David Beasley v. William HowardDavid Beasley v. William Howard
On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 1:19-cv-11058) District Judge: Honorable Noel L. Hillman
Argued: November 13, 2020
Before: CHAGARES, GREENAWAY, JR., and NYGAARD, Circuit Judges
Martin B. Schwimmer [ARGUED]
Leason Ellis 1 Barker Avenue 5th Floor White Plains, NY 10601
John Welch Wolf Greenfield & Sacks 600 Atlantic Avenue Boston, MA 02210
Counsel for Appellant
Moshe D. Lapin [ARGUED] Suite 840 300 East Lombard Street Baltimore, MD 21202
Counsel for Appellee
CHAGARES, Circuit Judge.
Musicians David Beasley and William Howard are embroiled in a long-running dispute over the rights to the band name “Ebonys.” Beasley filed two petitions before the Trademark Trial and Appeal Board (“TTAB“) to cancel Howard‘s registered THE EBONYS mark. The TTAB dismissed them both. Beasley then filed a lawsuit against Howard for trademark infringement in federal court. The District Court relied on claim preclusion to dismiss Beasley‘s complaint. Beasley appeals, so we now consider whether trademark cancellation proceedings before the TTAB have claim preclusive effect against trademark infringement lawsuits in federal district courts. We hold that they do not. The TTAB‘s limited jurisdiction does not allow trademark owners to pursue infringement actions or the full scope of infringement remedies in proceedings before it. Because the judgments of tribunals with limited jurisdiction have limited preclusive effect, we will reverse and remand in part the District Court‘s order so that the District Court may determine the scope and plausibility of Beasley‘s claims. But we will affirm the District Court‘s order to the extent it dismisses any claim that Howard defrauded the U.S. Patent & Trademark Office (“PTO“).
I.
In 1969, David Beasley founded a band named “The Ebonys” in Camden, New Jersey. The Ebonys were one of many bands that helped create the “Philadelphia Sound” - a style of rhythm and blues music centered around the Philadelphia International Records label, and which incorporated elements of soul, funk, and disco. See generally Jim Morrison, Forty Years of Philadelphia Sound, Smithsonian Mag. (Feb. 18, 2011), https://www.smithsonianmag.com/arts-culture/forty-years-of-philadelphia-sound-326818/ (documenting the genre‘s history). The Ebonys achieved some commercial success in the 1970s, but never reached the notoriety that similar artists such as the O‘Jays or the Blue Notes achieved. The Ebonys‘s popularity faded as the decade progressed, but Beasley alleges that they nonetheless have performed continuously since their formation.1
But Beasley and Howard would soon part ways. Each artist made his own claim to the Ebonys name, and in 2012, Howard registered THE EBONYS as a federal trademark with the PTO. See THE EBONYS, Registration No. 4,170,469 (the “‘469 mark“). Beasley alleges that since Howard registered the ‘469 mark, Howard‘s registration has interfered - and continues to interfere - with his business. Beasley claims that he has not been able to register a band website that uses “the Ebonys” in its domain name, Howard has kept concert venues from booking Beasley‘s performances, Howard has tried to collect royalties from Beasley‘s recordings, and Howard has claimed to be the Ebonys‘s true founder.
Beasley filed a petition with the TTAB to cancel the ‘469 mark in 2013, contending that Howard had defrauded the PTO. The 2013 petition recounted the Ebonys‘s 1969 founding, the New Jersey service mark he had obtained for the group, Howard‘s arrival and departure from the band, and the claim that Beasley continued to operate under the Ebonys name. The TTAB dismissed the petition the following year. It found that for all the evidence Beasley submitted, Beasley failed to show that Howard defrauded the PTO.
Beasley filed a second petition with the TTAB in 2017. His 2017 petition again asserted that Howard had committed fraud on the PTO, but also requested that the PTO cancel the ‘469 mark because it could be confused with Beasley‘s THE EBONY‘S mark.
The TTAB dismissed the 2017 petition. It did so on the ground of claim preclusion, reasoning that Beasley‘s 2017 fraud claim rested on the same facts as his 2013 one and that Beasley forwent the opportunity to assert the likelihood-of-confusion claim in his 2013 petition, because it also rested on the same transactional facts as his 2013 fraud claim. Beasley did not appeal either petition‘s dismissal.
