTRACING word mark in all global markets except within a European carve-out of 53 named countries in exchange for a $4.5 million payment to GTOR. Under the agreement, Wudi was barred from purchasing ad words from search engines and shopping sites or using any social media platforms to promote GTRACING in the European carve-out countries.

In May 2022, GTOR filed a motion for enforcement in the district court, alleging breach because some of Wudi’s marketing and promotional content in the European carve-out contained the GTRACING mark. The district court granted GTOR’s motion and issued a first order. Under threat of contempt for noncompliance, Wudi was ordered to cease impermissible conduct and take down all posts accessible in the European carve-out containing GTRACING within seven days. In June 2022, the district court issued a second order stating that the first order was a grant of specific performance, not a preliminary injunction. Wudi appealed both orders.

The Fourth Circuit vacated and remanded the district court’s first and second orders because of procedural errors amounting to abuses of discretion, despite the dissent’s argument that the orders merely enforced the parties’ agreement. The Court concluded that the first order constituted a preliminary injunction, later made permanent by the second order, because “if it walks like a duck, quacks like a [...]

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District Court Finding Doesn’t Preclude PTAB Proceeding

by Mike Baldwin | Jun 15, 2023 | America Invents Act, Patents

The Patent Trial & Appeal Board refused to terminate an inter partes review (IPR) proceeding, finding that collateral estoppel and claim preclusion do not apply to previous findings from a district court proceeding. Patent Quality Assurance, LLC v. VLSI Technology LLC, IPR2021-01229, Paper No. 128 (PTAB June 3, 2023) (Melvin, Giannetti, McNamara, APJs).

Patent Quality Assurance filed a petition for IPR on July 7, 2021, against a patent owned by VLSI. The Board granted institution. The Board later instituted on a substantively identical petition filed by Intel and granted Intel’s motion for joinder to add Intel to the Patent Quality Assurance IPR proceeding. Prior to the July 7, 2021, petition, litigation between VLSI and Intel resulted in a jury verdict that Intel infringed certain claims of the challenged patent. Invalidity was not presented to the jury. On May 10, 2022, the district court entered final judgment, including a finding that Intel had not proven invalidity. Based on the district court’s judgment, VLSI asserted that claim preclusion barred Intel from challenging validity of the asserted patent in IPR and sought termination of the IPR as to Intel.

VLSI argued that the elements of claim preclusion were met because both VLSI and Intel were parties to both cases, the district court entered a final judgment for infringement and no finding of invalidity, and the effect of Intel’s IPR was to collaterally attack the final judgment in the first case. Intel responded, arguing that claim preclusion does not apply to IPRs from the district court under the America Invents Act (AIA).

The Board agreed with Intel that estoppel did not apply. Intel argued that if Congress had intended for IPRs to be precluded by claims in a parallel district court, it would have identified that as one of the estoppel circumstances in the AIA. VLSI argued that the Supreme Court’s 1991 decision in Astoria Federal sav. & Loan Ass’n v. Solimino applies only when an agency decision precludes a later court decision and, therefore, common-law claim preclusion would apply to the IPR proceeding barring a plain statement from Congress showing intent to overcome preclusion.

The Board disagreed, noting that the cited case law related to statutes where a later statute superseded the earlier one and required a clear and manifest intent to repeal the earlier statute. The Board found that there was no express intent to repeal the earlier statute regarding estoppel, and the jurisprudence constantly counsels against repeal “by implication.” The Board also crucially noted that there was no statutory conflict between the earlier and later statutes, and the question, therefore, was whether (under Astoria) the AIA showed congressional intent that common-law claim preclusion should apply to IPRs.

Reading 35 U.S.C. § 315(e), the codification of the AIA’s estoppel provision, the Board noted that the statute clearly imposes estoppel on future agency and district proceedings but says nothing about applying adjudications in district court proceedings at the Board. As the Board explained, there would be no reason for § 315(e) to spell [...]

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All’s Well That Edwell: Two Markets Can Be Substantially Different if Defined Narrowly Enough

by Tessa Kroll | Jun 8, 2023 | Trademarks

Despite evidence of actual confusion and seemingly similar services, the US Court of Appeals for the Tenth Circuit upheld a district court’s noninfringement finding concerning two nearly identical education-related marks because the parties targeted different goods and marketing channels. M Welles & Assocs., Inc. v. Edwell, Inc., Case No. 22-1248 (10th Cir. May 31, 2023) (Ebel, Bacharach, JJ.) (Tymkovich, J., dissenting). In his dissent, Judge Tymkovich criticized the lower court for characterizing the scope of the parties’ services too narrowly and observed that “[a]ny court can find some differences between businesses and markets at a particular level of generality.”

