Tuesday, January 24, 2023

E.D. Texas Denies Motion to Stay Infringement Action in Favor of TTAB Proceeding

O&M Halyard brought a civil action against Sri Trang US, Inc., claiming trademark infringement and dilution of two registered trademarks for medical gloves, one mark consisting of the color purple and the other the color gray. Sri Trang then filed at the TTAB petitions for cancellation of the two registrations. The Board suspended the cancellation proceeding pending the outcome of the litigation. Sri Trang then moved to stay the litigation in favor of the TTAB proceeding, but the court denied the motion because the defendants "have not shown that any potential efficiencies to be gained by awaiting the TTAB decision warrant a stay." O&M Halyard, Inc. v. Sri Trang USA, Inc, et al. , Civil No. 4:22-CV-622-SDJ (E.D. Texas January 18, 2023).

The court took guidance from the Second Circuits decision in Goya Foods, Inc. v. Tropicana Products, Inc., 846 F.2d 848 (2d Cir. 1988) regarding the doctrine of "primary jurisdiction" on behalf of an administrative agency. That doctrine is "relatively narrow" in scope, applying only in lawsuits involving an issue committed by Congress in the first instance to an agency's determination - e.g., the validity of a commercial rate or practice - and involving technical questions uniquely within the agency's expertise. 

The Goya court concluded that "the basic framework of federal registration differs from other statutory regimes that implicate primary jurisdiction because the Lanham Act allows a litigant disappointed with a TTAB decision to file an action in federal district court that is 'intended to be a trial de novo.'" Furthermore, courts have a long-standing familiarity in resolving suites under both the Lanham Act and the common law of trademark infringement and unfair competition.

The Second Circuit developed the following guidance regarding whether a court should stay an action pending the outcome of a TTAB "registration action."

On the one hand, if the district court action "involves only the issue of whether a mark is entitled to registration," the doctrine of primary jurisdiction “might well be applicable” because the benefits of awaiting the TTAB's decision would rarely be outweighed by the need for a prompt adjudication. *** On the other hand, if the district court action concerns infringement, "the interest in prompt adjudication far outweighs the value of having the views of the [USPTO]."

Here, the civil action "involves issues well beyond trademark registration" because it includes questions of trademark infringement and dilution. The district court therefore concluded that "the interest in prompt adjudication of this case substantially outweighs the value of having the view of the TTAB on the question of registration of O&M Halyard's marks. The doctrine of primary jurisdiction is therefore inapplicable and Sri Trang's motion must fail."

The court also denied the motion because a stay "would unnecessarily delay the resolution of this case without providing any meaningful narrowing of the issues before the Court."

Because the TTAB lacks authority to resolve all the issues raised in this case, the parties will wind up back in this Court regardless of the TTAB outcome. Under similar circumstances, courts routinely reject requests to stay proceedings pending the outcome of parallel TTAB actions.

Finally, Sri Trang neither asserted nor demonstrated any hardship or inequity if a stay is not granted. On the other hand, there is a "fair possibility" that a stay would harm O&M Halyard by preventing a prompt resolution of its claims.

Read comments and post your comment here.

TTABlogger comment: When will a civil action involve only a question of registration?

Text Copyright John L. Welch 2023.


At 8:14 AM, Anonymous Anonymous said...

Dilution claims for the goods having the colors purple or gray? Good grief. In my opinion, including that claim obscures the trademark infringement claim.

At 8:18 AM, Anonymous Anonymous said...

Best I can come up with is some theory of priority based on a filing date? So the registration needs to issue to establish senior rights?

At 11:34 AM, Anonymous Tom McCarthy said...

This decision fits comfortably in the mainstream: courts usually deny a stay. There is little reason to let the T.T.A.B. go ahead first. The usual reason is that the court can determine all issues of trademark validity and infringement in the case—the T.T.A.B. cannot.

At 10:52 PM, Anonymous Brian T said...

Agree with Anonymous 8:18 am - constructive first use case

At 7:55 AM, Blogger John L. Welch said...

But how would "constructive first use" be an issue unless there was an infringement claim? And if there was an infringement claim, then registration is not the only issue.


Post a Comment

<< Home