San Diego County Credit Union v. Cefcu ( 2023 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
Nos. 21-55642
SAN DIEGO COUNTY CREDIT
21-55662
UNION,
21-56095
21-56389
Plaintiff-Appellee/
Cross-Appellant,
D.C. No. 3:18-cv-
v.
00967-GPC-MSB
CITIZENS EQUITY FIRST CREDIT
UNION,
OPINION
Defendant-Appellant/
Cross-Appellee.
Appeal from the United States District Court
for the Southern District of California
Gonzalo P. Curiel, District Judge, Presiding
Argued and Submitted December 9, 2022
Pasadena, California
Filed February 10, 2023
Before: Carlos T. Bea, Sandra S. Ikuta, and Morgan
Christen, Circuit Judges.
Opinion by Judge Bea
2 SDCCU V. CEFCU
SUMMARY *
Trademark / Article III Standing
The panel affirmed in part and vacated in part the district
court’s judgment and award of attorneys’ fees in favor of the
plaintiff and remanded in a trademark case.
Defendant Citizens Equity First Credit Union (CEFCU)
petitioned the Trademark Trial and Appeal Board (TTAB)
to cancel a trademark registration belonging to plaintiff San
Diego County Credit Union (SDCCU). SDCCU procured a
stay to the TTAB proceedings by filing an action seeking
declaratory relief to establish that it was not infringing either
of CEFCU’s registered and common-law marks and to
establish that those marks were invalid. The district court
granted SDCCU’s motion for summary judgment on non-
infringement. After a bench trial, the district court also held
that CEFCU’s common-law mark was invalid and awarded
SDCCU attorneys’ fees.
Vacating in part and remanding, the panel held that
SDCCU had no personal stake in seeking to invalidate
CEFCU’s common-law mark because the district court had
already granted summary judgment in favor of SDCCU,
which established that SDCCU was not infringing that
mark. Hence, there was no longer any reasonable basis for
SDCCU to apprehend a trademark infringement suit from
CEFCU. After it granted summary judgment in favor of
SDCCU, the district court was not resolving an actual “case”
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
SDCCU V. CEFCU 3
or “controversy” regarding the validity of CEFCU’s
common-law mark; thus, it lacked Article III jurisdiction to
proceed to trial on that issue. The panel therefore vacated
the district court’s judgment and its award of attorneys’ fees,
which was based, in part, on the merits of the invalidity
claim over which the district court lacked Article III
jurisdiction.
In light of MedImmune, Inc. v. Genentech, Inc., 549 U.S.
118 (2007), and Clapper v. Amnesty Int’l, 568 U.S. 398(2013), the panel confirmed the ongoing vitality of precedent
applying what the parties labeled a “reasonable
apprehension” test to determine whether a controversy exists
in a declaratory judgment action regarding trademark
infringement. Under this test, 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. The
panel held that a live controversy existed at the pleading
stage, and CEFCU did not meet its burden of proving that
the case was moot at the summary judgment stage. The
district court did not, however, possess Article III
jurisdiction to proceed to trial on SDCCU’s invalidity claim.
The panel held that the district court correctly exercised
personal jurisdiction over CEFCU regarding SDCCU’s non-
infringement claims, which sought declaratory relief that
SDCCU was not infringing CEFCU’s registered mark or
common-law mark.
The panel affirmed the district court’s dismissal without
prejudice of CEFCU’s counterclaim for cancellation of
SDCCU’s trademark registration.
4 SDCCU V. CEFCU
COUNSEL
James W. Dabney (argued), Emma L. Baratta, and Michael
M. Polka, Hughes Hubbard & Reed LLP, New York, New
York; Steven J. Cologne, Higgs Fletcher & Mack, LLP, San
Diego, California; for Defendant-Appellant.
Martin R. Bader (argued), Stephen Sandor Korniczky, Lisa
M. Martens, Jesse A. Salen, and Karin Dougan Vogel,
Sheppard Mullin Richter & Hampton LLP, San Diego,
California; Todd E. Lundell, Sheppard Mullin Richter &
Hampton LLP, Costa Mesa, California; James V. Fazio III,
San Diego IP Law Group, San Diego, California; for
Plaintiff-Appellee.
SDCCU V. CEFCU 5
OPINON
BEA, Circuit Judge:
After a party obtains declaratory relief which decrees
that it is not infringing a trademark, does it retain Article III
standing to invalidate that mark? That is the central question
presented in these appeals, and we answer it: No.
Defendant-appellant and cross-appellee Citizens Equity
First Credit Union (CEFCU) began this dispute by
petitioning the Trademark Trial and Appeal Board (TTAB)
to cancel a trademark registration belonging to plaintiff-
appellee and cross-appellant San Diego County Credit
Union (SDCCU). CEFCU claimed that SDCCU’s
registration covered a mark that is confusingly similar to
both CEFCU’s registered mark and its alleged common-law
mark. SDCCU procured a stay to the TTAB proceedings by
filing the instant declaratory judgment action. SDCCU
persuaded the district court that, during the course of the
TTAB proceedings, it had become apprehensive that
CEFCU would sue SDCCU for trademark infringement.
SDCCU sought declaratory relief to establish it was not
infringing either of CEFCU’s marks and to establish that
those marks are invalid. The district court granted SDCCU’s
motion for summary judgment on non-infringement. After a
bench trial, the district court also held that CEFCU’s
common-law mark is invalid and awarded SDCCU
attorneys’ fees.
We hold that SDCCU had no personal stake in seeking
to invalidate CEFCU’s common-law mark because the
district court had already granted summary judgment in
favor of SDCCU, which established that SDCCU was not
infringing that mark. Hence, there was no longer any
6 SDCCU V. CEFCU
reasonable basis for SDCCU to apprehend a trademark
infringement suit from CEFCU. After it granted summary
judgment in favor of SDCCU, the district court was not
resolving an actual “case” or “controversy” regarding the
validity of CEFCU’s common-law mark; thus, it lacked
Article III jurisdiction to proceed to trial on that issue. We
therefore vacate its judgment and its award of attorneys’
fees. Of the remaining issues that are not obviated by our
holding on Article III jurisdiction, we affirm. Thus, we
affirm in part, vacate in part, and remand.
I.
This is a trademark dispute between two credit unions
with largely geographically remote membership counties.
CEFCU’s principal place of business is in Peoria,
Illinois. In 2008, it acquired Valley Credit Union located in
the Bay Area of Northern California. Although CEFCU has
members residing in all 50 states, it generally requires that
its members have ties to Illinois or the following California
counties: Alameda, Contra Costa, or Santa Clara. In 2011,
CEFCU registered its trademark, “CEFCU. NOT A BANK.
BETTER.,” with the United States Patent and Trademark
Office. CEFCU also claims to own a common-law
trademark that is nearly identical to its registered mark, but
omits its house mark. Its claimed common-law mark is
“NOT A BANK. BETTER.”
SDCCU’s principal place of business is in San Diego,
California. Each of SDCCU’s locations are located in San
Diego, Riverside, or Orange County. SDCCU focuses its
marketing on these counties and over 95 percent of its
members are resident Californians. In 2014, SDCCU
obtained a registration for “IT’S NOT BIG BANK
BANKING. IT’S BETTER.”
SDCCU V. CEFCU 7
CEFCU petitioned the TTAB to cancel SDCCU’s
registration in 2017, alleging that CEFCU had used its
registered mark in commerce prior to SDCCU’s registration.
CEFCU alleged the parties provide “identical” services to
“identical” types of customers and use their respective marks
in “identical . . . online advertising media.” It claimed that
SDCCU’s mark “so resembles” CEFCU’s registered mark
“as to be likely, when used in connection with the services
of [SDCCU], to cause confusion, or to cause mistake, or to
deceive within the meaning of [the] Trademark Act §2 (d),
15 U.S.C. § 1052(d).” Finally, CEFCU alleged it “believes
it will be damaged by continued registration of [SDCCU’s
mark] because such registration gives false color to
[SDCCU]’s right to use [SDCCU’s mark] and encourages
[SDCCU]’s misleading and deceptive use of [SDCCU’s
mark] in derogation of [CEFCU]’s prior and superior rights
in [CEFCU]’s registered mark.”
