San Diego Cnty. Credit Union v. Equity First Credit Union

• Decision Date: 10 February 2023
• Docket Number: 21-55642,21-55662,21-56095,21-56389
• Parties: SAN DIEGO COUNTY CREDIT UNION, CITIZENS Plaintiff-Appellee/Cross-Appellant, v. EQUITY FIRST CREDIT UNION, Defendant-Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

SAN DIEGO COUNTY CREDIT UNION, CITIZENS Plaintiff-Appellee/Cross-Appellant, v. EQUITY FIRST CREDIT UNION, Defendant-Appellant/Cross-Appellee.

Nos. 21-55642, 21-55662, 21-56095, 21-56389

United States Court of Appeals, Ninth Circuit

February 10, 2023

Argued and Submitted December 9, 2022 Pasadena, California

Appeal from the United States District Court No 3:18-cv-00967-GPC-MSB for the Southern District of California Gonzalo P. Curiel, District Judge, Presiding

James W. Dabney (argued), Emma L. Baratta, and Michael M. Polka Hughes Hubbard &Reed LLP, New York, New York; Steven J Cologne, Higgs Fletcher &Mack, LLP, San Diego California; for Defendant-Appellant.

Martin R. Bader (argued), Stephen Sandor Korniczky, Lisa M. Martens, Jesse A. Salen, and Karin Dougan Vogel, Sheppard Mullin Richter &Hampton LLP, San Diego, California; Todd E. Lundell, Sheppard Mullin Richter &Hampton LLP, Costa Mesa, California; James V. Fazio III, San Diego IP Law Group, San Diego, California; for Plaintiff-Appellee.

Before: Carlos T. Bea, Sandra S. Ikuta, and Morgan Christen, Circuit Judges.

SUMMARY^[*]

Trademark/Article III Standing

The panel affirmed in part and vacated in part the district court's judgment and award of attorneys' fees in favor of the plaintiff and remanded in a trademark case.

Defendant Citizens Equity First Credit Union (CEFCU) petitioned the Trademark Trial and Appeal Board (TTAB) to cancel a trademark registration belonging to plaintiff San Diego County Credit Union (SDCCU). SDCCU procured a stay to the TTAB proceedings by filing an action seeking declaratory relief to establish that it was not infringing either of CEFCU's registered and common-law marks and to establish that those marks were invalid. The district court granted SDCCU's motion for summary judgment on noninfringement. After a bench trial, the district court also held that CEFCU's common-law mark was invalid and awarded SDCCU attorneys' fees.

Vacating in part and remanding, the panel held that SDCCU had no personal stake in seeking to invalidate CEFCU's common-law mark because the district court had already granted summary judgment in favor of SDCCU, which established that SDCCU was not infringing that mark. Hence, there was no longer any reasonable basis for SDCCU to apprehend a trademark infringement suit from CEFCU. After it granted summary judgment in favor of SDCCU, the district court was not resolving an actual "case" or "controversy" regarding the validity of CEFCU's common-law mark; thus, it lacked Article III jurisdiction to proceed to trial on that issue. The panel therefore vacated the district court's judgment and its award of attorneys' fees, which was based, in part, on the merits of the invalidity claim over which the district court lacked Article III jurisdiction.

In light of Medlmmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), and Clapper v. Amnesty Int'l, 568 U.S. 398 (2013), the panel confirmed the ongoing vitality of precedent applying what the parties labeled a "reasonable apprehension" test to determine whether a controversy exists in a declaratory judgment action regarding trademark infringement. Under this test, a plaintiff has standing to seek declaratory relief of non-infringement if he demonstrates "a real and reasonable apprehension that he will be subject to liability" if he continues with his course of conduct. The panel held that a live controversy existed at the pleading stage, and CEFCU did not meet its burden of proving that the case was moot at the summary judgment stage. The district court did not, however, possess Article III jurisdiction to proceed to trial on SDCCU's invalidity claim.

The panel held that the district court correctly exercised personal jurisdiction over CEFCU regarding SDCCU's noninfringement claims, which sought declaratory relief that SDCCU was not infringing CEFCU's registered mark or common-law mark.

The panel affirmed the district court's dismissal without prejudice of CEFCU's counterclaim for cancellation of SDCCU's trademark registration.

OPINION

BEA, CIRCUIT JUDGE.

After a party obtains declaratory relief which decrees that it is not infringing a trademark, does it retain Article III standing to invalidate that mark? That is the central question presented in these appeals, and we answer it: No.

