9th Circuit decides that "naked licensing" led to abandonment of mark

The 9th Circuit recently decided that "“The Freecycle Network"—a non-profit organization facilitating the free re-use of unwanted items by others—abandoned the mark FREECYCLE because it failed to exert adequate quality control over its loose network of local affiliates.

The court based its conclusion on the facts that: (1) there was no express licensing agreement between the main organization and its affiliates; (2) a directive to affiliates not to use the mark "for commercial purposes" didn’t constitute an implied license; (3) a one sentence ethics standard and voluntary "etiquette guidelines" did not constitute actual control over the affiliates; and (4) the main organization could not have reasonably relied on the affiliate’s own quality control standards (if any) because there was no evidence of a "close working relationship" between the two.

The case is Freecycle Sunnyvale v. The Freecycle Network, No. 08-16382 (9th Cir. Nov. 24, 2010).

7th Circuit (Posner, J.) decision on proper standards for finding case "exceptional" under Lanham Act

The 7th Circuit today published an interesting decision, written by Judge Posner, on the proper standards for determining whether a case is “exceptional” under the Lanham Act, 15 U.S.C. § 1117(a). The opinion reviews the standards in the other circuits, notes that they seem to differ, and then goes back to “first principles” to try to see if it’s possible both to articulate the proper standard and to reconcile the various circuits’ seemingly different tests.

To cut to the chase, the court held:

We conclude that a case under the Lanham Act is “exceptional,” in the sense of warranting an award of reasonable attorneys’ fees to the winning party, if the losing party was the plaintiff and was guilty of abuse of process in suing, or if the losing party was the defendant and had no defense yet persisted in the trademark infringement or false advertising for which he was being sued, in order to impose costs on his opponent.

The court believed that this test “captures the concerns that underlie the various tests and offers a pathway through the semantic jungle.” In arriving at its holding, the court was swayed by, among other things, the “practical concern” about the misuse of the Lanham Act “to obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor.”

The case is Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, No. 10-2327 (7th Cir. Nov. 23, 2010).

Fed. Cir.'s decision on district court challenges to BPAI decisions to apply to TTAB decisions too?

In today’s en banc decision in Hyatt v. Kappos, No. 2007-1066 (Fed. Cir. Nov. 8, 2010), the Federal Circuit addressed 35 U.S.C. § 145, which concerns the alternative routes by disappointed patent applicants can contest BPAI rulings rejecting a patent: an “appeal” to the Federal Circuit or a “civil action against the Director in the United States District Court . . . .” Addressing the “civil action” alternative, the court held:

(1) § 145 itself imposes no limit on an applicant’s right to introduce new evidence in the district court, regardless of whether he could have introduced before the BPAI;

(2) such new evidence is subject only to the Federal Rules of Civil Procedure and Evidence;

(3) the district court must make de novo findings on any issues implicated by the new evidence;

(4) in contrast, the district court must apply the deferential APA “substantial evidence” standard of review as to issues for which no new evidence was taken; and

(5) issues (as opposed to evidence) not raised in the Patent Office cannot be raised for the first time in a district court action.

The opinion did not mention the trademark-side counterpart to 35 U.S.C. § 145 (i.e., 15 U.S.C. § 1071(b)). In my view, however, (so take it for whatever it's worth), these standards on the patent side may very well apply to proceedings challenging TTAB trademark decisions too, for the wording of the two provisions is virtually identical, at least in the respects that the en banc court found significant:

35 U.S.C. § 145

"An applicant dissatisfied with the decision of the [BPAI] may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court . . . . The court may adjudge that such applicant is entitled to receive a patent for his invention . . . as the facts in the case may appear . . . ."

15 U.S.C. § 1071(b)

"Whenever a person . . . is dissatisfied with the decision of the [TTAB], said person may, unless appeal has been taken to said United States Court of Appeals for the Federal Circuit, have remedy by a civil action . . . . The court may adjudge that an applicant is entitled to a registration . . . , that a registration involved should be canceled, or such other matter as the issues in the proceeding require, as the facts in the case may appear."

I also commend Judge Newman’s partial dissent. She didn’t like points (4) & (5), above. As usual, her dissent seems to make sense.