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Section 37 of the Lanham Act Does Not Provide an Independent Basis for Federal Jurisdiction: Ninth Circuit
Practical Law Legal Update 3-559-4805 (Approx. 3 pages)
Section 37 of the Lanham Act Does Not Provide an Independent Basis for Federal Jurisdiction: Ninth Circuit
by Practical Law Intellectual Property & Technology
| Published on 03 Mar 2014 • USA (National/Federal) |
In Airs Aromatics, LLC v. Victoria's Secret Stores Brand Management, Inc., the US Court of Appeals for the Ninth Circuit held that Section 37 of the Lanham Act, which provides for cancellation of a federal registration, does not provide an independent basis for federal subject matter jurisdiction.
On February 28, 2014, in Airs Aromatics, LLC v. Victoria's Secret Stores Brand Management, Inc., the US Court of Appeals for the Ninth Circuit affirmed the district court's dismissal of a trademark cancellation claim under Section 37 of the Lanham Act concerning the defendant Victoria's Secret's registered DREAM ANGELS mark (No. 12-55276, (9th Cir. Feb. 28, 2014)).
The plaintiff, Airs Aromatics, alleged owner of the common law mark ANGEL DREAMS for perfume and other personal care products, filed a complaint in the US District Court for the Central District of California against Victoria's Secret that:
- Alleged Victoria's Secret's breach of a consent-use-agreement that had allowed Victoria's Secret to use the mark DREAM ANGELS for personal care products.
- Requested cancellation of a registration for DREAM ANGELS obtained by Victoria's Secret.
Among other findings, the district court dismissed Airs Aromatics's trademark cancellation claim finding that Airs Aromatics lacked standing since it had not adequately alleged non-abandonment of its ANGEL DREAMS mark. Airs Aromatics only appealed the dismissal of its trademark cancellation claim.
On appeal, the Ninth Circuit held that Airs Aromatics's Section 37 trademark cancellation claim, alone, did not provide an independent basis for federal subject matter jurisdiction. The court looked to the plain language of Section 37, which provides that cancellation is available in "any action involving a registered mark" to support its reasoning. The court noted that:
- The statute only specifies that cancellation can be sought if there is already an ongoing action involving a registered mark. There is no language stating that a cancellation claim is available as an independent cause of action.
- Other federal circuit courts considering this language have held that it creates a trademark infringement remedy, not an independent basis for federal jurisdiction.
- This interpretation preserves USPTO cancellation proceedings as the primary cancellation method.
The court then turned to Airs Aromatics' argument that its cancellation claim was actually a poorly pleaded trademark infringement claim. The court found that, even considering the claim as an infringement claim, Airs Aromatics did not allege sufficient facts to support the claim. The court noted that in its complaint Airs Aromatics neither alleged continuous use of ANGEL DREAMS throughout the relevant period nor any attempt to use the mark before it filed suit. The court also rejected Airs Aromatics' argument on appeal that ongoing litigation constitutes sufficient attempts to continue usage.
Finally, the court denied Airs Aromatics's motion for leave to amend its complaint. The court noted that a party cannot amend a pleading to directly contradict an earlier assertion made in the same proceeding. Since Airs Aromatics had asserted ongoing litigation as the basis for continuous usage of its alleged mark, and the court rejected that theory, amendment of the complaint would be futile.