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Potential trademark injury not enough for federal jurisdiction

April / May 2022 IP Newsletter

For the first time, the U.S. Court of Appeals for the Federal Circuit recently considered what a trademark challenger must show to establish the standing required under the U.S. Constitution to appeal a decision of the Trademark Trial and Appeal Board (TTAB). Its conclusion in Brooklyn Brewery Corp. v. Brooklyn Brew Shop, LLC, resulted in a mixed bag for one challenger.

Trouble brews in Brooklyn

Brooklyn Brewery Corporation (Brewery) brews and sells craft beers through thousands of U.S. retailers including Whole Foods Market and Total Wine. For more than 30 years, it has used the marks BROOKLYN and BROOKLYN BREWERY in connection with its beer and beer-related merchandise. It holds a registration on BROOKLYN BREWERY for beer in Trademark Class 32, light beverages (including beer).

Brooklyn Brew Shop (BBS), founded in 2009, sells beer-making kits that include the equipment, cleaning sanitizer and ingredients. It also sells beer-making accessories, including additional sanitizer packets. BBS distributes kits in all 50 states and sells kits online and through stores such as Whole Foods Market, Bed Bath & Beyond and Macy’s.

In 2011, BBS applied for, and was issued, registration of BROOKLYN BREW SHOP in standard character format in Class 32 for beer-making kits. Three years later, it applied to register the mark in a stylized format for a wide variety of goods in Class 32, including beer, and for sanitizing preparations in Class 5, pharmaceuticals (including sanitizing goods).

In 2015, Brewery filed a petition for cancellation of BBS’ original registration and a notice of opposition to the application. The TTAB denied the cancellation action and gave Brewery mixed results on its opposition.

The Federal Circuit hops in

When Brewery appealed to the Federal Circuit, BBS argued that Brewery lacked the requisite standing to appeal the TTAB opposition decision. As the court noted, its cases in the patent context have made clear that a party appealing a decision of an administrative agency in federal court must satisfy both the relevant statute (here, the Lanham Act) and the requirements of Article III of the Constitution. That’s because Article III limits federal courts to hearing “cases” or “controversies.”

A party seeking federal jurisdiction must show, among other things, that it has suffered an injury that is both “concrete and particularized” and “actual or imminent.” When a trademark opposition is based on: 1) likelihood of confusion with the challenger’s mark, or 2) descriptiveness, meaning the mark can’t be registered because it’s composed of words that are merely descriptive, the court said, a challenger must show:

The Federal Circuit found that Brewery failed to show how granting the registration for the Class 5 goods would cause it Article III injury. After all, Brewery doesn’t make or sell beer-making kits. It dismissed the claim that Brewery would suffer potential injury if the company ever expanded to sell sanitizing products.

The court pointed out that no evidence indicated Brewery has such plans. Moreover, it found that “hypothetical future possible injury is insufficient to establish Article III standing.”

Notably, BBS didn’t dispute Brewery’s Article III standing as to cancellation or opposition to marks for beer-making kits. As the TTAB found, the kits are related to beer and to some extent compete with beer. BBS’ marks were “more similar than dissimilar” to Brewery’s, and Brewery submitted a “great deal” of evidence showing many instances of actual confusion among consumers. Combined, the Federal Circuit said, this was more than enough evidence to establish standing to challenge the existing and applied-for marks for beer-making kits.

Crafting a challenge

This case is a reminder that, if you want to appeal a TTAB decision, be prepared to demonstrate how the decision will injure you competitively. If you can’t, the Federal Circuit is likely to reject the appeal for lack of standing.

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