M Welles & Associates provides classes, seminars and certification workshops in the project management space under the brand name EDWEL (derived from “education done well”). The classes are designed for professionals in a variety of industries, including information technology, healthcare, education and the military. Welles primarily advertises its services via social media, Google and email, and further owns a variety of domain names incorporating both EDWEL and EDWELL. The defendant, Edwell, is a nonprofit organization that provides mental health coaching services to schoolteachers using the domain name Edwell.org and the brand name EDWELL (derived from “to be an educator and to be well”). Edwell operates by partnering with schools to provide its services and currently has partnerships with 10 K-12 public schools. Edwell does not target institutions of higher learning and does not offer services to corporations.

Welles first learned of Edwell’s services when it received a call from a potential customer asking about classes at Denver North High School—classes that were in fact offered by Edwell, not Welles. Welles sent a cease-and-desist notice to Edwell, which rebranded to “Educator Wellness Project” for a short time before reverting back to EDWELL. Welles then sued Edwell for trademark infringement, and the district court found that there was no likelihood of confusion. Welles appealed.

Welles raised three arguments on appeal:

The magistrate judge used the wrong legal standard in assessing likelihood of confusion.
The Tenth Circuit should adopt a presumption of confusion.
The magistrate judge clearly erred in the analysis of Edwell’s intent, the similarity of the parties’ services and marketing, the degree of purchaser care and actual confusion.

Welles also moved to supplement the appellate record with new evidence of actual confusion that occurred after the trial.

Supplementation

The Tenth Circuit first addressed Welles’s motion, finding that there was no legitimate basis for supplementing the record. Fed. R. of Civ. P. 10(e) permits a court to modify the appellate record “only to the extent necessary to ‘truly disclose what occurred in the district court.’” Because the new evidence of actual confusion was not before the district court, the Tenth Circuit concluded that Rule 10(e) would not permit it to be added to the record. The Court further reasoned that the rare exception to Rule 10, which permits the court to supplement the record to correct misrepresentations, demonstrate mootness, or raise an issue for the first time on appeal, did not [...]

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Electra Powers Second Circuit’s False Endorsement Analysis

by Nitya Anand | Jun 8, 2023 | Trademarks

Following on the heels of its 2021 decision in Electra v. 59 Murray, the US Court of Appeals for the Second Circuit affirmed the summary judgment denial of a Lanham Act claim related to false endorsement premised upon the unauthorized use of photographs in connection with promotional materials. Souza et. al. v. Exotic Island Enterprs., Inc., Case No. 21-2149 (2d Cir. May 19, 2023) (Lynch, Nardini, Menashi, JJ.) The Second Circuit also affirmed the district court’s summary judgment denial of Lanham Act false advertising and New York state right of publicity claims.

The operator of a gentlemen’s club used photographs of current and former professional models in social media posts promoting the club. The photographs were obtained without the models’ permission through a third-party vendor. The models sued the club operator asserting false endorsement, false advertising and right of publicity violations. The parties filed dueling summary judgment motions in February 2021. During the pendency of those motions, the Second Circuit decided Electra, a case involving overlapping plaintiffs suing on several of the same causes of action based on highly similar fact patterns. The district court subsequently granted the club operator’s motion for summary judgment and denied the models’ motion. The models appealed.

The Second Circuit relied heavily on its Electra decision to affirm the district court’s denial of the models’ false endorsement claim. To prevail on a false endorsement claim under Section 43 of the Lanham Act, the models were required to prove that there was a likelihood of confusion between their goods or services and those of the club operator. Likelihood of consumer confusion is evaluated using the eight Polaroid factors:

Strength of the trademark
Similarity of the marks
Proximity of the products and their competitiveness with one another
Evidence that the senior user may bridge the gap by developing a product for sale in the market of the alleged infringer’s product
Evidence of actual consumer confusion
Evidence that the imitative mark was adopted in bad faith
Respective quality of the products
Sophistication of consumers in the relevant market.

First, the models argued that the district court oversimplified the “strength of the mark” analysis (factor 1) to focus only on the recognizability of the mark. The Second Circuit disagreed, explaining that not only was Electra’s focus on recognizability binding precedent but also, that factor was required to be evaluated in the context of the mark’s strength in the false endorsement context (i.e., as a function of the extent to which the endorser’s identity could be linked with the product being sold). In other words, without an adequate showing that the models were recognized in the social media posts promoting the club, there could be no case of endorsement, let alone false endorsement.

