Expert Commentary

Forum Selection: Appealing a Trademark Trial and Appeal Board Decision

The Trademark Act provides two avenues for a dissatisfied trademark applicant to appeal a final Trademark Trial and Appeal Board decision: appealing the decision to the Court of Appeals for the Federal Circuit or commencing a civil action in a federal district court.


Intellectual Property
July 2021
Acknowledgment

Sanford E. Warren Jr. thanks Nathan L. Levenson, an associate with Warren Rhoades LLP, for his assistance and contributions to this article. Mr. Levenson primarily focuses his practice on intellectual property prosecution and litigation, specifically patent, copyright, and trademark prosecution and litigation. He has represented clients in patent, trademark, copyright, trade secret, and unfair competition disputes in a variety of federal district courts, before the Patent Trial and Appeal Board and before the Trademark Trial and Appeal Board. Mr. Levenson also helps his clients identify, evaluate, and enforce their intellectual property asset rights. He was recognized by Texas Monthly for 2020 and 2021 as a Texas Rising Star in the area of intellectual property—signifying a high degree of peer recognition and achievement.

Although some similarities exist between the two available avenues, this article examines the advantages and disadvantages facing litigants in their forum determination for appeals involving ex parte proceedings and briefly outlines significant distinctions for appeals involving inter partes proceedings.

Forum Selection

Federal Circuit versus Federal District Court

Dissatisfied parties are afforded the right to appeal a final decision by the Trademark Trial and Appeal Board by either (i) appealing the decision to the Court of Appeals for the Federal Circuit pursuant to § 1071(a) of the Lanham Act, or (ii) to commence a civil action in a federal district court pursuant to § 1071(b) of the Lanham Act.1 Notwithstanding this right of review, there are several significant distinctions between each forum's substantive standards and procedural requirements. Astute litigators and their respective clients should evaluate these significant distinctions when deciding whether to appeal to either the Federal Circuit or the District Court for the Eastern District of Virginia. Moreover, litigants should be aware that once a dissatisfied party elects to proceed with an appeal to either the Federal Circuit or the district court, that party will waive its rights to proceed in the alternative forum.2

The Effect of an Appeal on a Party's District Court Forum Selection

If a dissatisfied party elects to forego an appeal to the Federal Circuit, the fact of whether the appeal stems from an ex parte proceeding (e.g., a Trademark Trial and Appeal Board decision upholding an examiner's final refusal) or an inter partes proceeding (e.g., a Trademark Trial and Appeal Board decision of an opposition or cancellation proceeding) plays a critical role in a dissatisfied party's district court forum selection. In appeals involving ex parte proceedings, the dissatisfied party must initiate the civil action against the director of the US Patent and Trademark Office (USPTO).3 As a result, the appeal must be filed in the jurisdiction in which the USPTO maintains its principal office, which is the Eastern District of Virginia.4

To the contrary, for appeals involving an inter partes proceeding, a civil action under Trademark Act § 21(b), 15 U.S.C. § 1071(b), may generally be brought in any federal district court that has jurisdiction over the adverse party to the proceeding.5 However, the District Court for the Eastern District of Virginia retains exclusive jurisdiction for appeals involving inter partes proceedings where there are adverse parties residing in multiple districts or an adverse party residing in a foreign country.6 Significantly, unlike appeals involving ex parte proceedings, the director of the US Patent and Trademark Office cannot be made a party in an inter partes proceeding.7 Despite this fact, the director retains the right to intervene in the inter partes appeal.

The Key Differences

Scope of Review. While the standards of review for each forum cannot be ignored in a litigant's venue consideration, the most notable distinction can be found in the scope of review between the federal circuit and a federal district court. If a final decision is appealed to the federal circuit, the record is closed, and the appeal will be decided based solely on the record as presented before the Trademark Trial and Appeal Board. As a result, a dissatisfied party may not submit any new evidence nor raise any new issues that were not previously raised before the Trademark Trial and Appeal Board.

Quite to the contrary, an appeal to a federal district court—involving inter partes proceedings—a dissatisfied party is allowed to advance additional claims as part of the appeal, such as claims for infringement and unfair competition. However, a dissatisfied party may not advance additional claims in ex parte proceedings. Notably, both ex parte and inter partes appeals allow the administrative record to be supplemented with new evidence relevant to the proceeding.8 This supplementation allows a dissatisfied party to strengthen its positions on issues that may have been ineffective before the Trademark Trial and Appeal Board. For example, a party may not have decided to perform a market survey for its appeal to the Trademark Trial and Appeal Board, but a party may do so once they are litigating to a federal district court.

Standard of Review. Although the federal circuit applies its own interpretation of the law, this is typically the same law applied by the Trademark Trial and Appeal Board because the Trademark Trial and Appeal Board is legally bound to apply the federal circuit's viewpoint of trademark principles. Specifically, the applicable standard of review depends on whether the federal circuit is evaluating findings of fact or legal conclusions made by the Trademark Trial and Appeal Board.