In the TTAB proceedings, SDCCU deposed Jennifer
Flexer, CEFCU’s marketing director, and Susan
Portscheller, a former vice president of CEFCU. Flexer
testified that CEFCU petitioned to cancel SDCCU’s
registration because she “became aware that SDCCU’s
billboard was in the marketplace [in San Diego]. As a
marketing professional [she] had concerns with the content
of the advertisement” because it seemed “very similar” to
CEFCU’s common-law mark. Portscheller testified as
CEFCU’s corporate designee. See Fed. R. Civ. P. 30(b)(6)
(allowing for depositions of corporate entities through a
designee); 37 C.F.R § 2.116(a) (making the federal rules of
civil procedure generally applicable in TTAB proceedings).
Portscheller testified that CEFCU sought to build awareness
of its brand in a five-mile radius of its Bay Area branches
and seeks to “build awareness outside that radius in
8 SDCCU V. CEFCU
California.” She further testified that CEFCU has “members
throughout California, and many of them are in Southern
California.” Although she was not aware of any actual
customer confusion, she believed it was “just a question of
time” because CEFCU had only just begun marketing in
California. She thought that SDCCU’s mark constituted
“trademark infringement.”
CEFCU moved to amend its TTAB petition, alleging an
additional reason that SDCCU’s registration should be
cancelled—CEFCU’s prior use of its common-law mark.
While the motion to amend the TTAB petition was
pending, SDCCU filed the instant suit in the United States
District Court for the Southern District of California. Counts
one through four of SDCCU’s complaint sought declaratory
relief under the Declaratory Judgment Act 1 stating that: (1)
SDCCU is not infringing CEFCU’s registered mark; (2)
SDCCU is not infringing CEFCU’s common-law mark; (3)
CEFCU’s registered mark is invalid; and (4) CEFCU’s
common-law mark is invalid. Count five alleged that
CEFCU falsely or fraudulently registered its trademark. See
15 U.S.C. § 1120. At SDCCU’s request, the TTAB stayed
the cancellation proceedings pending resolution of this case.
Before answering the complaint, CEFCU filed two
motions to dismiss. 2
First, it moved to dismiss for lack of personal
jurisdiction. In support, CEFCU filed more than 200 pages
1
See 28 U.S.C. § 2201.
2
CEFCU filed a third pre-answer motion, and it filed many other
motions throughout the proceedings below. We discuss only those
relevant to our analysis.
SDCCU V. CEFCU 9
of exhibits, including the cancellation petition pleadings,
documents produced during discovery, deposition
transcripts, a consumer survey, and CEFCU’s motion to
amend its cancellation petition. SDCCU submitted 15
exhibits in opposition. In its order, the district court
acknowledged that it was resolving the motion “on written
materials rather than an evidentiary hearing” and,
consequently, required SDCCU to make only “a prima facie
showing of jurisdictional facts to withstand the motion to
dismiss.” San Diego Cnty. Credit Union v. Citizens Equity
First Credit Union, 325 F. Supp. 3d 1088, 1095 (S.D. Cal.
2018). Applying the prima facie standard, the district court
held that specific personal jurisdiction existed in California
over CEFCU because: (1) CEFCU purchased Valley Credit
Union in the Bay Area and marketed its services there using
its trademarks; (2) CEFCU challenged the registration of
SDCCU’s mark, which was used solely in California, and
because SDCCU alleged that CEFCU’s initiation of the
cancellation proceedings was prompted by Flexer’s
observation of SDCCU’s billboard in San Diego; and (3)
CEFCU’s acts would “likely cause harm to SDCCU in
California.” Id. at 1101. Based on this analysis, the district
court found specific personal jurisdiction had been proven
and thus denied CEFCU’s motion.
CEFCU then moved to dismiss the first four counts for
lack of Article III subject matter jurisdiction. CEFCU
acknowledged it was making a “factual attack on
jurisdiction,” and asked the district court to consider the
hundreds of documents it had submitted in its prior motion
to dismiss for lack of personal jurisdiction. Based on these
documents, CEFCU argued that Article III jurisdiction did
not exist because SDCCU could not have reasonably
apprehended a trademark infringement lawsuit. Applying
10 SDCCU V. CEFCU
Chesebrough-Pond’s, Inc. v. Faberge, Inc.
(“Chesebrough”), 666 F.2d 393 (9th Cir. 1982), the district
court held that a case or controversy existed because
CEFCU’s petition in the TTAB alleged “the elements of a
cause of action for trademark infringement,” which
reasonably put SDCCU in fear of an infringement suit. San
Diego Cnty. Credit Union v. Citizens Equity First Credit
Union, 344 F. Supp. 3d 1147, 1155 (S.D. Cal. 2018). The
district court denied CEFCU’s motion.
Its motions to dismiss for lack of personal and subject
matter jurisdiction denied, CEFCU answered the complaint.
It generally denied the allegations of SDCCU’s complaint,
including that it had any intent to sue for infringement.
CEFCU also asserted a counterclaim which mirrored the
claim it originally asserted in the TTAB—cancellation of
SDCCU’s registration.
New depositions were taken. This time, Flexer was
CEFCU’s corporate designee. See Fed. R. Civ. P. 30(b)(6).
The thrust of her testimony was that CEFCU did not intend
to sue SDCCU for trademark infringement. She clarified that
CEFCU did not take issue with SDCCU’s use of its mark “to
date,” but that she would “not speculate with regard to the
future.” If future harm resulted from SDCCU’s use of its
mark, she “would seek counsel at that time.”
In view of the lack of evidence regarding infringement,
SDCCU requested that CEFCU stipulate that SDCCU had
not infringed CEFCU’s marks. But CEFCU declined.
The district court then granted CEFCU’s motion for
summary judgment on SDCCU’s fraudulent registration
claim (count five). At the same time, it granted SDCCU’s
unopposed motion for summary judgment on its non-
infringement claims. The district court understood that
SDCCU V. CEFCU 11
CEFCU did “not dispute that SDCCU’s use of its mark does
not infringe CEFCU’s [m]arks.” San Diego Cnty. Credit
Union v. Citizens Equity First Credit Union, No. 18CV967,
2020 WL 5797827, at *3 (S.D. Cal. Sept. 29, 2020). Instead,
CEFCU had sought dismissal of SDCCU’s claims,
contending that SDCCU could not reasonably apprehend an
infringement suit on the current record. In rejecting
CEFCU’s argument, the district court relied on its earlier
rulings and reasoned that, although CEFCU had not
presented its argument “as a mootness argument, in essence,
CEFCU is arguing that the declaratory relief claims have
become moot.” Citing Already, LLC v. Nike, Inc., 568 U.S.
85 (2013), the district court determined that CEFCU did not
meet its “burden to demonstrate that circumstances have
changed since the initiation of this lawsuit to moot the
claims.” San Diego Cnty. Credit Union, 2020 WL 5797827at *3–5.
CEFCU did not raise its personal jurisdiction defense at
the summary judgment phase. It did not seek an interlocutory
appeal of the order which granted SDCCU summary
judgment. Nor does it, in this appeal, challenge this order on
the merits.
Having resolved counts one, two, and five, the district
court sua sponte dismissed without prejudice CEFCU’s
counterclaim seeking cancellation of SDCCU’s registration
because the district court action no longer “involve[ed] a
registered mark” under the meaning of 15 U.S.C. § 1119.
The parties agreed to dismiss count three. The only issue that
remained after the summary judgment phase was count
four—SDCCU’s count seeking declaratory relief to
invalidate CEFCU’s common-law mark.
12 SDCCU V. CEFCU
CEFCU again moved to dismiss for lack of personal and
subject matter jurisdiction, both of which motions the district
court denied. After holding a bench trial, the district court
determined that CEFCU’s common-law mark is invalid,
entered a final judgment, and granted SDCCU’s motion for
attorneys’ fees.
II.
The parties raise a bevy of issues on appeal. To assist in
our explanation and analysis of those issues, it is helpful to
establish some short-hand terminology.
We will refer to counts one and two of SDCCU’s
complaint—which sought declaratory relief that SDCCU is
not infringing CEFCU’s registered mark or common-law
mark—as SDCCU’s “non-infringement claims.” And we
will refer to count four, which sought a declaration that
CEFCU’s common-law mark is invalid, as SDCCU’s
“invalidity claim.”
With that terminology in mind, we turn to the four issues
that we decide in this appeal. First, we conclude that the
district court lacked Article III jurisdiction to invalidate
CEFCU’s common-law mark following its grant of
summary judgment in favor of SDCCU on its non-
infringement claims. Second, we vacate the district court’s
award of attorneys’ fees because its decision to grant that
award was based, in part, on the merits of the invalidity claim
over which it lacked Article III jurisdiction. Third, we hold
that the district court correctly exercised personal
jurisdiction over CEFCU regarding SDCCU’s non-
SDCCU V. CEFCU 13
infringement claims. Fourth, we affirm the district court’s
dismissal of CEFCU’s counterclaim. 3
A.
