Courts And TTAB Weigh In On First Amendment Defence And Scope Of Rights Protection Under The Lanham Act

In summary

This chapter provides an overview of key developments in trademark litigation in the United States over the past year. It addresses new legal precedents set by the US Supreme Court, federal trial and appellate courts, and the US Patent and Trademark Office's Trademark Trial and Appeal Board (TTAB).

Discussion points

• Continued litigation over First Amendment issues
• Increased protection for geographical indications
• Distinctions between types of fraud at the US Patent and Trademark Office
• Wording of identifications of goods and services
• Scope of protectable retail services
• 'Trademark bullying' as a defence

Referenced in this article

• Vidal v Elster
• Punchbowl, Inc v AJ Press LLC
• Bureau National Interprofessionnel du Cognac, et al v Cologne & Cognac Ent
• Great Concepts, LLC v Chutter, Inc
• In re Locus Link USA
• Blizzard Ent, Inc v Ava Labs, Inc
• DoorDash, Inc v Greenerside Holdings, LLC

Injunctions at a glance

Introduction

Litigation regarding trademark rights in the United States typically occurs in federal courts or at the Trademark Trial and Appeal Board (TTAB) of the US Patent and Trademark Office (USPTO). While the TTAB only has jurisdiction over disputes regarding federal registration, courts are authorised to address both registration and use in commerce. Recent decisions in these fora shed light on the scope of litigants' rights under the US Trademark Act (15 USC sections 1051 et seq, colloquially known as the Lanham Act), which governs federal trademark rights in the United States. Courts and the TTAB have provided guidance to litigants on the merits of certain claims and defences specific to these proceedings, including those surrounding free speech rights under the First Amendment to the US Constitution, fraud and 'trademark bullying'.

Continued litigation over intersection of free speech and trademark rights

'Names clause' does not violate free speech rights

In contrast to other recent decisions striking down portions of the Lanham Act as unconstitutional on First Amendment grounds, the Supreme Court in Vidal v Elster upheld the Act's 'names clause' restriction. This clause prohibits registration of a mark that '[c]onsists of or comprises a name . . . identifying a particular living individual except by his written consent'.¹ Based on this restriction, the applicant in Vidal was ultimately precluded from registering a mark commenting on former President Donald Trump.

Applicant Steve Elster sought to register the mark 'TRUMP TOO SMALL' for shirts and hats in reference to a debate that had taken place in 2016. The examining attorney refused registration and the TTAB upheld the refusal. But the Federal Circuit reversed, finding that the names clause was unconstitutional in violation of First Amendment protection over free speech.

The Supreme Court sided with the USPTO, ultimately holding that although the names clause regulates particular content, it is viewpoint-neutral and does not discriminate based on the particular underlying message.

The Court took care to distinguish Vidal from other recent cases in which the Court did strike down certain Lanham Act provisions as unconstitutional: a prohibition on registration of disparaging marks (Matal v Tam) and a prohibition on registration of marks that are immoral or scandalous (Iancu v Brunetti). Unlike in those cases, where the statutory provision in question was not viewpoint-neutral, '[t]he names clause does not facially discriminate against any viewpoint', Justice Clarence Thomas wrote in an opinion with unanimous support. 'No matter the message a registrant wants to convey, the names clause prohibits marks that use another person's name without consent'.

The Court noted that trademark law has historically included content-based distinctions to prevent confusion and protect reputation associated with certain trademarks. These restrictions have coexisted with the First Amendment since the country's founding, the Court said, suggesting that not all content-based trademark restrictions require heightened scrutiny.

At the same time, the Court took care to clarify that the decision in Vidal is meant to be interpreted narrowly, in that it does not establish a comprehensive framework for all content-based, viewpoint-neutral restrictions contained in the Lanham Act.

Impact of limitation on First Amendment defence still unclear

A closely watched US Supreme Court decision from 2023 has continued to play out in various federal courts in 2024. In Jack Daniel's Properties Inc v VIP Prods, Inc, the Court unanimously rejected an appellate court's opinion that a dog toy mimicking a bottle of JACK DANIEL'S-branded whiskey should be protected as a parody under the First Amendment, finding that the right to free expression does not excuse 'trademark law's cardinal sin' – use of another's trademark 'as a trademark'.

