American Bakeries Co. v. Pan-O-Gold Baking Co.

• Decision Date: 15 December 1986
• Docket Number: Civ. No. 4-86-595.
• Citation: 2 USPQ 2d 1208,650 F. Supp. 563
• Parties: AMERICAN BAKERIES CO., Plaintiff, v. PAN-O-GOLD BAKING CO., Defendant.
• Court: U.S. District Court — District of Minnesota

650 F. Supp. 563

2 USPQ 2d 1208

AMERICAN BAKERIES CO., Plaintiff, v. PAN-O-GOLD BAKING CO., Defendant.

Civ. No. 4-86-595.

United States District Court, D. Minnesota, Fourth Division.

December 15, 1986.

Dorsey & Whitney, Peter Dorsey, Minneapolis, Minn. (Alexander, Unikel, Bloom, Zalewa & Tenenbaum, Richard Alexander, James D. Zalewa and Mark J. Liss, Chicago, Ill., of counsel), for plaintiff.

Faegre & Benson, John D. French, Charles E. Steffey and Calvin L. Litsey, Minneapolis, Minn., for defendant.

MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

American Bakeries Co. (ABC) brought this action for compensatory and punitive damages, an accounting, and injunctive relief against Pan-O-Gold Baking Co. Both parties are commercial manufacturers of baked goods, and their dispute arises from the names and packages of their competing Italian bread products. This court has jurisdiction to hear trademark claims pursuant to 15 U.S.C. § 1121. By order dated August 20, 1986, this court granted ABC's motion for a preliminary injunction. Defendant now moves to stay this litigation pending the completion of certain United States Patent and Trademark Office (PTO) proceedings.

Background

Plaintiff manufactures a variety of bakery products which carry the "Taystee" mark. Since 1981, ABC has sold "D'Italiano" baked goods in Minnesota; in October 1984, it began selling D'Italiano Italian bread in this market. ABC has registered D'Italiano as U.S. Trademark No. 1,265,871. Defendant, a licensee of Roush Bakery Products Co., is a regional manufacturer of "Country Hearth" brand bakery goods. Pan-O-Gold purchases the mixes for these products from Roush and sells them in Roush's packaging. Other Roush licensees have produced its "D'Italia" products since 1982, but Pan-O-Gold first began marketing D'Italia bread earlier this year.

In 1985, Roush sought to register a "Country Hearth D'Italia" mark. ABC, citing its D'Italiano registration and asserting use and ownership of "D'Italiano and design" and a likelihood of confusion, opposed Roush's application. Roush answered, denying any likelihood of confusion and asserting defenses of estoppel, laches, acquiescence, improper issuance of registration, fraudulent procurement of registration, and lack of standing. On similar grounds, Roush counterclaimed for cancellation of American's mark. This "opposition/cancellation proceeding" is now before the Trademark Trial and Appeal Board (TTAB) of the PTO. The last brief is presently due in September 1987. A decision is not anticipated before 1988.

On July 25, 1986, American filed the instant litigation, alleging violations of federal trademark statutes, 15 U.S.C. §§ 1114(a) and 1125(a) and of the Minnesota Deceptive Trade Practices Act, and common law unfair competition and trademark infringement. Pan-O-Gold's answer and counterclaim for cancellation of the D'Italiano registration are based on the same grounds as Roush's answer and counterclaim in the PTO proceeding.

On August 20, 1986, this court granted a preliminary injunction barring Pan-O-Gold and its officers and agents from using the marks "D'Italia" or "D'Italia and Design" in the state of Minnesota.¹ Asserting that there can be no harm to ABC and that the PTO has "primary jurisdiction" to hear such trademark disputes, Pan-O-Gold now urges the court to stay all proceedings until the completion of PTO proceedings. ABC strenuously objects to this motion, asserting that primary jurisdiction is inapplicable and that this court should proceed and permit the PTO to stay its proceedings instead.

Discussion

The doctrine of primary jurisdiction "is concerned with promoting the proper relationships between the courts and administrative agencies charged with particular regulatory duties." United States v. Western Pacific Railroad Co., 352 U.S. 59, 63, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956). It "comes into play whenever enforcement of a claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case, the judicial process is suspended pending referral of such issues to the administrative body for its views." Id. at 64, 77 S.Ct. at 165. The underlying principle is

that in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over This is so even though the facts after they have been appraised by specialized competence serve as a premise for legal consequences to be judicially defined. Uniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by preliminary resort for ascertaining and interpreting the circumstances underlying legal issues to agencies better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure.

