District Court Dismisses PRETZEL CRISPS Section 1071(b) Appeal for Lack of Subject Matter Jurisdiction

The U.S. District Court for the Western District of North Carolina dismissed Princeton Vanguard’s civil action seeking review of the TTAB’s September 6, 2017 decision finding PRETZEL CRISPS to be generic for pretzel crackers. [TTABlogged here]. That 2017 Board decision was issued after the CAFC in May 2015 reversed Board’s original 2014 decision and remanded the case with instructions to apply the correct genericness standard. [TTABlogged here]. Judge Kenneth D. Bell, considering the issue of subject matter sua sponte, ruled that because Princeton Vanguard had appealed the first Board decision to the CAFC under Section 1071(a) of the Lanham Act, it had waived its right to proceed in the district court (rather than the CAFC) as to the second Board decision. Therefore, the district court lacked subject matter jurisdiction over the action. Princeton Vanguard, LLC and Snyder’s Lance, Inc. v. Frito-Lay North America, Inc., 2019 USPQ2d 401574 (W.D.N.C. 2019).

The court observed that it must dismiss an action under FRCP 12(b)(3) if it determines at any time that it lacks subject matter jurisdiction. Plaintiffs filed this action on November 6, 2017. When Judge Bell, newly assigned to the case, reviewed the parties’ summary judgment motions he concluded that the issue of subject matter jurisdiction needed to be addressed. The parties filed memoranda regarding the issue on October 10, 2019. The court dismissed the case, without prejudice, on October 21, 2019.

The court saw the issue as one of first impression. It began its analysis with the wording of Section 1071 of the Lanham Act, observing that Section 1071 provides two avenues for appeal: to the CAFC under Section 1071(a) or by way of civil action in a district court under 1071(b).

However, the statute makes clear–twice–that a dissatisfied party may not do both. In §1071(a), the statute says that a party who files an appeal with the Federal Circuit waives his right to seek District Court review under §1071(b),and then in §1071(b) the statute again specifically prohibits parties who have taken an appeal to the Federal Circuit from filing a civil action. Therefore, the plain language of the statute does not allow a dissatisfied party who has taken an appeal to the Federal Circuit under §1071(a) to later exercise the option to file a civil action under §1071(b).

Furthermore, Section 1071(a)(4) provides that the CAFC’s determination of an appeal “shall govern the further proceedings in the case.” If plaintiffs were allowed to bring this civil action, the de novo review by the court would be “constrained by the Federal Court’s ruling.”

The only interpretation of the statute that gives full effect to the mandated primacy of a Federal Circuit opinion under §1071(a)(4), and avoids the conflict of one Court of Appeals being “bound” by the decision of another Court of Appeals in an appeal from one of its District Courts, is to not allow parties to file an appeal in District Court after a Federal Circuit appeal has been filed. Appeals from TTAB opinions will thus be heard either by the Federal Circuit, who can best interpret and apply its own prior ruling in the event there was an earlier appeal, or in the first instance by a District Court and later the Court of Appeals for the circuit in which the District Court sits if there is no appeal to the Federal Circuit. This procedure, which gives full meaning to all of the provisions of §1071, is plainly a better and more efficient process for fairly resolving trademark disputes.

And so the court found that plaintiffs waived their right to appeal to the district court by taking their first appeal to the Federal Circuit. Consequently, this court lacked subject matter jurisdiction to hear this action.

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TTABlog comment: The dismissal of the civil action was “without prejudice.” Can the plaintiffs now appeal to the CAFC from the Board’s second decision? Would the appeal be timely?