Abolishing the Missing-Claim Rule for Judicial Cancellations
Section 37 of the Lanham Act vests courts with the power to order the Director of the U.S. Patent and Trademark Office (PTO) to cancel trademark registrations. 1 This power to “rectify the register”2 is discretionary, and since the act’s enactment in 1946, courts have routinely granted cancellation requests when the trademark’s invalidity was established in the trial court proceedings. However, that is not always the outcome. Some courts refuse to exercise their power to rectify the register under section 37 even with a proven and valid basis for cancellation.
This article examines cases where the district courts refused to cancel invalid trademarks even though a basis for cancellation had been established. In some cases, the appellate courts have reversed, holding that this was an abuse of discretion. In others, the Courts of Appeals have affirmed the refusal to cancel. Why the difference? The distinguishing fact appears to be that in cases where cancellation was ultimately ordered, the party seeking cancellation affirmatively sought cancellation via a cause of action—typically a counterclaim in an infringement suit. In cases where cancellation was ultimately rejected, the common theme seems to be that the party did not request cancellation as a claim, but instead requested cancellation as a remedy in a motion.
This article takes a close look at the claim requirement and argues that not only should a party not have to file a claim, but also courts should exercise their section 37 cancellation powers sue sponte when a mark’s invalidity has already been proved. Additionally, on appeal, a failure to cancel under section 37 when invalidity has been established should be characterized as a per se abuse of discretion. These sensible proposals benefit the public by driving down producers’ costs and consumer prices and freeing up already overburdened administrative resources, while only placing a negligible burden on the courts, and they do not pose the same problems that typically cause objections to sua sponte action. Moreover, a sua sponte cancellation requirement will not require judges to engage in complex statutory interpretation. These proposals can easily be read consistently with section 37’s existing language.
In Part II, I briefly introduce the trademark registration system and point out the benefits of registration to both trademark owners and the public.
In Part III, I discuss the cancellation system for registered trademarks, including the two cancellation methods (before the Trademark Trial and Appeal Board (TTAB) and the courts), the grounds for cancellation, and the procedures for seeking cancellation before the TTAB.
In Part IV, I review the case law where cancellation under section 37 was initially refused and explore why some refusals were affirmed while others were reversed— ultimately concluding that a failure to file a claim is the distinguishing factor. I further illustrate in this part why refusing to cancel the registration puts an additional burden on the litigant seeking cancellation, why the litigant may reasonably shirk this burden, and how this ultimately harms the public.
Finally, in Part V, I explain the proposals discussed above, detailing how these proposals are more efficient, how they advance trademark law’s purpose, and how courts can easily implement them. Ultimately, I urge district courts to adopt a standard practice of ordering cancellation when the registered mark has been found invalid, and for the Courts of Appeals or Supreme Court to adopt a per se abuse of discretion standard for such a circumstance. Alternatively, Congress should amend section 37 to reflect these proposals.
Texas Intellectual Property Law Journal
Ryan G. Vacca, Abolishing the Missing-Claim Rule for Judicial Cancellations, 18 Tex. Intell. Prop. L.J. 297 (2010).