Blue Athletic v. Nordstrom 10-CV-036-SM 07/19/10 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Blue Athletic, Inc., Petitioner
v. Civil No. 10-cv-036-SM Opinion No. 2 010 DNH 116 Nordstrom, Inc. and NIHC, Inc., Respondents
O R D E R
Blue Athletic, Inc., operates a retail clothing store and an
online denim store, both named "denimrack." It seeks declaratory
judgment that "denimrack" does not infringe trademarks owned by
respondents, and that it is entitled to federal trademark
registration for its "denimrack" mark. Before the court is
respondents' motion to dismiss. Petitioner objects. For the
reasons given, respondents' motion to dismiss is denied.
Background
Blue Athletic has owned and operated an online denim shop
found at www.denimrack.com since 2006. In June of 2009, it
opened a retail clothing store in Portsmouth, New Hampshire, also
called "denimrack." Around the time it opened its Portsmouth
store. Blue Athletic filed an application for federal trademark
registration of the "denimrack" mark. Shortly after a Notice of Publication issued from the United
States Patent and Trademark Office ("PTO"), Blue Athletic
received a letter from respondents' counsel which stated, in
pertinent part:
. . . Nordstrom is one of the nation's leading retailers and its reputation and trademarks are extremely valuable assets. As a trademark owner, our client is required to watch for and take reasonable steps to address misuse, infringement and dilution of its marks.
Your use of "DenimRack" and "what's in your rack?" for retail clothing services is likely to confuse customers into believing your services are sponsored or affiliated with Nordstrom or its Rack store, when they are not. Thus, your use and application conflict with Nordstrom's prior rights under the federal Lanham Act, 15 U.S.C. § 1501 et seq. and applicable state laws.
Thus, on behalf of Nordstrom, we must demand that you cease and desist all use of "DenimRack", "what's in your rack?" and other RACK marks to promote your services.
(Resp't's Obj., Uhrin Aff. (document no. 16-3), Ex. A.) More
specifically, Nordstrom asked Blue Athletic to: (1) discontinue
its use of "DenimRack" and adopt new marks that do not include
RACK or any variant thereof; (2) withdraw its trademark
application for "DENIMRACK"; and (3) discontinue its use of
w ww.DenimRack.com and adopt a new domain name that does not
include RACK or any variant thereof. Blue Athletic responded
that there was no likelihood of confusion between its mark and
2 respondents' marks. Respondents, in turn, restated their
demands, but expressed an interest in "resolving this matter
amicably." (Uhrin Aff., Ex. B.) A week later, respondents filed
a Notice of Opposition to Blue Athletic's registration of
"denimrack" with the PTO's Trademark Trial and Appeal Board
("TTAB") in which they contended that "denimrack" was confusingly
and deceptively similar to their own "Nordstrom Rack" and "Rack"
marks.
Asserting reasonable anticipation that respondents would
file an infringement action if it continued to use its
"denimrack" mark, and that the opposition action before the TTAB
would not resolve all the issues between the parties. Blue
Athletic filed this suit for declaratory judgment that: (1) its
use of the mark "denimrack" does not infringe any valid trademark
rights respondents may have in the "Nordstrom Rack" mark; (2) its
use of the mark "denimrack" does not infringe any valid trademark
rights respondents may have in the "Rack" mark; and (3) because
"denimrack" does not infringe respondents' marks, it is entitled
to federal trademark registration for its "denimrack" mark.
Discussion
Respondents move to dismiss Blue Athletic's petition in its
entirety, arguing that because petitioner's anticipation of an
3 infringement action is not reasonable, its claims are not ripe
for decision, and the court is, accordingly, without subject
matter jurisdiction. See F e d . R. C i v . P. 12(b)(1). Moreover, in
reliance on both Rule 12(b)(1) and Rule 12(b)(6), respondents
move to dismiss Blue Athletic's third request for relief, i.e., a
declaration that it is entitled to federal registration for its
"denimrack" mark, on the additional ground that exclusive
jurisdiction to determine the registrability of the "denimrack"
mark rests with the PTO until that agency renders a decision on
Blue Athletic's application.
A. Subject Matter Jurisdiction
"The proponent of federal jurisdiction bears the burden of
proving its existence by a preponderance of the evidence."
United States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49,
54 (1st Cir. 2009) (citing Campbell v. Gen. Dynamics Gov't Svs.
Corp., 407 F.3d 546, 551 (1st Cir. 2005); 31 U.S.C. § 3731(d)).
