Section 1071 of the Lanham Act provides parties two options for appealing adverse ex parte decisions from the Trademark Trial and Appeal Board (TTAB). The dissatisfied party may either appeal to the Federal Circuit under Section 1071(a) or to any U.S. district court under Section 1071(b). 15 U.S.C. §1071(a)-(b). Although pursuit of an appeal to the Federal Circuit may under some circumstances prove to be quicker and less expensive, appeals to district courts are becoming increasingly attractive given recent changes in the law and USPTO practice in defending these actions. Based on the authors’ recent experience in several such appeals, they can share the following lessons learned.
1. Selection of the Forum
Although many parties may initially be inclined to bring ex parte appeals in the U.S. District Court for the Eastern District of Virginia, because the USPTO is domiciled within that district, such appeals also may be brought in any district court in which the appealing party resides. 28 U.S.C. §1391(e)(1)(C). Assuming the party is a domestic applicant, filing the action in a district court in which the appealing party resides may provide a strategic advantage as the judiciary there may have greater (and ideally positive) familiarity with the appealing party and the designation subject to the appeal. This may prove to be important where the issue on appeal is focused on whether a particular designation is understood by the relevant consuming public to be a trademark — that is where trademark eligibility is being challenged by the USPTO on genericness, descriptiveness and/or failure-to-function grounds.
2. The Significance of De Novo Review
A well-recognized benefit of pursuing ex parte appeals in district court is the ability to introduce new evidence, arguments and claims supporting registration of the designation at issue. Indeed, Section 1071(b)(1) instructs district courts to adjudicate such actions “as the facts of the case may appear.” 15 U.S.C. §1071(b)(1). The statute contemplates the district court will conduct fact finding based on the administrative record as well as “further cross-examination” of witnesses and “further testimony”. 15 U.S.C. §1071(b)(3); see also, Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 155 (4th Cir. 2014). The ability to introduce new evidence and claims, however, is a two way street, meaning that the USPTO is entitled to introduce new evidence, arguments and claims as well supporting the refusal to register below — including claims and arguments that may have been abandoned or not fully developed by the examining attorney below.
Significantly, the de novo standard applies only if some new evidence is introduced on a disputed issue of fact on the appeal. If either the appealing party or the USPTO introduces some new evidence, then the district court “must make its own findings de novo” as to the entire record, taking into account both the new evidence and the administrative record before the USPTO. See, Kappos v. Hyatt, 566 U.S. 431 (2012) (construing 35 U.S.C. §145). In cases where no new evidence is introduced, the district court instead applies a more deferential standard to the findings made by the TTAB in the order being appealed. See, e.g., In re Coors Brewing Co., 343 F.3d 1340, 1343 (Fed. Cir. 2003); Coach House Rest., Inc. v. Coach & Six Restaurants, Inc., 934 F.2d 1551, 1556-57 (11th Cir. 1991). The de novo standard of review has been liberally applied by district courts not only to the new facts introduced by the parties but also to the application of the law to those facts. In some cases, this has resulted in district courts criticizing or outright rejecting factual and legal positions advocated by the USPTO on appeal. For example, in Snap, Inc. v. Vidal, 2024 U.S.P.Q. 2d 456, *12-13 (C.D. Cal. 2024), an ex parte appeal assessing whether the term SPECTACLES is generic, the court in denying the USPTO’s motion for summary judgment ruled that the USPTO’s genericness construct was as “factually undeveloped as it is legally unsound” and rejected the USPTO’s assumption that the key aspect of the smart glasses genus was invariably its glasses component, as opposed to its computer technology.
Notably, the USPTO very recently fared no better at trial, as the court again rejected the USPTO’s genericness construct finding that its entire case was built on its “unproven and legally misguided idea that the eyewear form of smart glasses — but none of its computing capabilities — is the key product attribute against which consumer perception of SPECTACLES should exclusively be measured.” Memorandum and Order, 17, Snap,. Inc. v. Vidal, Case No. 2:22-cv-0085-SK (C.D Cal. Sept. 27, 2024).
