Monday, March 22, 2021

Fourth Circuit Rules That a TTAB Party, After Remand from its CAFC Appeal, May Seek Further Review in District Court

The long and winding road to determination of the genericness of PRETZEL CRISPS for pretzel crackers has taken another twist. The journey began with the TTAB's 2014 decision (TTABlogged here), finding the term to be generic. Princeton Vanguard appealed to the CAFC (under Section 1071(a)). The appellate court vacated and remanded in 2015 because the Board had failed to correctly apply the legal standard (here). On remand, the Board (in 2017) again found PRETZEL CRISPS to be generic for pretzel crackers (here). Princeton Vanguard then filed a complaint in the U.S. District Court for the Western District of North Carolina, seeking Section 1071(b) review of the Board's decision. In October 2019, Judge Kenneth D. Bell ruled (sua sponte) that because Princeton Vanguard had appealed the first Board decision to the CAFC under Section 1071(a) of the Lanham Act, it had waived its right (under Section 1071(b)) to proceed in the district court (rather than the CAFC) as to the second Board decision. Therefore, the district court lacked subject matter jurisdiction over the civil action (here). The U.S. Court of Appeals for the Fourth Circuit, on March 17, 2021, reversed that decision and remanded the case to the district court for further proceedings. Snyder's-Lance, Inc and Princeton Vanguard, LLC v. Frito-Lay North America, Inc., 2021 U.S.P.Q.2d 318 (4th Cir. 2021).

A party seeking review of a TTAB decision may appeal to the CAFC under Section 1071(a) or seek de novo review in a U.S. District Court under Section 1071(b). As the Fourth Circuit observes, the CAFC route may lead to a faster resolution of the appeal, but the record is restricted to that developed at the TTAB. The district court route allows the parties to introduce additional evidence and new issues. [There are other considerations, of course, like cost and "home court advantage" - ed.]. If an appeal is commenced at the CAFC, the appellee may elect to have further proceedings conducted in a district court. The reverse is not allowed.

The parties agreed that certain points of law ruled on by the CAFC are binding as law of the case. They also agreed that the two TTAB decisions were unique and separate decisions. The parties disagreed on whether Princeton Vanguard had the same two options for review in 2017 as it did in 2014. The Board found the statutory language to be "somewhat ambiguous," but it sided with Princeton Vanguard.

Section 1071(a) states that when a party elects to appeal to the CAFC, it "thereby waive[es] his right to proceed under Section 1071(b)." Moreover, the latter section states that a party dissatisfied with a TTAB decision "may, unless appeal has been taken to . . . the Federal Circuit, have remedy by a civil action." The Fourth Circuit noted that "[a]t first blush," this language seems to foreclose Princeton's path to the district court. However, that interpretation leads to difficulties.

While the statute speaks of “waiving [one’s] right” to district court proceedings and refers to an “appeal [that] has been taken” to the Federal Circuit, it says nothing about how long a choice of forum remains in effect, or whether it can bind a party across appeals from related, but distinct “decisions.” Common sense, however, suggests that there must be some limitation.

Following a detailed examination and analysis of Section 1071, the appellate court concluded that the language supported Princeton Vanguard's position. The court then looked to other sources of authority, including legislative history (of patent-related statutory provisions), the decisions of two other circuits, the Seventh (a patent case) and Ninth (trademark), and relevant policy considerations.

The court noted that a party's need or desire to seek district court review may become clear only after reviewing the Board's second decision. Here, Princeton Vanguard explained that it originally went to the CAFC because it wanted a swift correction of the Board's legal error. After the Board's second decision, Princeton believed that further fact finding would support their case, and so it decided to proceed in the district court. 

The Fourth Circuit observed that its interpretation of the statute, allowing the civil case to proceed, furthers a party's ability to choose its own litigation strategy and to reassess its position after each Board decision.

The court did not agree with district court regarding its concerns about judicial economy. Although the Federal Circuit has certain expertise in a particular trademark matter, district courts are "perfectly capable of applying the law of the case doctrine." Moreover, if the blanket waiver did apply, a dissatisfied party might feel compelled to choose the district court route so as not to foreclose the possibility of further developing the factual record as circumstance might warrant.

And so the appellate court reversed the district court's ruling and remanded the case for further proceedings.

Read comments and post your comment here.

TTABlogger comment: Marty Schwimmer and I had a case a few years ago in which we first appealed to the CAFC but were allowed by the TTAB to withdraw that notice of appeal and instead proceed in the district court (all within the original appeal deadline). The other party had filed a civil action for unfair competition, which was then consolidated with the Section 1071 action.

Text Copyright John L. Welch 2021.


At 9:55 AM, Anonymous Anonymous said...

All that time, effort, and money invested into a mark which is highly descriptive at best. They should have come up with an inherently distinctive mark for this product back in 2017.


Post a Comment

<< Home