No Standing To Seek Cancellation of Trademark Registrations Absent Injury From Registrant's Fraud: Eighth Circuit | Practical Law

No Standing To Seek Cancellation of Trademark Registrations Absent Injury From Registrant's Fraud: Eighth Circuit | Practical Law

In East Iowa Plastics, Inc. v. PI, Inc., the US Court of Appeals for the Eighth Circuit vacated the district court's cancellation of PI, Inc.'s federal trademark registrations because East Iowa Plastics, Inc. (EIP) lacked standing to seek cancellation, and reversed the award of attorneys' fees to EIP.

No Standing To Seek Cancellation of Trademark Registrations Absent Injury From Registrant's Fraud: Eighth Circuit

by Practical Law Intellectual Property & Technology
Published on 16 Aug 2016 • USA (National/Federal)
In East Iowa Plastics, Inc. v. PI, Inc., the US Court of Appeals for the Eighth Circuit vacated the district court's cancellation of PI, Inc.'s federal trademark registrations because East Iowa Plastics, Inc. (EIP) lacked standing to seek cancellation, and reversed the award of attorneys' fees to EIP.
On August 11, 2016, in East Iowa Plastics, Inc. v. PI, Inc., the US Court of Appeals for the Eighth Circuit vacated the US District Court for the Northern District of Iowa's cancellation of PI, Inc.'s (PI) federal trademark registrations and reversed its decision to award East Iowa Plastics, Inc. (EIP) attorneys' fees ( (8th Cir. Aug. 11, 2016)). The court held that EIP lacked standing to seek cancellation of PI's registrations and, as a result, the district court lacked jurisdiction and EIP was not entitled to attorneys' fees.
This case involved the PAKSTER trademark, used in the 1990s by a company called KenTech in manufacturing molded plastic goods for use in the egg and poultry industries. KenTech's operations used both the thermoforming and injection molding methods of manufacturing plastic goods. In 1997, KenTech sold its thermoformed PAKSTER plastic goods manufacturing operations to EIP. Shortly after the sale, KenTech sold its injection molding PAKSTER operations to PI. Subsequently, EIP and PI both used the PAKSTER mark in connection with their respective products made using the different methods.
Ten years later, PI applied for and acquired two trademark registrations with the US Patent and Trademark Office (USPTO) for the word PAKSTER, and an image of a rooster with the word PAKSTER. In doing so, PI falsely stated that to its knowledge and belief, no other corporation had the right to use the mark in commerce.
After acquiring the registrations, PI sent EIP three cease and desist letters, asserting trademark infringement under the Lanham Act and contending that EIP had no right to use the PAKSTER mark for either thermoformed or injection molded products.
In December 2012, EIP sued PI seeking, among other things:
  • Cancellation of PI's federal registrations of the PAKSTER marks and damages under Sections 37 and 38 of the Lanham Act (15 U.S.C. §§ 1119-1120).
  • A declaration that EIP owns the PAKSTER mark.
Following a trial, the district court issued findings of fact and conclusions of law. Among other things, the district court found that:
  • PI had violated Section 38 in registering the PAKSTER marks with the USPTO by a false or fraudulent declaration or representation.
  • EIP had not suffered any damages from PI's Section 38 violation and was not entitled to an injunction.
  • EIP had established its ownership of the PAKSTER mark.
The district court cancelled both of PI's registrations under Section 37 as a remedy for the Section 38 violation. The district court also awarded EIP $585,000 in attorneys' fees, finding that attorneys' fees were warranted under both:
  • Section 35 of the Lanham Act (15 U.S.C. § 1117) because it was an exceptional case.
  • Section 38 due to fraud on the USPTO.
On appeal, the Eighth Circuit vacated the cancellation of the two marks, holding that the district court lacked jurisdiction to cancel the registrations because EIP did not have standing to seek cancellation under Section 37. In concluding that EIP lacked standing, the court held that:
  • EIP's standing to seek cancellation of the trademark under Section 37 was dependent on its Section 38 claim, because Section 37 only provides a remedy for some other violation of the trademark laws, not an independent cause of action.
  • Since the district court had determined that EIP did not suffer any damages from PI's Section 38 violation, EIP would have to show some other injury to support its standing to seek cancellation of the PAKSTER registrations. However, in this case:
    • there was no evidence that EIP suffered non-monetary injury such as loss of goodwill;
    • the fact that PI's fraudulent declaration misled the USPTO into registering its trademarks may be a generalized injury, but it is not particular to EIP and cannot support standing for a Section 38 claim; and
    • US Supreme Court precedent prevents EIP from basing its standing on having been forced to defend against an infringement suit.
Regarding the attorneys' fees award, the court held that because EIP was not entitled to damages, an injunction, or a cancellation from its section 38 claim, there was no basis for concluding that EIP was the prevailing party, which is a precondition to receiving attorneys' fees.
The Eighth Circuit remanded to the district court the question of ownership of the PAKSTER mark.