3. Development of the Appealing Party’s Case In Chief
It is rare for an appealing party to choose to pursue an ex parte appeal without new evidence in hand or a plan to secure such evidence (such as commissioning a survey or other expert evidence). Indeed, the appealing party should be prepared from the inception of the district court action to implement its plan for developing and introducing new evidence supporting registration as the district court will require the parties early on to enter into a scheduling order outlining deadlines for lay and expert discovery, which may be relatively abbreviated given the limited scope of the appeal. See, e.g., MAD Brewing Co. v. Vidal, Dkt. 15 4:21-cv-709 (W.D. Mo. Apr. 29, 2022) (maximum of 20 interrogatories and 5 depositions per party). Appealing parties should also take into account that they will need to develop affirmative evidence supporting their factual and legal positions independently rather than seeking to rely on anticipated admissions or other helpful information from the USPTO. Appealing parties who proceed with the expectation that they will successfully secure meaningful admissions or other information from the USPTO as to the presence or absence of helpful facts in the record may be sorely disappointed as the USPTO is loathe to admit anything substantive in such actions. For example, the USPTO in responding to an appealing party’s Complaint routinely responds to averments regarding factual aspects in the record with the following evasive response.
The allegations contained in paragraph ___ constitute a characterization of the administrative record in the case. The administrative record is the best evidence of its contents. To the extent the allegations contained in paragraph ___ are inconsistent with the record Defendants deny them.
Similarly, little helpful information can be obtained through efforts to depose USPTO personnel (i.e., the examining or supervising attorney) as these individuals are only permitted to testify about facts within their personal knowledge and will not testify as to hypothetical or speculative areas, much less the examining attorney or supervising attorney’s bases, reasons, mental processes, analyses or conclusions in connection with the subject application. See, T.M.E.P. §1801.01; Shaffer Tool Works v. Joy Mfg. Co, 167 U.S.P.Q. 170 (S.D. Tex. 1970). It is also the experience of the authors that USPTO responses to written discovery tend to be legalistic and uninformative. Where the issues warrant expert testimony, it is more realistic to expect a typical range of discovery (including cross-examination at deposition) of USPTO experts rather than fact witnesses.
4. The USPTO’s Evolving Approach to Settlement
In recent years, the USPTO appears to have become increasingly pragmatic in defending ex parte appeals and will vigorously litigate such matters “to the wall” through trial only when it believes its likelihood of success is high and/or it is defending a significant USPTO practice or procedure. United States Patent and Trademark Office v. Booking.com, N.V. and Snap, Inc. v. Vidal are examples of the latter. One factor contributing to the USPTO’s approach is the recent clarification of what expenses the USPTO is entitled to recover in ex parte appeals instituted in district court. Prior to 2020, the USPTO had been successful persuading courts that under 15 U.S.C. § 1071(b)(3) it was entitled to recover from the appealing party “all expenses” including the USPTO’s attorneys’ fees in defending an ex parte appeal whether or not it prevailed. See, Shammas v. Focarino, 784 F.3d 219, 225 (4th Cir. 2015), cert. denied, Shammas v. Hirschfeld, 136 S. Ct. 1376 (2016).
Fortunately the U.S. Supreme Court has come to the rescue of trademark applicants and would be appellants. First, in Peter v. Nantkwest, Inc., 140 S. Ct. 365 (2019) the Supreme Court ruled that the USPTO was not entitled to recover its attorney fees in defending an ex parte appeal under Section 145 of the Patent Act, a provision that parallels Section 1071(b)(3). Then in Booking.com v. United States Patent and Trademark Office, No. 18-1309 (July 2, 2020), in a ruling separate from the merits opinion, the Supreme Court extended this ruling in vacating an attorney fees award sought by the USPTO under Section 1071(b)(3) in connection with its unsuccessful defense in United States Patent & Trademark Office v. Booking.com N.V., 591 U.S. 549 (2020). Later, in Hyatt v. Hirshfeld, 16 F.4th 855 (Fed. Cir. 2021), the Federal Circuit further held that expert witness fees similarly are not recoverable as expenses under these provisions.
Undoubtedly in part as a result of the unavailability of attorneys’ fees awards in defending ex parte appeals, the USPTO in a number of recent district court cases has chosen to limit expending administrative resources and instead to settle relatively early on, often after review and analysis of the appealing party’s expert evidence (which in many cases includes a survey). Early settlement offers the USPTO the additional advantage of minimizing any public record or opinions (whether or not precedential) on which future litigants may seek to rely in pursuing appeals on similar issues.
