District courts have long had the ability to cancel trademark registrations in cases involving infringement claims or registered marks under 15 U.S.C. § 1119. Now, the Ninth Circuit has recently held—as a matter of first impression—in BBK Tobacco & Foods LLP v. Central Coast Agriculture, Inc. that district courts also have jurisdiction to review challenges to trademark applications in such cases, and that a lack of bona fide intent to use a mark in commerce is a proper basis to invalidate a trademark application.
The Ninth Circuit’s ruling is significant insofar as it holds that deciding whether a pending trademark application should be cancelled is not within the exclusive province of the U.S. Patent & Trademark Office, opening up another potential avenue for parties to attack trademark applications.
BBK Tobacco & Foods LLP (BBK) is a distributor and seller of smoking-related products, including cigarette rolling papers, lighters, tobacco shredders, tobacco grinders, and cigarette or cigar rolling trays under the trademark RAW. In September 2019, BBK commenced an action in the U.S. District Court for the District of Arizona against Central Coast Agriculture, Inc. (CCA), which sells concentrate and pre-rolled cannabis products under the brand RAW GARDEN, alleging, among other things, that CCA’s production, use, advertisement, distribution and sale of products using the RAW GARDEN label infringed BBK’s RAW trademarks. BBK also sought to void four of CCA’s trademark applications, which were filed on an intent-to-use basis, on the ground that CCA lacked a bona fide intent to use the relevant trademarks in commerce. CCA, in turn, asserted counterclaims seeking to cancel a number of BBK’s trademark registrations on the grounds of fraud and unlawful use.
Following discovery, the parties cross-moved for summary judgment. The district court granted summary judgment in favor of BBK on its petition to invalidate certain of CCA’s trademark applications and on CCA’s counterclaim to cancel BBK’s trademark registrations for fraud and unlawful use. The district court granted summary judgment in favor of CCA on BBK’s trademark claims. The parties both appealed the district court’s decision.
On appeal, CCA contended that the district court did not have the authority to invalidate trademark applications that had yet to mature into registrations. The Ninth Circuit rejected that argument, holding—for the first time—that under 15 U.S.C. § 1119, district courts have jurisdiction to alter or cancel trademark applications when an action concerns a registered trademark. Section 1119 provides that “[i]n any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, in whole or in part, restore cancelled registrations, and otherwise rectify the register with respect to the registrations of any party to the action.” According to the Ninth Circuit, “[p]ermitting a district court to adjudicate trademark applications when an action already involves a registered mark advances the interest of resolving all registration disputes in a single action.” However, the Court also noted that, “[c]ritically…§ 1119 grants courts discretion to address the trademark applications and registrations of a party to a suit already involving a registration” but “does not require district courts to address claims where these interests in efficiency or other considerations counsel against adjudicating a right to registration.”
Moreover, even though CCA did not contest the district court’s finding that it lacked a bona fide intent to use the marks at issue in commerce, the Ninth Circuit—also as a matter of first impression—concluded, consistent with the Federal Circuit, Sixth Circuit, D.C. Circuit, and the Trademark Trial and Appeal Board, that a party may properly oppose a trademark application on the ground that the applicant lacked a bona fide intent to use the mark in commerce. In doing so, the Court stated that it was “mak[ing] explicit what is already clear from the statutory text.”
Why it matters
Given the Ninth Circuit’s ruling that lack of a bona fide intent is a proper basis to invalidate a trademark application, trademark applicants should re-evaluate how soon efforts to use a mark should begin and take steps to preserve evidence of such efforts. Also, in light of the fact that the validity of an applicant’s pending application may now be litigated in court, applicants should also consider how much evidence they will need to produce in court (as opposed to the Trademark Trial and Appeal Board) to defend against such claims.