In ruling on respondents' motion to dismiss, the court must "take
as true all well-pleaded facts in the [petition], scrutinize them
in the light most hospitable to [petitioner's] theory of
liability, and draw all reasonable inferences therefrom in
[petitioner's] favor." United States ex rel. Duxburv v. Ortho
Biotech Prods., L.P., 579 F.3d 13, 20 (1st Cir. 2009) (quoting
Fotherqill v. United States, 566 F.3d 248, 251 (1st Cir. 2009) ) .
4 Blue Athletic brings this suit under the federal Declaratory
Judgment Act, which provides, in pertinent part, that "[i]n a
case of actual controversy within its jurisdiction . . . any
court of the United States, upon the filing of an appropriate
pleading, may declare the rights and other legal relations of any
interested party seeking such declaration . . 28 U.S.C. §
2201(a). In other words, the Act "empowers a federal court to
grant declaratory relief in a case of actual controversy." Ernst
& Young v. Depositors Econ. Prot. Corp., 45 F.3d 530, 534 (1st
Cir. 1995). Moreover, "federal courts retain substantial
discretion in deciding whether to grant declaratory relief." Id.
On the other hand, given the constitutional case-or-controversy
requirement, see U.S. C o n s t , art. Ill, § 2, "a court has no
alternative but to dismiss an unripe [declaratory judgment]
action." Ernst & Young, 45 F.3d at 535.
The court of appeals for this circuit has explained that, in
a Lanham Act declaratory judgment action, " [a] federal court will
not start up the machinery of adjudication to repel an entirely
speculative threat." PHC, Inc. v. Pioneer Healthcare, Inc., 75
F.3d 75, 79 (1st Cir. 1996). In determining that the threat
faced by the declaratory judgment petitioner in PHC was not
entirely speculative, the First Circuit invoked the rule that
"reasonable anticipation [of a claim under the Lanham Act] is a
5 settled requirement in a federal declaratory judgment action of
this character." Id. at 79 (citing Sweetheart Plastics, Inc. v.
111. Tool Works, Inc., 439 F.2d 871, 873 (1st Cir. 1971)).
As petitioner correctly suggests, what was a "settled
requirement" at the time PHC was decided has since been set
aside. In Medlmmune, Inc. v. Genentech, Inc., the Supreme Court
held that a patent licensee "was not required, insofar as Article
III is concerned, to break or terminate [a] license agreement
[and thus create the risk of a claim against it] before seeking a
declaratory judgment in federal court that the underlying patent
[was] invalid, unenforceable, or not infringed." 549 U.S. 118,
137 (2007). As the Court explained:
Aetna [Life Ins. Co. v. Haworth, 300 U.S. 227 (1937)] and the cases following it do not draw the brightest of lines between those declaratory-judgment actions that satisfy the case-or-controversy requirement and those that do not. Our decisions have required that the dispute be "definite and concrete, touching the legal relations of parties having adverse legal interests"; and that it be "real and substantial" and "admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Id.,at 240-241. In Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941), we summarized as follows: "Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment."
6 Medlmmune, 549 U.S. at 127 (parallel citations omitted); see also
Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1336 (Fed.
Cir. 2008) (contrasting Supreme Court's former "reasonable
apprehension" test with "the more general all-the-circumstances
test" adopted in Medlmmune); Russian Std. Vodka (USA), Inc. v.
Allied Domecq Spirits & Wine USA, Inc., 523 F. Supp. 2d 376, 382
(S.D.N.Y. 2007) ("The Medlmmune standard is necessarily less
rigorous than the 'reasonable apprehension of imminent suit' test
In Teva Pharmaceuticals USA, Inc. v. Novartis
Pharmaceuticals Corp., another patent case, the Federal Circuit
recognized that Medlmmune effectively overruled the "two-part
reasonable-apprehension-of-suit test" it had previously used to
determine whether it had jurisdiction over declaratory judgment
actions. 482 F.3d 1330, 1338 (Fed. Cir. 2007) (citation
omitted); see also SanDisk Corp. v. STMicroelectronics, Inc., 480
F.3d 1372, 1380 (Fed. Cir. 2007) ("The Supreme Court's opinion in
Medlmmune represents a rejection of our reasonable apprehension
of suit test."). And, in Surefoot LC v. Sure Foot Corp., 531
F.3d 1236 (10th Cir. 2008), a trademark case, the Tenth Circuit
held that Medlmmune displaced its previous jurisdictional test,
531 F.3d at 1244, which required a declaratory judgment
7 petitioner to demonstrate "a reasonable apprehension that an
imminent suit for trademark infringement was forthcoming," id. at
1240-41. In place of its former test, the Surefoot court applied
the principles from Aetna and Maryland Casualty as stated in
Medlmmune. See Surefoot, 531 F.3d at 1244-45. Based on
Medlmmune, Teva Pharmaceuticals, and Surefoot, it seems likely
that the First Circuit, if presented with the question, would
hold that Medlmmune effectively overruled the "reasonable
anticipation" test described in PHC.
