Contracting Away Rights to Use a Mark Does Not Preclude a Petitioner From Challenging the Mark Before the Trademark Trial and Appeal Board

Australian Therapeutic Supplies Pty. Ltd., v. Naked TM, LLC, No. 2019-1567 (Fed. Cir. Jul. 27, 2020)

Petitioner asked the Trademark Trial and Appeal Board (TTAB) to cancel registrant’s NAKED mark for condoms on several grounds including likelihood of confusion and lack of intent to use the mark. Petitioner also asserted prior use of the mark in the United States. The TTAB found petitioner lacked statutory standing because it had contracted away its rights in its unregistered NAKED and NAKED CONDOM marks. The TTAB reasoned petitioner led registrant to reasonably believe that it had abandoned its rights by entering into an informal agreement with registrant through email communications and the parties’ actions.  

On appeal, the Federal Circuit reversed and remanded. The panel majority explained entitlement to a cancellation proceeding is not contingent on whether a petitioner has proprietary rights in its own mark. And, contracting away one’s rights to use a mark does not preclude a petitioner from challenging the mark before the TTAB. Here, petitioner met the statutory requirements for seeking cancellation of the NAKED mark by showing a real interest in the proceeding and a reasonable belief of damage. For example, petitioner had filed a trademark registration that was refused based on a likelihood of confusion with the mark at issue in the petition. Petitioner’s advertising and sale of products bearing its unregistered mark further supported its real interest and reasonable belief of damage.

Judge Wallach dissented, reasoning the statute requires a petitioner to show a legitimate interest in the proceeding. He concluded the parties’ informal agreement deprived petitioner of this statutory requirement for standing.    

View the full opinion here.