The Jack Daniel's opinion limited application of the Rogers test, which unlike the multi-factor likelihood of confusion test used in most cases, weighs only two factors: (1) the accused work's artistic relevance; and (2) whether use of the other party's mark 'explicitly misleads as to the source or the content of the work'. Under Jack Daniel's, the Rogers test does not apply 'when an alleged infringer uses a trademark in the way the Lanham Act most cares about: as a designation of source for the infringer's own goods'.

Some courts that had originally relied upon Rogers in this context seem to have reversed course, indicating that there may be some longer-term impact on First Amendment defences to trademark infringement actions. However, it is still unclear how large that impact will actually be.

For example, in Punchbowl, Inc v AJ Press LLC, the Ninth Circuit Court of Appeals withdrew its original opinion affirming judgment in the defendant's favour based on Rogers. The Ninth Circuit, following Jack Daniel's, remanded and ordered the trial court to apply traditional likelihood of confusion factors to determine whether the defendant's use of PUNCHBOWL NEWS for an online news service infringed the plaintiff's rights in PUNCHBOWL for invitations and greeting cards. The defendant moved for judgment again and in August 2024 prevailed for a second time, even under the arguably more stringent standard.

Under both standards, the parties' respective goods and services offerings were different enough that the district court did not find a likelihood of confusion. Therefore, it may be that in some cases, as in Punchbowl, an academic decision regarding the appropriate standard of review in trademark infringement cases may not ultimately have an impact on a court's judgment of real-world consumer confusion.

Federal Circuit weighs in on scope of trademark protection in various contexts

Greater protection for geographical indications

Under US law, a certification mark can 'certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of such person's goods or services or that the work or labor on the goods or services was performed by members of a union or other organization'.² As in other jurisdictions, geographical indications (GIs) are recognised as a type of certification mark that may be used by others with permission of the mark owner and are entitled to the same protections as trademarks.

The Federal Circuit addressed several issues that have vexed those trying to protect GIs in Bureau National Interprofessionnel du Cognac, et al v Cologne & Cognac Ent. In that case, the entities responsible for controlling and protecting the certification mark COGNAC for brandy manufactured in the Cognac region of France challenged an application for COLOGNE & COGNAC ENTERTAINMENT for music and production services. The Federal Circuit vacated the TTAB's dismissal of the opposition.

First, the court found that the TTAB had erroneously focused on whether the COGNAC mark was famous for its certification function rather than for its regional origin or other characteristics. The court clarified that a certification mark's fame can be based on its geographical significance and does not need to be tied solely to its certification function.

Proving fame before the TTAB generally requires an examination of, among other evidence, the amounts received from sales and spent on advertising under the mark. Bureau National is a case of first impression on the issue of how such sales and advertising figures should be addressed in the context of certification marks that are accompanied by house or product marks. The TTAB had simply rejected the evidence based on the assumption that sales and advertising were driven solely by the house or product marks (eg, HENNESSY) rather than the certification mark. The court held that the TTAB 'should have determined, based on the context-specific evidence, whether a portion of the sales and advertising evidence could be attributed to the COGNAC mark such that that evidence was indicative of fame for the certification mark'. It specifically noted that evidence of the term COGNAC being used 'without reference to a house or brand name' could be evidence of fame.

The court also found that the TTAB had improperly ignored evidence showing the association between COGNAC and the hip-hop music industry. It held that the proper comparison should have been between the goods and services of certified users of the COGNAC mark and those of the applicant, rather than between the appellants' certification services and the applicant's goods and services.

This decision provides critical support for all owners of certification marks, and in particular for the entities responsible for controlling the use of GIs. Providing an approach that increases the likelihood a certification mark may be considered strong or even famous, the court has provided more protection for such marks.