CEFCU disputes the existence of a case or controversy
sufficient to satisfy Article III at the pleading, summary
judgment, and trial phases of the proceedings below. The
existence of a case or controversy is a question of law we
review de novo. Ridgeway v. Walmart Inc, 946 F.3d 1066,
1075 (9th Cir. 2020).
The judicial power granted to us by the Constitution is
limited to resolving actual cases or controversies. E.g.,
Spokeo, Inc. v. Robins, 578 U.S. 330, 337 (2016); U.S.
Const. Art. III, § 2. That limitation is “not relaxed in the
declaratory judgment context.” Gator.com Corp. v. L.L.
Bean, Inc., 398 F.3d 1125, 1129 (9th Cir. 2005) (en banc).
The Declaratory Judgment Act does not confer jurisdiction.
28 U.S.C. §§ 2201–02; Allen v. Milas, 896 F.3d 1094, 1099
(9th Cir. 2018). The party seeking declaratory relief must
demonstrate the three elements that comprise the
“irreducible constitutional minimum of standing”: (1) an
“injury in fact” that is “concrete and particularized” and
“actual or imminent, not conjectural or hypothetical” that is
(2) “causal[ly] connect[ed]” and “fairly traceable” to “the
conduct complained of” and “not the result of the
independent action of some third party not before the court”
and (3) “likely as opposed to merely speculative,” such that
“the injury will be redressed by a favorable decision.” Lujan
v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992) (cleaned
up). To have such standing, the plaintiff must have a
3
CEFCU raises numerous issues regarding the trial. Our holding on
Article III jurisdiction obviates review those issues.
14 SDCCU V. CEFCU
“personal stake,” Gator.com Corp., 398 F.3d at 1130, in the
outcome of “each claim . . . and for each form of relief that
is sought,” Davis v. Fed. Election Comm'n, 554 U.S. 724,
734, (2008) (cleaned up), which “exist[s] not only at the time
the complaint is filed, but through all stages of the
litigation.” Already, 568 U.S. at 90–91 (quotations omitted).
These are the principles that primarily animate the parties’
dispute before us.
But before analyzing the parties’ arguments regarding
Article III jurisdiction, we first summarize our precedent
applying these principles to declaratory judgment actions in
the trademark infringement context and confirm our
precedent’s ongoing vitality in light of two intervening
Supreme Court cases, MedImmune, Inc. v. Genentech, Inc.,
549 U.S. 118 (2007), and Clapper v. Amnesty International,
568 U.S. 398 (2013).
We have applied what the parties label the “reasonable
apprehension” test to determine whether a controversy exists
in a declaratory judgment action regarding trademark
infringement. See Societe de Conditionnement en Aluminium
v. Hunter Eng’g Co. (“Societe”), 655 F.2d 938, 944–45 (9th
Cir. 1981); Chesebrough, 666 F.2d 393. Under our
precedent, 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. Societe, 655 F.2d
at 944–45; Chesebrough, 666 F.2d at 396. Such an
apprehension can exist even absent an explicit threat to sue.
Chesebrough, 666 F.2d 393; Rhoades v. Avon Products, Inc.,
504 F.3d 1151, 1158 (9th Cir. 2007).
Below, the district court expressed some hesitation
regarding the validity of our precedent after MedImmune.
SDCCU V. CEFCU 15
See San Diego Cnty. Credit Union, 344 F. Supp. 3d at 1154
n.3. In MedImmune, the plaintiff manufactured a drug called
Synagis. 549 U.S. at 121. Plaintiff and defendant were
parties to a license that covered one of defendant’s then-
pending patents. Id. After the application for that patent was
granted, defendant sent plaintiff a letter claiming that
Synagis was covered by the newly-granted patent and that
plaintiff should begin paying royalties. Id. at 121–22.
Plaintiff believed the letter was a threat to sue, paid the
royalties “under protest,” and filed an action seeking
declaratory relief that no infringement was occurring and no
royalties were due. Id. at 122. Defendant argued, and both
lower courts agreed, that there was no case or controversy
because plaintiff’s decision to pay the royalties
“obliterate[d] any reasonable apprehension” that plaintiff
would be sued for infringement. Id. (citation omitted).
In reversing, the Supreme Court explained that “[t]he
plaintiff’s own action (or inaction) in failing to violate the
law eliminates the imminent threat of prosecution, but
nonetheless does not eliminate Article III jurisdiction.” Id.at
128–30. “The dilemma posed by that coercion—putting the
challenger to the choice between abandoning his rights or
risking prosecution—is a dilemma that . . . was the very
purpose of the Declaratory Judgment Act to ameliorate.” Id.(internal quotation marks omitted). Notably, the Supreme
Court rejected the Federal Circuit’s articulation of the
reasonable apprehension test. Id. at 132 n.11. Instead, it
applied language from Maryland Casualty Co. v. Pacific
Coal & Oil Co., 312 U.S. 270, 273 (1941), to determine the
standing dispute before it. Id. at 127. 4
4
Namely, MedImmune reiterated: “Basically, the question in each case
is whether the facts alleged, under all the circumstances, show that there
16 SDCCU V. CEFCU
We conclude that our precedent is consistent with
MedImmune. Although MedImmune may have abrogated the
Federal Circuit’s version of the reasonable apprehension
test, see SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d
1372, 1380 (Fed. Cir. 2007), it did not abrogate our version.
As we explained in Rhoades, the Federal Circuit’s version of
the reasonable apprehension test created a “burden [that was]
heavier than what we require[d]” because the Federal Circuit
required “an explicit threat.” 504 F.3d at 1157 n.4. By
contrast, the Maryland Casualty standard applied in
MedImmune, 549 U.S. at 127, is precisely what we relied
upon in framing our version of the reasonable apprehension
test. Societe, 655 F.2d at 942.
Indeed, MedImmune simply reaffirms two principles we
had already articulated. First, it confirms that “concrete
threats” of a trademark infringement suit “are not required”
to create a live controversy for purposes of providing
standing in a declaratory relief action. Rhoades, 504 F.3d at
1158. Second, MedImmune underscores the importance of
our examination of “the likely impact on competition”
created by a defendant’s actions, along with “the risks
imposed upon the plaintiff.” Chesebrough, 666 F.2d at 396.
Even without expressly threatening to sue, a defendant can
harm a plaintiff by engaging in conduct that compels the
plaintiff to “chill[]” its use of its mark. Id. at 397. Whether
or not we call this latter harm a “reasonable apprehension of
is a substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of
a declaratory judgment.” 549 U.S. at 127 (quoting Maryland Cas., 312
U.S. at 273).
SDCCU V. CEFCU 17
suit” is beside the point. 5 The point is that Societe,
Chesebrough, and Rhoades are consistent with MedImmune.
We also conclude that our precedent survived Clapper.
CEFCU argues otherwise. It contends that our precedent is
outdated because it uses the “pre-Clapper phrase,
‘reasonable apprehension.’” “Post-Clapper,” CEFCU
argues, “future legal liability must be ‘certainly
impending.’” To begin with, CEFCU should have raised this
argument in its opening brief, not in a footnote to its reply
brief. See Christian Legal Soc. Chapter of Univ. of
California v. Wu, 626 F.3d 483, 485 (9th Cir. 2010).
Regardless, Clapper does not require plaintiffs, for
purposes of establishing standing, “to demonstrate that it is
literally certain that the harms they identify will come
about.” 568 U.S. at 412 n. 5. Rather, Clapper recognized that
standing may exist when there is a “‘substantial risk’ that the
5
The Federal Circuit explained that MedImmune “did not completely do
away with the relevance of a reasonable apprehension of suit.” Prasco,
LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1336 (Fed. Cir. 2008).
According to Prasco, “proving a reasonable apprehension of suit is one
of multiple ways that a declaratory judgment plaintiff can satisfy the
more general all-the-circumstances test to establish that an action
presents a justiciable Article III controversy.” Id.We agree in substance. We agree that a reasonable apprehension of
infringement liability remains the primary focus of the inquiry after
MedImmune. But in our view, a plaintiff who thinks himself forced to
engage in or refrain from engaging in certain conduct to avoid being sued
simply evinces a reasonable apprehension of suit in a manner different
from what the Federal Circuit had previously recognized. Take the
plaintiff in MedImmune, for example. By paying the royalties under
protest, the plaintiff voluntarily refrained from fulfilling a condition
precedent to the defendant’s purported ability to file an infringement
lawsuit. The plaintiff’s fear of infringement liability remained the basis
for jurisdiction even in that example.
