The courts, not the United States Patent and Trademark Office, get the last word on the validity of trademark registrations. But do they also get the first word?

The Ninth Circuit Court of Appeals, in a divided opinion, recently held that a federal court has the power to cancel trademark applications pending in the United States Patent and Trademark Office, but not yet accepted or rejected, as long as the applications are involved in an action concerning an already registered trademark. BBK Tobacco & Foods LLP v. Central Coast Agriculture, Inc., 97 F.4th 668 (9th Cir. April 1, 2024).

Given the BBK decision, in federal court actions concerning an already-registered trademark, trademark owners should consider using the lawsuit as an alternative line of attack against offending applications rather than waiting for the Trademark Office.

In BBK, the plaintiff, BBK, owned a registration for the trademark “Raw” for smoking related products. Defendant, Central Coast, filed intent to use applications for “Raw Garden” for cannabis products. BBK sued Central Coast for trademark infringement and also to cancel Central Coast’s applications. BBK claimed that Central Coast did not have a bona fide intent to use the mark, as required for intent-to-use applications.

The district court found that Central Coast did lack bona fide intent. On appeal, Central Coast did not challenge that finding, arguing instead that the District Court lacked jurisdiction to cancel pending trademark applications before registration.

The Ninth Circuit construed 15 U.S.C. § 1119, which provides:

In any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action.

The Ninth Circuit noted that this section empowers the courts “to determine the right to registration” and to “rectify the register,” and concluded that “the plain language of section 1119 thus grants a district court jurisdiction to consider challenges to the trademark applications of a party to the action if the action involves a registered trademark.” The court limited its holding by quoting a previous Ninth Circuit decision that stated that section 1119 “does not indicate that a cancellation claim is available as an independent course of action.” Airs Aromatics, LLC v. Victoria's Secret Stores Brand Mgmt., Inc., 744 F.3d 595, 599 (9th Cir. 2014).

The Ninth Circuit supported its conclusion by noting that it is more efficient to adjudicate related applications as well as the infringement claim in one action rather than leaving the parties to further proceedings:

Permitting a district court to adjudicate trademark applications when an action already involves a registered mark advances the interest of resolving all registration disputes in a single action. “[W]here, as here, there is a potential infringement lawsuit, federal courts are particularly well-suited to handle the claims so that parties may quickly obtain a determination of their rights without accruing potential damages.” Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1165 (9th Cir. 2007).

If the BBK decision is followed, courts will be able to adjudicate trademark applications before they are passed on by the Trademark Office, at least when they are challenged in a case involving infringement of a registered trademark that presents issues that are also involved in the trademark application. For example, if the plaintiff owns a federal registration for a mark, and the defendant asserts common law rights in and has a pending application to register the same mark, the court would be able to cancel either the plaintiff’s registration or the defendant’s application depending on which party it determines is the rightful owner of the mark.

By coincidence, a related issue arose in this office last year. Two parties disputed the right to a rock band tradename. One of the disputants had a pending application to register the name in the Trademark Office, which the other opposed. In a case in New York state court in which the parties were contesting ownership of the tradename, the court issued a temporary restraining order forbidding the applicant to take further steps to pursue the registration application.

Two years after the state court issued the TRO, the trademark applicant filed a new case in federal court asking the federal court to preliminarily enjoin the state court TRO. The trademark applicant argued that the state court had overstepped its power by making an order affecting proceedings in the U.S. Patent and Trademark Office. Applicant argued that the federal courts alone had the power to give orders to the Trademark Office concerning registrations.

The federal judge agreed that the federal courts had the exclusive power to review registration decisions of the Trademark Office, but noted that the Trademark Office had not yet made a decision on the application at issue. The court expressed doubt that the court’s exclusive power to review Trademark Office decisions extended to the pre-decision stage. As the court put it, “[t]he only issue as to which I have exclusive jurisdiction would be the appeal of a decision by the TTAB, and no decision has yet been rendered.” Hauman v. Fisher, 23 cv 6366 (S.D.N.Y.), transcript, p. 55, filed October 3, 2023, https://ecf.nysd.uscourts.gov/doc1/127134170931. The federal court ultimately opined that doctrines of federal-state comity made it unlikely that plaintiff would succeed in obtaining an injunction against the state court’s TRO and denied preliminary relief.

There is clearly room for disagreement on the question of whether federal courts have the power to cancel trademark registration applications before the Trademark Office rules.

The Ninth Circuit opinion in BBK, even if it is followed, does not quite open the floodgates for litigants to bring actions to interfere with the registration processes of the U.S. Patent and Trademark Office. The Ninth Circuit entertained claims to cancel trademark applications because those applications were related to an already registered mark.

Nevertheless, there are lots of registered marks and we can expect to see this issue come up again. Trademark owners bringing actions concerning already registered trademarks, at least within the Ninth Circuit, might consider federal court as an alternative line of attack against offending trademark applications before final action has been taken in the Trademark Office.