Posternak Blankstein & Lund LLP is now Arent Fox. Read the press release

Don’t Wait! Federal Court Sends Case Back to TTAB

Not only do decisions from the Trademark Trial and Appeal Board now, in some circumstances, have a preclusive effect on federal litigation, the US District Court for the District of Delaware recently granted a motion to stay a federal court action pending the outcome of a TTAB proceeding.

See B&B Hardware Inc. v. Hargis Industries, Inc., 135 S. Ct. 1293 (2015); Order and Memorandum, Tigercat Int’l, Inc. v. Caterpillar Inc., No. 16-1047 (D. Del. May 2, 2018), ECF Nos. 36 & 37. This recent decision marks a departure from the customary practice of immediately staying a TTAB proceeding once a federal court action is filed. The decision thus serves as a warning to TTAB combatants to act quickly – and prior to engaging in significant discovery – if they wish to pursue an infringement action in federal court.

In 2013, Tigercat International Inc. and Tigercat Industries Corp. (“Tigercat”) applied to register the mark TIGERCAT, with no designated field-of-use restriction, at the US.Patent and Trademark Office. Caterpillar Inc. (“Caterpillar”) initiated opposition proceedings before TTAB alleging that Tigercat’s mark, without a field-of-use restriction, would likely cause confusion and dilute Caterpillar’s prior registered CAT and CATEPILLAR marks. For three years, the parties engaged in contentious and voluminous discovery, including consumer surveys, 106 interrogatories, 172 document requests, 332 requests for admission, and 22 depositions, including 7 expert and 3 third-party depositions. After seven discovery and trial date extensions, TTAB set discovery to close on November 21, 2016 and trial to begin on January 20, 2017.

Ten days before the close of discovery and two months before the last scheduled trial date, Tigercat filed an action for declaratory judgment of non-infringement and non-dilution in the US District Court for the District of Delaware. In response, Caterpillar moved to stay the district court action to allow the TTAB proceeding to continue, which was subsequently suspended upon a motion by Tigercat after TTAB determined that the civil action in district court would have a direct impact on the opposition proceeding.

The district court considered three factors in deciding whether to grant the stay:

  1. Judicial efficiency as measured by stage of the civil litigation and the stay’s potential to simplify the issues;
  2. Harm or unfair prejudice to the non-moving party that will result from the grant of a stay; and
  3. The hardship and inequity to the moving party if the stay is denied.

Given the early stage of litigation, the potential narrowing of contentions based on the TTAB decision, and the near completion of the TTAB proceeding, the court found judicial efficiency weighed in Caterpillar’s favor. To reset the clock struck the court “as a monumental waste of time, money, and effort.” The court did not find Tigercat likely to be harmed or prejudiced by the stay based on Tigercat’s unsupported conclusory statements that it would suffer harm in the face of a stay, particularly when Tigercat failed to offer any explanation for its delay in bringing the civil action. Next, the court acknowledged Tigercat would likely suffer some prejudice from grant of the stay, but found the scale tipped in favor of Caterpillar, particularly given Tigercat’s “decision to remain dormant and sit on its rights” and attempt “to engage in tactical gamesmanship”. The court refused “to place its imprimatur on Tigercat’s antics” and granted Caterpillar’s motion to stay pending TTAB’s decision.

Although TTAB generally stays its proceedings when parties take their dispute to a federal court – as was the case here – there are circumstances in which a district court may find it more efficient to allow TTAB to complete its work first, particularly if the filing party in district court waited a significant period of time to file.

Contacts

Continue Reading