Registration not required for Section 43 Lanham Act claim

In Waymark Corporation v Porta Systems Corporation, the US Court of Appeals for the Federal Circuit has reversed an award of sanctions for lack of legal standing issued against Waymark and a number of co-plaintiffs. It held that a plaintiff has standing to allege trademark infringement in an action under Section 43(a) of the Lanham Act, even if it does not own a federal trademark registration when the complaint is filed.

The plaintiffs brought an action against Porta Systems seeking, among other things, damages and an injunction under Section 43(a) of the Lanham Act for infringement of their BATTSCAN trademark and trade dress. In their complaint, the plaintiffs alleged that they had used the BATTSCAN mark but the complaint did not state that the mark was registered, nor did it recite a cause of action under Section 32 of the act, which is reserved for federal registrants.

The lower court granted Porta Systems's motion for dismissal and summary judgment, and dismissed the plaintiffs' trademark infringement claim for lack of standing because they did not own a federal trademark registration for the mark BATTSCAN until more than one year after they had filed the complaint. The plaintiffs appealed and while the appeal was pending Porta Systems moved for sanctions in the form of attorneys' fees. The lower court granted the motion based, in part, on the fact that the plaintiffs had not owned a federal trademark at the time of the complaint. It later dismissed the plaintiffs' appeal and affirmed its award of sanctions. The plaintiffs appealed again.

The Federal Circuit reviewed the award of sanctions and acknowledged that section 1117(a) of the Lanham Act "provides that the court, in exceptional cases, may award reasonable attorney fees to the prevailing party". Applying Eleventh Circuit law, the court noted that "exceptional cases" includes those cases "characterized as malicious, fraudulent, deliberate and wilful".

The appellate court reversed the award of sanctions and held that it was based, in part, on a misunderstanding of governing trademark law. In awarding sanctions, the lower court had found that the plaintiffs lacked standing to allege trademark infringement because they did not own a registered trademark at the time the complaint was filed. However, the Federal Circuit noted that the plaintiffs sought relief under Section 43(a), which (unlike Section 32) provides a remedy for infringement of registered and unregistered trademarks. According to the Federal Circuit, the case therefore was not an "exceptional case" for which sanctions were warranted. Thus, the plaintiffs had acquired rights through use of the BATTSCAN mark and thereby had standing to allege trademark infringement.

Maria Baratta, Kilpatrick Stockton LLP, Atlanta