IP Law Daily District court lacks jurisdiction over challenge to PRETZEL CHIPS genericness finding
Thursday, October 24, 2019

District court lacks jurisdiction over challenge to PRETZEL CHIPS genericness finding

By Thomas Long, J.D.

A party that appeals a TTAB decision to the Federal Circuit cannot later opt to file a district court action challenging the decision, even if the TTAB issues a subsequent opinion on remand.

A civil action appealing a Trademark Trial and Appeal Board decision on remand from the U.S. Court of Appeals for the Federal Circuit, sustaining an opposition to registration of the mark PRETZEL CRISPS because it was generic for the underlying goods, "pretzel crackers," has been turned away by the federal district court in Charlotte, North Carolina, for lack of subject matter jurisdiction. Because the applicant had chosen to take its initial appeal to the Federal Circuit, it waived its right to proceed in the district court. According to the court, language in Section 21 of the Lanham Act, 15 U.S.C. §1071, provided that a party that chooses to take an appeal of a Board decision to the Federal Circuit is prohibited from later filing a civil action in district court, even if the Board issues another decision in the case (Princeton Vanguard, LLC v. Frito-Lay North America, Inc., October 21, 2019, Bell, K.).

Snack food producer Princeton Vanguard, LLC, owned a registration on the Supplemental Register granted in July 2005 for PRETZEL CRISPS, in standard character format, for "pretzel crackers," with the term "PRETZEL" disclaimed. Princeton then applied to register the described mark on the Principal Register. In 2010, competing snack food company Frito-Lay North America filed an opposition to the registration and petitioned for cancellation of the Supplemental Registration on the grounds that the term "PRETZEL CRISPS," when used in connection with "pretzel crackers," was generic and, in the alternative, that PRETZEL CRISPS was highly descriptive and had not acquired distinctiveness.

In 2014, the Board granted the cancellation of the Supplemental Register registration and sustained the opposition to the application on the ground that Princeton’s asserted mark PRETZEL CRISPS as used in connection with "pretzel crackers" was generic. Princeton appealed that ruling to the Federal Circuit pursuant to 15 U.S.C. §1071(a). In May 2015, the Federal Circuit determined that the Board used an incorrect legal standard and vacated and remanded the decision for the Board to "give appropriate consideration to the proffered survey evidence."

On remand, neither party sought to introduce new or additional evidence into the record. The Board ordered the parties to rebrief the case on the original record, and the case was then considered on remand based on that record. In September 2017, the Board again decided that the term PRETZEL CRISPS was generic or, in the alternative, descriptive and without secondary meaning.

Princeton did not appeal the Board’s opinion on remand to the Federal Circuit but instead filed a civil action in the Western District of North Carolina seeking review of the Board’s remand opinion pursuant to 15 U.S.C. §1071(b). In the course of reviewing the parties’ respective motions for summary judgment, the court determined that the issue of subject matter jurisdiction needed to be considered and asked the parties to file memoranda of law addressing jurisdiction.

The court noted that the issue appeared not to have previously been decided and therefore started with an analysis of Section 1071. The parties agreed that the only possible basis for the court’s jurisdiction was that section of the Lanham Act. Under Section 1071 a dissatisfied party in a Board proceeding may opt to appeal to the Federal Circuit under Section 1071(a) or may, if it chooses, appeal by filing a civil action in a district court under Section 1071(b). However, the statute makes it clear that a dissatisfied party may not do both, the court said. Section 1071(a) states that a party who files an appeal with the Federal Circuit waives its right to seek district court review under Section 1071(b), and Section 1071(b) again specifically prohibits parties who have taken an appeal to the Federal Circuit from filing a civil action.

The court disagreed with Princeton’s contention that the statute should be read to allow the dissatisfied party to make a new choice after each and every "decision" of the Board. In the court’s view, nothing in the language of Section 1071 limited the scope of the resulting statutory waiver when a Federal Circuit appeal is taken, either as to time or as to a particular decision.

The court also noted that the limited case law addressing the question, as well as the interests of justice and judicial economy, supported the conclusion that the court lacked subject matter jurisdiction. Frito-Lay cited a purportedly analogous patent case in which a district court ruled that it lacked subject matter jurisdiction after a party had opted to appeal an adverse decision of the Board of Patent Appeals and Interferences to the Federal Circuit. In that case, the district court interpreted the Patent Act parallels to 15 U.S.C. §1071—35 U.S.C. §141 (appeal to Federal Circuit) and 35 U.S.C. §145 (appeal to district court—to operate similarly to Section 1071. There was other authority in the Fourth Circuit making the same interpretation.

The court found the reasoning in the cited case to be persuasive. As the plaintiffs had done in that case, Princeton argued that the Federal Circuit’s ruling must be followed as the binding "law of the case," and that the district court should find that the Board failed to follow the Federal Circuit’s directions or instructions. The district court also noted that the Federal Circuit, in its 2015 opinion, "plainly envisioned that it would be reviewing the case again after remand." In the district court’s view, the Federal Circuit was better suited to determine whether the Board had faithfully followed the appellate court’s decision, particularly since the Federal Circuit had extensive expertise in the field of trademark law.

According to the court, Princeton was given a full and fair opportunity to appeal to the district court when it chose to appeal the Board’s 2014 decision to the Federal Circuit. Allowing Princeton to appeal de novo to the district court was inconsistent with the plain language of Section 1071 and would be inconsistent with the interests of judicial economy. It also would remove the consideration of the merits from the court that is indisputably in the best position to render judgment on whether the Board followed the Federal Circuit’s earlier opinion, which the statute provides "shall govern the further proceedings in the case." Accordingly, the court concluded that Princeton waived its right to appeal to the district court by taking its appeal to the Federal Circuit, and the district court thus lacked subject matter jurisdiction to hear the action.

This case is No. 3:17-CV-00652-KDB-DSC.

Attorneys: David H. Bernstein (Debevoise & Plimpton LLP) for Princeton Vanguard, LLC and Snyder's-Lance, Inc. Alice Carmichael Richey (Alexander Ricks PLLC) and David E. Armendariz (Pirkey Barber PLLC) for Frito-Lay North America, Inc.

Companies: Princeton Vanguard, LLC; Snyder's-Lance, Inc.; Frito-Lay North America, Inc.

MainStory: TopStory Trademark NorthCarolinaNews

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