Second, the models challenged the district court’s exclusion of their expert testimony on certain Polaroid factors. The district court excluded surveys conducted by the models’ expert as unreliable because they suffered from various methodological flaws and, therefore, did not provide a reliable [...]

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Common Sense: Nonparties Not Precluded by Ex Parte Reexamination Termination

by Brennen Baylor | Jun 8, 2023 | Trademarks

In a precedential decision, the US Patent & Trademark Office (PTO) Trademark Trial & Appeal Board denied a motion for judgment based on either claim or issue preclusion, and in the alternative for a show cause order, in a challenger’s petition. Common Sense Press Inc. d/b/a Pocket Jacks Comics v. Ethan Van Sciver and Antonio J. Malpica, Cancellation No. 92075375, 2023 BL 171365 (TTAB May 19, 2023) (Wellington, Pologeorgis, English, ATJs).

Common Sense Press filed a petition to cancel the registration for the mark “Comics Gate” for comics. In its petition, Common Sense asserted claims of nonuse, abandonment and fraud. The Respondents denied the allegations in the petition and also raised unclean hands by petitioner as a defense.

Common Sense also requested reexamination of the “Comics Gate” mark, which the PTO Director instituted on May 9, 2022. The cancellation proceeding was suspended pending the outcome of the reexamination. The Respondents were instructed to submit evidence to establish use of their mark for comics as of the August 13, 2020, deadline for filing a statement of use, as required under Section 1(d) of the Lanham Act.

The Respondents’ Section 1(d) statement showed that the “Comics Gate” mark was used in connection with comics sales in interest commerce and that such comics were provided via interest trade channels during the relevant period. In view of the Respondents’ evidence, the PTO Director determined that use had been demonstrated for comics and terminated the reexamination.

With the Notice of Termination in hand, the Respondents requested that the Board enter judgment in their favor in the cancelation proceeding as to nonuse and abandonment based on issue preclusion or, in the alternative, issue a show cause order to Common Sense as to why judgment should not be entered against them.

The Board denied the Respondents’ request, reasoning that termination of a reexamination proceeding does not preclude future nonuse challenges. Nor does such a reexamination termination decision have preclusive effect on a petitioner seeking cancellation, even if the petitioner requested the terminated reexamination. Citing due process concerns, the Board explained that the termination of an ex parte reexamination proceeding in which the petitioner necessarily does not participate may not serve as a basis for preventing the petitioner from raising even identical challenges in another action. The Board further noted that while the applicable statute “contains explicit estoppel provisions that bar the filing of future expungement or reexamination proceedings as to the identical goods or services once a proceeding of the same kind has been instituted . . . neither the statute nor regulations set forth a limitation on any party’s ability to petition to cancel a registration just because it is or has been the subject of a reexamination or expungement proceeding.” Thus, the Board concluded there is no basis to issue a show-cause order to a litigant who never appeared in a prior action.

Practice Note: This case serves as a reminder of the metes and bounds of an ex parte reexamination or expungement proceeding. Although [...]

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Neither Narrow Proposed Claim Construction nor Work Product Claim Justify Withholding Material Factual Information

by Cecilia Choy, Ph.D. and Hannah Hurley | Jun 1, 2023 | Patents

The Patent Trial & Appeal Board of the US Patent & Trademark Office (PTO) canceled all challenged claims across five patents because the patent owner failed to meet its duty of candor by selectively and improperly withholding material information that was inconsistent with its patentability arguments. Spectrum Solutions, LLC v. Longhorn Vaccines & Diagnostics, LLC, IPR2021-00847; -00850; -00854; -00857; -00860 (PTAB May 3, 2023) (Braden, Yang, Derrick, Pollock, APJs) (per curiam) (Braden, APJ concurring).

The Board instituted inter partes reviews (IPRs) against five Longhorn patents based on petitions filed by Spectrum. During the proceedings, Longhorn filed motions to amend, after which the Board issued preliminary guidance suggesting that Spectrum established a reasonable likelihood that the proposed substitute claims were unpatentable. Longhorn engaged Assured Bio Labs (ABL) to conduct biological testing that would support its arguments distinguishing a prior art reference, but Longhorn made attorney work product objections in Spectrum’s ABL depositions and withheld testing data inconsistent with its arguments on the patentability of the original and proposed substitute claims. The Board subsequently allowed additional questioning on certain ABL testing, after which Spectrum filed a motion for sanctions, requesting judgment against Longhorn, a finding that the prior art reference taught the claim limitations and precluding Longhorn from contesting the finding, and an award to Spectrum of compensatory expenses, including attorneys’ fees.