Far East Conference v. United States, 342 U.S. 570, 574-75, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952).

In some cases, the principles underlying the doctrine of primary jurisdiction are so strong that preliminary submission to a regulatory agency is necessary. See, e.g., United States v. Western Pacific Railroad Co., 352 U.S. 59, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956) (under circumstances of case, tariff construction was within exclusive primary jurisdiction of Interstate Commerce Commission); United States v. United States Steel Corp., 645 F.2d 1285 (8th Cir.1981) (preliminary ICC interpretation of tariff terms was necessary, and trial court erred in deciding dispute without ICC's views). Even in closely regulated areas, such as rate setting or tariff interpretation, however, referral of a matter to the regulatory agency may be unnecessary or even improper. E.g., Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 96 S.Ct. 1978, 48 L.Ed.2d 643 (1976) (court erred in holding that consumer's dispute with airline was within primary jurisdiction of Civil Aeronautics Board).

The briefs of the parties and the court's own research suggest that neither the Supreme Court nor the Court of Appeals has considered whether trial courts should stay proceedings and permit the PTO to exercise primary jurisdiction over trademark disputes such as the instant one. There is a split of authority among the district courts that have addressed the issue. See, e.g., C-Cure Chemical Co. v. Secure Adhesives Corp., 571 F.Supp. 808 (W.D.N.Y.1983) (comparing approaches of various courts).

The doctrine of primary jurisdiction arose in regulated industries, and the earlier cases emphasized "the desirable uniformity which would obtain if initially a specialized agency passed on certain types of administrative questions." United States v. Western Pacific Railroad Co., 352 U.S. at 64, 77 S.Ct. at 165 (citing Texas & Pacific Railroad Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 533 (1907)). The instant case does not involve a regulated industry. Moreover, it is a private dispute between two manufacturers, "not a public issue of industry-wide or regulatory concern." Johnson & Johnson, Inc. v. Wallace A. Erickson & Co., 627 F.2d 57, 62 (7th Cir.1980) (finding doctrine of primary jurisdiction inapplicable where plaintiff sought to submit patent dispute to PTO). See also Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 304, 96 S.Ct. 1978, 1987, 48 L.Ed.2d 643 (1976) (consumer dispute with airline not within primary jurisdiction of Civil Aeronautics Board).

The trial courts that have stayed their proceedings in deference to the asserted primary jurisdiction of the PTO have followed the more recent line of primary jurisdiction cases and stressed the "expert and specialized knowledge," United States v. Western Pacific Railroad Co., 352 U.S. at 64, 77 S.Ct. at 165, of the regulatory agency. Thus, in Driving Force, Inc. v. Manpower, Inc., 498 F.Supp. 21 (E.D.Pa.1980), the court emphasized the PTO's "broad authority to regulate trademarks," id. at 25, and noted that decisions of the TTAB are "entitled to the most respectful consideration because of the Patent Office's day-to-day expertise in adjudicating cases wherein the ultimate question decided is the question of `likelihood of confusion....' as that term is employed in various parts of the Lanham Act." Id. (citation omitted). While acknowledging that PTO decisions do not bind the courts, the Driving Force court stressed the likelihood that agency adjudication would be "a material aid in ultimately deciding" the federal court dispute." Id. Similarly, in C-Cure Chemical Co., Inc. v. Secure Adhesives Corp., 571 F.Supp. 808 (W.D.N.Y.1983), the court, relying on Driving Force, stressed the TTAB's "axiomatic ... specialized expertise and experience," id. at 823, and the likelihood that its consideration would "materially aid in ultimately deciding the issues presented before the court."² Id. See also Litton Bionetics, Inc. v. Bionetics Corp., Civil No. R-84-84 (D.Md. Sept. 14, 1985) (similar reasoning); Cf. Kemin Industries, Inc. v. Watkins Products, Inc., 183 U.S.P.Q. 799 (D.Minn.1974) (granting stay on grounds of judicial economy, where PTO resolution would be faster and might eliminate need for further litigation in district court).

Certain factors caution against the extension of the doctrine of primary jurisdiction to trademark disputes such as the instant one. First, the proceedings and determinations of the PTO are of limited importance in a federal court proceeding:

Generally, a court defers to the exercise of an administrative agency's primary jurisdiction to have the benefit of the agency's expertise in the assessment of disputed facts that are not open for reconsideration by the court.... But when registration decisions are litigated in a district court ... the proceeding is virtually de

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