In those cases in which the USPTO has been persuaded by the appealing party’s evidence to withdraw its refusal(s) to register, the appealing party should not expect the USPTO to agree to a robust order, consent judgment or any other public document in which the USPTO admits any fault with any factual or legal position taken in the district court appeal or below. At most, the USPTO will agree only to an abbreviated stipulation or order containing vague “one off” language to the effect that in light of the unique circumstances presented by this case and after consideration of certain additional evidence or information shared by the appealing party (which it will not name or otherwise identify), the USPTO is agreeable to withdrawing its refusal to register and the subject application will be approved for publication. See, e.g., Pound Law LLC v. Vidal, Dkt. 55, No. 6:23-cv-00061-RMN (M.D. Fla. Sept. 1, 2023); Grupo Bimbo S.A.V. de C.V. v. Hirshfeld, Dkt. 23, No. 1:21-cv-721 (E.D. Va. Apr. 8, 2022); MAD Brewing Co. v. Vidal, Dkt. 20, No. 4:21-cv-709 (W.D. Mo. July 26, 2022); Vitamin Shoppe Procurement Services, LLC v. Iancu, Dkt. 28, No. 2:19-cv-20948 (D.N.J. Nov. 24, 2020).
The rationale for this approach is clear because, as previously noted, the USPTO is anxious to avoid the creation of any document that includes anything that might be argued as precedential in a future contested prosecution matter. Some have complained that the absence of information in the record leading to the settlement (including any evidence or information the USPTO may have found persuasive) suggests nefarious activity by the USPTO or the appealing party, but this practice is instead entirely consistent with the USPTO’s record minimalization objective. See, “Precedential No. 33: #LAW Fails to Function as a Source Indicator for Legal Referral Services, Says TTAB,” The TTAB Blog (Nov. 14, 2022).; see also, the e-Trademarks list serv.
5. Trial (or other Disposition) of Ex Parte Appeals
The eventual trial (or other disposition) of ex parte appeals can take many forms depending on the preferences of the parties and approval of the reviewing court. The USPTO is known to suggest in many cases (with the appealing party’s agreement) to resolution of the appeal through cross-motions for summary judgment where the parties consent to the court’s resolution of any disputed issue of material fact on the TTAB administrative record and the materials submitted to the court (including expert reports and deposition testimony). See, e.g., MAD Brewing Co., Dkt. 15, at 4.
Other courts presented with the proposed cross-motions for summary judgment resolution by the parties have been more circumspect and less committal in their consideration of this proposal. For example, in Pound Law LLC v. Vidal, Dkt. 45, Case 6:23-cv-00061-RMN (M.D. Fla. Apr. 1, 2023), the court instructed the parties instead to submit cross-motions for final judgment (which would be treated by the court as pretrial briefs). Id. at *6-7. The court further reserved the option of moving forward with a full bench trial or an evidentiary hearing once briefing on the parties’ cross-motions was complete and evaluated by the court. Id. at *7. The court added that, at a minimum, a limited trial would be required “because of the parties’ intent to offer competing expert testimony requiring the Court to assess the experts’ credibility and weigh it when making its factual findings.” Id.
Still other courts appear to make no special accommodation to the parties for such appeals and schedule them for a bench trial in accordance with that court’s local rules. See, e.g., Snap, Inc. v. Vidal, Dkt. 43, No. 2:22-cv-00085-SK No (C.D. Cal. Nov. 7, 2022) (but also contemplating the parties’ filing cross motion for summary judgment); Vitamin Shoppe Procurement Services, LLC v. Iancu, Dkt. 16, No. 2:19-cv-20948-KM-JBC (D.N.J. Apr. 20, 2020).
In sum, there may be considerable benefits to ex parte de novo appeals to the district courts rather than direct appeal to the Federal Circuit. In all instances, the decision must be fact specific, based on the existing record, the opportunities to augment that record, and the relevant case law in the district and/or circuit courts. However, such de novo review can be a vital and expedient means of challenging PTO decisions.
Christopher P. Bussert is Senior Counsel at Kilpatrick Townsend and a member of the Board of Editors of The Intellectual Property Strategist. He can be reached at [email protected] and on LinkedIn here. Jonathan E. Moskin is a partner at Foley & Lardner LLP and is also a member of the Board of Editors of The Intellectual Property Strategist. He can be reached at [email protected] and on LinkedIn here.
This article appeared in The Intellectual Property Strategist, an ALM/Law Journal Newsletters publication that provides a practical source of both business and litigation tactics in the fast-changing area of intellectual property law, including litigating IP rights, patent damages, venue and infringement issues, inter partes review, trademarks on social media – and more.