The case of The Board of Trustees of the University of Alabama and Paul W. Bryant, Jr. v. Houndstooth Mafia Enterprises LLC et al.  showcases an unusual clash between a federal judge and the Trademark Trial and Appeal Board (“TTAB”).  The issue: if the parties to a trademark registration dispute settle while the case is on appeal to a federal district court, does the TTAB have to obey the court’s order to vacate its precedential decision?  The TTAB initially refused to vacate its order, but begrudgingly obeyed after receiving a second direct command from The Hon. R. David Proctor of the U.S. District Court for the Northern District of Alabama.  The TTAB is not giving up, and has appealed the Judge’s order to the Eleventh Circuit.  This case bears watching by trademark owners, as it impacts the scope of a federal district court’s authority on appeals from TTAB decisions as well as best practices for settling trademark registration disputes.

Paul “Bear” Bryant was the legendary football coach at the University of Alabama from 1958-1982, leading the Crimson Tide to six national championships.  Coach Bryant famously wore a hat with a “houndstooth” pattern on game days.

In 2007, diehard Alabama fans William Pitts, Jr. and Christopher Blackburn filed an application to register the stylized mark HOUNDSTOOTH MAFIA, intending to sell t-shirts and hats to the Alabama faithful bearing that mark.  The University of Alabama (joined by Coach Bryant’s son) filed an opposition, alleging that the HOUNDSTOOTH MAFIA mark was confusingly similar to the University’s alleged trademark rights in 1) a houndstooth pattern used in connection with the University’s licensed apparel, 2) the University’s Crimson and White color scheme; and 3) the University’s rights in the PAUL W. BRYANT MUSEUM and design logo, which incorporated a picture of the iconic coach wearing his houndstooth hat.  The University also alleged that the proposed mark should be rejected because the use of the word “mafia” was disparaging.

After more than five years of TTAB proceedings and a full trial on the merits, the TTAB rejected all of the University’s arguments.  In a 75-page decision, the TTAB ruled that the University did not have trademark rights in the houndstooth pattern, that it had failed to prove that Applicants’ HOUNDSTOOTH MAFIA mark was confusingly similar to any of the University’s claimed marks, and that Applicants’ use of the word “mafia” was not disparaging because it referred to a group of friends united by love of the Crimson Tide, rather than to a criminal organization.

Presumably seeking home field advantage, the University appealed to the U.S. District Court for the Northern District of Alabama.  The University and Applicants settled during the appeal.  Judge Proctor’s decision reports that the Applicants settled because they “wanted to get what they could” and their attorneys “couldn’t afford to do free work on an appeal as they had on a hearing before the TTAB.”    The University was amenable to settlement, but as a repeat player before the TTAB was concerned with the precedential effect of the TTAB’s decision.  The University thus had one non-negotiable condition for settlement: it required the Applicants to agree to a consent judgment vacating the TTAB’s decision.  The parties stipulated to a consent judgment including an assignment of the Applicants’ rights in the HOUNDSTOOTH MAFIA mark to the University, an agreement to vacatur of the TTAB decision, and certain stipulations of fact at odds with the TTAB’s decision.  In September 2014 the District Court entered a Final Consent Judgment, ordering that the TTAB’s order “is VACATED.”

The University filed a motion asking the TTAB to reopen the case and vacate its prior decision based on the Final Consent Judgment.  The TTAB, noting “the importance of this issue and the frequency with which the Board has received similar post-decisional requests”, added the Chief Administrative Trademark Judge and the Deputy Chief Administrative Trademark Judge to the original three-judge panel.

The TTAB refused to obey the District Court’s order that its decision “is VACATED,” and denied the University’s motion. According to the TTAB, the normal practice is to remand a settled registration dispute to allow the TTAB to determine whether its order should be vacated, rather than directing the TTAB to do so.  The TTAB then analyzed the source of the District Court’s authority to require the TTAB to vacate its order, concluding that such authority was lacking.  The TTAB first held that 28 U.S.C. § 2106, which authorizes “the U.S. Supreme Court or any other court of appellate jurisdiction” to vacate lower court orders, did not apply because the TTAB was not subject to that statute.

The TTAB next analyzed Section 21(b) of the Lanham Act, which empowers federal district courts deciding appeals from the TTAB to “adjudge that an applicant is entitled to a registration . . . that a registration involved should be canceled, or such other matter as the issues in the proceeding require, as the facts in the case may appear.” 15 U.S.C. 1071(b)(emphasis added).  Section 21(b) also provides that, once a district court has adjudicated such matters, it “shall authorize the Director to take any necessary action . . .”

The TTAB ruled that Section 21(b) did not empower the District Court Court to require the TTAB to vacate its order. The TTAB reasoned that the District Court’s Final Consent Judgment “does not appear to involve adjudication, and does none of these things a court is empowered to judge or directed to inform the Director of, following adjudication.”  The TTAB also found that the District Court had not determined any facts or issues in the case, and that vacatur of its prior order was not a “necessary action.”

Finding no statutory authority for vacatur, the TTAB next considered whether it should vacate its order under its general equitable authority.  The TTAB refused to do so, noting that the District Court’s consent judgment did not make a determination that the

“Board’s final order was wrong in any respect.  All it recites is that it is Plaintiffs’/Opposers’ opinion that the Board’s order was erroneous, in unspecified material respects.  Indeed, we do not read it to reflect an adjudication of any of the facts or issues in the case before the court.”

The University naturally hustled back down the field to Alabama and filed a motion to enforce the Final Consent Judgment.  Judge Proctor was aghast at the TTAB’s temerity.  Judge Proctor held that the TTAB, an administrative arm of the USPTO, does not have the authority to ignore an order from a federal district court, stating that “[a]dministrative agencies are not free to ignore a court’s mandates . . . the TTAB, an administrative body, is no different than a lower court which is reviewed by an appellate court.”

Concerning the specific statutory sources of his authority, Judge Proctor ruled that Section 21(b) of the Lanham Act empowered him to decide “such other matter as the issues in the proceeding require”, and that that grant of power included the authority to decide to vacate the TTAB’s order upon the parties’ request.  Judge Proctor also relied on 28 U.S.C. 2106, reasoning that federal district courts are acting as a “court of appellate jurisdiction” when they review TTAB orders, and therefore also have authority under that statute to vacate TTAB orders.

Having made his authority as loud and clear as a Bear Bryant halftime talk, Judge Proctor also found that this case did not involve merely a case of mootness due to settlement in which the courts can decide as a matter of discretion whether to vacate a prior order.  Here, the parties expressly agreed to the vacatur as a necessary condition of settlement.  Judge Proctor reasoned that this case was closely analogous to Major League Baseball Properties, Inc. v. Pacific Trading Cards, Inc., 150 F.3d 149 (2d Cir. 1998).  Major League Baseball Properties held that vacatur is proper where the parties “were thus locked in a dispute that they could end on a commercial basis satisfactory to both” which included vacatur as a “necessary condition of settlement.”  150 F.3d at 152.

The TTAB subsequently vacated its decision, while noting that it reserved the right to file an appeal.  The Patent and Trademark Office (“PTO”) has appealed Judge Proctor’s order requiring vacatur to the Eleventh Circuit.  The Eleventh Circuit may not decide this case on the merits, however, because Judge Proctor also denied the PTO’s motion to intervene in the case.  Trademark practitioners can hope that Judge Proctor’s penalty flag is not upheld by the replay officials, so we can find out the answer to this fascinating question concerning judicial authority to impose vacatur on an unwilling administrative agency.