J & D Home Improvement, Inc. v. Basement Doctor, Inc. ( 2004 )

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
1-22-2004
J&D Home Improvement v. Basement Doctor Inc
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-1902
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-1902
J&D HOME IMPROVEMENT, INC.,
Appellant
v.
BASEMENT DOCTOR, INC.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
D.C. Civil No. 02-cv-01275
District Judge: The Honorable Sue L. Robinson
Submitted Under Third Circuit LAR 34.1(a)
January 8, 2004
Before: BARRY, SMITH, Circuit Judges, and POLLAK,* District Judge
(Opinion Filed: January 22, 2004)
OPINION
*
The Honorable Louis H. Pollak, District Judge, United States District Court for the
Eastern District of Pennsylvania, sitting by designation.
BARRY, Circuit Judge
This appeal asks us to determine whether a federal District Court has subject
matter jurisdiction over a declaratory judgment action asking the Court to declare,
pursuant to 15 U.S.C. § 1052(d), that both plaintiff and defendant are entitled to
concurrent use trademark registrations. The District Court held that it did not have
subject matter jurisdiction. We agree, and will affirm.
I.
Appellant J&D Home Improvement, Inc. (“J&D”) has been in the business of
providing basement waterproofing, foundation support, and concrete restoration services
since 1939. J&D began using the mark THE BASEMENT DOCTOR in the Midwest,
unaware that appellee Basement Doctor, Inc. (“Basement Doctor”) was using the mark
BASEMENT DOCTOR in a different geographical area. On September 1, 1998, J&D
applied for federal registration of the mark THE BASEMENT DOCTOR. On November
16, 1999, the United States Patent and Trademark Office (“PTO”) issued Registration No.
2,292,578 to J&D for THE BASEMENT DOCTOR. On July 24, 2000, Basement Doctor
applied for federal registration of the mark BASEM ENT DOCTOR. That application
was rejected.
On July 17, 2001, Basement Doctor initiated a proceeding before the Trademark
Trial and Appeal Board (“TTAB”) seeking cancellation of J&D’s registration, under
Section 2(d) of the Lanham Act, based upon priority of use. Basement Doctor alleged
2
that it was the senior user because its predecessor-in-interest was using BASEMENT
DOCTOR as a service mark prior to J&D’s first use of THE BASEMENT DOCTOR. In
October 2001, J&D filed an answer in the TTAB proceeding.
On July 8, 2002, J&D filed a complaint against Basement Doctor for a declaratory
judgment in the U.S. District Court for the District of Delaware, asking the Court to
declare (1) that J&D is entitled to a concurrent use registration for the mark THE
BASEMENT DOCTOR for the entire country, except those areas in which Basement
Doctor is able to demonstrate actual use of the mark as of J&D’s filing of its registration;
or (2) that J&D’s registered mark for THE BASEMENT DOCTOR is valid and prima
facie evidence of its right to use that mark. On July 26, 2002, Basement Doctor moved to
dismiss J&D’s complaint, pursuant to FED. R. C IV. P. 12(b)(1), on the ground that the
District Court lacked subject matter jurisdiction because the PTO had primary jurisdiction
over J&D’s concurrent use claim. The TTAB stayed the cancellation proceeding pending
resolution of this action.
On February 23, 2003, the District Court granted Basement Doctor’s motion to
dismiss J&D’s complaint. The Court held that J&D had not pled the existence of an
actual controversy that would permit jurisdiction over an action under the Declaratory
Judgment Act, and that 15 U.S.C. § 1052(d) was not a grant of original jurisdiction. J&D
now appeals. We have jurisdiction under 28 U.S.C. § 1291.
3
II.
Our review of the District Court’s order granting the motion to dismiss for lack of
subject matter jurisdiction is plenary. See, e.g., Turicentro, S.A. v. American Airlines
Inc., 303 F.3d 293, 300 (3d Cir. 2002) (citing Gould Elec. Inc. v. United States, 220 F.3d
169, 176 (3d Cir.2000)). In a Rule 12(b)(1) appeal, “‘we review only whether the
allegations on the face of the complaint, taken as true, allege facts sufficient to invoke the
jurisdiction of the district court.’” Turicentro, 303 F.3d at 300 (quoting Licata v. United
States Postal Serv., 33 F.3d 259, 260 (3d Cir.1994)). “Challenges to subject matter
jurisdiction under Rule 12(b)(1) may be ‘facial’ or ‘factual.’ Facial attacks, like this one,
contest the sufficiency of the pleadings, and the trial court must accept the complaint’s
allegations as true.” Turicentro, 303 F.3d at 300, n.4 (citing NE Hub Partners, L.P. v.
CNG Transmission Corp., 239 F.3d 333, 341 n.7 (3d Cir. 2001)). Our review of a
dismissal because a claim is not ripe is also plenary. NE Hub Partners, 239 F.3d at 341(3d Cir. 2001) (citing Philadelphia Fed'n of Teachers v. Ridge, 150 F.3d 319, 321 (3d Cir.
