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The Naked Truth About Trademark Cancellation: Only Harm, No Proprietary Interest Required

by Christopher M. Bruno | Aug 5, 2020 | Trademarks

The US Court of Appeals for the Federal Circuit determined that a contracting party that contractually abandoned any proprietary interest in a mark may still bring a cancellation action if it can “demonstrate a real interest in the proceeding and a reasonable belief of damage.” Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC, Case No. 19-1567 (Fed. Cir. July 24, 2020) (Reyna, J.) (Wallach, J., dissenting).

Australian sold condoms with the marks NAKED and NAKED CONDOMS, first in Australia in early 2000, then in the United States in 2003. Two years later, Australian learned that Naked TM’s predecessor had registered a trademark NAKED for condoms in September 2003. Australian and Naked TM communicated by email regarding use of the mark for a few years. Naked TM contended that the parties reached an agreement; Australian disagreed and said no final terms were agreed upon. Australian filed a petition to cancel the NAKED trademark registration. Ultimately, and after trial, the Trademark Trial and Appeal Board (TTAB) concluded that Australian lacked standing because it had reached an informal agreement that Naked TM reasonably believed was an abandonment of any right to contest Naked TM’s registration of NAKED. Thus, the TTAB found that Australian lacked a real interest in the proceeding because it lacked a proprietary interest in the challenged mark. Australian appealed.

The Federal Circuit reversed. First, the Court clarified that the proper inquiry was a matter of proving an element of the cause of action under 15 USC § 1064 rather than standing. The Court explained that, contrary to the TTAB’s conclusion, “[n]either § 1064 nor [its] precedent requires that a petitioner have a proprietary right in its own mark in order to demonstrate a cause of action before the Board.” Assuming without deciding that the TTAB correctly determined that Australian had contracted away its rights, the Court found that fact irrelevant. Ultimately, even though an agreement might be a bar to showing actual damages, a petitioner need only show a belief that it has been harmed to bring a petition under § 1064.

The Federal Circuit found that Australian had a reasonable belief in its own damage and a real interest in the proceedings based on a history of two prior applications to register the mark, both of which the US Patent and Trademark Office rejected on the basis that they would have created confusion with Naked TM’s mark. The Court rejected Naked TM’s argument that Australian’s abandonment of those applications demonstrated there was no harm, instead concluding that Australian’s abandonment of its applications did not create an abandonment of its rights in the unregistered mark. Moreover, as a prophylactic rationale, the Court explained that Australian’s sales of products that might be found to have infringed the challenged registration also create a real interest and reasonable belief in harm.

Judge Wallach dissented. Although he agreed that the TTAB erred by imposing a proprietary-interest requirement to bring suit under § 1064, he disagreed that Australian properly demonstrated an alternative, legitimate interest—i.e., a belief [...]

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Unnamed Respondent Has Standing to Seek Rescission of ITC General Exclusion Order

by Paul Devinsky | Jul 30, 2020 | Patents

The US Court of Appeals for the Federal Circuit affirmed a US International Trade Commission (ITC) decision denying a petition for rescission of a general exclusion order (GEO) prohibiting importation of products accused of patent infringement, because a post-investigation invalidity attack is not a changed condition warranting rescission. Mayborn Grp., Ltd. v. Int’l Trade Comm’n, Case No. 19-2077 (Fed. Cir. July 16, 2020) (Lourie, J.).

Several parties filed a complaint at the ITC against several respondents, not including Mayborn Group, Ltd., and Mayborn USA, Inc. The complaint alleged infringement of a patent disclosing a self-anchoring beverage container that prevents spills. The complainants sought a GEO barring importation of infringing goods by any party, including unnamed respondents such as Mayborn. In contrast to GEOs, limited exclusion orders only prohibit infringing goods imported by named respondents in an investigation. The ITC instituted an investigation, and the administrative law judge determined that two respondents were in default and liable for unfair acts (patent infringement) in connection with importation. The defaulting respondents did not raise any invalidity challenge during the investigation. On the administrative law judge’s recommendation, the ITC issued a GEO.

Following issuance of the GEO, Mayborn continued to import potentially infringing products. The complainants notified Mayborn that they were working with US Customs and Border Protection (CBP) to enforce the GEO against Mayborn’s importations. In response, Mayborn petitioned the ITC to rescind the GEO pursuant to its power to rescind or modify an order if there is a change in the conditions that led to the GEO. Mayborn argued that the “changed condition” requirement was satisfied because it contends the asserted claims are invalid.. The ITC denied Mayborn’s petition, holding that a petitioner’s asserted discovery of invalidating prior art after the issuance of a GEO was not a changed condition. Mayborn appealed, arguing that the ITC erred in rejecting its request for rescission. The ITC alleged that Mayborn lacked standing to appeal because Mayborn’s alleged injury stemmed from the complainants’ threat to enforce the GEO rather than any act by the ITC.

The Federal Circuit affirmed, finding that Mayborn’s post-investigation invalidity challenge was not a basis for rescission of the GEO. The Court first addressed the ITC’s standing argument, and determined that Mayborn had standing because it was injured by the GEO and the GEO was enforced by the ITC. The ITC or CBP could act to enforce the GEO at any time. Mayborn had also lost sales and incurred other harm stemming from the complainants’ threats to assert the GEO, including reputational injury, market share loss and damaged business relationships. Standing did not require the ITC to have already barred importation of Mayborn’s products.

After finding that Mayborn had standing, the Federal Circuit determined that Mayborn’s invalidity challenge was not a permissible basis to seek rescission of the GEO for two reasons. First, although patent invalidity is an affirmative defense to patent infringement, the ITC is constrained to adjudicating patent validity only when a respondent raises an invalidity defense during an [...]

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Ninth Circuit Gleefully Rejects Copyright Claims against California High School

by Sarah Bro | Apr 9, 2020 | Copyrights

Affirming a district court’s summary judgment in favor of various defendants, including the vocal music director and parent volunteers at Burbank High School (whose competitive show choirs reportedly inspired the television series “Glee”), the US Court of Appeals for the Ninth Circuit examined issues of standing via copyright ownership and the copyright infringement defense of fair use. The Court, however, reversed the lower court’s denial of defendants’ attorneys’ fees and remanded for the calculation of an appropriate award in view of plaintiff’s “objectively unreasonable” arguments in the lawsuit. Tresóna Multimedia, LLC, v. Burbank High School Vocal Music Association, et. al., Case No. 17-56006 (9th Cir., Mar. 24, 2020) (Wardlaw, J.).

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