Thursday, July 10, 2008

Tenth Circuit Applies Supreme Court’s MedImmune Precedent to Trademark Infringement Declaratory Judgment Action

Both Likely to be Confused and Blawgletter® have succinct write-ups on the Tenth Circuit’s decision in Surefoot LC v. Sure Foot Corp., No. 06-4294 (10th Cir. July 8, 2008) addressing whether the standard for seeking declaratory judgments of non-infringement established by the U.S. Supreme Court’s 2007 opinion in MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007), which involved a declaratory judgment of non-infringement of patent, also applies to declaratory judgment actions involving trademark infringement.

Surefoot's Ski Boot

The lower court had dismissed a declaratory judgment action filed by Surefoot, L.C., a maker of ski boots among other things, against Sure Foot Corp., which makes products to provide more traction for shoes and owns the registered mark SUREFOOT for “self-adhesive non-ski [sic] pad for shoe soles.”

Sure Foot's Boot Adhesive

Sure Foot had sent Surefoot several cease and desist letters accusing Surefoot of infringement in 1998 and 1999, but nothing thereafter. In 2000, Surefoot filed a use-in-commerce application to register SUREFOOT for various shoes and clothing items (claiming use dating back to February 1995) – the mark registered in 2002. Soonafter, Sure Foot filed a petition to cancel the registration. See Sure Foot Corporation v. Surefoot, L.C., Cancellation No. 92041209 (Filed August 1, 2002) . At the same time, Surefoot also filed an opposition against another intent-to-use application filed in 2000 by Surefoot for SUREFOOT (for bags and ski boot liners). Sure Foot Corporation v. Surefoot, L.C., Opposition No. 91153685 (Filed August 1, 2002).

In 2004, Surefoot filed three more use-in-commerce applications for the mark SUREFOOT for ski boot orthotics; ski googles, helmets, poles, and skis; and ski boot warmers, shoes and clothing, and “detachable devices placed on the bottom of ski boots to improve ski boot traction” claiming date of first use as December 1994. Each of the applications were opposed by Sure Foot upon publication. See Sure Foot Corporation v. Surefoot, L.C., Opposition No. 91165562 (Filed June 16, 2005); Sure Foot Corporation v. Surefoot, L.C., Opposition No. 91169601 (Filed March 7, 2006); and Sure Foot Corporation v. Surefoot, L.C., Opposition No. 91171534 (Filed June 23, 2006) .

Believing that Sure Foot would keeping opposing all future trademark applications and eventually sue for trademark infringement, Surefoot filed a declaratory judgment action in July 2006 seeking a declaration that it did not infringe Sure Foot's SUREFOOT mark.

The district court dismissed the action on the grounds that it lacked Article III jurisdiction to hear the action brought under the Declaratory Judgment Act because Surefoot had not demonstrated that it had a “reasonable apprehension of an imminent suit” by Sure Foot. The district court felt that the threat from the 1998-99cease and desist letters had dissipated by 2006 and that the TTAB administrative actions did not give rise to any reasonable basis of fear imminent litigation.

The Tenth Circuit reversed the district court’s decision and found that the district court did have Article III jurisdiction to hear Surefoot’s declaratory judgment action.

The court held that the Supreme Court’s MedImmune decision – decided after the district court’s decision – where the Supreme Court found the existence of a case or controversy in a declaratory suit where no reasonable apprehension of litigation existed, replaced the Tenth Circuit’s previous "reasonable apprehension of imminent suit" test set forth in Cardtoons, L.C. v. Major League Baseball Players Ass'n, 95 F.3d 959 (10th Cir. 1996). The court focused on the language in the Supreme Court’s footnote 11 where the Court stated that the “reasonable apprehension of suit doctrine” conflicted with prior Supreme Court decisions.

The court described the “case or controversy” standard as follows:

[A] declaratory judgment suit must be "definite and concrete, touching the legal relations of parties having adverse legal interests," must be "'real and substantial' and '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.'" Put differently, "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."

(citations omitted).

Based on this standard, the court held that the existence of the TTAB proceedings as well as the previous cease and desist letters demonstrated a sufficient “case or controversy” between the parties to grant the district court Article III jurisdiction.

The court noted that the district court, once it has established that it can exercise jurisdiction, should still consider the discretionary factors set forth in State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 983 (10th Cir. 1994) in assessing whether it should exercise jurisdiction under the Declaratory Judgment Act:

[1] whether a declaratory action would settle the controversy; [2] whether it would serve a useful purpose in clarifying the legal relations at issue; [3] whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race to res judicata"; [4] whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and [5] whether there is an alternative remedy which is better or more effective.
In light of the change in Tenth Circuit precedent arising from the Supreme Court’s MedImmune decision, the court reversed the district court’s decision that no Article III jurisdiction exists and remanded the case back to the district court for consideration of the above discretionary factors.

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