1998); and Gould Elecs., 220 F.3d at 176).
Section 2(d) of the Lanham Act provides that the Director of the PTO may issue
concurrent use registrations either based upon the Director’s own determinations or
“when a court of competent jurisdiction has finally determined that more than one person
4
is entitled to use the same or similar marks in commerce.” 1 15 U.S.C. § 1052(d); see also
Enterprises Rent-A-Car Co. v. Advantage Rent-A-Car, Inc., 330 F.3d 1333, 1339 (Fed.
Cir. 2003), cert. denied __ S.Ct. __, 2003 WL 22327301 (Dec. 15, 2003). J&D argues
that the District Court had subject matter jurisdiction over the § 1052(d) claim asserted in
this case because 15 U.S.C. § 1121(a) states that district courts “shall have original
jurisdiction ... of all actions arising under [Chapter 22: Trademarks],” and because, they
claim, § 1052(d) authorizes a § 1121(a) “action.” The District Court held, and Basement
Doctor argues, that § 1052(d) authorizes a remedy only, not a § 1121(a) “action,” and,
therefore, subject matter jurisdiction cannot be based on that statute.
We agree with the District Court, which noted that when Congress wanted to
create an “action” under the Lanham Act, it clearly did so.2 No such unambiguous
language is found in § 1052(d). 3 Therefore, although a court may determine that
1
A court does not itself cause the concurrent use registration to be issued; rather, it
determines whether both parties are entitled to use the mark(s), and the PTO Director then
issues the concurrent use registrations. See, e.g., Sears, Roebuck & Co. v. Sears Realty
Co., 30 U.S.P.Q.2d 1219, 1225 (N.D.N.Y. 1993).
2
See, e.g., 15 U.S.C. § 1114(1) (any person using or reproducing a registered mark
without authorization “shall be liable in a civil action by the registrant”); 15 U.S.C. §
1120 (any person who obtains a registration by false or fraudulent means “shall be liable
in a civil action”); 15 U.S.C. § 1125(a)(1) (any person using false designations of origin
likely to cause confusion “shall be liable in a civil action”); 15 U.S.C. § 1129(1) (any
person who uses another’s name, without permission and for profit, in an internet domain
name “shall be liable in a civil action”); 15 U.S.C. § 1071(b) (authorizing applicants
unsatisfied with TTAB decisions to “have a remedy by a civil action”).
3
The full text of § 1052(d) states as follows:
5
concurrent registration is appropriate (and thereby direct the PTO to issue concurrent
registrations), it may only do so in the context of actions over which courts already have
No trademark by which the goods of the applicant may be
distinguished from the goods of others shall be refused registration
on the principal register on account of its nature unless it ...
(d) Consists of or comprises a mark which so resembles a mark
registered in the Patent and Trademark Office, or a mark or trade
name previously used in the United States by another and not
abandoned, as to be likely, when used on or in connection with the
goods of the applicant, to cause confusion, or to cause mistake, or to
deceive: Provided, That if the Director determines that confusion,
mistake, or deception is not likely to result from the continued use by
more than one person of the same or similar marks under conditions
and limitations as to the mode or place of use of the marks or the
goods on or in connection with which such marks are used,
concurrent registrations may be issued to such persons when they
have become entitled to use such marks as a result of their
concurrent lawful use in commerce prior to (1) the earliest of the
filing dates of the applications pending or of any registration issued
under this chapter; (2) July 5, 1947, in the case of registrations
previously issued under the Act of March 3, 1881, or February 20,
1905, and continuing in full force and effect on that date; or (3) July
5, 1947, in the case of applications filed under the Act of February
20, 1905, and registered after July 5, 1947. Use prior to the filing
date of any pending application or a registration shall not be required
when the owner of such application or registration consents to the
grant of a concurrent registration to the applicant. Concurrent
registrations may also be issued by the Director when a court of
competent jurisdiction has finally determined that more than one
person is entitled to use the same or similar marks in commerce. In
issuing concurrent registrations, the Director shall prescribe
conditions and limitations as to the mode or place of use of the mark
or the goods on or in connection with which such mark is registered
to the respective persons.
15 U.S.C. § 1052(d) (emphasis added).
6
subject matter jurisdiction on some other basis.4 See, e.g., Old Dutch Foods, Inc. v. Dan
Dee Pretzel & Potato Chip Co., 477 F.2d 150, 155-56 (6th Cir. 1973) (jurisdiction in
infringement action over counterclaimant’s seeking concurrent use registration); Lone
Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc., 106 F.3d 355, 365-66 (11th Cir.
