United States: Federal Courts Lack Subject Matter Jurisdiction Over Declaratory Judgment Action Seeking Concurrent Use

The U.S. Court of Appeals for the Third Circuit has now held that a federal district courts lack subject matter jurisdiction over an action seeking a declaration that both the plaintiff and the defendant are entitled to concurrent use trademark registrations. J&D Home Improvement, Inc. v. Basement Doctor, Inc., Case No. 03-1902, 2004 U.S. App. LEXIS 1008 (3rd Cir. Jan. 22, 2004).

Section 2(d) of the Lanham Act, 15 U.S.C. § 1052(d), provides that the U.S. Patent and Trademark Office (USPTO) may issue concurrent use trademark registrations either based on its own determination or when a court has finally determined that more than one person is entitled to use the same or similar marks. J&D and Basement Doctorwere each using the trademark BASEMENT DOCTOR in different geographical areas. J&D procured a federal trademark registration for the mark THE BASEMENT DOCTOR, and, thereafter, Basement Doctor unsuccessfully sought registration of its BASEMENT DOCTOR mark. Basement Doctor then initiated proceedings before the Trademark Trial and Appeal Board seeking cancellation of J&D’s registration based on priority of use.

J&D filed suit in federal court against Basement Doctor, seeking a declaration that J&D is entitled to a concurrent use registration for the mark THE BASEMENT DOCTOR for the entire country, except in those areas in which Basement Doctor could demonstrate actual use of the mark as of the filing date of J&D’s trademark registration. J&D argued that subject matter jurisdiction existed because § 2(d) authorized its action, and under § 39(a) of the Lanham Act, district courts "shall have original jurisdiction…of all actions arising under [this chapter]." Basement Doctor moved to dismiss, arguing that§2(d) authorizes a remedy only, not a § 39(a) "action." The district court agreed and dismissed the complaint, holding that § 2(d) is not a grant of original jurisdiction, and J&D had not pled the existence of an actual case or controversy that would otherwise confer the district court with jurisdiction over the action. J&D appealed.

The Third Circuit affirmed, finding that although a court may determine that concurrent registration is appropriate and thereby direct the USPTO to issue concurrent registrations, it may only do so in the context of actions over which the court already has subject matter jurisdiction on some other basis. Here, there was no other basis. The court noted that no actual controversy existed because J&D’s trademark registration was valid, because no competing mark had been registered by Basement Doctor, and neither party had alleged infringement against the other party.