Fourth Circuit Clarifies the Role of the District Court in a Trademark Civil Action Following a Proceeding Before the Trademark Trial and Appeal Board

On January 7, 2014, the Fourth Circuit Court of Appeals clarified that a district court must take a fresh look at all of the evidence – including evidence previously submitted to the Trademark Trial and Appeal Board (TTAB) – in cases in which a party before the TTAB files a subsequent civil action rather than appeals the TTAB’s decision to the Federal Circuit.

In Swatch AG v. Beehive Wholesale, LLC, No. 12-2126 (4th Cir. Jan. 7, 2014), the plaintiff filed suit in the Eastern District of Virginia after the TTAB dismissed its opposition to a pending trademark registration application. In addition to a petition to cancel the defendant’s registration, the plaintiff’s civil action included claims for federal, state and common-law trademark infringement, trademark dilution and unfair competition. 

In support of its claims in the civil action, the plaintiff submitted the record from the TTAB opposition proceeding, along with new evidence. The district court concluded that it had a dual role under these circumstances – as an appellate court that must accord deference to the TTAB’s factual findings and as a finder of fact that must evaluate the new evidence and claims. The district court ultimately agreed with the TTAB, finding that the defendant’s mark was entitled to registration and dismissing the plaintiff’s infringement, dilution and unfair competition claims. 

The Fourth Circuit affirmed the district court’s decision, but found that the district court had followed the wrong standard of review. The Fourth Circuit explained that the district court’s dual standard of review directly conflicted with the Supreme Court’s 2012 decision in Kappos v. Hyatt, 132 S. Ct. 1690 (2012), the "primary case interpreting the patent and trademark civil action statutes." In Kappos, the Supreme Court held that, when new evidence is offered to the district court that was not proffered in the proceeding before the Patent and Trademark Office (PTO), the district court is required to consider all of the evidence anew and may not defer to the PTO’s factual findings. 

Despite the district court’s erroneous standard of review, the Fourth Circuit concluded that the case did not need to be remanded because it was not clear from the record that the district court in fact deferred to the TTAB’s factual findings.

The upshot of this decision for trademark owners is that civil actions in district court can be a “second chance” for parties who are unhappy with a TTAB decision. By introducing evidence and claims that were not considered by the TTAB, a party ensures that the case will get a fresh look from the district court, regardless of the earlier TTAB decision.