10th Circuit Applies Medimmune to Trademark Dispute

Trademark owners who are parties in TTAB proceedings, or are the recipients or senders of cease and desist letters, should know that the Supreme Court’s decision in Medimmune has changed the landscape and lowered the bar for declaratory judgment (DJ) jurisdiction for trademarks as well as patents. 

Last July, the U.S. Court of Appeals for the 10th Circuit issued a decision in Surefoot LC v. Sure Foot Corporation, 531 F.3d 1236 (10th Cir. 2008), an appeal from the United States District Court for the District of Utah, adopting for the first time in a trademark case the standard articulated by the U.S. Supreme Court in Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 S. Ct. 764, 166 L. Ed. 2d 604 (2007), which was a patent case.  Medimmune overturned the body of Federal Circuit caselaw holding that “a reasonable apprehension of imminent suit” was required to bring a declaratory judgment action involving intellectual property claims.  In Medimmune, the Supreme Court held that Medimmune, Inc. did not have to cease payment of royalties pursuant to a license agreement (thus creating a breach that would have provided a reasonable apprehension of suit) prior to bringing a declaratory judgment action seeking invalidation of the patent on which the royalty was due.  The 10th Circuit Surefoot decision marks the first time the Medimmune rationale has been applied in a trademark DJ action. 

The plaintiff in Surefoot had been embroiled for several years in a dispute over use and registration of its SUREFOOT trademark.  The defendant in Surefoot had previously asserted  trademark rights in the mark SURE FOOT,  both in correspondence with the plaintiff, and in numerous TTAB proceedings.  In light of the long history and pending TTAB matters without specific threats of further litigation, the Utah District Court ruled that the plaintiff did not have a reasonable basis to fear imminent litigation, and dismissed its declaratory judgment action.  The 10th Circuit Court of Appeals reversed and remanded.

The 10th Circuit held that Medimmune abolished the “reasonable apprehension of suit” test not only for patent cases and for cases in which the parties had a privity relationship pursuant to a licensing agreement, but also for trademark cases in which no such relationship exists.  The Court found the salient question to be “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” . 

The Court looked at the five pending TTAB oppositions filed by the defendant, combined with an extensive history of interactions between the parties in which the defendant expressly and repeatedly suggested historical and continuing infringing activity by the plaintiff, and found that a substantial controversy existed.  The Court emphasized that the District Court’s power to accept jurisdiction was not the same as answering the discretionary question of whether the District Court should entertain that jurisdiction.  As a result, the Court of Appeals remanded the case to the District Court to decide, based upon equitable factors, whether to exercise its jurisdiction.

The Court underscored that it had no need to “pass on what MedImmune means to a case where the only indicia of a live infringement controversy is the existence of a single TTAB opposition proceeding, or perhaps a single cease and desist letter.”   Instead, the Court  emphasized that its decision was based on the specific facts of the case.  Nonetheless, unlike patent infringement cease and desist letters, which prior to MedImmune typically attempted to avoid a DJ action by cautiously recommending a license rather than accusing anyone of outright infringement, trademark cease and desist letters historically have almost always alleged infringement and demanded that the infringement stop.  Thus, trademark cease and desist letters have historically carried with them a greater likelihood of resulting in a DJ action. 

The change brought by the Surefoot decision may be that a TTAB defendant who has not only registered or attempted to register a mark, but is also actually using the mark in question, may wish to consider filing a DJ action in Federal Court to resolve the issue of use and registration in a single proceeding.  Particularly where the TTAB decision may not resolve all of the issues between the parties, or where the TTAB defendant believes that TTAB plaintiff has grossly overstated the scope of its trademark protection to the extent that it may be able to recover costs, the TTAB defendant may wish to consider a DJ action as an alternative forum or as a means to foster a settlement.  TTAB plaintiffs hoping to avoid some of the costs and formalities of district court litigation by confining the dispute to the TTAB may wish to consider whether the risk of a DJ action in an unfriendly forum counsels filing a lawsuit in the forum of its own choice before the defendant files first.  If the parties wish to have the matter decided by the TTAB alone, they can then reach an agreement to suspend or withdraw without prejudice the district court action and not to file a DJ action at least until the TTAB renders its decision.