18 SDCCU V. CEFCU
harm will occur,” id., and subsequent Supreme Court cases
have followed suit. See Susan B. Anthony List v. Driehaus,
573 U.S. 149, 158 (2014) (“An allegation of future injury
may suffice if the threatened injury is certainly impending,
or there is a substantial risk that the harm will occur.”
(emphasis added) (cleaned up)). We have also used similar
language and long held that a threatened injury may
constitute an injury in fact where there is “a credible threat
of harm” in the future. See Krottner v. Starbucks Corp., 628
F.3d 1139, 1143 (9th Cir. 2010). This language is perfectly
consistent with our “reasonable apprehension” standard.
Moreover, Clapper emphasized the separation-of-
powers considerations inherent in a national security case.
568 U.S. at 407–08. It applied an “especially rigorous”
analysis to avoid judicial usurpation of the powers of the
political branches. Id. at 408. We reject CEFCU’s
unexplained insistence that we transform the “certainly
impending” language in Clapper into a “precise test” by
which we must analyze the existence of Article III
jurisdiction in any and all cases, regardless of their contexts.
See Babbitt v. United Farm Workers Nat. Union, 442 U.S.
289, 297 (1979). In the context of declaratory judgment
actions regarding trademark infringement, we will continue
to apply the principles articulated in Societe, Chesebrough,
and Rhoades.
Having clarified the applicable standard, we now turn to
the question whether subject matter jurisdiction existed at
the pleading, summary-judgment, and trial stages of the
proceedings below.
1.
CEFCU argues that SDCCU did not reasonably
apprehend an infringement suit at the pleading stage because
SDCCU V. CEFCU 19
of the parties’ geographic separation. CEFCU characterizes
its TTAB petition as challenging only SDCCU’s claim of
right to use its mark “nationwide.” SDCCU responds that the
TTAB “petition alone was sufficient for SDCCU to infer a
threat of an infringement action” because it alleged a
likelihood of confusion. SDCCU also argues that CEFCU’s
conduct during the cancellation proceedings reaffirmed the
reasonableness of its apprehension.
We conclude that a justiciable controversy existed at the
pleading stage, but not solely because of the allegations in
CEFCU’s TTAB petition. SDCCU makes much ado about
the fact that CEFCU alleged a likelihood of confusion
resulting from SDCCU’s “use” of its mark. In urging us to
focus on CEFCU’s use of the word “use” in its TTAB
petition, SDCCU reads far too broadly our decision in
Chesebrough.
In that case, plaintiff Chesebrough applied for
registration of its “Match” mark. Chesebrough, 666 F.2d at394–95. While Chesebrough’s application was pending,
Faberge—which owned a registration for its “Macho” mark
in the same industry—sent Chesebrough a letter “stating that
it believed the two marks to be ‘confusingly similar’ and that
unless Chesebrough withdrew its application, Faberge
would file opposition thereto.” Id. at 395. Chesebrough
refused to withdraw and Faberge filed opposition. Id. Three
years later, Chesebrough sought declaratory relief of non-
infringement in federal court. Id. The district court found a
live controversy and granted summary judgment in favor of
Chesebrough, holding that there was no likelihood of
confusion between the parties’ marks. Id.We affirmed. In assessing the reasonableness of
plaintiff’s apprehension, we explained that the court in
20 SDCCU V. CEFCU
Societe “focused upon the position and perceptions of the
plaintiff, declining to identify specific acts or intentions of
the defendant that would automatically constitute a threat of
litigation” in determining the circumstances in which a
“trademark or patent dispute ripened into an actual
controversy.” Id. We explained, “[t]he acts of the defendant
[are] instead to be examined in view of their likely impact
on competition and the risks imposed upon the plaintiff.” Id.Despite our admonition that “simple opposition
proceeding[s]” generally do not create a reasonable
apprehension of suit, and despite our recognition that
likelihood of confusion is “relevant to both registration and
infringement proceedings,” we held in Chesebrough that
Faberge’s letter created a reasonable apprehension of suit
because it alleged a likelihood of confusion and thereby
“stat[ed] a prima facie case for trademark infringement.” Id.at 396–97. We identified two additional facts that
“bolster[ed]” the reasonableness of Chesebrough’s
apprehension. Id. at 397. First, after Chesebrough filed its
complaint, Faberge asserted an infringement counterclaim.
Id. Second, Chesebrough’s use of its mark had been
“chill[ed]” by the opposition proceedings. Id. 6
In arguing that CEFCU’s TTAB petition created a live
controversy, SDCCU interprets Chesebrough as holding that
the mere allegation of a likelihood of confusion—regardless
of context—can create a justiciable controversy. 666 F.2d at
6
The opinion does not explain how, exactly, Chesebrough proved to the
district court that Faberge’s actions had caused Chesebrough to “chill[]”
the use of its mark out of a fear of infringement liability. But because the
district court analyzed jurisdiction at the summary judgment phase,
Chesebrough, 666 F.2d at 395, we assume that Chesebrough submitted
some form of evidence to that effect.
SDCCU V. CEFCU 21
396–97. That broad reading of Chesebrough is inconsistent
with Chesebrough’s own limiting principle that “a simple
opposition proceeding in the Patent and Trademark Office
generally will not raise a real and reasonable apprehension
of suit,” id. at 396, because alleging a likelihood of
confusion is “[b]y far the most common ground of [a]
petition to cancel.” J. Thomas McCarthy, 3 McCarthy on
Trademarks and Unfair Competition § 20:7 (5th ed. 2019)
[hereinafter McCarthy].
If, as SDCCU contends, the most common ground for a
cancellation petition creates a justiciable controversy, then
little weight can be given to Chesebrough’s only limiting
principle. Diminishing that limiting principle would impair
the “[t]he traditional rule,” which “is that if the only basis for
a Declaratory Judgment is the threat or actual filing of an
opposition or cancellation proceeding against plaintiff's
trademark registration in the Patent and Trademark Office,
then this is not, by itself, sufficient to create an ‘actual
controversy’ over trademark infringement.” 6 McCarthy §
32:52. Accepting SDCCU’s position would allow litigants
to “file suit in federal court solely for cancellation of a
registration,” a result that “undercut[s] and short-circuit[s]
the power of the Trademark Board to consider such cases.”
6 McCarthy § 32:54.
Chesebrough itself rejects such a result. We emphasized
that jurisdiction does not depend on whether a party used
magic words in a TTAB petition—we “declin[ed] to identify
specific acts or intentions of the defendant that would
automatically constitute a threat of litigation.” Chesebrough,
666 F.2d at 396; see also Rhoades, 504 F.3d at 1157. Instead,
the reasonable apprehension test is “oriented to the
reasonable perceptions of the plaintiff,” Chesebrough, 666
F.2d at 396, based on “all the circumstances” known to it.
22 SDCCU V. CEFCU
Societe, 655 F.2d at 942 (quoting Maryland Cas., 312 U.S.
at 273); MedImmune, 549 U.S. at 127 (same). In short, we
must look to the context in which the allegation was made.
CEFCU argues that the relevant context here includes the
“geographic separation” between the areas in which the
parties use their marks. This geographic separation is
significant—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. That geographic
separation would have colored SDCCU’s understanding of
CEFCU’s likelihood-of-confusion allegation at that time.
SDCCU should have understood CEFCU’s likelihood-of-
confusion allegation merely as a necessary basis to support
CEFCU’s cancellation petition—statutory standing. 15
U.S.C. § 1064; see also infra note 7. A reasonable person in
SDCCU’s position would have known that an infringement
suit was unlikely. Compare Giant Food, Inc. v. Nation’s
Foodservice, Inc., 710 F.2d 1565, 1568–69 (Fed. Cir. 1983)
(noting that “geographical distance between the present
locations of the respective businesses of the two parties has
little relevance in” a cancellation petition alleging a
likelihood of confusion) with Fairway Foods, Inc. v.
Fairway Markets, Inc., 227 F.2d 193, 196 (9th Cir. 1955)
(holding that liability for trademark infringement could not
lie because the geographically remote use of the parties’
marks foreclosed plaintiff’s ability to prove a likelihood of
confusion). Based on this context, we hold, consistent with
the limiting principle in Chesebrough, that CEFCU’s TTAB
petition—on its own—was insufficient to create a live
controversy. But the analysis does not end there.
