Federal Circuit Clarifies Standard For Bringing a Cancellation Proceeding under 15 U.S.C. § 1064

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In a recent decision, Corcamore, LLC v. SFM, LLC, 978 F.3d 1298 (Fed. Cir. 2020), the Court of Appeals for the Federal Circuit clarified the standard for maintaining a petition to cancel a trademark registration under §1064 of the Lanham Act.  The Federal Circuit noted that while these questions are often framed as questions of “standing,” they are “more appropriately viewed as requirements for establishing a statutory cause of action.” Id. at 1303.

In this case, the petitioner (SFM) owns a federal registration for SPROUTS for grocery store services, while the respondent (Corcamore) owned a federal trademark registration for SPROUT for use with vending machine services. In bringing its cancellation petition, SFM claimed that its rights were superior because of its purportedly earlier usage of the SPROUTS mark, and it further alleged that Corcamore’s SPROUT mark was injurious because it was “likely to cause confusion or mistake, or to deceive the purchasing public.”

Corcamore moved to dismiss, arguing that SFM lacked standing under the framework set forth in the Supreme Court’s decision in Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014). In Lexmark, the Supreme Court had established two requirements for determining whether a party is entitled to bring a statutory cause of action: a party must establish (i) an interest falling within the zone of interests protected by the statute and (ii) proximate causation. 572 U.S. at 129-34. But the Trademark Trial and Appeal Board (TTAB) determined that Lexmark was inapplicable, reasoning that Lexmark was limited to civil actions involving false designation of origin, or false advertising, claims under 15 USC §1125(a). The TTAB instead relied on the analysis adopted by the Federal Circuit in Empresa Cubana del Tabaco v. General Cigar Co., 753 F.3d 1270 (Fed. Cir. 2014), which requires a TTAB petitioner under §1064 to plead “a real interest in the proceedings” and a “reasonable basis for its belief of damage.” Empresa Cubana, 753 F.3d 1270, 1275 (quotation marks and internal citations removed).

On appeal, the Federal Circuit clarified that Lexmark is indeed applicable in TTAB cancellation proceedings because §1064 is a statutory cause of action, and the zone-of-interests requirement “applies to all statutorily created causes of action” and “unless it is expressly negated.” Corcamore, 978 F.3d at 1305. Notwithstanding that the TTAB failed to apply Lexmark, the court found that this was harmless error: the court found that the Lexmark “zone-of-interests requirement and the [Empresa Cubana] real-interest requirement share a similar purpose and application,” concluding that there was “no meaningful, substantive difference in the analysis used in Lexmark and Empresa Cubana.” Id. Put another way, “a party that demonstrates a real interest in cancelling a trademark under §1064 has demonstrated an interest falling within the zone of interests protected by §1064.” Id. at 1306. While the TTAB should have applied Lexmark, the outcome remains the same under either framework: SFM met the statutory requirements to challenge Corcamore’s registered mark.[1]

[1] The Federal Circuit also affirmed the TTAB’s discovery sanctions against Corcamore.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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