Thursday, March 06, 2014

Ninth Circuit Rules That Cancellation Is Not An Independent Cause of Action

The U.S. Court of Appeal for the Ninth Circuit has ruled that Section 37 of the Lanham Act does not provide an independent cause of action for cancellation of a trademark registration. Cancellation may be sought in federal court only "if there is already an ongoing action that involves a registered mark." Air Aromatics, LLC v. Victoria's Secret Stores Brand Management, Inc., 109 USPQ2d 1960 (9th Cir. 2014).

In 1991, a company called Airs International entered into a consent-to-use agreement allowing Victoria's Secret to use the mark DREAM ANGELS in connection with various personal care products. In 2008, Victoria's Secret stopped making payments under the agreement when Airs International became involved in a dispute over its ownership of the mark. In 2011 the owner of Airs International attempt to transfer rights in the mark to a new company, Air Aromatics, which new company filed a complaint against Victoria's Secret for breach of contract, and sought cancellation of eight registrations that that Victoria's Secret had obtained for the mark DREAM ANGELS .

The district court dismissed the complaint, finding that Air Aromatics lacked standing for the cancellation claim because it had failed to adequately plead its continued usage of the DREAM ANGELS mark, and it also dismissed the breach of contract claim because there was no breach. Air Aromatics appealed only from the dismissal of the cancellation claim.

The appellate court held that the cancellation claim would not "provide an independent basis for subject-matter jurisdiction on remand standing alone."

Section 37 of the Lanham Act gives a district court power to order cancellation of a trademark registration "in any action involving a registered mark." This plain language specifies that cancellation may be sought only if "there is already an ongoing action that involves a registered mark: it does not indicate that a cancellation claim is available as an independent cause of action." The court noted that each circuit that has addressed this question has held that the statutory language "creates a remedy for trademark infringement rather than an independent cause of action."

And so the court affirmed the dismissal of the cancellation claim.

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Text Copyright John L. Welch 2014.


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