1997) (affirming District Court’s concurrent use findings in a 15 U.S.C. § 1125(a) false
designation of origin case). 5
Neither can J&D predicate subject matter jurisdiction on the relief sought under
the Declaratory Judgment Act. That Act empowers district courts to “declare the rights
4
At least one treatise has suggested, albeit implicitly, that a plaintiff can bring a civil
action for concurrent use registration. See T RADEMARK R EGISTRATION P RACTICE § 11:4,
2d ed. (2003). It notes that § 1052(d) places certain constraints on the Director of the
PTO (e.g. finding that the junior user began its use prior to filing of the senior user’s
application, and that no confusion will result from the concurrent uses) that it does not
place on the courts, and suggests that it might be advantageous for a plaintiff to pursue
concurrent use registration in the courts for this reason. Courts have recognized their
freedom from these constraints, though not as a basis for concluding that jurisdiction is
thereby conferred, see, e.g., Holiday Inn v. Holiday Inns, Inc., 534 F.2d 312, 318
(C.C.P.A. 1976), as has the Trademark Manual of Examining Procedure (“TMEP”). See
TMEP § 1207.04(F). J&D argues that this distinction conveys Congress’s intent that §
1052(d) confers jurisdiction. Although we acknowledge that § 1052(d) places constraints
on the Director that it does not place on courts, and that circumstances may arise whereby
these constraints might prevent an applicant from receiving concurrent use registration,
we do not believe that this distinction indicates that Congress intended to authorize §
1121(a) “actions” based solely on an attempt to acquire concurrent use registrations
pursuant to § 1052(d).
5
Congress’s decision to include “court of competent jurisdiction” in § 1052(d), which
is echoed in the PTO regulations governing concurrent use registrations, see 37 C.F.R. §
2.99(f), further supports our interpretation because it suggests that a court must have
some other basis for its jurisdiction before ruling on whether the parties are entitled to use
the disputed mark(s) concurrently.
7
and other legal relations of any interested party seeking such declarations,” but only “[i]n
a case of actual controversy within its jurisdiction.” 28 U.S.C. § 2201(a) (emphasis
added). J&D’s complaint fails to state an actual controversy, much less one within the
Court’s jurisdiction.
“‘The existence of a case and controversy is a prerequisite to all federal actions,
including those for declaratory relief.’” Peachlum v. City of York, Pennsylvania, 333
F.3d 429, 433 (3d Cir. 2003) (quoting Presbytery of New Jersey of Orthodox Presbyterian
Church v. Florio, 40 F.3d 1454, 1462 (3d Cir. 1994)). “The question in each case is
whether the facts alleged show that there is a substantial controversy, between parties
having adverse legal interests, ‘of sufficient immediacy and reality’ to justify judicial
resolution.” Peachlum, 333 F.3d at 434 (quoting Maryland Casualty Co. v. Pacific Coal
& Oil Co., 312 U.S. 270, 273 (1941)).
J&D asks for relief in anticipation of the TTAB’s ruling in its cancellation
proceeding. That proceeding, i.e. the dispute over which party is entitled to registration
of its respective mark, has been stayed pending the conclusion of this case. The TTAB
will determine whether J&D is entitled to keep its registration for THE BASEMENT
DOCTOR. If not, it may then utilize the PTO procedures for applying for concurrent use
registration of its mark. See 37 C.F.R. § 2.99(a)-(e). No actual controversy exists now,
however, because the registration for J&D’s mark is valid, because no competing mark
has been registered by Basement Doctor, and because no infringement claims have been
8
made. Because no controversy exists, the District Court did not have jurisdiction over
J&D’s declaratory judgment action.6
Moreover, as discussed above, the District Court did not have jurisdiction to
declare the parties’ rights to concurrent registration because that remedy, authorized by §
1052(d), is not a § 1121(a) “action.”
The order of the District Court will be affirmed.
/s/ Maryanne Trump Barry
Circuit Judge
6
Courts in other jurisdictions facing similar questions have reached the same
conclusion. See, e.g., Red Lobster Inns of America, Inc. v. New England Oyster House,
Inc., 524 F.2d 968, 969 (5th Cir. 1975) (no jurisdiction over a declaratory judgment action
seeking determination that no conflict existed between parties’ marks because “opposition
proceedings before the [PTO] did not constitute a claim of infringement and therefore did
not present an actual controversy as required by the Declaratory Judgment Act”); Chicago
Cosmetologists Ass’n, Inc. v. National Cosmetology Ass’n, Inc., No. 92 C 4627, 1993
WL 177027, at *3 (N.D. Ill. May 21, 1993) (“The mere filing of a statutory notice of
opposition to the registration of a service mark, however, does not by itself create an
actual case or controversy between the parties which is justiciable by a federal court
because opposition proceedings do not constitute claims of infringement, misuse, or
unfair competition .... This is true even when the PTO has suspended proceedings
pending the outcome of the district court action.”) (internal quotations omitted).