Respondents argue that because Medlmmune is a patent case,
and patent law presents public policy considerations that do not
apply to trademark law, Medlmmune should not be applied to
trademark cases. That argument is not persuasive. No court of
appeals has so held. Moreover, the Tenth Circuit rejected a
similar argument in Surefoot, see 531 F.3d at 1243, and at least
one other circuit has applied Medlmmune in a trademark case, see
Vantage Trailers, Inc. v. Beall Corp., 567 F.3d 745, 748 (5th
Cir. 2009) (pointing out, in trademark declaratory judgment
action , that "[f]ollowing Medlmmune, the 'reasonable
apprehension of suit' requirement no longer applies"). Numerous
district courts have also applied Medlmmune in declaratory
judgments actions brought to determine rights under the Lanham
Act. See, e.g., Sinclair v. StudioCanal, S.A., ___ F. Supp. 2d , ___, 2010 WL 1743208, at *3 (E.D. La. Apr. 29, 2010); Poly-
America, L.P. v. Steqo Indus., L.L.C., 694 F. Supp. 2d 600, 605-
OS (N.D. Tex. 2010); Monster Cable Prods., Inc. v. Euroflex
S .R .L ., 642 F. Supp. 2d 1001, 1010-11 (N.D. Cal. 2009); Young v.
Vannerson, 612 F. Supp. 2d 829, 838-46 (S.D. Tex. 2009); Amerimax
Real Estate Partners, Inc. v. RE/MAX Int'l, Inc., 600 F. Supp. 2d
1003, 1008 (N.D. 111. 2009); Geisha, LLC v. Tuccillo, 525 F.
Supp. 2d 1002, 1010-11 (N.D. 111. 2007); HSI IP, Inc. v. Champion
Window Mfg. & Supply Co., 510 F. Supp. 2d 948, 955-56 (M.D. Fla.
2007) .1 No federal court has declined to apply Medlmmune to a
trademark case, and no good reason for this court to do so has
been presented.
Under the now-applicable standard. Blue Athletic's claims
are ripe for decision. The controversy between the parties is
substantial, the parties plainly have adverse interests, and the
1 See also Geltech Solutions, Inc. v. Marteal, Ltd., No. 09- CV81027, 2010 WL 1791423, at *3 (S.D. Fla. May 5, 2010); In re Casino de Monaco Trademark Litig., No. 07 Civ. 4802(DAB), 2010 WL 1375393, at *8 (S.D.N.Y. Mar. 31, 2010); Loufrani v. Wal-Mart Stores, Inc., No. 09 C 3062, 2009 WL 3787941, at *3 (N.D. 111. Nov. 12, 2009); Wham-Q, Inc. v. Manley Toys, Ltd., No. CV 08- 07830 CBM (Ssx), 2009 WL 6361387, at *3 (C.D. Cal. Aug. 13, 2009); Floyd's 99 Holdings, LLC v. Woodman, No. 08-cv-01321-MSK- BNB, 2009 WL 798804, at *3-*4 (D. Colo. Mar. 24, 2009); Franek v. Walmart Stores, Inc., Nos. 08-CV0058 & 08-CV-1313, 2009 WL 674269, at *8 n.7 (N.D. 111. Mar. 13, 2009) ("While Medlmmune arose in the patent context, trademark law historically has been treated in a similar manner, especially in regard to declaratory judgments.") .
9 controversy is both immediate and real. See Medlmmune, 549 U.S.
at 127. The parties dispute Blue Athletic's right to continue
using the "denimrack" mark, with which it has labeled its website
since 2006 and its retail store since 2009. As in Surefoot, Blue
Athletic asks this court "only to adjudicate the rights of the
parties based on historical facts and an already existing dispute
over a federal right." 531 F.3d at 1244. Moreover, "the parties
. . . have a dispute that is definite and concrete that would
admit of specific relief through a decree of a conclusive
character, as distinguished from an opinion advising what the law
would be upon a hypothetical state of facts." Id. at 1245
(citation and internal quotation marks omitted). Under the
Medlmmune standard. Blue Athletic's requests for declaratory
judgment are ripe for decision.
