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Tenth Circuit: MedImmune declaratory judgment jurisdiction test applies in trademark cases

July 18, 2008
Post by Blog Staff

In a decision last week, the Tenth Circuit reversed a district court's decision that Article III jurisdiction did not exist over a declaratory judgment action in a trademark case. At issue was whether a triable case or controversy within the meaning of Article III existed in declaratory judgment action regarding trademark infringement. The district court, applying the Tenth Circuit's pre-MedImmune standard set forth in Cardtoons, L.C. v. Major League Baseball Players Ass’n, which required a "reasonable apprehension of suit," concluded no jurisdiction existed because there was no such reasonable apprehension.The Tenth Circuit reversed. The court held that the "reasonable apprehension of suit" standard it applied in trademark cases was supplanted by the Supreme Court in MedImmune v. Genentech. Instead, the court, quoting MedImmune, described the test as:

the question in each case is 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.
Whether jurisdiction exists could be confirmed, according to the court, by examining whether the court would have Article III jurisdiction if faced with a straightforward infringement suit rather than a declaratory judgment action in which the parties are reversed. Here, there would undisputedly be such jurisdiction, given that the DJ defendant had threatened suit in the past and had filed five administrative proceedings at the TTAB regarding the DJ plaintiff's marks.Also of importance, the Tenth Circuit held that the elimination of the reasonable apprehension of imminent suit test by MedImmune applies to all areas of intellectual property, not just patent cases. The court noted that MedImmune itself relied on cases well outside the patent context, namely insurance cases. Thus the court found no persuasive reason why trademark cases should be analyzed under a different calculus.More on Surefoot LC v. Sure Foot Corp. after the jump.

Sure Foot Corp. is based in North Dakota, manufactures and sells shoe traction products as well as shoe laces and insoles. Sure Foot Corp. has sold products under the Sure Foot brand since at least 1985. Sure Foot Corp. owns a registered trademark for SURE FOOT in connection with non-skid shoe pads. Sure Foot Corp. also uses the logo depicted below:Sure Foot Corp.Surefoot LC is based in Utah. Surefoot LC began its business in 1994 and sells custom-fit ski boots and ski boot orthotics under the mark SUREFOOT. Surefoot LC's logo is depicted below:Surefoot LCSure Foot Corp. became aware of Surefoot LC's mark in 1998, and sent a cease and desist letter asserting that the use of the "Surefoot" mark infringed on its "Sure Foot" trademark and created a likelihood of confusion between the companies and their products. Surefoot LC refused to change its name, but did express some willingness to consider a monetary settlement. Sure Foot Corp. also expressed a willingness to settle out of court but on more than one occasion threatened litigation if no settlement was reached. No settlement was reached between the parties and communications essentially ceased by the end of 1999.In September 2000, Surefoot LC applied to register its "Surefoot" mark in connection with certain products. The mark issued without opposition in June 2002, but in August 2002, Sure Foot Corp. initiated what ultimately became five separate cancellation and opposition proceedings before the Trademark Trial and Appeal Board against a series of trademark applications filed by Surefoot LC. In mid-2006 the proceedings were consolidated, and are still pending.Faced with these various threats and proceedings, Surefoot LC filed suit in July 2006 seeking, among other things, a determination of whether its mark infringed Sure Foot Corp's mark. Sure Foot Corp moved to dismiss for lack of jurisdiction. The district court granted the motion, holding no reasonable apprehension of imminent suit existed. The district court reasoned that although claims of infringement and litigation had been made by Sure Foot Corp. during the 1998-99 period, any apprehension had dissipated by 2006. Moreover, the court held that Sure Foot's TTAB actions did not give any reasonable basis to fear imminent litigation.The Tenth Circuit reversed. The court noted that the district court correctly applied the precedent applicable at the time, Cardtoons, L.C. v. Major League Baseball Players Ass’n, which held the Federal Circuit's "reasonable apprehension of suit" test for declaratory judgment jurisdiction applied in the context of trademark cases. However, since the district court granted Sure Foot Corp.'s motion to dismiss, the Supreme Court decided MedImmune v. Genentech, which changed the landscape of declaratory judgment actions. Thus, the court held Cardtoons was no longer good law and must be retired. The court seemed more than willing to follow the Supreme Court's lead, stating:
Discarding the reasonable apprehension of suit test makes good sense: the existence of an Article III case or controversy has never been decided by a judicial wager on the chances the parties will (imminently or otherwise) sue one another; rather, it has always focused on the underlying facts, assessing whether they suggest an extant controversy between the parties or whether instead they call on us to supply an advisory opinion about a hypothetical dispute.
The court rejected Sure Foot Corp's arguments that MedImmune should not apply insofar as the discussion of the reasonable apprehension of imminent suit test was purportedly dicta, that because MedImmune was a patent case it did not apply in the trademark context, and that it only applied when the parties to the suit are in a privity relationship, such as parties to a license agreement. The court highlighted the cases relied on in MedImmune, namely insurance cases, to demonstrate its broad applicability. The court reiterated a maxim from MedImmune that party need not "bet the farm" before obtaining a declaration of their rights.Having decided MedImmune provides the proper test, the court then moved to the facts of the case. The court highlighted Sure Foot Corp's five TTAB actions and earlier threats of litigation in reversing the district court, finding these actions sufficient to show a controversy of sufficient immediacy to warrant a declaratory judgment. The court confirmed this by asking whether, considering all the circumstances, the court would have Article III jurisdiction if faced with a straightforward infringement suit rather than a declaratory judgment action in which the parties are reversed. Given the evidence and the nature of the controversy, the court stated it had "no doubt the answer would be yes."The court expressed no opinion, however, 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. Rather, the case at hand, according to the court, had a particular combination of circumstances which sufficed to demonstrate the existence of Article III jurisdiction. As a result, the court held that declaratory jurisdiction existed as to entertain the case but remanded for further consideration as to whether, as a discretionary matter, the district court should do so.To read the full decision in Surefoot LC v. Sure Foot Corp., click here.


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