The Supreme Court decided five major trademark cases since 2010. This blog will discuss the two decisions that will have implications in other areas of intellectual property (IP) law. My next blog posting will discuss the remaining decisions.
Jurisdiction in Declaratory Judgment Actions
The decision by the Supreme Court in Already, LLC v. Nike, Inc., 568 U.S. ___ (2013) may have the biggest impact in intellectual property (IP) law of the above-mentioned five decisions. In the Already case, the plaintiff filed a declaratory judgment action after two of its customers were accused of trademark infringement by the defendant. After the suit was filed, the defendant issued a covenant-not-to-sue.
A declaratory judgment action allows an accused infringer to “turn the tables” on a purported IP owner by filing a lawsuit in a favorable forum. Such an action is usually effective when the accused infringer is substantially larger than the purported IP owner or when the accused infringer has built its business around the IP at issue.
A declaratory judgment action is an unusual type of lawsuit in the U.S. because courts are not allowed to issue “advisory” opinions. In other words, a party cannot go to court to ask whether something is illegal without performing some act that would create a legal controversy.
The Supreme Court determined that the unilateral issuance of a covenant-not-to-sue eliminated the controversy between the trademark owner and the accused infringers in the Already case. As a result, the IP owner was able to get out of the declaratory judgment action by issuing such a covenant. As a result of this decision, other IP owners will be able to use this technique to get out of unwanted declaratory judgment actions.
Unfortunately, the IP owner loses the ability to enforce the IP against the party who filed the declaratory judgment action when he or she uses this technique. However, sometimes it just makes economic sense to give up potential IP claims to avoid the costs associated with litigation.
The other trademark case that is likely to have an impact on other areas of IP law concerned issue preclusion. The Supreme Court considered the preclusive effect of Trademark Trial and Appeal Board (“TTAB”) decisions in B&B Hardware, Inc. v. Hargis Industries, Inc., 575 U.S. __ (2015). Specifically, the Court considered whether a party could be precluded from asserting that there is no likelihood of confusion between its trademark and another party’s trademark in a district court case after the TTAB ruled that there was a likelihood of confusion. The district court was located in the Eighth Circuit.
A finding of likelihood of confusion can result in liability for trademark infringement. The finding usually requires a highly technical analysis of multiple factors.
The Supreme Court found that the TTAB decision on the issue of likelihood of confusion could be binding on the district court. The decision was somewhat surprising because circuit courts can rely upon different factors than the TTAB in deciding whether a likelihood of confusion exists. However, the Court indicated that both the circuit court and the TTAB were applying the same standard even though they may have been relying on different factors.
The decision could have implications in other areas of IP law because the United States Patent and Trademark Office has another administrative tribunal that decides certain patent issues – the Patent Trial and Appeal Board. Similarly, the United States Copyright Office (“USCO”) has an administrative tribunal that decides certain royalty issues. The USCO is also trying to establish a tribunal to settle small copyright claims. The B&B Hardware makes it easier for decisions by those tribunals to be given preclusive effect in district courts.