Damages Claims Not Barred by Prior TTAB Cancellation Proceedings

Author: Violaine Brunet

The “Ebonys” is a 70s soul group, which helped create the “Philadelphia Sound,” incorporating elements of soul, funk, disco. The group was founded in 1968 by David Beasley (“Beasley”) and other members. William Howard joined the band in the 1990s, but departed after a few years.

In 2012, Howard registered “THE EBONYS,” as a federal trademark registration with the PTO (the “ ‘469 mark”), which prompted Beasley to ask the Trademark Trial and Appeal Board (the “TTAB”) to cancel the registration (the “ ‘469 mark”). However, the TTAB dismissed Beasley’s 2013 and 2017 petitions.

Unsatisfied with the outcomes of the TTAB proceedings, Beasley sued for trademark infringement in federal court in 2019. The District Court granted Howard’s motion to dismiss Beasley’s Complaint on the grounds of claim preclusion. The District Court reasoned that claim preclusion barred Beasley from asserting the claim because it turned on “facts and legal theories [that] were all actually litigated in” the 2017 petition, and Beasley could have raised any priority of use arguments in his 2013 petition. The trial judge further concluded that claim preclusion applied even though Beasley sought a damages remedy that he did not pursue at the TTAB.

Beasley then appealed the trial court’s decision to the Third Circuit Court of Appeals. The central issue of this appeal was whether Beasley’s prior losses in cancellation proceedings before the TTAB precluded Beasley’s Section 43(a) claim (pertaining to damages for trademark infringement) before the District Court. The Court of Appeals held that they do not. Specifically, the appellate court stated that “a limit to claim preclusion applies to cases, like this one, where a plaintiff seeks damages or an injunction in a section 43(a) infringement action after pursuing a cancellation claim before the TTAB.”

The Appeals Court held that the TTAB is “not a general-purpose tribunal for trademark disputes. Instead, it has limited jurisdiction ‘to determine only the right to register’ a trademark and cannot ‘decide broader questions of infringement or unfair competition.’ ” (citations omitted) (emphasis added) “[T]he TTAB’s jurisdiction is narrow,” while the “statutory provision [Section 43(a) infringement action] under which Beasley sues is broad.” (emphasis added).

The Court wrote that “[b]ecause the TTAB has no jurisdiction to consider whether an infringer’s use of a mark damages a petitioner seeking cancellation, and in turn cannot award any remedy beyond cancellation for the injuries a petitioner has suffered. . . a Section 43(a) claim is not one that could have been brought in a TTAB cancellation proceeding.” (emphasis added).

This decision from the Third Circuit provides some comfort and reassurance to litigants that they can bring their claims before the TTAB without fear of waiving their rights to bring any future trademark infringement actions in federal courts, including actions that seek monetary and injunctive relief, which are not available in the TTAB.

On a related note, this Third Circuit decision joined the rulings of the Ninth and Second Circuit, which held that that preclusion is tightly limited to only those issues actually decided on the merits in the TTAB and for which the TTAB has jurisdiction to decide.

About the author: Violaine Brunet is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on litigation matters involving copyright, trademarks, and patents. Ms. Brunet also has experience in international law from her work in the Superior Court of Quebec in Quebec City, Canada. Ms. Brunet’s biography can be found here.