Declaratory judgments on concurrent trademark rights ruled out

In J&D Home Improvement Inc v Basement Doctor Inc (03-1902, 2004 WL 103416), the US Court of Appeals for the Third Circuit has ruled that, where a case is pending before the US Patent and Trademark Office (USPTO), federal courts do not possess subject matter jurisdiction to issue a declaratory judgment that a party has concurrent rights in a trademark, until after the USPTO has issued its decision.

Following the denial of its application to register the mark BASEMENT DOCTOR based on a prior registration of the mark THE BASEMENT DOCTOR owned by J&D Home Improvement Inc, Basement Doctor Inc petitioned the Trademark Trial and Appeal Board (TTAB) of the USPTO to cancel J&D's registration. Basement Doctor contended that its use predated J&D's first use of the mark.

While the matter was pending before the TTAB, J&D commenced a suit for declaratory judgment in the US District Court for the District of Delaware. J&D petitioned the court to find that (i) it was entitled to a concurrent use trademark registration for THE BASEMENT DOCTOR in a territory consisting of the whole of the United States, excluding any areas where Basement Doctor could show actual use of its mark at the time of J&D's application for trademark registration, or (ii) J&D's registration constituted prima facie evidence of its right to use the mark. The district court granted Basement Doctor's motion to dismiss on the basis of lack of subject matter jurisdiction.

On appeal, J&D argued that (i) subject matter jurisdiction existed because the Lanham Act gives district courts original jurisdiction of all actions arising under that statute, and (ii) 15 USC § 1052(d) of the act authorizes federal courts to enter concurrent use orders.

The Third Circuit rejected J&D's argument. It agreed with the district court and affirmed the dismissal, finding that § 1052(d) merely confirms that allowing concurrent use is an equitable remedy available to district courts where an independent basis for jurisdiction exists, as in an infringement action. However, where the only issue raised is the right to a concurrent use registration, the federal courts do not have jurisdiction to hear a declaratory judgment suit and the issue must be raised in the proceedings before the TTAB.

John Lawley, Kilpatrick Stockton LLP, Atlanta