Goya Foods, Inc. v. Tropicana Products, Inc.

• Citation: 846 F.2d 848
• Decision Date: 12 May 1988
• Docket Number: No. 577,D,577
• Parties: , 6 U.S.P.Q.2d 1950 GOYA FOODS, INC., Plaintiff-Appellant, v. TROPICANA PRODUCTS, INC., Defendant-Appellee. ocket 87-7802.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 848

846 F.2d 848

56 USLW 2720, 6 U.S.P.Q.2d 1950

GOYA FOODS, INC., Plaintiff-Appellant, v. TROPICANA PRODUCTS, INC., Defendant-Appellee.

No. 577, Docket 87-7802.

United States Court of Appeals Second Circuit.

Argued Jan. 29, 1988.

Decided May 12, 1988.

Ben C. Friedman, New York City (Baker & Friedman, New York City, on brief), for plaintiff-appellant.

Mitchell H. Stabbe, Washington, D.C. (Janet R. Studley, Holland & Knight, Washington, D.C., Robert Alpert, Ladas & Parry, New York City, Steven B. Gold, Bradenton, Fla., on brief), for defendant-appellee.

Before OAKES, NEWMAN and MINER, Circuit Judges.

JON O. NEWMAN, Circuit Judge:

This case presents the issue whether a district court may stay trademark infringement litigation pending the outcome of registration proceedings before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office. Plaintiff-appellant Goya Foods, Inc. ("Goya") appeals from a judgment of the District Court for the Southern District of New York (Milton Pollack, Judge) dismissing its action seeking a declaratory judgment of non-infringement with respect to two of its trademarks and cancellation of one of the trademark registrations of defendant-appellee Tropicana Products, Inc. ("Tropicana"). 666 F.Supp. 585. This determination was based primarily upon a finding that there was no justiciable controversy between the parties. Goya also appeals from a subsequent order denying its motion for leave to file an amended complaint alleging the basis for apprehending a claim of infringement by Tropicana. Judge Pollack denied leave to amend on the ground that even if the pleading was sufficient, he would have stayed the action pending completion of trademark registration proceedings before the United States Patent and Trademark Office ("PTO"). We need not determine whether the original complaint stated a claim because we conclude that in any event the pendency of a PTO proceeding was not a proper basis to forestall Goya's lawsuit. We therefore reverse and remand to afford Goya an opportunity to amend its complaint.

Background

Goya and its predecessors have used the TROPICOLA and TROPICOCO trademarks continuously since 1974 to sell cola- and coconut-flavored soft drink products. Goya acquired federal registrations to these trademarks by assignment on March 25, 1977, but failure to file timely proof of continued use resulted in automatic cancellation of the registrations. See 15 U.S.C. Sec. 1058(b) (1982). On January 25, 1985, Goya commenced re-registration proceedings with the PTO. The TROPICOLA and TROPICOCO applications were published in the PTO's Official Gazette, see 15 U.S.C. Sec. 1062(a) (1982), on July 2, 1985, and August 26, 1986, respectively.

On October 30, 1985, Tropicana commenced an opposition proceeding before the PTO's Trademark Trial and Appeal Board ("TTAB") challenging Goya's proposed registration of the TROPICOLA mark. See 15 U.S.C. Sec. 1063 (1982). Tropicana's Notice of Opposition asserted that the TROPICOLA mark too closely resembled Tropicana's own registered marks, TROPICANA, TROPICANA, and TROPI, used on its non-carbonated fruit juice products, creating a likelihood of confusion, mistake, or deception among consumers. The Notice of Opposition further alleged that Tropicana itself had made prior use of the TROPICOLA mark and that Goya had adopted the TROPICOLA mark "with full knowledge of" Tropicana's "pre-existing rights to the marks TROPICANA and TROPIC-ANA." For the foregoing reasons, and because the TROPICOLA beverage is allegedly of inferior quality compared to Tropicana's products, the Notice of Opposition concluded that approval of Goya's TROPICOLA application would cause Tropicana irreparable harm. On September 25, 1986, Tropicana commenced opposition proceedings before the TTAB challenging Goya's proposed registration of the TROPICOCO mark. The allegations contained in the Notice of Opposition are substantially the same as those set forth in the TROPICOLA opposition notice. The TTAB consolidated the two proceedings on April 24, 1987. Discovery was scheduled to close June 29, 1987, with final briefing due in mid-1988.