SDCCU V. CEFCU 23
During discovery in the TTAB proceedings, SDCCU
uncovered information that gave it a reasonable
apprehension of being sued by CEFCU. 7 CEFCU’s Rule
30(b)(6) designee, Portscheller, told SDCCU’s attorney that
she believed SDCCU’s mark constituted “trademark
infringement” of CEFCU’s marks, and that she believed
7
SDCCU misquotes documents from the TTAB proceedings to argue
that CEFCU attempted to prove “damages to CEFCU by reason of”
SDCCU’s use of its mark. (emphasis added). The portion of the record
quoted by SDCCU consists of an attorney declaration explaining
CEFCU’s submission of “[d]ocuments evidencing the potential for
damage to CEFCU by reason of” SDCCU’s use of the SDCCU mark.
(emphasis added). The distinction between “damages” and “damage” is
important. See Antonin Scalia & Bryan A. Garner, READING LAW: THE
INTERPRETATION OF LEGAL TEXTS 44 (2012) (“The word damage (harm
to property) is quite distinct in meaning from damages (money awarded
to a victorious litigant).”). Allegations of “damages” certainly could lead
a party to apprehend monetary damages resulting from infringement,
much like the damages sought by the defendant in Rhoades, 504 F.3d at
1158.
But any such apprehension was unreasonable in the context of the
then-ongoing cancellation proceedings. CEFCU was required to plead
and prove—as a matter of statutory standing—that it was “likely to be
damaged” by SDCCU’s registration. 3 McCarthy at § 20.41 (“To
successfully prosecute a petition for cancellation, petitioner must plead
and prove . . . that it has standing to petition to cancel in that it is likely
to be damaged by the registration.” (emphasis added)); 15 U.S.C. § 1064(“A petition to cancel a registration of a mark . . . may . . . be filed . . . by
any person who believes that he is or will be damaged . . . by the
registration of a mark.” (emphasis added)). It would make no sense that
CEFCU was trying to prove monetary damages in the TTAB
proceedings—the TTAB cannot award such damages. Rhoades, 504
F.3d at 1158; id. at 1158 n.6 (“The powers of the TTAB are limited to
determining and deciding the respective rights of trademark
registration.” (cleaned up)). CEFCU’s attempt to prove “potential for
damage” in the TTAB action should not have put SDCCU in reasonable
apprehension of an infringement suit.
24 SDCCU V. CEFCU
actual customer confusion was only a “question of time”
because CEFCU was attempting to increase brand awareness
outside of the Bay Area and, indeed, already had “many
[members] in Southern California.” In addition, Flexer
testified that CEFCU initiated cancellation proceedings
based on her observation of SDCCU’s mark in San Diego,
which she believed was “very similar” to CEFCU’s marks.
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. Dawn Donut Co. v. Hart’s Food Stores, Inc., 267
F.2d 358, 364 (2d Cir. 1959); see also Lodestar Anstalt v.
Bacardi & Co. Ltd., 31 F.4th 1228, 1250–51 (9th Cir. 2022)
(citing Dawn Donut with approval). 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
likelihood-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.
2.
CEFCU next argues that the district court erred in
concluding that it possessed ongoing Article III jurisdiction
at the summary judgment phase. CEFCU contends that
SDCCU was required to re-prove the existence of a live
controversy at the summary judgment phase. We disagree.
CEFCU made the strategic decision to assert a factual
jurisdictional attack in its motion to dismiss. “Rule 12(b)(1)
jurisdictional attacks can be either facial or factual.” White
v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). A factual attack
SDCCU V. CEFCU 25
on jurisdiction is also called a “speaking motion.” Thornhill
Pub. Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th
Cir. 1979).
Where the jurisdictional issue is separable
from the merits of the case, the judge may
consider the evidence presented with respect
to the jurisdictional issue and rule on that
issue, resolving factual disputes if necessary.
. . . The standards applicable to a Rule
12(b)(1) speaking motion differ greatly from
the standards for ruling on a motion for
summary judgment. Faced with a factual
attack on subject matter jurisdiction, the trial
court may proceed as it never could under
Rule 12(b)(6) or Fed. R. Civ. P. 56. No
presumptive truthfulness attaches to
plaintiff's allegations, and the existence of
disputed material facts will not preclude the
trial court from evaluating for itself the merits
of jurisdictional claims. Moreover, the
plaintiff will have the burden of proof that
jurisdiction does in fact exist.
Id. (cleaned up). If the factual basis for jurisdiction is
disputed, “[t]he plaintiff bears the burden of proving by a
preponderance of the evidence that each of the requirements
for subject-matter jurisdiction has been met.” Leite v. Crane
Co., 749 F.3d 1117, 1121 (9th Cir. 2014).
The district court understood CEFCU was “mounting a
factual attack on subject matter jurisdiction” in its motion to
dismiss. San Diego Cnty. Credit Union, 344 F. Supp. 3d at
1153. The district court did not expressly hold that SDCCU
26 SDCCU V. CEFCU
proved subject matter jurisdiction by a preponderance of the
evidence; however, it examined hundreds of pages of
documents outside the complaint, including the cancellation
petition, CEFCU’s proposed amendment to its cancellation
petition, discovery disclosures, deposition transcripts, as
well as attorney and witness affidavits laying foundation for
those documents. This evidence was sufficient to meet
SDCCU’s burden under the preponderance of the evidence
standard because, as we have explained, it was “more likely
than not” that SDCCU reasonably apprehended an
infringement suit from CEFCU. Guglielmino v. McKee
Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). Because
SDCCU established a justiciable controversy by a
preponderance of the evidence at the pleading stage, the
district court did not need to consider additional evidence at
the summary judgment stage—the district court had already
“resolv[ed] factual disputes” in a manner that “it never could
under Rule 12(b)(6) or Fed. R. Civ. P. 56.” Thornhill Pub.
Co., 594 F.2d at 733.
The district court appeared to recognize these principles
by relying upon Already, LLC v. Nike, Inc., 568 U.S. 85(2013), to apply a mootness analysis at the summary
judgment phase. See Cardinal Chem. Co. v. Morton Int’l,
Inc., 508 U.S. 83, 98 (1993) (“[W]hile the initial burden of
establishing the trial court’s jurisdiction rests on the party
invoking that jurisdiction, once that burden has been met
courts are entitled to presume, absent further information,
that jurisdiction continues.”). In Already, Nike sued Already
for infringing its “Air Force 1” mark. 568 U.S. at 88. Already
counterclaimed that the mark was invalid. Id. Nike later
issued a “Covenant Not to Sue,” in which Nike promised not
to sue Already for infringement related to its existing
designs. Id. at 88–89. Nike moved to dismiss its claims with
SDCCU V. CEFCU 27
prejudice, and moved to dismiss Already’s counterclaim
without prejudice. Id. Finding no live controversy, the
district court granted the motion and the Second Circuit
affirmed. Id. at 89–90.
The Supreme Court affirmed. It explained that a case
becomes moot “when the issues presented are no longer
‘live[,]’ the parties lack a legally cognizable interest in the
outcome,” or “the dispute is no longer embedded in any
actual controversy about the plaintiffs’ particular legal
rights.” Id. at 91 (citations and internal quotation marks
omitted). Because the case in Already was alleged to have
become moot due to the Nike’s voluntary cessation of
wrongdoing, the Supreme Court placed the burden on Nike
“to show that it could not reasonably be expected to resume
its enforcement efforts against Already.” Id. at 92 (citation
and internal quotation marks omitted). Nike met that burden
because it had made and delivered an “unconditional and
irrevocable” covenant not to sue. Id. at 93.
Based on the principles articulated in Already, we agree
with the district court that CEFCU bore the burden of
proving that the case was moot at the summary judgment
phase. Nike put Already in fear of infringement liability by
suing for infringement; Nike therefore bore the burden of
dispelling that fear. And CEFCU’s conduct in the TTAB
proceedings similarly sparked SDCCU’s fear of
infringement liability. Already therefore places the burden
on CEFCU to dispel SDCCU’s fear. But Already does not
hold that the only method by which CEFCU can do so is
through a binding promise not to sue. To be sure, if a
defendant provided similar evidence that eliminated, as a
matter of law, a declaratory-judgment plaintiff’s reasonable
apprehension of an infringement action, such evidence
would be sufficient to moot the case. We need not decide
28 SDCCU V. CEFCU
what that evidence might be; we merely conclude that
CEFCU’s evidence in this case was insufficient to moot the
case because it did not remove SDCCU’s reasonable
apprehension of suit as a matter of law.
