CAFC Largely Affirms TTAB's "BROOKLYN BREW SHOP" Decision Finding that Laches Barred Brooklyn Brewery's Section 2(d) Claims

The CAFC has affirmed most of the Board's rulings in the Brooklyn Brew Shop case [TTABlogged here], upholding the denial of Plaintiff Brooklyn Brewery's petition for cancellation of a registration for the mark BROOKLYN BREW SHOP (in standard form) for beer-making kits. The Brewery did not challenge the Board's application of laches to its Section 2(d) claim, and the Brewery failed to prove its claim that the mark is merely descriptive. As to the Brewery's opposition to the stylized version of the mark, the court upheld the Board's application of laches to the Section 2(d) claim, but as to the mere descriptiveness claim it reversed and remanded because the Board failed to make sufficient factual findings on that issue. Brooklyn Brewery Corporation v. Brooklyn Brew Shop, LLC, 2021 USPQ2d 1069 (Fed. Cir. 2021), errata issued January 18, 2022 (here).

Standing: The CAFC first dealt with the Brewery's appeal from the Board's dismissal of its opposition to registration of Defendant BBS's stylized mark for "sanitizing preparations for household use." The court found that the Brewery lacked Article III standing to appeal that decision because it failed to demonstrate that it would suffer injury if the registration were granted, since the Brewery does not sell sanitizing preparations.

[T]he test for likelihood-of-confusion or descriptiveness purposes is whether the challenger and registrant compete in the same line of business and failure to cancel an existing mark, or to refuse registration of a new mark, would be likely to cause the opposer competitive injury.

Therefore, the court dismissed the appeal as to those Class 5 goods.

Laches: The Brewery argued that the Board committed legal error by finding the two challenged marks to be substantially similar so that laches from the cancellation proceeding applied to the opposition as well. The court, however, found that the Board did not err. It also agreed with the Board's conclusion that confusion was not inevitable, which would have prevented the application of laches, since "neither the marks nor the goods were nearly identical." And so, the Board properly dismissed the Brewery Section 2(d) claim as to the stylized mark.

Acquired Distinctiveness: As to the registered, standard form mark, the Board found that the Brewery failed to overcome the presumption of inherent distinctiveness that attaches to a registered mark. That finding was supported by substantial evidence.

However, as to the unregistered, stylized version of the mark, because registration was sought under Section 2(f), the burden of proving acquired distinctiveness was on Defendant BBS, not on the Brewery. BBS contended that the Board did not have to address this issue, because, once the Board had denied the petition for cancellation, the Morehouse defense barred a challenge to the stylized mark since it is "essentially the same mark for the same goods."

The court observed that the Morehouse defense is premised on the principle that a party damaged by an existing registration “cannot suffer legal damage from [an] additional registration, over and above any damage it may suffer from [an] existing registration” for essentially the same mark and same goods. Morehouse Mfg. Corp. v. J. Strickland & Co., 407 F.2d 881, 884 (CCPA 1969).

The CAFC ruled that the Morehouse defense was inapplicable, noting that in the standard form registration for BROOKLYN BREW SHOP, the term BROOKLYN BREW was disclaimed, whereas in the stylized application, BREW SHOP was disclaimed. 

Therefore, because BBS’s applied-for mark claims rights to BROOKLYN and the registered mark disclaims rights in BROOKLYN BREW, the harm the two marks cause to Brewery’s BROOKLYN and BROOKLYN BREWERY marks is potentially different.

Because the Board did not make any factual findings as to whether BBS had met its burden of proof, the court remanded the case to the Board on that issue.

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TTABlogger comment: Since the registration for the standard character mark survived, maybe BBS should drop the stylized application. What do you think?

Text Copyright John L. Welch 2021.