Professor McCarthy Criticizes CAFC's Stance on Article III Standing in Brooklyn Brewery Case
Professor J. Thomas McCarthy has provided to me his comments on the CAFC's October 27, 2021 decision in the Brooklyn Brewery case, in which the appellate court largely affirmed the TTAB's 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. However, as to the Board's dismissal of Brewery's opposition to the stylized form of the mark for "sanitizing preparations for household use," the court ruled that 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. That, in Professor McCarthy's view, was a serious error. His comments are set out below.
The Federal Circuit in its 2021 Brooklyn Brewery decision stated that competition between the parties is a prerequisite to assertion of a claim of likelihood of confusion in court. The court said that although Article III constitutional standing is not required to assert a confusion-based opposition or cancellation claim in the Trademark Trial and Appeal Board, it is required to appeal or assert such a claim in a court. According to the Federal Circuit, Article III constitutional standing requires that “the challenger and registrant compete in the same line of business:” “Thus, the 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.” Brooklyn Brewery Corp. Brooklyn Brew Shop, LLC, 17 F.4th 129, 139 (Fed Cir. 2021).
The Federal Circuit held that Opposer Brewery did not have Article III standing to appeal because it could not show a “concrete and particularized risk of interference with the rights that flow to it from registration of its own mark, or some other Article III injury.” This failure to show an Article III injury from an application to register BROOKLYN BREW SHOP for sanitizing preparations was said to arise because the opposer, who uses its registered BROOKLYN BREWERY mark for beer, could not be injured by a registration of a similar mark for sanitizing preparations, a product opposer did not make or sell. While the TTAB decided the case as a traditional question of whether confusion was likely, the Federal Circuit turned it into a constitutional Article III issue. The court did not mention the Supreme Court’s most recent Article III decision in TransUnion LLC v. Ramirez, 141 S.Ct. 2190, 2211 (2021), where the Supreme Court said of its prior Spokeo decision: “As Spokeo noted, ‘the law has long permitted recovery by certain tort victims even if their harms may be difficult to prove or measure.’” In my view, this would easily encompass claims of a likelihood confusion between non-competitors.
In my opinion, the court’s embrace in the Brooklyn Brewery case of a novel requirement of a competitive relationship is both unprecedented and alarming. I can only hope that it will not be read by this or other courts to work a sudden and far-reaching change in the legal test for likelihood of confusion. A century ago, courts did require competition between the parties for infringement by likelihood of confusion to occur. For example, in 1912 the Seventh Circuit found no infringement of the trademark BORDEN for milk by the use of BORDEN for ice cream because the goods were non-competitive. Borden Ice Cream Co v. Borden's Condensed Milk Co, 201 F. 510, 513 (7th Cir. 1912).
Under that early view of trademark law, unless there was competition between the parties, there could not be a diversion of customers and thus there could be no injury to the mark owner. Case law in the early 20th century decisively rejected the earlier precedent. For many decades since, no court, including the Federal Circuit, has held that the parties must be in competition with each other for a likelihood of confusion to occur. See McCarthy on Trademarks and Unfair Competition, §24:13 (Competition is Not Necessary for Confusion to Occur.) The Federal Circuit itself held that the “related goods test measures whether a reasonably prudent consumer would believe that noncompetitive but related goods sold under similar marks derive from the same source, or are affiliated with, connected with, or sponsored by the same trademark owner.” In re Save Venice New York, Inc., 259 F.3d 1346, 1355, 59 U.S.P.Q.2d 1778 (Fed. Cir. 2001),
The Supreme Court in the seminal Lexmark standing case held that under the Lanham Act, competition is not required for standing. The high court noted that: “By the time the Lanham Act was adopted, the common-law tort of unfair competition was understood not to be limited to actions between competitors.” Lexmark International, Inc. v. Static Components, Inc., 134 S. Ct. 1377, 1392, (2014).
One result of the Brooklyn Beer case is that the Federal Circuit will not review most TTAB decisions in which the parties are not in competition. Will this channel all TTAB appeals to a federal District Court? But if other courts adopt the same thinking, then most TTAB decisions will not be reviewable by any court. In that event, the TTAB will be the “court” of last resort.
I conclude that the language in Brooklyn Brewery is an erroneous reading of both Article III and classic trademark law. I am concerned that it has the potential to work a drastic and far-reaching change in the basic test for likelihood of confusion.
Read comments and post your comment here.
TTABlogger comment: The Brewery recently filed a petition for en banc reconsideration of the court's decision.
Text Copyright J. Thomas McCarthy 2022.
posted by John L. Welch @ 1/07/2022
8 comments
8 Comments:
I disagree with Professor McCarthy. The Federal Circuit’s ruling in Brooklyn Brewery is consistent with—arguably required by—the Supreme Court’s decision in TransUnion. TransUnion stresses the need for plaintiffs to establish “concrete harm,” defined as an injury with a “close historical or common-law analogue.”
As Professor McCarthy acknowledges, trademark infringement traditionally required competition between the parties. That restriction made sense because a trademark owner like Brooklyn Brewery is unlikely to lose business when it does not sell the product that it complains about.
When asked to explain its injury at oral argument, Brooklyn Brewery “urged that it would suffer possible injury if it were ever to expand its business to the sale of sanitizing preparations.” It entered nothing into the record to show that it had any plans or even any interest in that expansion. The Federal Circuit correctly determined that “[s]uch hypothetical future possible injury is insufficient to establish Article III standing.”