With respect to questions of fact, the federal circuit evaluates factual findings under the "substantial evidence" standard of review.9 Thus, the federal circuit will uphold the Trademark Trial and Appeal Board's factual findings unless they are unsupported by substantial evidence.10 Questions of fact include whether a trademark is descriptive;11 whether a trademark is generic;12 whether a trademark has been abandoned;13 and whether a trademark has acquired inherent distinctiveness.14 To the contrary, legal conclusions determined by the Trademark Trial and Appeal Board are reviewed de novo by the federal circuit.15

Unlike an appeal to the federal circuit, district courts must apply the law of the circuit in which they are located. For example, the actual standard of review to be applied by the federal district court for the eastern district of Virginia depends on whether or not the administrative record has been supplemented with new evidence. The two forums differ, specifically, with respect to the standard of review applied to factual findings by the Trademark Trial and Appeal Board if new evidence is submitted in a district court proceeding. To the extent new evidence is provided to the court, the federal district court reviews the record de novo and acts as the ultimate fact finder based on the entire record before the court.16

Notwithstanding this rule, the federal district court retains the discretion to consider the record before the Trademark Trial and Appeal Board as well as any factual findings to determine what weight to afford to the newly submitted evidence.17 To the contrary, if new evidence is not submitted to the court or the proceeding solely involves a review of legal conclusions, similarities of the standards are immediately apparent between the standard of review for the District Court for the Eastern District of Virginia and that of the federal circuit. For example, the federal district court will evaluate factual findings deferentially under the "substantial evidence" standard of review if new evidence is not provided. Likewise, the federal district court will review the Trademark Trial and Appeal Board's legal conclusions de novo.18

Moreover, the two forums also differ with respect to the characterization of a "likelihood of confusion" determination. Under the federal circuit's standard of review, likelihood of confusion is a legal determination that is based on underlying factual findings of the Board's application of some, or all, of the 13 factors set forth in In re E.I. DuPont DeNemours & Co., 476 F.2d 1357 (CCPA 1973).19 As a result, the federal circuit reviews the Trademark Trial and Appeal Board's overall determination of the likelihood of confusion de novo without deference.20 To the contrary, the Fourth Circuit recognizes the likelihood of confusion as an inherently factual issue.21 Despite this rule of law, the applicable standard of the review still depends on whether or not the administrative record has been supplemented with new evidence, as previously discussed.

15 U.S.C. § 1071(b)(3). Prior to 2020, the daunting provision of 15 U.S.C. § 1071(b)(3) 22 more likely than not deterred the majority of litigants and their respective clients from pursuing an ex parte appeal in the eastern district of Virginia. This is because to an ex parte appellant's dismay, the terms "all expenses" had been found to encompass all of the US Patent and Trademark Office's attorneys' fees associated with the proceeding, regardless of whether the final decision is in their favor or not.23 Put simply, if such civil action was commenced, the moving party was required by statute to reimburse the government for US Patent and Trademark Office's attorneys' fees, regardless of whether or not the moving party is successful on appeal.

Indeed, in Shammas v. Focarino, a dissatisfied party filed a civil action in the eastern district of Virginia seeking review of the Trademark Trial and Appeal Board's decision to deny his federal trademark registration on the grounds of genericness. In a case of first impression, the US Patent and Trademark Office moved for an award seeking reimbursement of all expenses—including attorneys' fees—pursuant to 15 U.S.C. § 1071(b)(3) after the district court granted summary judgment in its favor. The district court granted the reimbursement of over $36,000 in legal fees and expenses.24 In affirming the decision from the eastern district of Virginia, the Fourth Circuit rejected the dissatisfied party's argument that such an award amounts to impermissible fee shifting.25 To the contrary, the Fourth Circuit agreed that the terms "all expenses" in ex parte proceedings include all attorneys' fees associated with the proceeding.26

However, in late 2019, a key US Supreme Court case provided a glimmer of hope to trademark practitioners and trademark applicants in avoiding the taxing of substantial attorneys' fees and costs in favor of the Patent and Trademark Office. On December 11, 2019, the US Supreme Court—in Peter v. NantKwest, Inc., 589 U.S. __ (2019)—issued a unanimous decision holding that the US Patent and Trademark Office was not entitled to receive its attorneys' fees in an ex parte proceeding under section 145 of the Patent Act. Critically, this ruling significantly deviates from the Fourth Circuit's ruling in Shammas because the statutory language of section 145 of the Patent Act is identical to 15 U.S.C. § 1071(b)(3) (i.e., that the applicant must pay "[a]ll the expenses of the proceedings"). Indeed, in Patent and Trademark Office v. Booking.com B.V., 91 U.S. ___ (2020), the US Supreme Court vacated the Fourth Circuit's award of attorneys' fees under 15 U.S.C. § 1071(b)(3) and remanded the case under the direction that the Fourth Circuit reconsider its previous decision in light of Peter v. NantKwest.