Defendant-appellant and cross-appellee Citizens Equity First Credit Union (CEFCU) began this dispute by petitioning the Trademark Trial and Appeal Board (TTAB) to cancel a trademark registration belonging to plaintiffappellee and cross-appellant San Diego County Credit Union (SDCCU). CEFCU claimed that SDCCU's registration covered a mark that is confusingly similar to both CEFCU's registered mark and its alleged common-law mark. SDCCU procured a stay to the TTAB proceedings by filing the instant declaratory judgment action. SDCCU persuaded the district court that, during the course of the TTAB proceedings, it had become apprehensive that CEFCU would sue SDCCU for trademark infringement. SDCCU sought declaratory relief to establish it was not infringing either of CEFCU's marks and to establish that those marks are invalid. The district court granted SDCCU's motion for summary judgment on non-infringement. After a bench trial, the district court also held that CEFCU's common-law mark is invalid and awarded SDCCU attorneys' fees.

We hold that SDCCU had no personal stake in seeking to invalidate CEFCU's common-law mark because the district court had already granted summary judgment in favor of SDCCU, which established that SDCCU was not infringing that mark. Hence, there was no longer any reasonable basis for SDCCU to apprehend a trademark infringement suit from CEFCU. After it granted summary judgment in favor of SDCCU, the district court was not resolving an actual "case" or "controversy" regarding the validity of CEFCU's common-law mark; thus, it lacked Article III jurisdiction to proceed to trial on that issue. We therefore vacate its judgment and its award of attorneys' fees. Of the remaining issues that are not obviated by our holding on Article III jurisdiction, we affirm. Thus, we affirm in part, vacate in part, and remand.

I.

This is a trademark dispute between two credit unions with largely geographically remote membership counties.

CEFCU's principal place of business is in Peoria, Illinois. In 2008, it acquired Valley Credit Union located in the Bay Area of Northern California. Although CEFCU has members residing in all 50 states, it generally requires that its members have ties to Illinois or the following California counties: Alameda, Contra Costa, or Santa Clara. In 2011, CEFCU registered its trademark, "CEFCU. NOT A BANK. BETTER.," with the United States Patent and Trademark Office. CEFCU also claims to own a common-law trademark that is nearly identical to its registered mark, but omits its house mark. Its claimed common-law mark is "NOT A BANK. BETTER."

SDCCU's principal place of business is in San Diego, California. Each of SDCCU's locations are located in San Diego, Riverside, or Orange County. SDCCU focuses its marketing on these counties and over 95 percent of its members are resident Californians. In 2014, SDCCU obtained a registration for "IT'S NOT BIG BANK BANKING. IT'S BETTER."

CEFCU petitioned the TTAB to cancel SDCCU's registration in 2017, alleging that CEFCU had used its registered mark in commerce prior to SDCCU's registration. CEFCU alleged the parties provide "identical" services to "identical" types of customers and use their respective marks in "identical . . . online advertising media." It claimed that SDCCU's mark "so resembles" CEFCU's registered mark "as to be likely, when used in connection with the services of [SDCCU], to cause confusion, or to cause mistake, or to deceive within the meaning of [the] Trademark Act §2 (d), 15 U.S.C. § 1052(d)." Finally, CEFCU alleged it "believes it will be damaged by continued registration of [SDCCU's mark] because such registration gives false color to [SDCCU]'s right to use [SDCCU's mark] and encourages [SDCCU]'s misleading and deceptive use of [SDCCU's mark] in derogation of [CEFCU]'s prior and superior rights in [CEFCU]'s registered mark."

In the TTAB proceedings, SDCCU deposed Jennifer Flexer, CEFCU's marketing director, and Susan Portscheller, a former vice president of CEFCU. Flexer testified that CEFCU petitioned to cancel SDCCU's registration because she "became aware that SDCCU's billboard was in the marketplace [in San Diego]. As a marketing professional [she] had concerns with the content of the advertisement" because it seemed "very similar" to CEFCU's common-law mark. Portscheller testified as CEFCU's corporate designee. See Fed.R.Civ.P. 30(b)(6) (allowing for depositions of corporate entities through a designee); 37 C.F.R § 2.116(a) (making the federal rules of civil procedure generally applicable in TTAB proceedings). Portscheller testified that CEFCU sought to build awareness of its brand in a five-mile radius of its Bay Area branches and seeks to "build awareness outside that radius in California." She further testified that CEFCU has "members throughout California, and many of them are in Southern California." Although she was not aware of any actual customer confusion, she believed it was "just a question of time" because CEFCU had only just begun marketing in California. She thought that SDCCU's mark constituted "trademark infringement."

CEFCU moved to amend its TTAB petition, alleging an additional reason that SDCCU's registration should be cancelled-CEFCU's prior use of its common-law mark.

While the motion to amend the TTAB petition was pending, SDCCU filed the instant suit in the United States District Court for the Southern District of California. Counts one...