Unsatisfied with his results at the TTAB and proceeding pro se, Beasley filed the lawsuit before us now in April 2019. Beasley‘s complaint once again recounted the band‘s history and his acrimonious split with Howard. He asked that the District Court “vacate trademark ownership of” the ‘469 mark, award him monetary damages for losses from being unable to market his band, and allow him to register his own EBONYS trademark with the PTO. Appendix (“App.“) 28.
The District Court applied the liberal rules of construction we require for a pro se complaint to understand Beasley to assert a claim under section 43(a) of the
II.
The District Court had federal subject matter jurisdiction under
We exercise plenary review over the District Court‘s dismissal of Beasley‘s complaint and may affirm on any ground supported by the record. Watters v. Bd. of Sch. Dirs., 975 F.3d 406, 412 (3d Cir. 2020). We accept as true all factual matters Beasley alleges, but his complaint cannot survive unless the facts it recites are enough to state plausible grounds for relief. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim that relies just on “conclusory statements,” or on “threadbare recitals of the elements of a cause of action” without supporting factual allegations, does not establish plausible grounds for relief. Fischbein v. Olson Rsch. Grp., Inc., 959 F.3d 559, 561 (3d Cir. 2020) (quoting City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp., 908 F.3d 872, 878-79 (3d Cir. 2018)). We liberally construe pro se filings like Beasley‘s. Jones v. Unknown Dep‘t of Corr. Bus Driver & Transp. Crew, 944 F.3d 478, 483 (3d Cir. 2019). Notwithstanding the rule of liberal construction, a pro se complaint may not survive dismissal if its factual allegations do not meet Iqbal‘s basic plausibility standard. Mala v. Crown Bay Marina, Inc., 704 F.3d 239, 245 (3d Cir. 2013).
III.
Beasley limits this appeal to whether the District Court properly dismissed his section 43(a) infringement claim, so its central issue is whether Beasley‘s prior losses in cancellation proceedings before the TTAB preclude his section 43(a) claim before the District Court. We hold that they do not. Despite the factual similarities between Beasley‘s petitions for cancellation and the complaint he filed in the District Court, the jurisdictional limits on the TTAB that accompany its role as the primary venue for narrow questions of trademark registration ensure that proceedings before it do not carry claim preclusive effect against subsequent Article III infringement proceedings under section 43(a). We first address claim preclusion‘s general principles, then examine their application to this case, and finally consider the other arguments Howard raises in favor of affirmance.
A.
Claim preclusion - which some courts and commentators also call res judicata - protects defendants from the risk of “‘repetitious suits involving the same cause of action’ once ‘a court of competent jurisdiction has entered a final judgment on the merits.‘” United States v. Tohono O‘Odham Nation, 563 U.S. 307, 315 (2011) (quoting Comm‘r v. Sunnen, 333 U.S. 591, 597 (1948)); see also Brownback v. King, 141 S. Ct. 740, 747 n.3 (2021) (“The terms res judicata and claim preclusion often are used interchangeably.“). The doctrine does so by “prevent[ing] parties from raising issues that could have been raised and decided in a prior action - even if they were not actually litigated.” Lucky Brand Dungarees, Inc. v. Marcel Fashions Grp., Inc., 140 S. Ct. 1589, 1594 (2020). The prior judgment‘s preclusive effect then extends not only to the claims that the plaintiff brought in the first action, but also to any claims the plaintiff could have asserted in
Recognizing the severity of claim preclusion‘s consequences, we apply the doctrine with care and only in appropriate circumstances. See, e.g., Papera v. Pa. Quarried Bluestone Co., 948 F.3d 607, 611 (3d Cir. 2020) (construing ambiguities in prior dismissal against claim preclusion). When a defendant seeks to invoke claim preclusion based on a federal tribunal‘s judgment, we require “(1) a final judgment on the merits in a prior suit involving (2) the same parties or their privies and (3) a subsequent suit based on the same cause of action.” In re Healthcare Real Est. Partners, LLC, 941 F.3d 64, 72 (3d Cir. 2019) (quoting Mullarkey, 536 F.3d at 225).2
Claim preclusion also has limits. A predicate for the doctrine is that “a court of competent jurisdiction ha[ve] entered a final judgment on the merits” in the first action. Tohono O‘Odham, 563 U.S. at 315 (quoting Sunnen, 333 U.S. at 597). The corollary to this prerequisite is that claim preclusion “generally does not apply where ‘[t]he plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy because of the limitations on the subject matter jurisdiction of the courts. . . .‘” Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 382 (1985) (quoting Restatement (Second) of Judgments § 26(1)(c) (Am. L. Inst. 1982)). But cf. Humphrey v. Tharaldson Enters., Inc., 95 F.3d 624, 626 (7th Cir. 1996) (“[A]s long as there existed a tribunal before which [plaintiff] could have consolidated all his claims in a single lawsuit, the principles of claim preclusion bar his current federal suit, even though he could not have raised the federal claims before the [state administrative agency].“). This limit to claim preclusion protects a plaintiff‘s right to bring claims that he “was not at liberty to assert” in a prior forum of limited jurisdiction. Est. of Roman v. City of Newark, 914 F.3d 789, 805 (3d Cir. 2019). Whether claim preclusion bars Beasley‘s lawsuit depends on whether this limitation applies here.
