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US trademark case and TTAB trends explained

A session on Wednesday will give attendees analysis of the most important US trademark cases in the past year. Michael Loney looks at some of the cases that might be discussed.

Theodore Davis, partner at Kilpatrick Townsend & Stockton, will give an overview on court decisions during Wednesday’s annual round-up. He believes the most interesting recent development is the Supreme Court taking more interest in the Lanham Act.

Already this year, the Supreme Court has issued a decision in one trademark case, Lexmark International v. Static Control Components, and heard arguments in another, POM Wonderful v. Coca-Cola. In addition, the Court has asked the U.S. Solicitor General to file a brief in B&B Hardware v. Hargis Industries, in which it has been asked to decide whether a Trademark Trial and Appeal Board (TTAB) finding of a likelihood of confusion precludes the respondent from re-litigating that issue in infringement litigation and whether the district court is obliged to defer to the board’s finding. “The Supreme Court all of a sudden has gotten interested in the Lanham Act,” said Davis. “There is one opinion down, one to come and there may be a third as well.”

Lexmark v. Static Control

In a unanimous decision in Lexmark on March 25, the Supreme Court articulated a new test for standing in Lanham Act false advertising cases. The case resolved the question of whether it is necessary for two parties to be in direct competition for a plaintiff to be able to bring a false advertising claim. “This is an issue on which there was a very significant split among our circuit courts,” said Davis. “The Supreme Court resolved that by rejecting the rule that you need to have direct competition. So at least in some circuits bringing these claims will be dramatically easier. It is an opinion that does substantially change the law across most of the country.”

The Lexmark decision followed the Supreme Court’s Already v. Nike decision in January last year upholding a trademark owner’s right to have counterclaims for cancellation dismissed if it has withdrawn infringement claims. Davis noted, however, that this was a case “that involved a registered trademark but was primarily turned on a procedural ground rather than it being a true substantive trademark opinion.”

Davis is not sure why the Court is seemingly more interested in trademark cases. He noted, however, that Justice Sonia Sotomayor was involved in trademark cases in private practice and as a trial judge, unlike the other Justices. Davis added: “It may be that that interest that the Court has developed on the patent side may be carrying over to the trademark side. If it is, though, it is significant that in the first of these three cases [Lexmark] the Court has decided very much in the plaintiff’s favor. The conventional wisdom on the patent side is the plaintiffs are not going to come out of this string of cases as well. A lot of patent practitioners would predict that the Court isn’t taking the patent cases to affirm them. It may be taking these cases to overturn them.”

POM Wonderful v. Coca-Cola

The Supreme Court’s decision in POM Wonderful, in which oral arguments were heard on April 21, is expected by the end of June. Beverage firm POM Wonderful sued The Coca-Cola Company over a product labeled as “Pomegranate Blueberry” that only contained about 0.3% pomegranate juice and 0.2% blueberry juice. Coca-Cola argued that its labeling was specifically authorized under the Federal Food, Drug & Cosmetic Act, the Nutrition Labeling and Education Act of 1990, and U.S. Food and Drug Administration (FDA) regulations governing the naming and labeling of juice products.

A California appeals court decided in 2012 that there was no cause of action because the FDA had chosen not to challenge the label and therefore POM Wonderful could not use a false advertising statute to challenge the FDA’s inaction. The Ninth Circuit Court of Appeals affirmed that decision.

Davis said the most interesting aspect of the Supreme Court taking the case is how broad its ruling will be. If its opinion is broad enough that it applied to other statutes it could have ramifications for false advertising claims in industries other than beverages. He adds, however, that a narrow ruling that applies only to the POM Wonderful case is more likely.

“The significance of this case may well be very limited in the sense that it is limited to a very narrow statutory construction of the Food, Drug & Cosmetic Act,” said Davis. “It may also be something considerably broader in the sense that the Court’s holding has some significance to other industries that have other regulatory frameworks. The Environmental Protection Agency, for example, has the authority to approve labels of certain kinds of products and you must have that approval before that product can go on [the market] but that’s a separate statute governing the enquiry. The Department of Treasury has the obligation and must approve an alcoholic beverage label before that label can be put on the market. That too is governed by a separate statutory framework.

“So if there is a very broad holding from the court, which is generally unlikely because the court prefers to issue very narrow holdings, it could bleed over into other industries as well.”

Outside of the Supreme Court, Davis identifies “an unusually large number of opinions over the past couple of years and certainly over the past 12 months attempting to clarify the relationship between trademark protection and the first amendment protection available for creative works.”

TTAB trends

John Welch, partner at Lando & Anastasi, who runs the respected The TTABlog, will be reviewing the past year at the TTAB during Wednesday’s session. He identifies activity around non-traditional marks as an area to watch.

“Probably the most interesting area from a high-level view is the never-ending attempt by trademark attorneys to push the envelope and try to get all kinds of non-traditional marks registered,” he said. “Often product shapes come before the Board and get shot down, particularly because often these products have patent protection that is about to run out so the owner of the patent or the design will try to get trademark protection. The TTAB usually will shoot it down on functionality grounds, particularly if there was a utility patent involved.”

The TTAB now has two judges who were patent attorneys. Welch believes this is helping the board get a better understanding on the interface between patent and trademark law. “They are getting a much better handle on the role of the utility patent and the difference between de facto functionality, in other words the product shape as a function, versus de jure functionality, meaning it can’t be a trademark because the shape is essential to the usefulness of the product. For instance, the scoring of a candy bar is de facto functional because it has a function that makes it easier to break the candy bar apart but it is not de jure functional because it is not essential – you could do it many, many ways.”

Welch refers to an example from 2012 when the TTAB reversed a refusal to register a Hershey bar product configuration. Hershey proved functionality and distinctiveness. Judge Thomas Shaw, a patent attorney, wrote the decision in this case and Welch was pleased to see Shaw make the distinction between the two.

TTAB judges are holding firm despite attorneys’ attempts to push the boundaries of non-traditional marks. “Occasionally one slips by because the judges don’t know what they are doing or don’t understand, but generally they are pretty tough,” he said. “I think they are getting better and they make it difficult for these non-traditional marks.”

He pointed to a 2012 case about a yellow triangular shape a ceiling fan. Delta T had applied to register a two-dimensional design for ventilating fans. But the specimen of use displayed the design in three dimensions, corresponding to the shape of the winglet at the outer tip of the fan blade. The board found that the proposed mark was “coextensive with and inseparable from the applicant’s patented winglet design” and therefore de jure functional.

“The board said: ‘You say it is a two dimensional shape. But actually it is the shape of the fan and the shape of the fan is functional and it is three dimensional. So, even though you are trying to register it as a two dimensional design, we know what you are doing and you’re not getting away with it.’ That was an example,” said Welch.

Another trend Welch identifies is the Board lecturing practitioners about discovery and disclosure rules. He said some practitioners are not very familiar with TTAB Rules and procedures. “A lot of practitioners before the Board may be federal litigators,” he said. “They don’t pay attention to the TTAB Rules, which are pretty particular – they are not the same as the federal rules. There are various things you have to do at the TTAB that aren’t the same as at the courts. Litigators may be great court litigators, but they think they know what they are doing and they stumble over the TTAB Rules.”

One thing the Board does like, however, is when parties decide to go down the accelerated case resolutions (ACR) route. ACR streamlines the procedures because the two parties decide not to have testimony, using affidavits instead. “That gets the Board all excited,” said Welch. “They commend the parties for using ACR. But from what I can tell not many people use it.”

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