Ninth Circuit clarifies power of district courts to cancel pending applications in infringement spat

The US Court of Appeals for the Ninth Circuit has partly affirmed a district court’s ruling in a trademark dispute between two smoking product retailers, upholding its decision to invalidate the applications. The Ninth Circuit held that district courts do in fact have jurisdiction to alter or cancel trademark applications in an action properly brought under Section 1119 of US Code 15, and that in the context of challenges to intent-to-use (ITU) applications, proof of a lack of intent can invalidate the mark (BBK Tobacco & Foods LLP v Central Coast Agriculture Inc, case 22/16190; 16281, 1 April 2024, Hurwitz, Desai, JJ, Bumatay, J dissenting).

Case background

BBK sells and distributes smoking-related products under its trademark RAW. Central Coast Agriculture (CCA) sells cannabis products using the brand name Raw Garden. 

BBK filed a complaint against CCA, claiming trademark infringement and petitioning to void several of CCA’s ITU trademark applications for lack of intent to use the relevant marks in commerce. However, instead of disputing the merit of BBK’s claims, CCA argued that the district court had no jurisdiction to adjudicate the issue. The district court granted summary judgment in favour of BBK on its claims to invalidate CCA’s trademark applications. CCA appealed.

Relevant legislation

The Ninth Circuit affirmed the summary judgment in favour of BBK, explaining that “when an action involves a claim of infringement on a registered trademark, a district court also has jurisdiction to consider challenges to the trademark application of a party to the action”. 

Under Section 1190 of US Code 15, the Lanham Act provides that:

In any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, . . . restore cancelled registrations, and otherwise rectify the register with respect to the registrations of any party to the action.

Under Section 1051, the Lanham Act defines an application for use as a “request for registration of a trademark on the principal register”. Since a challenge to an application affects the applicant’s right to the registration, the court reasoned that Section 1119 authorises a district court to resolve disputes over trademark applications.

Court decisions 

The Ninth Circuit held that a “lack of bona fide intent to use a mark in commerce is a valid basis to challenge a trademark application”, aligning with decisions made by sister circuits and the TTAB. An applicant can seek to register a mark if it is already being used in commerce or if the applicant intends, showing good faith, to use the trademark in commerce. 

While applicants filing under ITU provisions may begin the registration process based on a bona fide intent to later use the mark in commerce, the Lanham Act requires an applicant to either subsequently file a verified statement of actual use of the mark or convert its application into a use application. As a result, the Ninth Circuit affirmed the district court’s invalidation of CCA’s trademark applications.

Differing opinions

In his dissent, Judge Bumatay explained that federal courts do not have the authority to cancel pending trademark applications before the USPTO if it has registered the mark – “unless Congress says so”. Relying on textual and historical context, Judge Bumatay described the USPTO’s exclusive power to adjudicate trademark applications, and voiced concern that the majority opinion would create premature interferences that would effectively remove the USPTO’s power to work with applicants to modify, amend or revise applications. 

In his view, while Section 1119 empowers district courts to determine which party has rights to a registered mark, it does not authorise the courts to cancel pending applications.

The panel majority explained that in its view, the dissent did not properly consider the Lanham Act’s definition of an ‘application’. Allowing a district court to adjudicate trademark applications in an action that already involves a registered mark will allow resolution of all registration disputes in a single action.