Not all fraud is created equal

In Great Concepts, LLC v Chutter, Inc, the Federal Circuit offered guidance on the different ramifications for fraudulent submissions at the application stage and fraudulent submissions seeking to achieve incontestable status for an existing registration. While only the former will result in cancellation of a registration, fraud on either type of submission will not be tolerated.

If a mark has been used continuously for five years after federal registration, it can become 'incontestable' upon filing a sworn declaration, pursuant to section 15 of the Lanham Act, attesting to the continuous use and the lack of proceedings involving the registration.³ An incontestable registration will be accepted in litigation as conclusive evidence of the validity of the mark and the registrant's exclusive right to use it in commerce.

Even without the section 15 declaration, section 14 of the Act provides that five years after the date a registration is issued, it can no longer be cancelled on likelihood of confusion grounds.⁴ However, cancellation may occur if the mark has been abandoned or if the 'registration was obtained fraudulently'.

In Chutter, an attorney signed a declaration under section 15 stating that the mark was still in use and that 'there is no proceeding involving said rights pending and not disposed of either in the [USPTO] or in the courts'. The latter statement was demonstrably false. At the time, the registration was the subject of both a petition to cancel at the TTAB as well as civil litigation in court.

The TTAB cancelled the registration based on fraud after finding that the signatory knew the section 15 declaration was false, intended the USPTO to rely on it, and in the end, the USPTO did rely on it in accepting the declaration and conferring incontestability status on the registration.

On appeal, the Federal Circuit examined the difference between filing a false section 15 declaration supporting incontestability of an existing registration, versus filing a false application to obtain the registration in the first place. While the relevant statute allows for cancellation if a registration is 'obtained' fraudulently, it does not explicitly authorise cancellation related to a fraudulent section 15 declaration. Thus, the court concluded, the only statutory remedy for fraudulently obtaining incontestable status is the loss of that status – not cancellation of the underlying registration.

The dissent argued, in part, that just because litigants had limited grounds for petitioning to cancel or addressing fraudulent activity, that does not mean the USPTO was so limited and is free to fashion sanctions to address fraudulent conduct. The decision presents a reminder that applicants and registrants – and their attorneys – should take care to ensure that all representations made to the USPTO are accurate. Further, although attorneys are allowed to make factual representations and sign certain declarations on their client's behalf, by doing so they may be taking on unnecessary risks should those facts turn out to be false.

First Trademark Modernization Act expungement appeal focuses on identifications of goods

In the four years since the Trademark Modernization Act created two new procedures to cancel existing trademark registrations based on non-use – expungement⁵ and re-examination⁶ – over 4,500 proceedings have been filed. The Federal Circuit's first review of two such cancellations in In re Locus Link USA provides valuable guidance regarding the structure of identifications of goods and services.

In particular, the court focused on the commonly used term 'namely'. Trademark practitioners in the United States often use this term to provide a more specific and definite identification of goods. It clarifies the introductory wording that precedes it by specifying the exact goods or services covered, which should be within the scope and a subset of the introductory wording. For example, 'clothing, namely, shirts' specifies that the term 'clothing' refers specifically to shirts.

In this case, Locus Link had applied to register its mark for 'Components for air conditioning and cooling systems, namely, evaporative air coolers'. The problem? Lotus Link did not sell evaporative air coolers, but rather the components used to keep them running cool. The court agreed with the USPTO that 'evaporative air coolers' modifies the otherwise indefinite wording 'components for air conditioning and cooling systems'. Thus, the identification covered evaporative air coolers that are components of air-cooling systems, not unspecified components for evaporative air coolers.

While the court's affirmance of the USPTO's cancellation decisions was not surprising, the decision is a reminder that the structure and language of identifications of goods or services must be carefully drafted to ensure they cover the actual goods being sold, or services being provided, by the trademark applicant.

TTAB rejects attacks based on non-use and bullying

Sale of one's own goods qualifies as 'service'

Under well-established US law, service marks are only protectable to the extent the services at issue are provided for the benefit of others. This means that, traditionally, retail sales of one's own products have not necessarily been sufficient to support a service mark registration in International Class 35. But in Blizzard Ent, Inc v Ava Labs, Inc, the TTAB clarified that '[w]hile at one time retail store activities were not considered services, it has long been recognized that gathering various products together, making a place available for purchasers to select goods, and providing any other necessary means for consummating purchases constitute the performance of a service'.