Not only did CEFCU fail to provide a binding promise
that it would not sue for infringement (as Nike did in
Already), but CEFCU affirmatively refused SDCCU’s
stipulation that SDCCU was not infringing CEFCU’s marks.
CEFCU now claims it was merely unwilling to waive its
jurisdictional defenses, but that limited characterization of
its objection is not apparent from the record. And although
CEFCU submitted Flexer’s deposition testimony suggesting
that CEFCU did not plan to sue SDCCU for trademark
infringement, it provided no assurances to that effect.
Moreover, Flexer’s testimony was conspicuously couched in
present-tense language. She did not dispute SDCCU’s use of
its mark “to date,” and pointedly would “not speculate with
regard to the future.” Given Portscheller’s previous
testimony suggesting CEFCU was growing in California and
that it was only a matter of time before actual confusion
occurred, Flexer’s restrained testimony served to reaffirm
SDCCU’s reasonable apprehension about whether it could
be subject to legal action for the current use of its mark in
Southern California. The district court therefore possessed
Article III jurisdiction at the summary judgment phase, and
we affirm its entry of judgment in favor of SDCCU on
SDCCU’s non-infringement claims.
3.
Finally, we come to the question presented at the
beginning of this opinion: whether the district court
possessed Article III jurisdiction to proceed to trial on
SDCCU’s invalidity claim. We conclude it did not.
SDCCU V. CEFCU 29
In the patent context, it is “usually” an error to reach the
issue of validity “in the face of a finding of non-
infringement.” Lockwood v. Langendorf United Bakeries,
Inc., 324 F.2d 82, 91 (9th Cir. 1963). “To do so . . . would
be to decide a hypothetical case.” Id.; see also Altvater v.
Freeman, 319 U.S. 359, 363 (1943) (“To hold a patent valid
if it is not infringed is to decide a hypothetical case.”). This
premise makes equal sense in the trademark context. 8 But it
is not a hard-and-fast rule, cf. Cardinal Chem. Co., 508 U.S.
at 89–90 (rejecting “[t]he Federal Circuit’s current practice
of routinely vacating declaratory judgments regarding patent
validity following [an appellate] determination of
noninfringement”), nor do we adopt it as such. As always,
the question is whether, based on “all the circumstances,”
there remains “a substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and
reality to warrant the issuance of a declaratory judgment.”
MedImmune, 549 U.S. at 127 (quoting Maryland Cas., 312
U.S. at 273); see also Bayer v. Neiman Marcus Grp., Inc.,
861 F.3d 853, 867–68 (9th Cir. 2017) (applying MedImmune
to determine mootness of claims seeking declaratory relief).
In other words, we must determine whether the grant of
summary judgment in favor of SDCCU on its non-
infringement claims presented a “change[] in the
circumstances that prevailed at the beginning of the
litigation” which forecloses the possibility of SDCCU
8
We regularly borrow on principles from patent cases to guide our
analyses in trademark cases. See, e.g., SunEarth, Inc. v. Sun Earth Solar
Power Co., 839 F.3d 1179, 1180 (9th Cir. 2016) (“We interpret the fee-
shifting provisions in the Patent Act and the Lanham Act in tandem.”
(internal citation omitted)).
30 SDCCU V. CEFCU
obtaining “meaningful relief” by pursuing its invalidity
claim. See Gator.com Corp., 398 F.3d at 1129.
In Altvater, plaintiffs alleged that defendants infringed
patents covered by their license. 319 U.S. at 360. Defendants
asserted a counterclaim, seeking a declaration that the
patents were invalid. Id. at 360–61. The district court held
that defendants did not infringe and that the patents were
invalid. Id. at 362. The Eighth Circuit reversed in part,
holding “that when the District Court found . . . no
infringement, the other issues [including patent invalidity]
became moot and there was no longer a justiciable
controversy between the parties.” Id. The Supreme Court
reversed. It rejected plaintiffs’ argument that, “so long as
[defendants] continue to pay royalties, there is only an
academic, not a real controversy, between the parties”
regarding the invalidity counterclaim. Id. at 364. A real
controversy continued to exist because defendants continued
to manufacture and sell items that were alleged to fall under
the patents, and plaintiffs continued to demand royalties. Id.
at 365.
The facts in Altvater mirrored those in MedImmune. See
549 U.S. at 130 (comparing the two). And, as we previously
mentioned, MedImmune reaffirmed Altvater’s reasoning that
a controversy may be established upon proof of “plaintiff’s
self-avoidance of imminent injury [that] is coerced by
threatened enforcement action of a private party.” Id. at 130(emphasis deleted). The lesson from these cases is that
federal 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.
SDCCU V. CEFCU 31
Here, in contrast to the justiciable injuries found in
Altvater or MedImmune, the record is devoid of any evidence
that an ongoing threat of liability is causing SDCCU to
engage in any “self-avoidance” of harm, MedImmune, 549
U.S. at 130, or is “chilling” SDCCU’s use of its mark.
Chesebrough, 666 F.2d at 397. Much to the contrary:
SDCCU at one point amended its complaint to allege that it
had increased the use of its mark in direct response to
CEFCU’s cancellation petition. As the Supreme Court did in
Already, we conclude that this case is distinguishable from
Altvater because “the whole point is that [SDCCU] is free to
[market its services] without any fear of a trademark claim.”
568 U.S. at 96.
At oral argument, counsel for SDCCU argued that
SDCCU retained standing to pursue its invalidity claim even
after it obtained summary judgment on its non-infringement
claims because the still-pending cancellation proceedings
might be affected by a finding regarding the validity of
CEFCU’s common-law mark. But counsel did not explain
why a potential impact on the cancellation proceedings could
satisfy the requirements of Article III standing. To the
contrary, we have held that a “simple opposition proceeding
in the Patent and Trademark Office generally will not raise
a real and reasonable apprehension of suit,” and so is
insufficient to show injury-in-fact. See Chesebrough, 666
F.2d at 396. Accepting SDCCU’s argument would mean that
any time a party seeks to cancel a registration due to prior
use of a common-law mark, a controversy is created such
that the registrant may circumvent the TTAB’s jurisdiction.
We reject that premise.
Moreover, we note that a future conflict over CEFCU’s
common-law trademark rights is extremely unlikely as a
matter of law. Unlike the ability of a senior registrant to
32 SDCCU V. CEFCU
enjoin a junior user of an infringing mark when it is likely
that the registrant will move into the junior user’s territory,
see Dawn Donut, 267 F.2d at 364, the rights of a common-
law trademark owner are generally limited to the territory in
which he has already used that trademark. Stone Creek, Inc.
v. Omnia Italian Design, Inc., 875 F.3d 426, 436 (9th Cir.
2017) (“[C]ommon-law trademark rights extend only to the
territory where a mark is known and recognized, so a later
user may sometimes acquire rights in pockets geographically
remote from the first user’s territory.”) abrogation on other
grounds recognized by Harbor Breeze Corp. v. Newport
Landing Sportfishing, Inc., 28 F.4th 35, 38 (9th Cir. 2022).
Aside from Portscheller’s testimony regarding the presence
of CEFCU members in Southern California, the record
provides no suggestion that CEFCU developed common-law
trademark rights there. And given the district court’s grant
of summary judgment on non-infringement, Portscheller’s
testimony can no longer give rise to a reasonable
apprehension of suit.
In sum, once SDCCU obtained an adjudication stating
that the use of its mark does not infringe CEFCU’s common-
law mark, SDCCU lost any personal stake it once had in
invalidating CEFCU’s common-law mark. We recognize the
significant resources that the parties and the district court
have already invested in holding a bench trial on this issue.
But “sunk costs to the judiciary does not license courts to
retain jurisdiction over cases in which one or both of the
parties plainly lacks a continuing interest.” Gator.com
Corp., 398 F.3d at 1132 (alterations accepted). Although we
must “eschew undue formalism” in analyzing mootness, we
“must nevertheless operate within the well-defined contours
of Article III.” Id. Those constitutional contours require us
to vacate the district court’s judgment as to the invalidity of
SDCCU V. CEFCU 33
CEFCU’s common-law trademark, “NOT A BANK.
BETTER.”
B.
The second issue for review is whether the district court
erred in awarding attorneys’ fees to SDCCU under 15 U.S.C.
