On March 17, 2021, in a matter of first impression, the United States Court of Appeals for the Fourth Circuit held a party appealing a decision of the United States Trademark Trial and Appeal Board (“TTAB”) may seek review of the decision in either the United States Court of Appeals for the Federal Circuit or a district court—even if the party had previously appealed an earlier TTAB decision in the same case to the Federal Circuit.  See Snyder’s-Lance, Inc. v. Frito-Lay N. Am., Inc., Case No. 19-2316 (4th Cir. Mar. 17, 2021).

In 2004, Princeton Vanguard, LLC (later acquired by Snyder’s-Lance in 2012) (collectively, “Plaintiffs”) obtained a supplemental registration for the mark PRETZEL CRISPS for use with flat pretzel crackers.  In 2009, Plaintiffs reapplied to register the PRETZEL CRISPS mark on the Principal Register in connection with the same goods based on a claim of acquired distinctiveness.  Frito-Lay opposed the application and sought to cancel the supplemental registration, arguing the PRETZEL CRIPS mark is generic or, alternatively, the mark is highly descriptive of the product and has not acquired distinctiveness.

The TTAB ruled in Frito-Lay’s favor, holding the PRETZEL CRISPS mark is generic.  The TTAB cancelled Plaintiffs’ supplemental registration and refused the application for registration on the Principal Register.  The TTAB did not reach the question of acquired distinctiveness.

The Lanham Act provides that a party can seek review of an adverse TTAB decision through either the Federal Circuit or a district court.  15 U.S.C. §§ 1071(a), (b).  Appealing to the Federal Circuit generally provides a quicker resolution of the appeal, but restricts the record to that developed before the TTAB.  Conversely, filing a civil action in a district court allows for additional development of the factual record and de novo review of the TTAB decision.  The district court path, however, is not without risks as it opens the appellant up to counterclaims by the other party.

If the appellant choses to seek Federal Circuit review, it waives the right to seek review of the TTAB decision in the district court.  However, the appellee can force the case to proceed before a district court.  15 U.S.C. § 1071(a)(1).  The reverse is not true.  Neither party can force the other party to proceed before the Federal Circuit.

Plaintiffs appealed the adverse TTAB decision to the Federal Circuit because they sought review of a legal question and believed this to be the quicker route.  The Federal Circuit held that the TTAB had applied the incorrect legal standard in determining whether the mark was generic, vacated the TTAB’s judgment, and remanded the case to the TTAB for further proceedings.

On remand, the TTAB again concluded that the PRETZEL CRISPS mark is generic.  This time, however, it also concluded that, in the alternative, the mark had not acquired distinctiveness.

The second time around, Plaintiffs elected to seek review of the adverse decision in federal district court so they could expand the record to include additional evidence of acquired distinctiveness that had arisen during the intervening years—something they could not do in the Federal Circuit.

The parties litigated the case for two years before it was reassigned to a new district judge who, sua sponte, raised, for the first time, the question of whether the district court had jurisdiction to review the TTAB’s second decision given Plaintiffs had appealed the TTAB’s first decision to the Federal Circuit.  The court ultimately concluded Plaintiffs’ initial election to proceed before the Federal Circuit meant they could appeal subsequent TTAB decision in the same case only to the Federal Circuit.  Thus, the court dismissed the case for lack of subject matter jurisdiction.  Plaintiffs appealed the district court’s decision to the Fourth Circuit.

The Fourth Circuit held the district court erred in dismissing the case for lack of subject matter jurisdiction.  In reaching its decision, the Court noted that the Section 1071 waiver language relates only to the choice of review options for the decision from which a party appeals.  More specifically, each unique decision the TTAB issues gives the losing party a new chance to choose between the two Section 1071 review options.

The Court found the statutory text ambiguous, yet ruled that the text favored Plaintiffs because the statute’s specification that, if a party elects Federal Circuit review, the Federal Circuit’s decision governs future proceedings in a case supports the notion that not all subsequent appeals would proceed before the Federal Circuit.  If all future appeals had to return to the Federal Circuit, such language would be unnecessary.

Further, the Court determined that Congress’s use of the language “further proceedings in the case” makes clear that Congress knows how to refer to the whole case when it wants.  Congress’s conscious use of the language “the decision” reinforces that the statute refers to each TTAB decision and that the wavier applies only to that decision, not to the full proceedings.

Moreover, applying the initial appellate venue choice to all later TTAB decisions would unfairly bind the initial winning party to the decision not to force district court review.

The Court also ruled that the legislative history for parallel patent provisions supported the Court’s decision, as did prior decisions issued by the Seventh and Ninth Circuit Courts of Appeal.

Finally, the Court evaluated policy considerations and concluded judicial economy favored Plaintiffs’ interpretation because, if a party could choose its appellate venue only once, it would likely to opt for district court review so as not to be precluded from further developing the record where necessary.  This would result in more appellants seeking the drawn-out proceedings in district court rather than a quicker review by the Federal Circuit.

In view of the above, the Fourth Circuit reversed the district court’s decision and remanded the case to the district court for further proceedings.

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