After receiving notice of an allegation of infringement from a trade mark owner, the receiving party is often put in the unenviable position of having to make a unilateral determination to either cease the activity at issue or continue with conduct that potentially violates a third party's rights while it waits to see if formal legal action is initiated.
In the US, in a case of actual controversy, after receiving a notice alleging wrongdoing, the receiving party may seek what is referred to as a declaratory judgment from the courts with respect to the rights of the parties at issue. Typically, declaratory judgment is sought when a party is threatened with a lawsuit but the lawsuit has not yet been filed. This option provides a party with the ability to seek an early adjudication on the matter rather than waiting until such time as the claimant decides to bring suit.
Historically, the ability to seek declaratory judgment had not typically been available to parties that had been threatened with a potential opposition proceeding after filing an intent-to-use-based trade mark application. Recently, however, there has been a change in the manner in which certain US courts have applied the standard for declaratory judgment jurisdiction in trade mark disputes. Specifically, an allegation that the use of a mark which is not yet in use would cause a likelihood of confusion has been interpreted by some courts as creating an immediate and actual controversy. Consequently, the recipient of the notice letter, i.e, the alleged infringer, may then have a basis to seek a declaratory judgment with respect to their intended use of the mark at issue.
Therefore, a party that sends a cease and desist letter to a third party that files an intent-to-use-based trade mark application – even if such a letter takes a friendly approach – may unintentionally expose themselves to a declaratory judgment action. This course of events effectively deprives the senior user of the mark (the party initially alleging infringement) from controlling certain aspects of the case. For example, if the other party files for declaratory judgment, they usurp the ability of the party making the allegation of infringement to choose the jurisdiction where the dispute will be heard and to control the manner in which the controversy is handled (i.e, either within or outside of the judicial system).
This recent change in direction by courts in certain jurisdictions makes it more difficult for a party alleging infringement to avoid potential exposure to a declaratory judgment action. In view of such change, it is recommended that trade mark owners consider whether certain enforcement measures which had otherwise been considered routine in the past are worthwhile or timely in view of the potential risk that such measures may result in inadvertently fostering litigation.
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| Karen Artz Ash and Bret J Danow |
Katten Muchin Rosenman LLP
575 Madison Avenue
New York, NY 10022-2585
United States
Tel: +1 212 940 8554
Fax: +1 212 940 8671
karen.ash@kattenlaw.com
www.kattenlaw.com