Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC

• Decision Date: 04 December 2020
• Docket Number: 2019-1567
• Citation: 981 F.3d 1083 (Mem)
• Parties: AUSTRALIAN THERAPEUTIC SUPPLIES PTY. LTD., Appellant v. NAKED TM, LLC, Appellee
• Court: U.S. Court of Appeals — Federal Circuit

981 F.3d 1083 (Mem)

AUSTRALIAN THERAPEUTIC SUPPLIES PTY. LTD., Appellant

v.NAKED TM, LLC, Appellee

2019-1567

United States Court of Appeals, Federal Circuit.

December 4, 2020

ON PETITION FOR REHEARING EN BANC

ORDER

Per Curiam.

Appellee Naked TM, LLC filed a petition for rehearing en banc. A response to the petition was invited by the court and filed by Appellant Australian Therapeutic Supplies Pty. Ltd. A motion for leave to file an amicus brief was filed by Lee Thomason and granted by the court. The petition for rehearing, response, and amicus brief were first referred to the panel that heard the appeal, and thereafter, to the circuit judges who are in regular active service. A poll was requested, taken, and failed.

Upon consideration thereof,

IT IS ORDERED THAT :

The petition for panel rehearing is denied.

The petition for rehearing en banc is denied.

The mandate of the court will issue on December 11, 2020.

I write to express my disagreement with the merits of the decision in Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC (Australian III ), 965 F.3d 1370 (Fed. Cir. 2020), and to note a potential point of confusion in our case law going forward. Statutory standing is a question of "whether a legislatively conferred cause of action encompasses a particular plaintiff's claim." Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 127, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014).¹ A cause of action "extends only to plaintiffs whose interests fall within the zone of interests protected by the law invoked." Id. at 129, 134 S.Ct. 1377 (internal quotation marks and citation omitted). Australian III concerns how broad the "zone of interests" is for 15 U.S.C. § 1064 —specifically, whether a prior settlement agreement may preclude a petitioner from establishing a valid cause of action. Compare Australian III , 965 F.3d at 1374–76 (concluding that a petitioner had a valid cause of action because "proprietary rights" are not required), with Australian III , 965 F.3d at 1376–81 (Wallach, J. dissenting) (concluding that a petitioner did not have a valid cause of action because it was precluded by a prior settlement agreement). See 15 U.S.C. § 1064 (providing for cancellation of registration of a trademark).

Australian III : (1) conflicts with our case law requiring a "legitimate commercial interest" to have a valid cause of action under 15 U.S.C. § 1064, see Empresa Cubana Del Tabaco v. Gen. Cigar Co. , 753 F.3d 1270, 1274 (Fed. Cir. 2014) (following Lexmark , noting that a petitioner must have a "legitimate commercial interest sufficient to confer standing"); (2) undermines our case law favoring the enforcement of settlement agreements, see Wells Cargo, Inc. v. Wells Cargo, Inc. , 606 F.2d 961, 965 (C.C.P.A. 1979) ("If there [is] a policy favoring challenges to trademark validity, it too has been viewed as outweighed by the policy favoring settlements."); and (3) raises questions as to the impact of Supreme Court precedent on our statutory standing jurisprudence, see Lexmark , 572 U.S. at 128 n.4, 134 S.Ct. 1377 (noting that statutory standing does not implicate Article III subject matter jurisdiction), 134 (providing "a direct application of the zone-of-interests test and the proximate-cause requirement [to] suppl[y] the relevant limits on who may sue"). Accordingly, I respectfully dissent from our denial of rehearing en banc. See FED. R. APP. P. 35(a)(1)–(2).

BACKGROUND

I. Legal Framework

Statutory standing is a question of "whether a legislatively conferred cause of action encompasses a particular plaintiff's claim." Lexmark, 572 U.S. at 127, 134 S.Ct. 1377.² A cause of action "extends only to plaintiffs whose interests fall within the zone of interests protected by the law invoked." Id. at 129, 134 S.Ct. 1377 (internal quotation marks and citation omitted). Under the relevant statute, "a direct application of the zone-of-interests test and the proximate-cause requirement supplies the relevant limits on who may sue." Id. at 134, 134 S.Ct. 1377. "[T]he breadth of the zone of interests varies according to the provisions of law at issue[.]" Id. at 130, 134 S.Ct. 1377.³

