Shire City Herbals, Inc. v. Blue

• Decision Date: 15 September 2015
• Docket Number: Case No. 15-cv-30069-MGM
• Parties: SHIRE CITY HERBALS, INC., Plaintiff, v. MARY BLUE d/b/a FARMACY HERBS, et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

SHIRE CITY HERBALS, INC., Plaintiff, v. MARY BLUE d/b/a FARMACY HERBS, et al., Defendants.

Case No. 15-cv-30069-MGM

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

September 15, 2015

MEMORANDUM OF DECISION AND ORDER REGARDING DEFENDANTS' MOTION TO STAY

(Dkt. No. 16)

ROBERTSON, U.S.M.J.

I. Introduction

Currently before the court is a motion to stay filed by defendants Mary Blue d/b/a Farmacy Herbs, Nicole Telkes d/b/a Wildflower School of Botanical Medicine and/or Wild Spirit Herbs, and Katheryn Langlier d/b/a Herbal Revolution (together, "Defendants") (Dkt. No. 16), which Shire City Herbals, Inc. ("Plaintiff") has opposed (Dkt. No. 19). The motion was referred to this court for decision (Dkt. No. 28).¹ On August 4, 2015, a hearing on the motion to stay was held before the court. For the reasons stated below, the court DENIES Defendants' motion.

II. Relevant Procedural Background

This action arises out of Defendants' alleged infringement of Plaintiff's registered trademark FIRE CIDER, an apple cider vinegar-based dietary supplement drink (Dkt. No. 19-2). In April 2012, Plaintiff filed an application with the U.S. Patent & Trademark Office ("PTO") for the mark FIRE CIDER, which was published and placed on the principal register later that year. In June 2014, defendant Mary Blue filed a petition for cancellation of Plaintiff's registered mark with the Trademark Trial and Appeal Board ("TTAB" or "Board"), seeking cancellation of the trademark registration on the grounds that (1) the designation FIRE CIDER is generic; (2) the designation is merely descriptive; and (3) Plaintiff's trademark application was fraudulently filed.²

On April 16, 2015, Plaintiff filed this action against Defendants, asserting, among others, a claim for declaratory relief regarding the validity of the FIRE CIDER mark on a statutory basis (Count I), a trademark infringement claim pursuant to 15 U.S.C. § 1141(1) (Count II), and a trademark infringement claim pursuant to Massachusetts common law (Count V) (Dkt. No. 1 at ¶¶ 46-56, 68-70).³ The court has original jurisdiction over claims arising under Chapter 22 of Title 15 of the United States Code, see 28 U.S.C. § 2201; 28 U.S.C. § 1338, and has jurisdiction over this matter pursuant to 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1367 (supplemental jurisdiction). On April 17, 2015, Plaintiff filed a motion with the TTAB tosuspend the cancellation proceeding, which Mary Blue opposed. On June 1, 2015, Defendants filed the instant motion to stay this matter pending the outcome of the TTAB proceeding. On July 15, 2015, the TTAB granted Plaintiff's motion to suspend the cancellation proceeding (Dkt. No. 36-1 at 4 n.2). Thereafter, defendant Mary Blue filed a motion with the TTAB to reconsider the suspension (Dkt. No. 36-1), on which, so far as the court is aware, the Board has not ruled.

III. Discussion

"A court's right to stay a proceeding is inherent in its power to control its own docket." Amersham Int'l v. Corning Glass Works, 108 F.R.D. 71, 71-72 (D. Mass. 1985) (citing Landis v. North American Corp., 299 U.S. 248, 254 (1936)). The decision of whether to grant a stay "calls for the exercise of judgment, which must weigh competing interests and maintain an even balance." Landis, 299 U.S. at 254-255. A stay is warranted if "it would conserve party and judicial resources . . . [and] avoid potentially inconsistent judgments." New Balance Athletic Shoe, Inc. v. Converse, Inc., No. 14-14715-NMG, 2015 WL 685070, at *2 (D. Mass. Feb. 18, 2015).

Notwithstanding the suspension of the TTAB proceeding, Defendants contend that judicial economy would be served by a stay of Plaintiff's case in this court because discovery was well underway at the TTAB and a trial date had been set. They further contend that a stay would avoid the risk of potentially inconsistent judgments on the validity of the trademark at issue. Plaintiff asserts that a stay would not simplify proceedings in this court because the PTO does not have exclusive jurisdiction over the trademark issue, so that even if the TTAB proceeding went forward and the Board issued a ruling, the parties could litigate the validity issue in federal district court or file an appeal of the TTAB decision with the United States Court of Appeals for the Federal Circuit. In addition, Plaintiff points out that because many of theclaims and counterclaims in this action are not within the jurisdiction of the TTAB, Defendants' claims of judicial economy are not persuasive. Plaintiff further contends that because it has claimed infringement and an alleged on-line campaign vilifying it, a stay would cause it prejudice. For the following reasons, in the court's view, Defendants' contentions do not warrant a stay in this matter.

