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.

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TTABlogger comment: The Brewery recently filed a petition for en banc reconsideration of the court's decision.

Text Copyright J. Thomas McCarthy 2022.