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District Court Lacked Jurisdiction to Invalidate Common-Law Trademark
Bea Says Once Judge Determined That Plaintiff’s Trademark
Does Not Infringe on Defendant’s, Controversy Ended
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals on Friday held that a district court invalidated a defendant’s common law trademark in the absence of jurisdiction because the court had already declared that the plaintiff’s similar trademark was not an infringement, meaning that the plaintiff had no continuing stake in the matter,
“[F]ederal courts lack Article III jurisdiction to review questions of trademark validity unless the plaintiff faces a threat of infringement liability or otherwise suffers a justiciable injury that is fairly traceable to the trademark’s validity,” Senior Circuit Judge Carlos T. Bea explained.
The plaintiff was San Diego County Credit Union (“SDCCU”). It sought a determination that its 2014 registered trademark—“IT’S NOT BIG BANK BANKING. IT’S BETTER.”—does not infringe upon the common law trademark or the 2011 trademark of Citizens Equity First Credit Union (“CEFCU”):
“CEFCU. NOT A BANK. BETTER.”
SDCCU’s Standing
SDCCU had standing, under the Ninth Circuit’s 1981 decision in Societe de Conditionnement en Aluminium v. Hunter Engineering Co. which says that “a plaintiff has standing to seek declaratory relief of non-infringement if he demonstrates ‘a real and reasonable apprehension that he will be subject to liability’ if he continues with his course of conduct,” Bea wrote.
The San Diego-based credit union had such an apprehension, he said, because the Illinois-based CEFCU had sought to have the Trademark Trial and Appeal Board cancel SDCCU’s registration. However, once District Court Judge Gonzalo P. Curiel of the Southern District of California granted summary judgment in favor of SDCCU declaring non-infringement, Bea declared, “SDCCU lost any personal stake it once had in invalidating CEFCU’s common-law mark.”
Bea specified that “reasonable apprehension” on the part of SDCCU that it would be sued for trademark infringement was not spawned by the mere fact that CEFCU had sought cancellation of SDCCU’s registered trademark. CEFCU has operations in Northern California and SDCCU has a presence is Southern California counties and, the jurist noted, these are “geographically remote membership counties.”
He pointed out:
“SDCCU’s northernmost credit union branch is in Orange County, while CEFCU’s southernmost membership county is Santa Clara. That leaves Los Angeles, Ventura, Santa Barbara, San Luis Obispo, and Monterey counties to separate the parties’ territories.”
Further Factor
In light of that, Bea reasoned, the petition to cancel CEFCU’s registration “on its own…was insufficient to create a live controversy,” but added that “the analysis does not end there.”
During discovery in the administrative proceedings, he noted, there was testimony by CEFCU’s representative that the credit union was expanding its operations and already had members in Southern California.
“This testimony is relevant because a senior registrant can enjoin a junior user of an infringing mark if it is likely that the senior registrant will expand into the junior user’s market,” Bea wrote, adding:
“CEFCU’s employee’s testimony that it was just a matter of time before actual confusion occurred in California, combined with CEFCU’s overall growth in California and existing members in Southern California, provided new context to CEFCU’s labelloid-of-confusion allegation. This new context reasonably put SDCCU in apprehension that CEFCU would sue for infringement of its registered and common-law marks. Thus, a live controversy existed at the pleading stage.”
The case is San Diego County Credit Union v. Citizens Equity First Credit Union, 21-55642.
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