§ 1117(a). Under that statute, a “prevailing party” may be
awarded attorneys’ fees “in exceptional cases.” 15 U.S.C. §
1117(a). CEFCU challenges this award on numerous
grounds. 9
Our conclusion that the district court lacked jurisdiction
to proceed to trial on SDCCU’s invalidity claim does not, by
itself, preclude jurisdiction to award attorneys’ fees. See,
e.g., K.C. ex rel. Erica C. v. Torlakson, 762 F.3d 963, 968
(9th Cir. 2014) (collecting cases); see also Zucker v.
Occidental Petroleum Corp., 192 F.3d 1323, 1329 (9th
Cir.1999) (“No Article III case or controversy is needed with
regard to attorneys’ fees . . . because they are but an ancillary
matter over which the district court retains equitable
jurisdiction even when the underlying case is moot.”). When
9
We reject CEFCU’s near-frivolous argument that a party must prove
“infringement” to be entitled to attorneys’ fees under § 1117(a). The
first sentence of § 1117(a) discusses the measure of damages to be
awarded upon proof of trademark infringement. Six sentences later, the
statute states: “The court in exceptional cases may award reasonable
attorney fees to the prevailing party.” Obviously, a defendant in an
infringement case—or, as in this case, a plaintiff in a declaratory
judgment action seeking a declaration of non-infringement—can be the
“prevailing party” and can therefore be entitled to reasonable attorneys’
fees, without proof that infringement occurred. See, e.g., Gracie v.
Gracie, 217 F.3d 1060, 1071 (9th Cir. 2000) (“The above standard for
exceptional circumstances applies to prevailing defendants as well as
prevailing plaintiffs under the Lanham Act”). CEFCU cites no authority
to the contrary.
34 SDCCU V. CEFCU
the district court grants a fee award that is “collateral to the
merits,” it does not risk “adjudicating the merits of a ‘case or
controversy’ over which it lacks jurisdiction.” Willy v.
Coastal Corp., 503 U.S. 131, 138 (1992).
Here, the district court’s decision to award attorneys’
fees under § 1117(a) was partly based on the merits of the
invalidity claim over which it lacked jurisdiction. We
therefore vacate that award.
The district court concluded that SDCCU was the
prevailing party because of the non-infringement relief it
obtained on summary judgment and because of its victory in
invalidating CEFCU’s common-law mark at trial. Although
the question whether SDCCU remains a prevailing party
even absent its trial victory is a legal question subject to de
novo review, 10 we leave that question for the district court to
10
SDCCU urges us to adopt the district court’s prevailing-party
determination under an abuse of discretion standard. SDCCU recognizes
that we have previously reviewed prevailing party determination under
§ 1117(a) de novo, Asociacion de Trabajadores de Lake Forest v. City
of Lake Forest, 624 F.3d 1083, 1089 (9th Cir. 2010), but SDCCU claims
that our precedent was abrogated by Octane Fitness, LLC v. ICON
Health & Fitness, Inc, 572 U.S. 545 (2014), and Highmark Inc. v. Allcare
Health Management System., Inc., 572 U.S. 559 (2014). We disagree.
Octane Fitness and Highmark addressed only the exceptional-case
requirement. 572 U.S. at 554; 572 U.S. at 563. And Highmark made clear
that it is “the exceptional-case determination” that must “be reviewed
only for abuse of discretion.” 572 U.S. at 563. It did nothing to disturb
the premise that “questions of law are reviewable de novo.” Id. (citation
and internal quotation marks omitted). A prevailing party determination
is a question of law because “[t]he term ‘prevailing party,’ . . . is a term
of art that courts must interpret consistently throughout the United States
Code.” Klamath Siskiyou Wildlands Ctr. v. U.S. Bureau of Land Mgmt.,
589 F.3d 1027, 1030 (9th Cir. 2009); see also Buckhannon Bd. & Care
Home, Inc. v. W. Virginia Dep't of Health & Hum. Res., 532 U.S. 598,
SDCCU V. CEFCU 35
consider in the first instance because of its “familiarity with
the progress of the litigation through the pleading,
discovery,” and trial stages. Maher v. Gagne, 448 U.S. 122,
130 (1980).
The district court should also revisit its exceptional-case
determination. In making that determination, the district
court relied in part upon conduct that occurred at trial.
Although we conclude that the district court lacked subject
matter jurisdiction to proceed to trial on SDCCU’s invalidity
claim, our conclusion “does not automatically wipe out all
proceedings had in the district court at a time when the
district court operated under the misapprehension that it had
603 n.4 (2001) (“We have interpreted these fee-shifting provisions
consistently and so approach the nearly identical provisions at issue
here.” (internal citation omitted)).
Notably, the Eighth Circuit held that Highmark did not displace de
novo review for prevailing party determinations. E. Iowa Plastics, Inc.
v. PI, Inc., 832 F.3d 899, 906 n.5 (8th Cir. 2016). In two separate
opinions disposing of the same case, the Second Circuit applied de novo
review to a prevailing party determination in one opinion, Manhattan
Rev. LLC v. Yun, 919 F.3d 149, 152 (2d Cir. 2019) (“Whether a litigant
qualifies as a ‘prevailing party’ constitutes a question of law warranting
de novo review.”), and applied Highmark’s abuse of discretion standard
to the exceptional-case determination in the other. Manhattan Rev. LLC
v. Yun, 765 F. App’x 574, 577 (2d Cir. 2019) (unpublished). And
although the Federal Circuit did not expressly say it was applying de
novo review to its prevailing party determination in Raniere v. Microsoft
Corp., it seemed to apply a de novo standard. 887 F.3d 1298, 1303 (Fed.
Cir. 2018). There, the Federal Circuit analyzed several Supreme Court
cases “address[ing] the issue of what constitutes a ‘prevailing party,’”
and, in doing so, determined that appellees were prevailing parties
without deferring to the district court’s conclusion. Id. at 1303–07. We
join our sister circuits in holding that Highmark does not demand review
of a prevailing-party determination under an abuse of discretion
standard.
36 SDCCU V. CEFCU
jurisdiction.” Willy, 503 U.S. at 137. Thus, the district court
is not precluded from considering CEFCU’s litigation
conduct leading up to and during the trial. But because an
exceptional-case determination lies within the discretion of
the district court, see Highmark, 572 U.S. at 563; SunEarth,
839 F.3d at 1181, we express no view on this issue and
remand to the district court for consideration in the first
instance.
C.
The third issue is whether CEFCU is subject to personal
jurisdiction in California. We review the existence of
personal jurisdiction de novo. Ayla, LLC v. Alya Skin Pty.
Ltd., 11 F.4th 972, 978 (9th Cir. 2021). 11
A defendant is subject to specific personal jurisdiction in
the forum state if: (1) the defendant performed an act or
consummated a transaction by which it purposely directed
its activity toward the forum state; (2) the claims arose out
of defendant’s forum-related activities; and (3) the exercise
11
The parties dispute the correct evidentiary standard to apply to
CEFCU’s personal jurisdiction defense. The two evidentiary standards
that could apply are the prima facie and preponderance of the evidence
standards. See, e.g., 4 Wright, Miller, & Steinman, Federal Practice and
Procedure § 1067.6 at 581–645 (4th ed. 2015). CEFCU urges us to
reverse the judgment because SDCCU made out only a prima facie
showing of personal jurisdiction, see Data Disc, Inc. v. Sys. Tech.
Assocs., Inc., 557 F.2d 1280, 1285 n.2 (9th Cir. 1977), while SDCCU
responds that meeting said prima facie standard was sufficient because
CEFCU failed to preserve its personal jurisdiction defense. See Peterson
v. Highland Music, Inc., 140 F.3d 1313, 1316–17 (9th Cir. 1998). We
need not resolve this issue because, even applying the preponderance of
the evidence standard, we conclude that CEFCU is subject to personal
jurisdiction in California based on the very documents that CEFCU filed
with its motion to dismiss.
SDCCU V. CEFCU 37
of personal jurisdiction is reasonable. Id. at 979. Analysis of
the first prong—“purposeful availment or direction”—turns
on the nature of the underlying claims. Id. “Trademark
infringement is treated as tort-like for personal jurisdiction
purposes, and so we focus on purposeful direction.” Id.
SDCCU bears the burden of proving the first two prongs. Id.
Once those are established, the burden shifts to CEFCU to
prove that the exercise of personal jurisdiction is
unreasonable. Id.