1. The TTAB proceeding was not close to completion and has been suspended

The TTAB suspended its cancellation proceeding in reliance on 37 C.F.R. § 2.117 (Dkt. No. 36-1 at 3), which provides that "[w]henever it shall come to the attention of the Trademark Trial and Appeal Board that a party or parties to a pending case are engaged in a civil action . . . which may have a bearing on the case, proceedings before the Board may be suspended until termination of the civil action . . . ." 37 C.F.R. § 2.117(a). This court has no assurance that defendant Mary Blue's motion to reconsider the suspension will be granted, nor can it ascertain when the TTAB will rule on the reconsideration motion. The applicable regulation, 37 C.F.R. § 2.117(a), permits suspension of a cancellation proceeding "until termination of the civil action" in which the parties are engaged. At this time, this action is the only pending matter where the issue of validity can be determined, and the likely duration of the stay requested by Defendants is uncertain. See Water Quality Prot. Coal. v. Municipality of Arecibo, 858 F. Supp. 2d 203, 212 (D.P.R. 2012) (a "stay's duration must be reasonable"). Furthermore, the TTAB proceeding, even if reinstated, would not necessarily provide a prompt resolution of the validity issue. Contrary to Defendants' assertion that discovery was close to completion at the TTAB, at the time of the filing of the instant motion, the cancellation proceeding was in its early stages with only limited discovery having been completed (Dkt. Nos. 19 at 8, 19-1 at ¶ 4). While a trial date had been set for September 16, 2015, Mary Blue had only served an initial response to one set ofdiscovery requests (Dkt. No. 17-1 at ¶¶ 4, 6) and the trial date would have to be continued. Moreover, any discovery produced in the TTAB proceedings can presumably be used in this case. The parties' work at the TTAB need not be duplicated here. See In re Chiropractic Antitrust Litig., 483 F. Supp. 811, 813 (J.P.M.L. 1980) (in multidistrict litigation where the issue of duplicate discovery arose, the parties could request discovery completed in another action for their use in the current matter or stipulate that any discovery relevant to more than one action could be used in all actions).

2. The TTAB's decision is not necessarily final

Even if the TTAB were to reconsider its suspension decision and rule on the validity question before it, its decision would not be final. "[T]he Board is not an ordinary administrative agency whose findings control unless set aside after court review under a highly deferential standard." PHC, Inc. v. Pioneer Healthcare, Inc., 75 F.3d 75, 80 (1st Cir. 1996). Under the Lanham Act, "the Board's findings can be challenged in a civil action in district court using new evidence, and, to a certain extent, the issues can be litigated afresh." Id. at 80 (citing 15 U.S.C. § 1071(b)). "The law in this area is complicated, and perhaps confused; no simple generalization does it justice. For present purposes, it is enough that something close to de novo proceedings are often possible." Id. at 80 n.2 (citations omitted). Alternatively, the Board's findings may be appealed to the United States Court of Appeals for the Federal Circuit. See 15 U.S.C. § 1071(a). Accordingly, there is no guarantee that the TTAB's decision would be the final word on validity. A subsequent - and possibly different - decision could be made by the district court or the Federal Circuit.

Defendants point out that, in light of the Supreme Court's holding in B&B Hardware, Inc. v. Hargis Indus., Inc., 135 S.Ct. 1293 (2015), a TTAB ruling can have preclusive effect ondistrict court litigation, and contend that, for this reason, a stay is appropriate here. In B&B Hardware, the Supreme Court held that a TTAB ruling may, if the elements of issue preclusion are satisfied, be given preclusive effect. Id. at 1299. The Court granted such effect to a TTAB ruling where the Board had held a hearing on an issue within its jurisdiction, had made a decision on that issue, neither party sought further review of that decision in a district court or the Federal Circuit, and the elements of issue preclusion were satisfied. Id. at 1301-1310. While Defendants are correct that a TTAB ruling can, in appropriate circumstances, be given preclusive effect, the possibility that the TTAB might rule on the issue of validity, and that any such ruling could have preclusive effect - if neither party challenged the TTAB ruling - is far too speculative of a basis for staying a case.

3. Plaintiff's complaint is not limited to a request for a declaratory judgment

Finally, in addition to Plaintiff's claim for a declaratory judgment as to the validity of the FIRE CIDER mark, the complaint alleges nine other causes of action, including two trademark infringement claims. Even if the TTAB did issue a decision on validity, it could not order any relief as to the infringement claims. See PHC, Inc., 75 F.3d at 80 ("the Board cannot give relief for an infringement claim, either injunctive or by way of damages"); compare 15 U.S.C. §§ 1063(a), 1064, 1067(a) with 15 U.S.C. §§ 1116-1119 (powers of the district court are...