Bridging the Gap Between the Federal Courts and the U.S. Patent and Trademark Office

Boston University Journal of Science and Technology Law
Symposium
Sorry, guys, I did not follow the patent panels.

Panel III: Trademarks
Rebecca Tushnet, Fixing Incontestability: The Next Frontier
Incontestability is a nearly unique feature of American
trademark law, with a unique American implementation.    Even if a symbol is merely descriptive and
lacking secondary meaning, incontestability means that federal law will treat
the symbol as if it were functioning as a mark. 
This is a powerful protection, given that descriptive terms lacking
secondary meaning are otherwise free for all competitors to use, and that
competitors are likely to have good reasons to do so—after all, the symbol
describes relevant features of the product or service.  Although competitors retain the defense of
descriptive fair use, this defense is difficult to prove and often requires at
least extensive discovery .
Given the power of incontestability, one might think it
would be carefully granted. 
Unfortunately, claims of incontestability are not subject to substantive
examination at the PTO.  Moreover,
because incontestability has specific legal requirements that may be unfamiliar
to lawyers who aren’t trademark specialists, it’s simple for negligence alone
to produce invalid incontestability filings, which then appear on the Register
and may distort decisionmaking, both by competitors and by courts. 
Worse, and of particular relevance to this Symposium, courts
may misunderstand either the prerequisites for or the meaning of
incontestability, allowing trademark claimants to assert rights that they don’t
actually have.  Courts even appear to be
inconsistent about meeting their statutory duty to notify the PTO about the
filing and conclusion of all actions concerning registered trademarks, which
has implications both for validity in general and for incontestability in
particular.  Competitors, many of them
likely to have little in the way of sophisticated trademark advice, are in an
even worse position to evaluate the validity of incontestability.
In the last two years, several legally significant
cases—including one that went to the Supreme Court on apparently mistaken
premises—were complicated by unwarranted Section 15 approvals.  I’ll talk about one, but my paper discusses a
few others. 
The most striking example of apparently mistaken
incontestability comes from B&B v. Hargis.  
This case has a complicated procedural history, and it went to the
Supreme Court in 2015 on the question of whether preclusion applies to TTAB
rulings in subsequent infringement litigation. 
The Supreme Court answered in the affirmative, at least for some
situations.  That result makes the stakes
of registration higher, and reinforces the need to have the register reflect
reality.  However, the course of the
B&B case itself reveals trouble with the accuracy of incontestability
claims.  B&B registered SEALTIGHT for
fasteners in 1993 and then sued Hargis for infringement in 1998, relying on its
registration.  In 2000, Hargis proved at
trial that SEALTIGHT was descriptive without secondary meaning for
fasteners.  Yet neither the district
court, nor the court of appeals that affirmed the ruling, ordered the PTO to
cancel the registration, despite that registration’s invalidity.   Meanwhile, Hargis filed a petition to cancel
B&B’s mark, which proceeding was suspended pending the resolution of the
infringement lawsuit. 
When the infringement lawsuit was resolved in favor of
Hargis, Hargis attempted to amend its cancellation petition to add the ground
of invalidity on the basis of mere descriptiveness, but the TTAB denied the
motion to amend because by that point B&B’s registration was more than five
years old, and thus could no longer be challenged on mere descriptiveness
grounds.   B&B subsequently renewed
its registration in 2003, and filed a Section 15 affidavit in 2006 claiming
that the requirements for incontestability had been satisfied.   (As a reminder, those requirements include
that there be no pending challenge to the validity of the mark, or successful
and final challenge to validity.) 
Hargis applied for a registration of its own, which was
rejected by the TTAB on grounds of likely confusion with B&B’s registered
mark.  After filing for incontestability,
B&B sued Hargis again in 2006, and the court of appeals found that
preclusion from the first trial didn’t apply because of the change in the
mark’s circumstances from contestable to incontestable.  Then, after the Supreme Court decision, the
court of appeals found that preclusion from the TTAB ruling did apply, meaning
that Hargis was an infringer. B&B, that is, filed an affidavit claiming
that there had been no final decisions adverse to its ownership of the
SEALTIGHT mark, after losing an infringement case on the ground that it did not
own a protectable mark.  Then it parlayed
that affidavit into a decade of new litigation, including a successful TTAB
opposition and a duplicate infringement suit, having precluded its opponent’s
previously successful defense. 
Hargis contributed to the debacle by not seeking an
order  cancelling B&B’s trademark
registration upon its initial victory.  
But this too was almost certainly a function of the relative exoticism
of registration practice to ordinary trial lawyers : It is not necessarily
obvious to non-registration specialists that a final order from an Article III
court finding a claimed trademark to be merely descriptive needs to be followed
up by another order from the court directing the PTO to cancel the registration
in order to have preclusive effect. 
