832 F.3d 899
8th Cir.2016Background
- KenTech owned the PAKSTER mark and sold thermoformed product line and trademark rights to East Iowa Plastics (EIP) via an Asset Purchase Agreement (APA) that included a license back to KenTech (later assigned to PI) to use the mark for injection-molded products in North America, royalty-free, perpetual, and freely assignable.
- PI obtained federal trademark registrations for PAKSTER (word and rooster logo) after acquiring injection molds; PI falsely certified to the PTO that no one else had rights to the mark.
- PI sent cease-and-desist letters to EIP; EIP sued PI seeking cancellation of PI’s registrations under 15 U.S.C. § 1120 (false procurement), Lanham Act claims, and a declaration of ownership; PI counterclaimed for infringement but later voluntarily dismissed its counterclaims with prejudice before trial.
- The district court canceled PI’s federal registrations, found EIP the prevailing party, and awarded EIP $585,000 in attorney’s fees under both § 1120 (section 38) and § 1117 (section 35).
- The Eighth Circuit held the district court lacked Article III jurisdiction to cancel PI’s registrations because EIP suffered no concrete, particularized injury from PI’s false PTO declarations, vacated the cancellation, reversed the fee award, and remanded to address unresolved ownership/license factual issues relevant to fees under state law.
Issues
| Issue | Plaintiff's Argument (EIP) | Defendant's Argument (PI) | Held |
|---|---|---|---|
| Standing to seek cancellation of PI’s federal registrations under § 1120/§ 1119 | EIP argued PI’s fraudulent PTO filings injured it and thus gave Article III standing to pursue cancellation as a remedy | PI argued EIP suffered no particularized injury from the registrations and thus lacked standing to seek cancellation | Held: No standing — EIP showed no concrete, particularized injury from the fraudulent registrations, so district court lacked jurisdiction to cancel registrations |
| Availability of attorney’s fees under § 1120 (section 38) | Fees appropriate because EIP prevailed on § 1120 by obtaining cancellation | PI argued § 1120 does not provide a basis for fee shifting absent a prevailing party with cognizable relief | Held: Moot as to statutory interpretation because cancellation was vacated for lack of jurisdiction; EIP did not prevail on § 1120 and thus no fees under it |
| Prevailing party status under § 1117 (section 35) for defense against PI’s counterclaims | EIP claimed it prevailed by getting PI’s counterclaims dismissed with prejudice | PI argued neither side materially altered legal relationship; both obtained mixed outcomes so no prevailing party | Held: No prevailing party for section 35 purposes; neither party materially altered legal relationship, so EIP not entitled to fees under section 35 |
| Entitlement to fees based on declaratory judgment of trademark ownership (state-law contract issues) | EIP argued district court’s declaration of ownership made it prevailing and entitled to fees | PI argued ownership finding was ambiguous; any fee entitlement depends on state law and unresolved factual issues | Held: Remanded for district court to clarify ownership/license findings and determine availability of fees under applicable state law |
Key Cases Cited
- Hollingsworth v. Perry, 133 S. Ct. 2652 (2013) (Article III requires concrete and particularized injury that persists through litigation)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (statutory injury must also be concrete to satisfy Article III)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (interest in vindication or attorney’s fees alone cannot create Article III injury)
- Already, LLC v. Nike, Inc., 133 S. Ct. 721 (2013) (standing to seek cancellation depends on actual, particularized risk of injury; covenant or mootness can defeat standing)
- Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992) (Lanham Act protects both registered and unregistered trademarks)
- CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642 (2016) (prevailing-party inquiry focuses on material alteration of legal relationship)
- Bell v. Hood, 327 U.S. 678 (1946) (nonfrivolous claim of injury is sufficient at the outset to establish jurisdiction)
- Huggins v. FedEx Ground Package Sys., Inc., 566 F.3d 771 (8th Cir. 2009) (appellate courts must consider sua sponte whether jurisdiction exists)