B.
1.
There is no dispute that Beasley previously filed petitions before the TTAB against Howard to cancel the ‘469 mark and that the TTAB rendered a final judgment on the merits against Beasley. And although his precise theory of relief is somewhat unclear on this record, there is also no dispute that Beasley now seeks - at minimum - damages against Howard for trademark infringement under section 43(a) of the Lanham Act. We therefore must consider whether Beasley‘s claim is “of the type ‘that could have been brought‘” in his TTAB petitions. Roman, 914 F.3d at 804 (quoting Duhaney v. Att‘y Gen., 621 F.3d 340, 347 (3d Cir. 2010)).
We begin with the TTAB‘s jurisdiction. The TTAB is not a general-purpose tribunal for trademark disputes.
But while the TTAB‘s jurisdiction is narrow, the statutory provision under which Beasley sues is broad.
We therefore hold that a limit to claim preclusion applies to cases, like this one, where a plaintiff seeks damages or an injunction in a section 43(a) infringement action after pursuing a cancellation claim before the TTAB. A section
We join two of our sister Courts of Appeals in recognizing the limited preclusive effect of TTAB proceedings. The Court of Appeals for the Ninth Circuit addressed similar facts to those before us in V.V.V. & Sons Edible Oils Ltd. v. Meenakshi Overseas, LLC, 946 F.3d 542 (9th Cir. 2019). There, a common law trademark plaintiff repeatedly petitioned the TTAB to oppose and then cancel the registration of what it alleged were invalid marks. Id. at 544. With no success before the TTAB, the owner then filed a section 43(a) infringement claim in federal district court, where the defendant successfully obtained a dismissal on the ground of claim preclusion. Id. at 545. The Court of Appeals for the Ninth Circuit held - as do we - that claim preclusion did not apply, noting that “it would be unfair to preclude [the plaintiff] from litigating [its] claims and seeking relief when barriers existed that prevented it from doing so in the first action.” Id. at 546.
The Court of Appeals for the Second Circuit similarly recognized that the scope of claims and relief available in the TTAB limits the claim preclusive effect of that body‘s judgments, noting in Jim Beam Brands Co. v. Beamish & Crawford Ltd. that “[claim preclusion] would not apply” to a plaintiff‘s claims “[i]f an injunction against trademark infringement was not available” at the TTAB. 937 F.2d 729, 736 (2d Cir. 1991). Our holding here reaches the same conclusion and helps to maintain nationwide uniformity in how federal Article III courts treat TTAB judgments. Because the TTAB‘s jurisdictional limits do not allow it to consider the full range of facts or grant the full range of remedies relevant to violations of section 43(a), cancellation proceedings before it do not have claim preclusive effect against section 43(a) lawsuits in federal district court.6
2.
In reaching this result, we are unpersuaded by Howard‘s argument that Beasley could and should have “pursu[ed] his actions against Howard in district court
We disagree with Howard‘s argument. Giving TTAB cancellation proceedings claim preclusive effect against district court infringement suits would be inconsistent with the federal statutory scheme of the Lanham Act and the TTAB‘s role as the principal forum for cancellation actions. See Restatement (Second) of Judgments § 26 cmts e-f. Assertions of claim preclusion are “readily denied when the remedies sought in the second action could not have been sought in the first action, so long as there was good reason to maintain the first action in a court or in a form of proceeding that could not afford full relief.”