This comedy of errors ended in further farce when B&B
failed to renew its registration during the pendency of the Supreme Court
litigation.  As a result, the
registration expired.  The trial court
then held that, without the incontestable registration, B&B was once again
bound by the earlier trial result finding that it had achieved no secondary
meaning and thus no protectable mark. 
All of this could have been stopped much earlier if either the PTO had
possessed sufficient information to see that the statutory requirements for
incontestability had not been met or the courts had understood those statutory
requirements and independently examined whether they’d been satisfied.
There are other recent examples with similarly tortured
histories.  And one recent Sixth Circuit
court case apparently had no understanding at all of incontestability, deeming
it applicable to a mark that had been cancelled (and then subsequently
registered by the same party, but not for five years).
General unfamiliarity with incontestability probably
explains why many parties who would benefit from pointing out erroneous
incontestability designations fail to do so. 
The cases I have found are examples that turned up in my research
fortuitously; they were not produced from any attempt to determine how often
problems with Section 15 affidavits occur. 
Moreover, each case appears to involve courts that didn’t pay detailed
attention to, and were almost certainly unfamiliar with, the legal
prerequisites for incontestability.  If a
Section 15 affidavit is mistaken (whether or not knowingly false), then the
requirements of Section 15 haven’t been met, and thus courts should not accord
the affected registration an irrebutable presumption of distinctiveness. But it
is a disturbing fact that the error has been repeated multiple times by
different courts in case-dispositive ways, including in a case that made it all
the way to the Supreme Court and through two trials. 
What might we do?  Changes
to the process for Section 15 affidavits similar to those already underway for
Section 8 renewal filings could help registrants avoid the kinds of inadvertent
errors that may well have underlain these cases.  Fundamentally, while a mark that has become
incontestable cannot be challenged on the ground that it lacks secondary
meaning, it should be possible for challengers to identify marks that never
satisfied the statutory prerequisites for incontestability. Specifically,
possessing secondary meaning isn’t itself a prerequisite for
incontestability.  But lack of a pending
challenge or final successful challenge to validity is.  A mark that was in fact subject to such a
successful or pending challenge, therefore, has not satisfied the statute and
is not entitled to the cloak of incontestability.
Nor should courts be precluded by the statute from asking
the relevant questions about incontestability. 
Incontestability is for marks that have satisfied all the requirements
thereof, not just for marks that happen to have a Section 15 affidavit on
file—should be the same.  As the Second
Circuit court commented in a very slightly different context, it would be a
“perverse result” if the use of “recording—a ministerial act—[was transformed]
into a mechanism for conclusively defeating allegations … challenging the
legality of the assignment.”   So too
with the ministerial act of accepting a Section 15 affidavit, or counting the
years a registration has been on the record.
The PTO has discovered significant overclaiming through
random audits of renewal filings. 
Although incontestability is rarer than mere renewal, the cost to the
public of a single faulty incontestability designation may be higher than the
cost of a single extra goods or services designation, given the ability of a
registrant to use incontestability as leverage in disputes and the ongoing
confusion in the courts about the effect of incontestability on a mark’s
strength.
Small steps could prevent many of these mistakes in the
first place.  The PTO has made changes to
the standard declaration that an applicant signs under penalty of perjury when
filing a trademark application or renewal. Instead of a traditional block of
text, the form now presents a separate series of clauses with check boxes next
to each statement.  The applicant should
now more readily understand that it must claim use, or intent to use, the mark
on every good or service it lists in the application.  Similar measures could improve
incontestability by making the requirements of Section 15 more salient.  For example, the affiant could be required to
check a box, yes or no, about whether there are any pending or resolved cases
involving the mark.    If the answer is
yes, the form could ask the affiant to provide more information.  Alternatively, the affiant could be required
to list all proceedings, pending and terminated, involving any challenge to the
validity or ownership of the mark in question, and state the status or outcome
of the proceeding with respect to the mark.  
Random audits of trademarks for which the PTO has received a “Notice of
Suit Incoming” could also improve the situation, assisting the PTO and
registrants in determining when the register needs to be updated to reflect
reality.
Likewise, the PTO’s proposal to institutionalize random
audits of trademark maintanence filings could be expanded to a percentage of
Section 15 affidavits, at least to the extent of having examiners run a Westlaw
search and check whether any pending cases appear in TSDR and then, if the
trademark appears to be the subject of litigation, asking the trademark owner
to explain why the cases aren’t relevant. 
The PTO could also consider a similar procedure for verifying
incontestability if a question arises, making a more formal practice of the
correction it made in response to my blog post on one such case.
