On August 18, 2016, Judge Paula Xinis of the U.S. District Court for the District of Maryland granted client Heroes, Inc.'s Motion to Dismiss for lack of subject matter jurisdiction in a trademark infringement action brought pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201(a). While district courts outside the Fourth Circuit have considered subject matter jurisdiction issues in the context of a pending TTAB dispute, this decision appears the first of its kind in the District of Maryland. The District Court found that plaintiff The Hogs and Heroes Foundation Inc.'s ("HHF") allegations regarding "threatening" statements made in the course of settlement discussions, a pending dispute before the Trademark Trial and Appeal Board (TTAB), and Heroes' litigation history were insufficient to satisfy the Article III "case or controversy" requirement.
Heroes, Inc. ("Heroes") is a D.C.-based charitable organization that has provided support to the families of fallen law enforcement officers and firefighters in the D.C. metropolitan area for over 50 years. Heroes owns multiple federal registrations for its name and mark HEROES.
In October 2015, Heroes initiated a TTAB opposition to oppose the registration of two trademark applications owned by HHF for two mark incorporating the "HEROES" marks in "HOGS AND HEROES FOUNDATION" for use in connection with overlapping services. Prior to opposing HHF's applications, the parties were engaged in settlement discussions, and after Heroes initiated the opposition, the parties agreed to suspend the proceeding to allow for continued negotiations.
After a few months of negotiations marked by a handful of phone calls and emails, HHF filed a federal lawsuit with the District of Maryland seeking a declaration that HHF's continued use of its trademarks was unlikely to cause consumer confusion in violation of the Lanham Act. HHF alleged that it had a "reasonable apprehension of suit" based on the statements made by Heroes' counsel in the course of confidential settlement communications, Heroes' filing of the TTAB opposition, and Heroes' prior enforcement of its trademarks. Applying the MedImmune standard established by the Supreme Court in 2007, the District Court found that HHF had not presented a dispute that was "definite and concrete, touching the legal relations of parties having adverse legal interests."
In assessing the relevancy of the parties' settlement discussions, the District Court relied on the S.D.N.Y. decision Vina Casa Tamaya S.A. v. Oakville Hills Cellar, Inc., 784 F. Supp. 2d 391 (S.D.N.Y. 2011), which held that "the fact that settlement discussions have linked the issues of registration and use does not push this dispute into the territory of federal jurisdiction." Id. at 396. Moreover, the opinion noted that Heroes' counsel's refusal to provide a blanket covenant not to sue did not equate to a threat of litigation. During oral argument, Judge Xinis also queried whether HHF's reliance on confidential settlement discussions as a basis for subject matter jurisdiction would result in the chilling of further settlement negotiations.
In assessing Heroes' litigation history, the District Court found that Heroes' two prior infringement actions brought against third parties over the last 50 years did not support a claim of reasonable apprehension of suit. Further, Heroes' activity before the TTAB, in opposing HHF's applications and others, did not reflect an actual controversy between the parties.
Finally, Judge Xinis held that even if subject matter jurisdiction did exist, it would exercise its discretion to decline to hear the case because the "heart of this matter concerns the registration of [HHF's] service mark which will properly be resolved in the TTAB proceeding already underway."
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