CAFC Addresses Standing Requirement in Brooklyn Brew Shop Trademark Dispute

On October 27, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed the Trademark Trial and Appeal Board’s (TTAB) cancellation of Brooklyn Brew Shop, LLC’s (BBS) standard character mark and dismissed in part, affirmed in part and remanded the TTAB’s decision regarding the opposition of BBS’s mark.

For over 30 years, The Brooklyn Brewery Corporation (Brewery) has used the marks BROOKLYN and BROOKLYN BREWERY in connection with the advertising, promotion, and sale of Brewery’s beer and beer-related merchandise. In 2006, Brewery registered BROOKLYN BREWERY as a federal trademark for beer in class 32.

In 2009, BBS was founded and began selling kits for making beer, wine, or hard cider. BBS began as a small “mom-and-pop shop,” but over the last 10 years grew into a company that now distributes products to all fifty states. On February 18, 2011, BBS applied to register the mark BROOKLYN BREW SHOP in standard character format for beer making kits claiming first use in 2009. During prosecution, BBS disclaimed the use of “BROOKLYN BREW” outside the mark as a whole and on October 4, 2011, the United States Patent and Trademark Office (USPTO) issued BBS Registration No. 4,034,439 for this mark (the ‘439 Registration).

Over two years later, on May 14, 2014, BBS filed U.S. Trademark Application Serial No. 86,280,776 (the ‘776 Application) to register the mark BROOKLYN BREW as a stylized mark. Unlike the ‘439 Registration, which was limited to beer making kits, the ‘776 Application sought registration for a laundry list of goods in Class 32 and for “sanitizing preparations for household use” in Class 5. Like the ‘439 Registration, the ‘776 Application disclaimed “BREWSHOP.” The application also claimed acquired distinctiveness.

The Challenge

In 2015, Brewery filed a petition for cancellation of the ‘439 Registration and a notice of opposition to the ‘776 Application, which the TTAB consolidated. In their consolidated challenge, Brewery alleged that the registered and applied-for marks were “likely to cause confusion” and that the marks were merely descriptive and lacked acquired distinctiveness under Sections 2(d), 2(e)(1), and 2(f) of the Lanham Act respectively.

In its answers, BBS denied Brewery’s allegations. Regarding the Section 2(d) likelihood of confusion claims, BBS asserted the affirmative defenses of laches, acquiescence, and equitable estoppel based on the parties’ “substantial coexistence without any confusion” or prior challenge to BBS’s marks. Additionally, BBS moved to amend the ‘776 Application to delete all but “beer making kits” from goods identified under Class 32. Brewery opposed BBS’s motion to amend and the TTAB deferred ruling on it. Brewery then filed a motion for summary judgment on its petition to cancel the ‘439 Registration, arguing for the first time, that the mark was primarily geographically descriptive under Section 2(e)(2) of the Lanham act. The TTAB denied summary judgment, holding Brewery failed to adequately plead the claim.

On August 10, 2020, the TTAB issued a decision denying the petition for cancellation and sustaining in part and reversing in part the opposition. Brewery appealed.

Standing

On appeal, BBS argued that Brewery lacked Article III to appeal the TTAB’s decision. To satisfy the requirements of Article III standing, a party must satisfy three requirements: (1) there must be an “injury in fact” that is both “concrete and particularized” and “actual or imminent;” (2) the injury must be “fairly traceable” to the challenged action; and (3) it must be “likely” rather than “merely speculative” that a favor favorable decision will redress the injury. The CAFC noted that “[t]o establish injury in fact in a trademark case, an opposer must demonstrate a concrete and particularized risk of interference with the rights that flow to it from registration of its own mark, or some other Article III injury.” However, the CAFC clarified, “an opposer cannot show standing by merely showing the registrant competes with the opposer and receives a benefit from an unlawful trademark.” The CAFC found that Brewery lacked Article III standing to oppose the ‘776 Application as to the sanitizing preparations under Class 5 because Brewery does not sell such products and provided no evidence that they will in the future. Accordingly, the appeal was dismissed as to those goods.