Most registrants who provide incorrect information are not
determined to distort the register. 
Negligence and ignorance are bigger problems.  It is therefore worth giving more detailed
cues about the statutory requirements for a Section 15 affidavit to affiants at
the moment those cues are most needed. 
Trademark attorneys can improve their procedures as
well.  Registration counsel is sometimes,
but not always, litigation counsel.  When
lawyers discuss renewals and Section 15 affidavits with their clients, they
should take care to ask about whether there is any pending litigation or PTO
proceeding involving the mark, not just whether the client is still using the
mark and wants the registration renewed.
The courts also have a role to play.  Under current rules, notices should be sent
to the PTO about pending cases involving registered trademarks.   In theory, the plaintiff should file the
relevant form with its complaint, and the clerk’s office should pass the form
on to the PTO.  These forms are then
recorded by the PTO and become part of the formal record for the registration
at issue.  The form should be filed
again, with appropriate updates indicating the outcome, when the case is
terminated.
If a mark’s record is complete, then it will be a simple
matter to identify whether further inquiry is required to evaluate whether the
requirements for incontestability have been met.  Although the notification process is already
in place, experience indicates that compliance is spotty: many litigated cases
involving registered marks never show up in the registration record.  For example, the highly significant case
Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc.,  which involved a partial cancellation of
Louboutin’s red sole mark for its shoes, never showed up in the PTO’s records
until correspondence between the parties about how to implement the partial
cancellation order.  If litigators and
clerks’ offices around the country became more aware of the problem, the
records could be improved.  I have a
research project ongoing to figure out where the notice of suit falls through
the cracks and whether there are steps that the PTO or clerks’ offices could
take.
Similarly, it would be beneficial to improve judicial
understanding of the requirements for incontestability.  Even though courts do not evaluate whether an
incontestable mark has secondary meaning, they can and should evaluate whether
incontestability was properly secured. 
Fundamentally, no one should be made better off by providing
inaccurate information to the PTO. 
Unfortunately, it is currently possible to benefit from doing so. Incontestability
offers low-hanging fruit for improving the accuracy of the trademark register
and the courts’ understanding of what registration means.
Q: petition to cancel incontestability as a possible
solution?
A: good idea.  Similar
to a random audit; I’m more interested in things that the PTO could do in the
absence of congressional help.
Q: patent cases—it’s second entry in the docket in the
federal district court; why is it not showing up in the PTO’s records.  Also, why require act of PTO to make it
incontestable?
A: The form might be in all the TM dockets in federal
district court—the gap may be between the dcts and the PTO, and I want to find
out where that gap is.  I neglected to talk
about the fact that no act of the PTO is necessary to make incontestability
apply in cancellation proceedings, which is what happened to Hargis.  We could do the same with incontestability
for litigation purposes, but the incontestability filing may be our only chance
to get TM owners to look at this and see whether they actually meet the
requirements, so I’ve now talked myself into wanting to keep the affidavit—and maybe
to expand it to the cancellation context.
Alex Roberts: Your proposals are conservative; what would
you do if you could rewrite the law?
A: I might keep incontestability as part of a more
substantive approach to registration. That said, I’d want to have clear
requirements for substantive examination that the prerequisites had been
satisfied.
Christine Farley, American University Washington College of
Law, No Trademark—No Problem: About Belmora,
cert petition pending.  Today is the day
it was distributed for conference. 
Flanax: Bayer had no rights; Belmora didn’t look too good as a
copier. 
Person’s: strict territoriality (CAFC); Grupo Gigante,
famous marks (9th Cir.); Punchgini, no such exception to
territoriality for famous marks even if it would be a good idea (2d Cir.).

4th Circuit discussion was unsophisticated and
didn’t engage w/territoriality at all; TTAB discussion was much more nuanced
and understanding of the waters in which it was wading.  TTAB knew: territoriality is definitely a
hurdle and TM rights arise solely from use in commerce in the US.  Case law didn’t address whether Bayer’s use
in Mexico would be enough for a claim, but they decide to extend the law—unlike
Person’s, there was a reputation in the US, and Belmora was exploiting that
reputation.
Why didn’t Bayer act earlier?  They probably didn’t think they had a
successful claim to bring, until there was enough advertising to act on. That’s
reflected in the kind of petition/complaint they filed—named 3 different int’l
treaties as basis of claims, one of which Mexico wasn’t even a signatory
to.  Also, series of TTAB decisions
granting Bayer’s motion to amend again and again until everything was gone but
misrepresentation of source based on the goodwill that flowed across the
border. 