Respondents attempt to distinguish Surefoot on factual
grounds, arguing that the parties in Surefoot shared a longer and
richer history of disagreement over trademark issues than the
parties in this case. That may be so, but still, in this case,
the parties' history of disagreement includes respondents' demand
letters, which set out a prima facie case of trademark
infringement, see PHC, 75 F.3d at 79 (pointing out the import of
a demand letter setting out the elements of an infringement
claim), and a formal TTAB opposition which is based on a claim
10 that Blue Athletic's mark would infringe on respondents' marks,
see Surefoot, 531 F.3d at 1246 (pointing out the difference
between oppositions that touch on infringement and those that do
not, and suggesting the relevance of those that do). While there
has been less history between the parties in this case than there
was between the parties in Surefoot, the combination of two
demand letters and formal TTAB opposition on infringement
grounds, all steeped in the language of trademark infringement,
is sufficient to meet the Medlmmune standard.
This is not a case like those the court worried about in
Surefoot, in which "the only indicia of a live infringement
controversy is the existence of a single TTAB opposition
proceeding, or perhaps a single cease-and-desist letter." 531
F.3d at 1247. Rather, the circumstances here have more in common
with cases like Chesebrouqh-Pond's, Inc. v. Faberqe, Inc., in
which the Ninth Circuit held that the pre-Medlmmune "reasonable
apprehension" test was satisfied by a TTAB opposition preceded by
a cease-and-desist letter that threatened the filing of an
opposition (but not the filing of an infringement suit) and that
"stated a prima facie case for trademark infringement," 666 F.2d
393, 396 (9th Cir. 1982); see also Mfrs. Hanover Corp. v. Maine
Sav. Bank, No. 84 Civ. 2046 (JFK), 1985 WL 181, at *2 (S.D.N.Y.
Jan. 10, 1985) (determining that the "reasonable apprehension"
11 test was satisfied by respondents' letter indicating its
"aggressive" approach to protecting its marks, combined with its
filing of an opposition to petitioner's trademark application).
In sum, Surefoot supports Blue Athletic's position.
Even if PHC were still good law, respondents would still not
be entitled to dismissal. Respondents' demand letters invoked
the Lanham Act far more explicitly than the demand letters in
PHC. See 75 F.3d at 79. They allege conduct on Blue Athletic's
part that, if proven, would violate the Lanham Act. See id.
(pointing out that "the conduct of PHC, as described by the
Pioneer companies' letters, could easily amount to a violation of
section 4 3 (a)" of the Lanham Act); see also Chesebrouqh-Pond's,
666 F.2d at 396-97 (finding it "reasonable to infer from
Faberge's letter a threat of an infringement action" when letter
did not expressly threaten infringement action but "stated a
prima facie case for trademark infringement" by alleging "use in
commerce of a mark so similar to Faberge's that it was likely to
cause confusion"). Moreover, while the demand letters in this
case did not expressly state that respondents would initiate an
infringement action if Blue Athletic did not capitulate, a
specific threat is not necessary to create a reasonable
anticipation, see PHC, 75 F.3d at 79, and, in any event, those
letters characterized the capitulation they demanded as
12 "resolving this matter amicably" which was more than enough to
suggest the possibility of a less amicable resolution, i.e.,
legal action. In short, "[n]o competent lawyer advising [Blue
Athletic] could fail to tell it that, based on the threatening
letters and the surrounding circumstances, a [trademark
infringement] suit was a likely outcome." PHC, 75 F.3d at 79.
Thus, even if PHC were still good law, respondents would not be
entitled to dismissal of Blue Athletic's declaratory judgment
action on grounds that the claims are not ripe.
Because Blue Athletic's claims are ripe for review, the
court does not lack subject matter jurisdiction over them. To
the extent respondents seek dismissal on that basis, their motion
is denied.
B. Exclusive Jurisdiction - Primary Jurisdiction
Respondent also argue that Blue Athletic's third request for
declaratory relief should be dismissed because "the Lanham Act
grants exclusive jurisdiction to the U.S. Trademark Office to
decide issues of registrability in the first instance."