Such “good reason” exists here. Inter partes proceedings before the TTAB provide an expedited vehicle to protect both the petitioner and the public from an invalid trademark regardless of how that mark is used, and require more limited discovery and proof than do suits for infringement. See 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition §§ 20:1, 20:40 (5th ed. 2021) (describing cancellation as a “second backstop” to the PTO‘s ex parte review of trademark applications); see also B & B, 575 U.S. at 145. If a petitioner forsook any future infringement claims against the opposing party by pursuing an opposition or cancellation action before the TTAB, that loss of rights would “negate and short-circuit the power of the [TTAB] to consider such cases.” 5 McCarthy, supra, § 30:110; see also Airs Aromatics, LLC v. Victoria‘s Secret Stores Brand Mgmt., Inc., 744 F.3d 595, 599 (9th Cir. 2014) (interpreting district court jurisdiction so as to “preserve the use of actions before the [TTAB] as the primary vehicle for cancellation“).
We thus have made clear that even though a federal district court “has concurrent power to order cancellation,” “a petition to the [TTAB] is the primary means of securing a cancellation.” Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 873 (3d Cir. 1992). To this end, a district court‘s power to grant cancellation to a plaintiff is remedial, “rather than an independent basis for federal jurisdiction.” Airs Aromatics, 744 F.3d at 599 (quoting Nike, Inc. v. Already, LLC, 663 F.3d 89, 98 (2d Cir. 2011)); see also 2 Anne Gilson Lalonde, Gilson on Trademarks § 4.10[1] (2021) (describing court power over registration as “a remedial provision“). Because the Lanham Act‘s cancellation provision,
effect to TTAB proceedings against subsequent infringement suits would penalize trademark holders who promptly oppose or seek to cancel an invalid mark, rather than delay litigation until that party could assert all possible causes of action in the District Court. A rule encouraging such delay would moreover stand in tension with
We will not apply claim preclusion in a way that encourages litigants to sit on their claims and undermines the Lanham Act‘s adjudicative mechanisms. As a result, we reject Howard‘s invitation to force plaintiffs to choose between expeditiously petitioning the TTAB and vindicating eventual infringement claims in federal court. We therefore will not apply claim preclusion to Beasley‘s infringement claims here.
C.
Howard raises the specter of “relitigation of claims” that would “substantially increase the likelihood of inconsistent decisions[,] undercut reliance on judicial action[,] and stifle investment in brand promotion.” Howard Br. 42. But the application of the doctrine of issue preclusion will resolve any concerns about relitigation and finality here. See V.V.V., 946 F.3d at 546-47 (“To the extent a party before the TTAB litigates an issue that also arises in infringement proceedings before a federal district court, issue preclusion would bar relitigation.“).
Federal issue preclusion is a narrower doctrine than claim preclusion and prevents “a party from relitigating an issue actually decided in a prior case and necessary to the judgment.” Lucky Brand Dungarees, 140 S. Ct. at 1594. We apply issue preclusion from TTAB proceedings to section 43(a) suits where “an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment . . . in a subsequent action between the parties, whether on the same or a different claim.” B & B, 575 U.S. at 148 (quoting Restatement (Second) of Judgments § 27); see also Karns v. Shanahan, 879 F.3d 504, 514 n.3 (3d Cir. 2018) (“The elements for [issue preclusion] are satisfied when: ‘(1) the issue sought to be precluded [is] the same as that involved in the prior action; (2) that issue [was] actually litigated; (3) it [was] determined by a final and valid judgment; and (4) the determination [was] essential to the prior judgment.‘” (quoting Nat‘l R.R. Passenger Corp. v. Pa. Pub. Util. Comm‘n, 342 F.3d 242, 252 (3d Cir. 2003))).
Beasley concedes in his briefing that issue preclusion applies to any fraud claim he asserted below. Beasley wisely limited his challenge on appeal only to the District Court‘s dismissal of his section 43(a) claim, and we agree that issue preclusion bars any claim in Beasley‘s complaint seeking to cancel Howard‘s trademark on the
We also are unpersuaded by Howard‘s argument that we should affirm the District Court‘s judgment on the alternate ground that his right to use the ‘469 mark is incontestable.
IV.
For the foregoing reasons, we will affirm in part the District Court‘s order to the extent it dismisses any claim that Howard defrauded the PTO, and will otherwise reverse and remand the order of the District Court.
CHAGARES
CIRCUIT JUDGE