Relevant here, "[a] petition to cancel a registration of a mark ... may ... be filed ... by any person who believes that he is or will be damaged ... by the registration of a mark[.]" 15 U.S.C. § 1064. In Empresa Cubana , we explained that, in keeping with Lexmark , we must "focus[ ] on [a petitioner's] entitlement to the cause of action defined by 15 U.S.C. § 1064," Empresa Cubana , 753 F.3d at 1274, and confirmed the continued applicability of our pre- Lexmark 15 U.S.C. § 1064 jurisprudence to determine whether "[a] petitioner is authorized by statute to seek cancellation of a mark," id. at 1275. Under Empresa Cubana , a petitioner must show that "it has both a real interest in the proceedings ... [and] a reasonable basis for its belief of damage" to have a valid cause of action under 15 U.S.C. § 1064. Id. (internal quotation marks and citation omitted); see Australian III , 965 F.3d at 1373–74 (similar). Recently, we clarified both that "the Lexmark analytical framework is the applicable standard for determining whether a person is eligible under 15 U.S.C. § 1064 to bring a petition for the cancellation of a trademark registration," and that there is "no meaningful, substantive difference between the analytical frameworks expressed in Lexmark and Empresa Cubana ." Corcamore, LLC v. SFM, LLC , 978 F.3d 1298, 1303 (Fed. Cir. 2020) ; see id. at 1305 (explaining that "[t]he zone-of-interests requirement and the real-interest requirement share a similar purpose and application" and "a party that demonstrates a reasonable belief of damage by the registration of a trademark demonstrates proximate causation within the context of [ 15 U.S.C.] § 1064").⁴

Whether we adopt Empresa Cubana ’s or Corcamore ’s language, a petitioner needs a legitimate commercial interest to have a valid cause of action under 15 U.S.C. § 1064. Corcamore, 978 F.3d at 1303 ; Empresa Cubana , 753 F.3d at 1275 ; see Lexmark , 572 U.S. at 131–32, 134 S.Ct. 1377 (explaining that the "interests protected by the Lanham Act" are "commercial," including " ‘protect[ing] persons engaged in [commerce within the control of Congress] against unfair competition’ " (alterations in original) (quoting 15 U.S.C. § 1127 )).⁵

"In the usual case, where [a cancellation] is brought under [ 15 U.S.C. § 1052(d) ], the [petitioner] ha[s] a proprietary interest in [the] mark [at issue], and standing is afforded through its assertion that it will incur some direct injury to its own established trade identity." Jewelers Vigilance Comm., Inc. v. Ullenberg Corp. , 823 F.2d 490, 493 (Fed. Cir. 1987) (discussing statutory standing to oppose, under 15 U.S.C. § 1063, registration of a mark)⁶ ; see 15 U.S.C. § 1052(d) (providing that a mark may not be registered "on the principal register" if it "so resembles a mark registered in the [USPTO], or a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion"). However, a valid cause of action "can [also] be shown by establishing a direct commercial interest," Cunningham v. Laser Golf Corp. , 222 F.3d 943, 945 (Fed. Cir. 2000) (citing Int'l Order of Job's Daughters v. Lindeburg & Co. , 727 F.2d 1087, 1092 (Fed. Cir. 1984) ), such as the "longtime production and sale of merchandise with the [mark]" at issue, with "an equal right" to that of registrant-approved retailers "to use the [mark]," Job's Daughters , 727 F.2d at 1092, or "own[er]s[hip]" and use of potentially similar "prior registrations," Cunningham , 222 F.3d at 945.

Whatever commercial interest the petitioner asserts, it must be "legitimate." Empresa Cubana , 753 F.3d at 1275 ; see Coach Servs., Inc. v. Triumph Learning LLC, 668 F.3d 1356, 1376 (Fed. Cir. 2012) (requiring "a legitimate personal interest" (internal quotation marks and citation omitted)); Lipton Indus., Inc. v. Ralston Purina Co ., 670 F.2d 1024, 1029 (C.C.P.A. 1982) (similar); cf. Lexmark , 572 U.S. at 131–32, 134 S.Ct. 1377 (providing that the "interests protected by the Lanham Act" include " ‘protect[ing] persons engaged in [commerce within the control of Congress] against unfair competition’ " (alterations in original) (quoting 15 U.S.C. § 1127 )). Further, it must be rooted in "fact[ ]" and "affirmatively proved." Ritchie v. Simpson , 170 F.3d 1092, 1099 (Fed. Cir. 1999) (citing Lipton , 670 F.2d at 1028 ); see Lipton , 670 F.2d at 1029 (explaining that while "the legitimacy of the petitioner's activity from which its interest arises will be presumed in the absence of evidence to the contrary," a party may "of course, seek to attack the legitimacy of [an] application or in some other way negate appellee's interest"); cf. Lexmark , 572 U.S. at 133, 134 S.Ct. 1377 ("[A] plaintiff suing under [ 15 U.S.C.] § 1125(a) ordinarily must show economic or reputational injury[.]"). A petitioner may be deprived of a "legitimate commercial interest" under 15 U.S.C. § 1064 if such interest is precluded by a prior judgment, see Empresa Cubana , 753 F.3d at 1274–75 (explaining that a petitioner was not prevented from bringing cancellation proceedings before the TTAB because a relevant prior judgment "specifically did not address whether [the petitioner] could seek cancellation of the [registrations at issue]"), or a prior settlement agreement, see Danskin, Inc. v. Dan River, Inc., 498 F.2d 1386, 1387 (C.C.P.A. 1974) (concluding that a petitioner could not, as a matter of law, seek cancellation of a mark because it had entered a prior settlement agreement with the registrant to "not oppose or petition to cancel directly or indirectly any registration" by that registrant); cf. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc ., 528 U.S. 167, 192, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (noting that...