Motion to Amend

Brewery argued that the TTAB erred in failing to enter judgment against BBS on the class 32 goods deleted from the ‘776 Application, including beer, when it granted BBS’s motion to amend. The CAFC recognized that when considering whether to accept a proposed amendment to an identification that, though contested, is otherwise acceptable, the TTAB looks to among other things, if the applicant consented to the entry of judgment on the grounds for opposition regarding the broader identification of goods. Here, BBS provided consent, but inconsistent with their practice, the TTAB did not enter a judgment. The purpose of entering a judgment on deleted goods is to preclude the registrant from attempting to reclaim the deleted goods later. For this reason, the CAFC directed the TTAB to enter a judgment in favor of Brewery as to the items deleted from the ‘776 Application on remand.

Likelihood of Confusion

Brewery also argued on appeal that the ‘439 registration should be cancelled and the ‘776 Application should be denied due to a likelihood of confusion. Under Section 2(d) of the Lanham Act, the USPTO may refuse to register a trademark that sufficiently resembles a registered mark “as to be likely, when in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.” BBS’s defenses of laches and acquiescence were accepted by the TTAB. Citing Nat’l Cable Television Ass’n. the CAFC established laches in the trademark context “requires a showing of undue delay in asserting rights against a claimant to a conflicting mark and prejudice resulting therefrom.” Nat’l Cable Television Ass’n, Inc. v.  Am. Cinema Eds., 937 F.2d 1572, 1580 (Fed. Cir. 1991). Referencing Coach House, the CAFC explained that to establish acquiescence, the TTAB requires a showing that the plaintiff’s conduct amounted to an assurance to defendant “either express or implied, that plaintiff would not assert its trademark rights against the defendant.” Coach House Rest. Inc. v. Coach & Six Rests., Inc., 934 F.2d 1551, 1558 (11th Cir. 1991).

Here, the TTAB found that Brewery’s more than four-year delay in suing was unreasonable given that Brewery was aware of BBS’s mark. Furthermore, between 2011 and 2016, Brewery publicly collaborated with BBS on the sale of “co-branded beer-making kits, books on beer making, and educational programs on beer making.” During that time, the TTAB determined that Brewery actively represented that it would not assert a claim against BBS’s mark. On appeal the CAFC reviewed the TTAB’s decision for an abuse of discretion or clear legal error and concluded that the TTAB did not commit a legal error.

Brewery further alleged that even if laches or acquiescence applies, it overcame the defenses by establishing inevitable confusion. A showing of inevitable confusion requires that there be no reasonable doubt regarding the likelihood of confusion. Typically, this standard is only satisfied where the goods and marks are nearly identical. The CAFC concluded that “substantial evidence” supported the TTAB’s finding that although marks BROOKLYN BREWERY and BROOKLYN BREW SHOP are substantially similar, they are not nearly identical nor are the goods. Therefore, the CAFC reasoned, once the TTAB made the determination that neither the marks nor goods were nearly identical, a rejection of the inevitable confusion claim was proper.

Brewery’s Descriptiveness Claims

Brewery also alleged on appeal that the TTAB abused its discretion in refusing to consider its geographic descriptiveness claim against the ‘439 Registration because the equitable defenses of laches and acquiescence are not available against claims of descriptiveness. However, the CAFC was unconvinced by this, noting that Brewery’s claim was initially rejected as improperly pled. Brewery did not amend its claim, but rather argued that BBS implicitly consented to this claim. The CAFC was not persuaded, reasoning that BBS was not “fairly apprised” that the claim was being tried and could not have implicitly consented.

Brewery also argued that substantial evidence did not support the TTAB’s finding that it failed to prove the registered mark was merely descriptive. Brewery contended that the TTAB’s finding that “BREW SHOP describes a place to buy brewing supplies,” equates to a finding of merely descriptiveness. However, the CAFC was unconvinced, noting that a descriptive mark must conjure up the image of a precise good with which it is associated.

Lastly, the CAFC considered whether BBS was required to establish that the applied-for mark had acquired distinctiveness to register. The burden to show acquired distinctiveness is on the applicant. Here, the TTAB made no finding regarding the acquired distinctiveness, which the CAFC found to be an error. Therefore, the CAFC vacated the TTAB’s decision dismissing the opposition and remanded the case.