Analysis of this three-prong test leads to the conclusion
that CEFCU is subject to personal jurisdiction in California
regarding SDCCU’s non-infringement claims. 12
First, CEFCU purposefully directed its activity toward
California by using its trademarks there and by operating
several branches in the Bay Area. 13 CEFCU further directed
12
Where—as here—“a plaintiff relies on specific jurisdiction, he must
establish that jurisdiction is proper for ‘each claim asserted against a
defendant.’” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015)
(citation omitted); see also, Ayla, 11 F.4th at 983 (drawing a distinction
between contract and tort claims in specific personal jurisdiction
analysis); Fiore v. Walden, 688 F.3d 558, 593 (9th Cir. 2012) (Ikuta, J.,
dissenting) (“We analyze personal jurisdiction on a claim-by-claim
basis.”), reversed, 571 U.S. 277 (2014). Here, the only claims that must
be reviewed for personal jurisdiction are SDCCU’s non-infringement
claims against CEFCU. Aside from SDCCU’s invalidity claim—which
we have already explained must be vacated for lack of Article III
jurisdiction—SDCCU’s non-infringement claims are the only claims
upon which an adverse judgment was entered against CEFCU.
13
See, e.g., Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1322 (9th
Cir. 1998) (“Because the [in-forum plaintiffs] used their trademarks in
Indiana, any infringement of those marks would create an injury which
would be felt mainly in Indiana, and this, coupled with the [out-of-state]
defendant's ‘entry’ into the state by the television broadcasts, was
sufficient for the exercise of personal jurisdiction.” (describing and
38 SDCCU V. CEFCU
its activity toward California when it filed its cancellation
petition with the TTAB and alleged that the registration for
SDCCU’s trademark (used solely in California) must be
cancelled because of CEFCU’s prior use of its marks (used
in Illinois and California). Thus, the first prong is met.
Second, SDCCU’s non-infringement claims arose out of
CEFCU’s use of its trademarks in California because those
are the very same trademarks that CEFCU used to attack
SDCCU’s trademark registration in the TTAB proceedings.
Moreover, CEFCU’s conduct in those proceedings put
SDCCU in a reasonable apprehension that it would be sued
for use of its marks in California. Cf. Bancroft & Masters,
Inc. v. Augusta Nat. Inc., 223 F.3d 1082, 1084, 1087–89 (9th
Cir. 2000) (holding that California had personal jurisdiction
over declaratory judgment defendant because of defendant’s
challenge to plaintiff’s registration for its domain name,
which challenge was filed with an agency located in Virginia
but affected the plaintiff’s ability to use the domain name in
California), overruled in part on other grounds by Yahoo!
Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433
F.3d 1199 (9th Cir. 2006). In addition, Flexer testified that
CEFCU filed its TTAB cancellation petition because of her
observation of SDCCU’s billboard in San Diego. As in
Bancroft, then, CEFCU’s cancellation petition was
“expressly aimed at California because it individually
targeted [SDCCU], a California corporation doing business
almost exclusively in California” and “the effects of the
[petition] were primarily felt, as [CEFCU] knew they would
citing with approval Indianapolis Colts, Inc. v. Metropolitan Baltimore
Football Club Ltd. Partnership, 34 F.3d 410 (7th Cir. 1994))).
SDCCU V. CEFCU 39
be, in California.” Id. at 1088. Thus, the first two prongs of
our test for specific personal jurisdiction are met.
Regarding the third prong, CEFCU does not explain why
the exercise of personal jurisdiction in California is
unreasonable. Nor could it. CEFCU operates, uses its
trademarks, and serves its credit union members in
California. Under these circumstances, there is nothing
unreasonable about litigating a trademark infringement case
in California. Thus, we conclude that SDCCU established by
a preponderance of the evidence that CEFCU is subject to
personal jurisdiction in California regarding SDCCU’s non-
infringement claims.
D.
The fourth issue is whether the district court erred in
dismissing without prejudice CEFCU’s counterclaim for
lack of statutory subject matter jurisdiction. CEFCU’s
counterclaim mirrored the relief it had originally sought
before the TTAB; that is, it sought to cancel SDCCU’s
trademark registration. SDCCU argues that the district court
misinterpreted 15 U.S.C. § 1119 to conclude that it lacked
statutory subject matter jurisdiction over CEFCU’s
counterclaim. CEFCU responds that SDCCU lacks standing
to appeal this dismissal because it is favorable to SDCCU.
True, the general rule is that litigants have no standing to
appeal favorable decisions. E.g., United States v. Good
Samaritan Church, 29 F.3d 487, 488 (9th Cir. 1994). But one
exception to the general rule states that a defendant has
standing to appeal dismissal of a complaint without prejudice
when he sought to have it dismissed with prejudice. Farmer
v. McDaniel, 98 F.3d 1548, 1549 (9th Cir. 1996), abrogated
on other grounds by Slack v. McDaniel, 529 U.S. 473(2000); H.R. Techs., Inc. v. Astechnologies, Inc., 275 F.3d
40 SDCCU V. CEFCU
1378, 1383 (Fed. Cir. 2002) (applying Farmer to conclude
that a defendant in a patent infringement case has standing
to appeal a without-prejudice dismissal after moving to
dismiss with prejudice). SDCCU’s appeal falls within this
exception. SDCCU moved for summary judgment on
CEFCU’s counterclaim. By appealing the district court’s
dismissal of that claim without prejudice, SDCCU is
“appeal[ing] from a judgment in its favor [because] the
judgment is not as favorable as [SDCCU] sought,” H.R.
Techs., 275 F.3d at 1380, and now will be required to go
back to the TTAB to relitigate that issue. Cf. Farmer, 98 F.3d
at 1549. That is a sufficient grievance to maintain standing
to appeal.
The district court sua sponte dismissed the counterclaim
for lack of statutory subject matter jurisdiction after granting
summary judgment on the first, second, and fifth counts. As
a result of those counts being resolved, it concluded that this
case no longer “involve[ed] a registered mark” under 15
U.S.C. § 1119. That statute reads:
In any action involving a registered mark the
court may determine the right to registration,
order the cancelation of registrations, in
whole or in part, restore canceled
registrations, and otherwise rectify the
register with respect to the registrations of
any party to the action.
15 U.S.C. § 1119.
SDCCU argues that “action” refers to the entire case and
that this “action” still “involv[es] a registered mark” because
the parties’ claims originally involved their registered marks.
Thus, SDCCU contends, the district court possessed ongoing
SDCCU V. CEFCU 41
statutory subject matter jurisdiction over CEFCU’s
counterclaim. We disagree.
In Airs Aromatics, LLC v. Opinion Victoria’s Secret
Stores Brand Management, Inc., the plaintiff sought: (1) a
declaration that defendant breached a consent-to-use
agreement; and (2) cancellation of defendant’s trademark
registrations based on a likelihood of confusion with
plaintiff’s marks. 744 F.3d 595, 598 (9th Cir. 2014). The
district court dismissed both claims, but the plaintiff
appealed only the dismissal of his cancellation claim. Id. We
held that § 1119 would not “provide an independent basis for
subject-matter jurisdiction on remand standing alone.” Id.
We held that § 1119 provides cancellation only as relief to a
party who has proved infringement because § 1119 is
“remedial, not jurisdictional.” Id. at 598 (quoting Nike, Inc.
v. Already, LLC, 663 F.3d 89, 99 (2d Cir. 2011), aff’d, 568
U.S. 85 (2013)). Because the plaintiff did not appeal “the
dismissal of the only claims it bought that could support
jurisdiction” under § 1119, we affirmed.
That same syllogism dictates the outcome here.
CEFCU’s cancellation counterclaim under § 1119 must have
an independent jurisdictional basis. And SDCCU has
understandably not appealed from the district court’s
judgment on the only claims that could arguably provide
such a basis—i.e., SDCCU’s non-infringement claims. Like
the plaintiff in Airs Aromatics, SDCCU does not ask us to
reinstitute those non-infringement claims such that CEFCU
could potentially prove infringement and obtain cancellation
on remand. We therefore affirm the district court’s dismissal
of CEFCU’s counterclaim.
42 SDCCU V. CEFCU
III.
We vacate the district court’s judgment and remand with
instructions for further proceedings not inconsistent with this
opinion. On remand, the district court is instructed to dismiss
count four of SDCCU’s complaint for lack of Article III
jurisdiction, reassess its exceptional-case and prevailing-
party determinations and, if necessary, revisit the amount of
its fee award.
Pursuant to Federal Rule of Appellate Procedure 39(a)
and Ninth Circuit General Order 4.5(e), each party shall bear
its own costs on appeal.
AFFIRMED IN PART, VACATED IN PART, AND
REMANDED.