MAD ELF vs. RUDE ELF’S REDERVE – Battle of the Microbrews

Troegs Brewing of Harrisburg, PA has petitioned the Trademark Trial and Appeal Board to cancel the trademark registration of Fegley Brew Works of Allentown. Because the federal courts have primary jurisdiction over a trademark registration matter, it is prudent to consider filing an action in the federal court and suspending the proceeding before the Trademark Board. The client’s needs and financial resources may dictate how the case should proceed.

If you choose to first conduct the cancellation proceeding before the Trademark Office, you will get a second bite at the apple at the federal court level. This is because the trademark administrative proceedings (oppositions and cancellations) are appealable to the federal courts. The standard of review is de novo – a new case – like hitting the reset button on the decision.

Another factor to consider is that the Trademark Trail and Appeal Board (TTAB) only has the power to decide whether the trademark should be registered. The TTAB has no power to stop a party from using a trademark, or to award damages for trademark infringement. Accordingly, if the client is selling product under the mark, and the client loses the TTAB, the other party will likely file a second case in the federal courts to obtain damages and injunctive relief. If you win at the TTAB, the other party may take the appeal. In either instance, the client faces re-litigating the entire case a second time at twice the cost.

Typically the determinative factor of whether to suspend the TTAB case and file a federal action is litigation cost. As discussed above, there are two bites at the litigation apple: one at TTAB level, and the other in the federal courts. Once these cases start, they are extremely difficult to stop without giving up rights. As of 2009, the average cost of an opposition / cancellation proceeding before the trademark office is around $100,000. Ask any client if they want to spend $100,000 on an administrative proceeding that only decides registrability of a trademark application, and they will likely say no. Then tell the client that it is highly likely that an infringement litigation will happen over the same trademarks to resolve the remaining issues – to the tune of an additional $290,000 (average cost).

While there are valid reasons to continue with the proceeding before the Trademark Trial and Appeal Board, they are few. More often than not, it is economically prudent to advise the client of the cost saving option of taking the dispute out of the hands of the TTAB by filing a federal court action.