(Resp't's Mem. (document no. 15-1), at 9.) Because Blue Athletic
has not responded to that argument, respondents ask the court to
grant that portion of their motion as unopposed. Given Blue
Athletic's vigorous objection to respondents' first argument.
13 which pertains to all three requests for declaratory relief, and
the absence of an express waiver, the court is not inclined to
find that Blue Athletic has waived or forfeited its third request
for relief. Accordingly, the court turns to the merits of
respondents' argument.
Respondents rely on Merrick v. Sharp & Dohme, Inc., 185 F.2d
713 (7th Cir. 1950), for the proposition that this court is
barred from considering the registrability of Blue Athletic's
proposed "denimrack" mark until after the PTO has exercised its
"exclusive jurisdiction" and issued a decision on Blue Athletic's
application. Respondents' reliance on Merrick is misplaced. In
that opinion, the Seventh Circuit answered only this question:
Does the filing in the Patent Office of a statutory notice of opposition to the registration of a trade mark, which opposition is based upon the confusion-in- trade clause of the statute, create an actual controversy between the parties justiciable by a Federal Court under the Declaratory Judgment Act?"
185 F.2d at 713. In holding that "[a] notice of opposition . . .
should not be construed to be a charge of infringement or a
threat to proceed to redress past infringements or to prevent
future infringements," id. at 717, the court did not decide
whether the pendency of a trademark application bars a district
court from determining the registrability of the mark at issue in
14 the pending application. Accordingly, Merrick has no bearing on
the issues presented in this case.
The District of Columbia Circuit has observed that
" [d]istrict courts have broad authority to review trademark
decisions by the U.S. Patent and Trademark Office (PTO), both
before and after the registration of a mark . . . [and] may
authorize the PTO to register or to deny registration to a
pending mark." Aktieselskabet AF 21. November 2001 v. Fame Jeans
Inc., 525 F.3d 8, 12-13 (D.C. Cir. 2008) (emphasis added). In a
case in which a petitioner filed a declaratory judgment action in
the district court, then filed a petition with the TTAB, and then
asked the district court to stay its proceedings pending
resolution of the case before the TTAB, the district court
declined to do so. Invoking the doctrine of "primary
jurisdiction," the court noted that it "along with the TTAB has
concurrent jurisdiction over registration and cancellation of
trademarks under 15 U.S.C. § 1119." W & G Tenn. Imports, Inc. v.
Esselte Pendaflex Corp., 769 F. Supp. 264, 266 (M.D. Tenn. 1991)
(citing Durox Co. v. Duron Paint Mfg. Co., 320 F.2d 882, 886 (4th
Cir. 1963)). And, in Tillamook Country Smoker, Inc. v. Tillamook
County Creamery Ass'n, notwithstanding the fact the parties to
the district court declaratory judgment action were also parties
to cancellation and opposition proceedings pending before the
15 TTAB relating to the same two trademarks, the district court
determined that it had jurisdiction to order both cancellation
and registration of the marks at issue. 333 F. Supp. 2d 975,
979-80 (D. Or. 2004). Aktieselskabet, Tennessee Imports, and
Tillamook all demonstrate that the PTO's jurisdiction over
trademark registration is not "exclusive."
Closer to home, the First Circuit confronted the relevant
legal issue, and, rather than determining that the TTAB had
"exclusive jurisdiction," stated that "[p]roblems of coordination
and priority between court and agency are usually discussed under
the rubric of primary jurisdiction." PHC, 75 F.3d at 80 (citing
Massachusetts v. Blackstone Valiev Elec. Co., 67 F.3d 981, 992
(1st Cir. 1995)). That rubric is employed because the real issue
is whether a court should, in its discretion, exercise its
jurisdiction in particular circumstances. See PHC, 75 F.3d at
79-81. Finally, the PHC opinion also points out that the TTAB
"has a rule contemplating such suspensions [of proceedings before
it] where a court action may moot the matter before the agency."
Id. at 78 (citing 37 C.F.R. § 2.117) .
Because the TTAB does not have exclusive jurisdiction over
the registrability of Blue Athletic's marks, respondents are not
16 entitled to dismissal of Blue Athletic's third request for
declaratory relief.
Conclusion
For the reasons given, respondents' motion to dismiss
(document no. 15) is denied.
SO ORDERED.
Xteven teven J' McAuliffe Chief Judge
July 19, 2010
cc: Tracy A. Uhrin, Esq. Steven E. Grill, Esq. Nathaniel E. Durrance, Esq. William 0. Ferron, Jr., Esq.