OBX is not a valid trademark, says Fourth Circuit

United States of America
In OBX-Stock Inc v Bicast Inc (Case 06-1769, 06-1887, February 27 2009), the US Court of Appeals for the Fourth Circuit has upheld summary judgment against OBX-Stock Inc in its infringement suit against Bicast Inc, ruling that OBX-Stock's OBX mark was not a valid trademark. 
 
OBX-Stock obtained four registrations for the OBX mark on the Principal Register of the US Patent and Trademark Office (USPTO). OBX-Stock later sued Bicast for trademark infringement over Bicast’s sale of stickers bearing the term 'OB XTREME'. The US District Court for the Eastern District of North Carolina granted summary judgment in favour of Bicast, holding that OBX was generic or descriptive without secondary meaning. Therefore, it was not a valid trademark. OBX-Stock appealed. Bicast cross-appealed the district court’s decision not to order the USPTO to cancel the OBX registrations.
 
The Fourth Circuit upheld the granting of summary judgment. Based on trial testimony by OBX-Stock’s founder, the court found that OBX-Stock intended for OBX to indicate the Outer Banks region of North Carolina. The court thus ruled that OBX was a geographically descriptive mark that could not be a valid trademark without evidence that it had acquired secondary meaning. The court also found no indication of secondary meaning. The overwhelming evidence showed that the mark, when affixed to a product or service, served to indicate the Outer Banks, not the source of the product or service.
 
The court also said that OBX-Stock’s registration of OBX with the USPTO did not switch from OBX-Stock to Bicast the burden of persuasion about the validity of the trademark, but only the burden of production. The court found the evidence that OBX was a descriptive mark devoid of secondary meaning sufficient to overcome the burden.
 
The court also noted that the USPTO had refused to register OBX five times on the grounds that it was geographically descriptive, only granting registration after intervention by a congressional delegation. Analogizing to patent cases involving the issuance of a patent preceded by the USPTO’s refusal to grant the patent based on obviousness, the court found that the USPTO’s prior refusals to register the OBX mark undermined the validity of the eventual registration. The court thus seemed to believe that the OBX registration would not have been allowed but for the congressional intervention.
 
The Fourth Circuit also ruled that the district court had not abused its discretion when it had failed to order the USPTO to cancel the OBX registrations. The district court stated that the evidence did not conclusively establish that the registrations should be cancelled and pointed out that Bicast had not filed a counterclaim for cancellation. The circuit court added that the granting of summary judgment was an adequate remedy for Bicast and that the court’s final adverse decision on trademark validity would render the OBX marks open to challenge.
 
Arguably, by promoting OBX as a geographic designation for the Outer Banks, OBX-Stock undermined its claim that OBX was a valid trademark. Had the founder of the company, from the outset, used OBX as a source indicator of products bearing the mark, rather than as an indicator of the Outer Banks, the result in this case may have been different.
 
James L Bikoff, David K Heasley and Taro Konoshima, Silverberg Goldman and Bikoff, Washington DC
 

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