The recent trademark cases between noncompetitors that Professor McCarthy references have departed from the traditional standard. Many have wrongly recognized infringement in the absence of the concrete harm to the trademark plaintiff that TransUnion requires.
For more on this topic, see this recent note: https://harvardlawreview.org/2021/12/trademark-injury-in-law-and-fact-a-standing-defense-to-modern-infringement
Seems like that comment may have been written by one of the authors of the Harvard Law Review note, TTABlogged here: https://thettablog.blogspot.com/2021/12/recommended-reading-trademark-injury-in.html
To be clear, the challenged trademark owner would always have article III standing to appeal an adverse decision against them at the TTAB whether or not they are competitors. Their standing would be "self-evident" just like the owner of a patent being challenged in the IPR. If a challenger can't come up with a concrete reason why the trademark would harm them, then no they shouldn't be allowed to appeal.
So, anonymous, does the appellant automatically have Article III standing, or not? First you say yes, then maybe.
Say A petitions for cancellation of B's trademark at TTAB. If A wins at TTAB, B has self-evident standing to appeal (automatic as you say). If B wins, B must prove standing.
Registrations are cancelled, not trademarks. If B wins, why would it appeal?
Well, I agree with Prof. McCarthy. In fact, this is what I said (below) shortly after the Fed. Cir. issued its decision in Brooklyn Brewery. (I am not the "Anonymous" in the first comment above.) How does one establish a "concrete reason" or "concrete harm"? The appellant was selling beer but wasn't making the sanitizing preparations used with beer-making kits. The appellant, who was using a very similar mark (Brooklyn Brewery vs. Brooklyn Brew Shop), certainly wasn't just an intermeddler with no interest in this case. I think the Court got it wrong and that the question should not be one of standing but likelihood of confusion. The Court should just say, on appeal, that it believes that there is no likelihood of confusion of these similar marks when Brooklyn Brew Shop is used on sanitizing preparations, and not make it a question of standing.
Anonymous said...
It seems to me that having an appellant from a TTAB decision demonstrate Article III standing because the goods are different (although the sanitizing preparations are used with the beer-making kits) is unprecedented. A party has standing if the goods/services are plausibly related but doesn't if the goods on their face seems different!! The appellant has standing to challenge the mark BROOKLYN BREW SHOP for some goods but not for others??? Seems to conflate the merits with standing. I wouldn't go there. Seems to place an unnecessary and perhaps insurmountable burden on an appellant. What if a new and suddenly popular franchise restaurant opposes a ripoff applicant trying to register the same mark for unrelated merchandise? Why get into Art. III standing when the Court can just deal with the case on the merits. There is also some unfortunate language about sustaining an "injury in fact" (because of the standing issue) and about competing in the same line of business (??) in likelihood of confusion cases. The issue is likelihood of confusion amongst potential purchasers and I don't think "same line of business" should be involved.
I agree with Professor McCarthy’s sound objections to this decision but would add that it is also incorrect based on both the role of the Federal Circuit and its precedent on standing.
First, the Federal Circuit reviews the TTAB's decisions on appeal, asking, essentially, whether the TTAB was correct. Therefore, its task is to determine whether the TTAB properly followed the law as it applies in Board proceedings. The Federal Circuit should be asking whether an opposer or cancellation petitioner was entitled to bring its case to the Board, not whether it is entitled to bring its case before an Article III court.
See, e.g., Corcamore, LLC v. SFM, LLC, 978 F.3d 1298, 1303 (Fed. Cir. 2020) (“In this appeal, we review de novo whether SFM pleaded sufficient facts to establish entitlement to challenge Corcamore's registered trademark under § 1064. . . . To be clear, this appeal does not involve the traditional legal notions of Article III standing. This appeal focuses instead on the requirements that a party must satisfy to bring or maintain a statutory cause of action, such as a petition to cancel a registered trademark under 15 U.S.C. § 1064.”).
Second, this decision marks a big shift from the Federal Circuit's precedent on standing in TTAB appeals. It fails to mention any of the relevant case law that the Federal Circuit commonly relies on when reviewing a TTAB decision: Opposers and cancellation petitioners must have a belief in damage that has a reasonable basis, as well as having a real interest in the proceedings.
See, e.g., Ghomeshi v. StrongVolt, Inc., 851 Fed. Appx. 193, 196 n.5 (Fed. Cir. 2021) (unpublished) (“To be clear, the issue in front of the Board was not whether StrongVolt had Article III standing, but whether it had satisfied the statutory requirements of 15 U.S.C. § 1064 to pursue a cancellation proceeding.”); Coach Servs. v. Triumph Learning LLC, 668 F.3d 1356, 1376 (Fed. Cir. 2012) (“The ‘case’ and ‘controversy’ restrictions do not . . . apply to matters before administrative agencies. Instead, for an agency such as the PTO, standing is conferred by statute. Here, standing is conferred by Section 13 of the Lanham Act. . . .”); Cunningham v. Laser Golf Corp., 222 F.3d 943, 945 (Fed. Cir. 2000) (“Standing . . . requires only that the party seeking cancellation believe that it is likely to be damaged by the registration.”).
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