US trade marks: Threats of TTAB Cancellations

February 27 2018

In Teksystems v Teksavvy Solutions, the US District Court for the District of Maryland addressed the issue of whether a party's threat to initiate a cancellation action against a trade mark registration before the US Trademark Trial and Appeal Board (TTAB) was sufficient to create a case or controversy which provides a basis upon which a party may seek a declaratory judgment concerning the validity of a mark.

Defendant, Teksavvy, had filed a trade mark application for the mark TEKSAVVY which was refused by the United States Patent and Trademark Office based on a likelihood of confusion with a US trade mark registration for the TEKSAVVY mark owned by plaintiff, Teksystems. Following the issuance of the refusal, Teksavvy's attorney sent Teksystems a letter which sought a consent to registration from Teksystems, noting that Teksavvy had superior rights in the TEKSAVVY mark based on its prior use of the mark which would provide a basis to seek cancellation of Teksavvy's registration if the parties could not reach an amicable resolution. Teksystems responded by filing a lawsuit seeking a declaratory judgment of the validity of its mark and asserting a claim for trade mark infringement under the Lanham Act. Teksavvy, in turn, filed a motion to dismiss the claims, asserting that the court lacked subject matter jurisdiction to decide the declaratory judgment claim because no case or controversy existed.

Under US law, a party who has been threatened with a trade mark infringement claim has the basis upon which to initiate a declaratory judgment action to determine its rights rather than wait for the threatening party to take action. As the court in Teksystems noted, in order to bring a declaratory judgment action, a plaintiff must satisfy the case or controversy requirement which requires that it establish the existence of a dispute that is "definite and concrete, touching the legal relations of parties having adverse legal interests; and that is real and substantial." In its motion to dismiss, Teksavvy argued that no controversy existed because it never threatened litigation but, rather, threatened only to file a cancellation action with the TTAB.

Citing prior precedent, the court held that the threat of a cancellation action, alone, was not sufficient to establish subject matter jurisdiction or a standalone cause of action. The court distinguished this case from cases where a plaintiff sought declaratory action based on a fear of an impending infringement suit, indicating that since the plaintiff owned the trade mark registration, it was "not decidedly faced with the position of either pursuing arguably infringing behaviour or abandoning it use of the mark." As such, the court found that there was no "conclusive evidence of the existence of a live infringement suit" and granted Teksavvy's motion to dismiss the declaratory judgment claim. The court did, however, indicate that Teksystems could bring an infringement action against Teksavvy if it so desired and denied the motion to dismiss that claim.

This case is instructional as it provides guidance to parties involved in a trade mark dispute as to which threats may serve as the basis for filing a declaratory judgment action (and which threats may not provide such a basis).