TTAB 2000: found for a TM owner with no registration in the
US and allowed them to cancel under a little-known treaty (Belmont); again in
2008, Cuban coffee company used same path; in 2009, the claim was unsuccessful
b/c there was a requirement to pay a fee to a Bureau that didn’t exist to take
advantage of Inter-American treaty.
Why is the TTAB willing to go out on a limb?  She thinks it’s standing.  TTAB requirement: real interest.  TTAB in Belmora: “petitioner has shown that
it has an interest in protecting its Mexican FLANAX mark”—a relatively low
standard. But SCt just addressed this under the Lanham Act §43—Lexmark asked claimants to focus on zone
of interests protected by the statute. 
You’d think there’d be no basis for adjudicating a dispute w/o a use in
commerce. Maybe that should inform how the standing requirement is being
addressed.  
Given the outcome, you should go from TTAB petition to EDVA
to 4th Circuit.  The TTAB
stuff is very significant, because this can throw open the doors to a wider set
of claims.
Arti Rai: The TTAB standing requirement: why is there a
requirement for an administrative agency?
A: Because the Act says any person who would be
damaged.  TTAB has said Lexmark standard
doesn’t cover its proceedings–§43(a) is different, but the “damaged” language
is the same.
RT: zone of interests: people protected by §2 that don’t
have commercial interests.
A: treaty obligations—obligated by treaty to protect state
emblems and well-known marks, maybe that’s w/in the zone of interests in the
Lanham Act.
Stacey Dogan: whether the interests at issue in a
cancellation proceeding may be distinct from infringement?  TTAB as protecting integrity of the Register,
for example by barring registration of deceptive marks. 
A: it’s still the same priority battle in both cases.  Becomes confusing to have a different
standard/answer at the TTAB.
Q: curious about unfair competition aspect.  Seems strong rationale for protecting rights
of foreign user w/famous mark even w/o use in the US.
A: goodwill is the reason to protect.  There might be a public policy in favor of
this, but there has to be some rationale, and the 4th Cir. simply
deleted territoriality instead.
Alexandra Roberts, University of New Hampshire School of Law,
Trademark Failure to Function
What do we talk about when we talk about use as a mark?
Relative size, color, distinctive font, stylization, prominent placement in TM
spot, set off by itself, use of TM or ®, all caps or initial caps.  Lee et al. study: consumers are likely to
perceive most non-generic terms as TMs when they are in the right “place” on
the package.  Even w/o distinctive font,
70% said “Wonderful” was a brand name when it was large and placed right.  Smaller, lack of prominence—much less likely
to say it looks like a brand name. 
Small: 33% brand name; small and placed along the bottom edge of the
package: only 27% said brand name.
Maybe best way to think about this is ex parte v.
adversarial.  Applicant sought to
register icon of toilet for call devices used in hospitals.  Refused. 
Spectrum, in colors, but used in a sentence—TTAB rejected even though it’s
not just for a word mark; it was a design/composite mark using color.  Still not using it as a mark/fails to
function.

In re Chemical Dynamics (Fed. Cir. 1988): applied to
register dropper and droplet, not full image. 
The court (and PTO) said you aren’t using that separately, it’s part of
the whole mark—no separate commercial impression.  Often the applicant can file a new specimen to
rebut a failure to function refusal.  In
re Eli Lilly (TTAB 2015). Statement: “syringe contains a solution of Trulicity™ or placebo.”  Just plain text, part of sentence.  TTAB says: this is inherently distinctive;
distinctiveness creeps into use as a mark analysis. 
Ex parte failure to function: administrative expertise—examiners
do this every day; but: limited guidance/tools for identifying failure to
function v. tons of tests, factors for distinctiveness.  Lists in TMEP of what might fail to function;
language is super tautological: does it look like a TM?  Not actually that helpful!  Doctrine creep: mixing use w/use in commerce,
inherent distinctiveness, acquired distinctiveness, functionality. Ex parte =
closed universe of evidence for applicant’s specimen. Atty can manipulate that
by working w/client to generate a specimen that looks trademarky.  Examiners have incentive to work quickly—they
have a quota.  There’s also an ITU
handicap: a huge # are filed on ITU basis; initial application occurs w/o
specimen. We expect the review of the specimen won’t be as thorough—may even be
completed by paralegal and not examining atty, so will sail through w/o anyone
really examining function as a mark.
Adversarial proceeding: open universe of evidence; context
is cancellation, infringement, priority; divergent guidance/tools for
identifying failure to function; doctrine creep is similar; greater resources
but less expertise.  More nontraditional
marks–§43(a) unregistered trade dress. 
Rights defined around/against opponent. 

Starting to code cases: a lot of overlap w/other use issues
and w/distinctiveness.

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