The Board determined that sanctions of adverse judgment as to all challenged claims was appropriate because Longhorn failed to meet its duty of candor and good faith. The Board explained that parties have a duty of candor and good faith before the Board that requires any factual contentions to be well supported by evidence. Parties have “a duty to disclose to the [PTO] all information known . . . to be material to patentability.” (37 C.F.R. §1.56(a).) Information is material to patentability when it is “not cumulative to information already of record or being made of record in the application and . . . it refutes, or is inconsistent with, a position the applicant takes in . . . asserting an argument of patentability.” Taking a position contrary to any known fact while shielding factual information from the Board violates the duty of candor and good faith to the PTO, even if the party may otherwise withhold the information as being immaterial to patentability or privileged.

The Board criticized Longhorn’s proposed claim constructions as too narrow and contrary to the express language in both the original and proposed substitute claims. The Board explained that although Longhorn was free to maintain arguments grounded on Longhorn’s claim constructions, that did not excuse Longhorn’s duty of candor and good faith dealing, including disclosing material information relating to the Board’s preliminary claim constructions. Longhorn could not “simply withhold information” that the PTO would find material to patentability and should instead contest the Board’s constructions at trial.

The Board also explained that Longhorn took an overly strict view of what was material to claim patentability and a lax view as to the duty of candor [...]

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Weeded Out: Mark for Drug Paraphernalia Described as “Essential Oil Dispenser” Refused Registration

by Tessa Kroll | May 18, 2023 | Trademarks

Addressing the registrability of marks for cannabis-related products, the Trademark Trial & Appeal Board upheld an Examiner’s refusal to register marks for an “essential oil dispenser” based on extrinsic evidence that the dispenser was primarily used with cannabis extract. In re National Concessions Group, Inc., Ser. Nos. 87168058 and 87183434 (TTAB May 3, 2023) (Thurmon, Greenbaum, English, ATJs) (precedential).

National Concessions sought registration of the word mark BAKKED and a stylized drop logo for an “essential oil dispenser, sold empty, for domestic use” on the Principal Register. The specimen provided by National Concessions illustrated the two marks on an oil dispensing pen identified as “THE DABARATUS.” After reviewing National Concessions’ website—where THE DABARATUS was touted as “THE ALL-IN-ONE TOOL FOR DABBING” that delivers “THE PERFECT DOSE OF CANNABIS EXTRACT”—the Examiner concluded that THE DABARATUS was unlawful drug paraphernalia under the Controlled Substances Act (CSA) and refused registration of the marks. National Concessions appealed on the following three grounds:

The goods are not drug paraphernalia because they are used to dispense essential oil.
The exemption in Section 863(f)(1) of the CSA applies because National Concessions was permitted to sell the goods under Colorado state law.
The exemption in Section 863(f)(2) of the CSA applies because the goods are traditionally intended for tobacco products.

After briefing, the Board suspended the appeal and remanded the applications to the Examiner to request information from National Concessions concerning the legislative histories of Sections 863(f)(1) and (2) of the CSA and the relevant provisions of Colorado state law. The Examiner then issued a Supplemental Final Office Action maintaining the refusal of both marks, and the Board continued proceedings.

The Board began its analysis by outlining the relevant provisions of the CSA, explaining that for a mark to be eligible for registration, the goods must be legal under federal law. Under Section 863(a) of the CSA, it is unlawful to sell “drug paraphernalia,” which is defined as “any equipment, product, or material of any kind which is primarily intended or designed for use in … introducing into the human body a controlled substance, possession of which is unlawful under [the CSA],” including marijuana and marijuana-based preparations. The CSA includes exemptions for any person authorized by local, state or federal law to distribute such items (Section 863(f)(1)) or any item that is traditionally intended for use with tobacco products (Section 863(f)(2)).

The Board first found that National Concessions’ “essential oil dispenser” was prohibited drug paraphernalia under the CSA, even though the product was not unlawful as described in the application. The Board noted that extrinsic evidence, such as an applicant’s marketing materials or product instructions, can be used to show a violation of the CSA even if the application does not reveal a per se violation. After considering National Concessions’ website as well as third-party websites and articles, the Board agreed with the Examiner that National Concessions’ “essential oil dispenser” was primarily intended to dispense cannabis oil for “dabbing”—a method of inhaling superheated cannabis concentrates. The [...]

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