Opposer Blizzard Entertainment sought to prevent registration of applicant Ava Labs' BLIZZARD mark for various business services based on prior registrations for BLIZZARD and BLIZZARD ENTERTAINMENT for online retail store and mail order services. Ava responded with a counterclaim for cancellation based on non-use, arguing Blizzard only ever sold its own products and therefore could not demonstrate it offered retail services for the benefit of others. The Board applied precedent regarding the meaning of 'service' under the Lanham Act, ultimately finding that Blizzard's retail offerings were sufficient.

To qualify as a 'service' under the Lanham Act, the activity must be real, must benefit someone other than the applicant and must be qualitatively different from the sale of goods. In other words, it cannot be simply ancillary to the sale of products. Just because a seller benefits from a particular offering does not necessarily mean that offering cannot qualify as a service, the Board clarified. The relevant question is who primarily benefits from the activity. By providing a central location to purchase goods, Blizzard's online retail platform primarily benefitted consumers, the Board concluded.

Unfortunately, the opinion does not provide additional clarification on why or how this service 'primarily' benefits consumers as opposed to the retail seller, which leaves open the question of whether other types of services commonly performed by goods and services suppliers – such as advertising – might also qualify for trademark protection. However, its holding does offer clear precedent on what qualifies as a 'service' under the Trademark Act moving forward.

Trademark bullying not a valid defence at TTAB

For well over a decade, the term 'trademark bully' has been used pejoratively to describe a trademark owner that is particularly aggressive in seeking to protect its rights in its trademarks. Professor McCarthy even addresses the concept in his famed treatise McCarthy on Trademarks and Unfair Competition, defining it as 'conduct by a trademark owner that 1) asserts an "unreasonably inflated view" of the exclusive scope of its mark; 2) is overly aggressive in making demands that are not proportional to the objected to conduct; 3) is a sizeable company with substantial assets compared to 4) the smaller business owner accused of using a confusingly similar mark'.

However, the TTAB has determined that, while the term may appear in law journals, treatises, blogs and elsewhere, it does not provide grounds for an affirmative defence in an inter partes proceeding. In fact, the TTAB expressly rejected it when asserted in connection with an 'unclean hands' affirmative defence in DoorDash, Inc v Greenerside Holdings, LLC. Unclean hands is an equitable doctrine that bars relief to a party who has engaged in inequitable behaviour (including fraud, deceit, unconscionability or bad faith) related to that party's claim. In support of its defence, the applicant in DoorDash alleged that the 'Opposer has engaged in a practice of "trademark bullying"' because it had 'previously opposed a significant number of applications where the grounds of the opposition were dubious, weak, or exaggerated'.

The TTAB has the authority to strike any defence that it perceives as being insufficient and any matter that is 'redundant, immaterial, impertinent or scandalous'. Although the Lanham Act authorises trademark owners to protect their marks by opposing or petitioning to cancel any registration based on a reasonable belief of damage, the TTAB in DoorDash noted that a 'trademark bullying' defence to such actions is neither explicitly nor implicitly mentioned in the Act. Relying in part on long-standing authority rejecting the unclean hands defence based on a trademark owner's allegedly 'overzealous enforcement' of its rights, the TTAB similarly rejected the same defence, even if asserted under a different label.

The TTAB's decision was technically based on an applicant's failure to plead sufficient facts to support its defence. Given that proving the defence would require an assessment of the merits of proceedings unrelated to the one at hand, however, this decision is likely to spell an end to attempts to assert 'trademark bullying' as a defence in TTAB proceedings.

Footnotes

1. 15 U. S. C. §1052(c).

2. 15 U. S. C. §1127.

3. 15 U. S. C. §1065.

4. 15 U. S. C. §1064.

5. 15 U.S.C § 1066a.

6. 15 U.S.C § 1066b.

Originally published by WTR

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