On May 21, 1987, Goya filed a complaint in the Southern District of New York seeking a declaration that it had not infringed Tropicana's trademarks and cancellation of Tropicana's registration for TROPI. The TTAB granted Goya's request to suspend the administration hearings, see 37 C.F.R. Sec. 2.117 (1987), with leave to resume the proceedings in the event the District Court action was stayed or dismissed. On August 6, 1987, the District Judge dismissed the complaint for lack of a justiciable controversy, finding that the pending registration opposition proceeding did not, without more, give rise to an "actual controversy" between the parties. The District Judge also indicated his reluctance to "intercede gratuitously in the unfinished and pending [TTAB] administrative proceedings." 666 F.Supp. at 589.

Goya next moved for leave to amend its complaint pursuant to Fed.R.Civ.P. 15(a), in order to "plead[] with specificity those acts of TROPICANA which give rise to GOYA's real and reasonable apprehension that TROPICANA intends to sue GOYA for infringement and damages," Appellant's Br. at 14. The District Judge denied this motion on August 17, 1987, reiterating his intention not to interfere with the progress of the TTAB registration proceeding. Judge Pollack expressed concern both that the parties' investment of time and resources in the TTAB proceeding "should not be wasted" and that the TTAB's "unique experience and expertise" should be enlisted before consideration of Goya's lawsuit. 666 F.Supp. at 590. These factors apparently led the District Judge to view the Rule 15 motion as futile because "this Court would at all events enter a stay pending a Patent Office decision." Id. at 3. The dismissal of the complaint was modified, however, to be without prejudice to the institution of an amended claim after a final decision by the TTAB. Id.

Discussion

The narrow issue presented is whether the pendency of the registration proceeding before the TTAB was an appropriate basis for the denial of Goya's motion to amend its complaint seeking primarily a declaration of non-infringement. The rationale of the District Court's determination is essentially the doctrine of "primary jurisdiction," which guards against premature judicial encroachment upon an agency's sphere of responsibility and expertise. See Sam S. Goldstein Industries, Inc. v. Botany Industries, Inc., 301 F.Supp. 728, 731 (S.D.N.Y.1969). This doctrine is the explicit basis of the decisions primarily relied upon by the District Judge in his dismissal of Goya's complaint and denial of leave to amend, see, e.g., C-Cure Chemical Co. v. Secure Adhesives Corp., 571 F.Supp. 808, 823 (W.D.N.Y.1983); The Driving Force, Inc. v. Manpower, Inc., 498 F.Supp. 21, 24 (E.D.Pa.1980).

The doctrine of primary jurisdiction represents a version of the administrative exhaustion requirement under circumstances in which a judicially cognizable claim is presented but "enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body...." United States v. Western Pacific R.R., 352 U.S. 59, 64, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956). The rationale for the doctrine is two-fold. First, it ensures " '[u]niformity and consistency in the regulation of business entrusted to a particular agency.' " Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 303-04, 96 S.Ct. 1978, 1987, 48 L.Ed.2d 643 (1976) (quoting Far East Conference v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952)). Second, the doctrine is intended to recognize that, with respect to certain matters, "the expert and specialized knowledge of the agencies" should be ascertained before judicial consideration of the legal claim. United States v. Western Pacific R.R., supra, 352 U.S. at 64, 77 S.Ct. at 165. As the Supreme Court has observed in light of these factors:

The doctrine of primary jurisdiction thus does "more than prescribe the mere procedural timetable of the lawsuit. It is a doctrine allocating the law-making power over certain aspects" of commercial relations. "It transfers from court to agency the power to determine" some of the incidents of such relations.

Id. at 65, 77 S.Ct. at 165-66 (quoting Jaffe, Primary Jurisdiction Reconsidered, 102 U.Pa.L.Rev. 577, 583-84 (1954)).

An examination of the cases illustrates the relatively narrow scope of the doctrine of primary jurisdiction. The doctrine has been applied only when a lawsuit raises an issue, frequently the validity of a commercial rate or practice, committed by Congress in the first instance to an agency's determination, "particularly when the issue involves technical questions of fact uniquely within the expertise and experience of an agency." Nader v. Allegheny Airlines, Inc., supra, 426 U.S. at 304, 96 S.Ct. at 1987. See, e.g., Far East Conference v. United States, supra (antitrust action challenging shipping rates properly within primary jurisdiction of the Federal Maritime Board); Texas & Pacific Ry. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553 (1907) (shipper challenging carrier's rate must seek redress initially through the Interstate Commerce Commission); Danna v. Air France, 463 F.2d 407 (2d Cir.1972) (claim under Federal Aviation Act challenging reasonableness and discriminatory effect of airline's tariff initially a question for Civil Aeronautics Board). Application of the doctrine has been refused when the issue at stake is legal in nature and lies within the traditional realm of judicial competence. See Nader v. Allegheny Airlines, supra (Civil Aeronautics Board does not have primary jurisdiction over fraudulent misrepresentation claim against air carrier for failure to disclose overbooking practices); ...