Does the owner of an unregistered trademark have standing to petition for cancellation? AUSTRALIAN v. NAKED

Does the owner of an unregistered trademark have standing to petition for cancellation? AUSTRALIAN v. NAKED

A trademark is a something that a producer of a product uses to distinguish its products from competitors.  Trademark holders are granted the right to exclude others from placing the trademark on products not produced by the trademark holder.  The motivation behind trademark law is to protect consumers, not to reward producers.  Trademark law is intended to prevent consumer confusion and protect consumers from inferior quality products.  Protection for a trademark begins merely by using a trademark in commerce.  A trademark can be registered in the United States to strengthen the rights associated with the trademark, however, registration is not a prerequisite to begin using a trademark .

Registering a trademark in the United States begins with filing a trademark application with the United States Patent and Trademark Office.  A trademark application will be scrutinized to ensure that the applied for trademark does not conflict with any trademarks which are already registered.  Assuming that all the requirements are met, the trademark is placed on either the principal register of the supplemental register.  However, after a trademark is registered, the trademark is not irrevocable.

Trademark cancellation is the process of removing a registered trademark from the trademark federal register.  The Lanham Act provides for the trademark cancellation process.   The process begins with a Petition to Cancel, which is usually argued before the Trademark Trial and Appeal Board. In some cases, a trademark can be canceled by a federal court.  While the Trademark Trial and Appeal Board is not a federal court, there are still some requirements that a petitioner must meet to successfully submit a Petition to Cancel a trademark.  One of those requirements is standing.  To successfully cancel a trademark the petitioner must demonstrate that they have “a real interest in the proceedings” and “a reasonable basis” to believe that registration causes the petitioner damages.  If the petitioner cannot demonstrate standing, then the Petition to Cancel will fail.

AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC, 2019-1567 (C.A.F.C. 2020) is an example of a case where an unregistered trademark owner was found the have standing to petition for cancellation of a registered trademark.

Petitioner first started using the trademark NAKED on its products in the United States in 2003.  Petitioner never applied for registration of its trademark.  Respondent owns Registration No. 3,325,577 for the trademark NAKED in the same classification of products. In 2006, Petitioner contacted Respondent and claimed rights in its unregistered mark. From 2006 to 2007 the two parties engaged in settlement negotiations via email correspondence.

Petitioner petitioned for cancellation of the ‘577 registration in 2006.  Respondent defended saying that Petitioner was contractually and equitably estopped from pursuing the cancellation. Respondent asserts that the email communications demonstrate that the parties reached an agreement whereby Petitioner would discontinue use of its unregistered mark in the United States and consent to Respondent’s use and registration of its NAKED mark in the United States.

The Trademark Trial and Appeal Board determined that Petitioner lacked standing to petition for cancellation of a trademark registration. The TTAB reasoned that Petitioner could not show an interest in the cancellation proceeding or a reasonable belief of damage because it had contracted away its proprietary rights in its unregistered marks.  Petitioner appealed this decision the the Court of Appeals for the Federal Circuit.

The Federal Circuit reversed the TTAB’s decision.  The Federal Circuit held that absence of proprietary rights does not in itself negate an interest in the proceeding or a reasonable belief of damage. A petitioner seeking to cancel a trademark registration establishes an entitlement to bring a cancellation proceeding under 15 U.S.C. § 1064 by demonstrating a real interest in the cancellation proceeding and a reasonable belief of damage whether or not a petitioner has a proprietary interest in an asserted unregistered mark.  Petitioner has a real interest in the cancellation proceeding and a reasonable belief of damage, Petitioner satisfies the statutory requirements to seek cancellation of a registered trademark pursuant to § 1064.

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