Conclusion

In light of Peter v. NantKwest, filing an ex parte in the eastern district of Virginia may now appear more attractive from a procedural and substantive standpoint. Regardless, litigants and their respective clients must determine whether the foregoing advantages outweigh any disadvantages prior to ultimately deciding a venue determination for appeals involving either an ex parte or inter partes proceeding.


1 See Trademark Act § 21, 15 U.S.C. § 1071.

See Trademark Act § 21(a)(1), 15 U.S.C. § 1071(a)(1).

3 See Trademark Act § 21(b)(3), 15 U.S.C. § 1071(b)(3).

4 See 35 U.S.C. § 1(b) ("The United States Patent and Trademark Office shall be deemed, for purposes of venue in civil actions, to be a resident of the district in which its principal office is located, except where jurisdiction is otherwise provided by law."). The United States Patent and Trademark Office principal office is located in Alexandria, Virginia, which is in the Eastern District of Virginia. See 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 21:25 (4th ed. 2008).

5 See 28 U.S.C. § 1391(b).

6 See Trademark Act § 21(b)(4), 15 U.S.C. § 1071(b)(4).

7 See Trademark Act § 21(b)(2), 15 U.S.C. § 1071(b)(2).

8 Swatch AG v. Beehive Wholesale LLC, 739 F.3d 150, 155 (4th Cir. 2014); Seacret Spa Int'l v. Lee, No. 1:15cv405, 2016 U.S. Dist. LEXIS 29611, at *4 (E.D. Va. Mar. 8, 2016).

9 See In re Cordua Rests., Inc., 823 F.3d 594, 599 (Fed. Cir. 2016) (citing Aycock Eng'g, Inc. v. Airflite, Inc., 560 F.3d 1350, 1355 (Fed. Cir. 2009)).

10 See In re Coors Brewing Co., 343 F.3d 1340, 1343 (Fed. Cir. 2003).

11 See DuoProSS Meditech Corp. v. Inviro Med. Devices, Ltd., 695 F.3d 1247, 1252 (Fed. Cir. 2012).

12 See In re Cordua Rests., Inc., 823 F.3d 594, 599 (Fed. Cir. 2016); In re Hotels.com LP, 573 F.3d 1300, 1301 (Fed. Cir. 2009); In re Reed Elsevier Props., Inc., 482 F.3d 1376, 1378 (Fed. Cir. 2007).

13 See In re Cordua Rests., Inc., 823 F.3d 594, 599 (Fed. Cir. 2016) (citing Aycock Eng'g, Inc. v. Airflite, Inc., 560 F.3d 1350, 1355 (Fed. Cir. 2009)).

14 See In re Pacer Tech., 338 F.3d 1348, 1349 (Fed. Cir. 2003).

15 See id. (citing In re Int'l Flavors & Fragrances, Inc., 183 F.3d 1361, 1365 (Fed. Cir. 1999)).

16 See Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 156 (4th Cir. 2014) ("In sum, where new evidence is submitted, de novo review of the entire record is required because the district court "cannot meaningfully defer to the PTO's factual findings if the PTO considered a different set of facts." (quoting Hyatt v. Kappos, 625 F.3d 1320, 1335 (Fed. Cir. 2010))).

17 See Seacret Spa Int'l v. Lee, No. 1:15-cv-405, 2016 U.S. Dist. LEXIS 29611, at *4 (E.D. Va. Mar. 8, 2016) (citing Swatch AG v. Beehive Wholesale LLC, 739 F.3d 150, 155 (4th Cir. 2014)).

18 See Glendale Int'l Corp. v. United States PTO, 374 F. Supp. 2d 479, 485 (E.D. Va. 2005).

19 See Coach Servs. v. Triumph Learning LLC, 668 F.3d 1356, 1365 (Fed. Cir. 2012) (citing Cunningham v. Laser Golf Corp., 222 F.3d 943, 945 (Fed. Cir. 2000)).

20 See In re Chatam Int'l Inc., 380 F.3d 1340, 1342 (Fed. Cir. 2004).

21 Swatch AG v. Beehive Wholesale LLC, 739 F.3d 150, 155 (4th Cir. 2014) (citing Petro Shopping Ctrs., L.P. v. James River Petroleum Inc., 130 F.3d 88, 91-92 (4th Cir. 1997)).

22 See Trademark Act § 21(b)(3), 15 U.S.C. § 1071(b)(3).

23 See Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015).

24 See Shammas v. Focarino, 784 F.3d 219, 225 (4th Cir. 2015), cert. denied, Shammas v. Hirshfeld, 136 S. Ct. 1376 (2016).

25 See Shammas v. Focarino, 784 F.3d 219, 225 (4th Cir. 2015).

26 See id. ("Our reading that § 1071(b)(3) imposes a unilateral, compensatory fee, including attorneys' fees, on every ex parte applicant who elects to engage the resources of the PTO when pursuing a de novo action in the district court, whether the applicant wins or loses, is confirmed by the Lanham Act's structure and legislative history.").


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