Expensify Inc. v. Swappoint AG

Background

Expensify, Inc. brought a trademark dispute against Swappoint AG and Karmapoint, described as jointly owned Swiss providers of a mobile application and website. Expensify provides expense-reporting services and uses the “Karma Points” mark with its corporate credit card’s rewards program. Karmapoint uses the “Karmapoint” mark for an application through which users exchange recognition for good deeds.

Expensify’s amended complaint asserted four claims: a declaration that it did not infringe the defendants’ registered trademark; cancellation of that registration for lack of a genuine intent to use the mark; liability for a false or fraudulent trademark registration; and a declaration that it did not infringe common-law trademark rights. The court had previously denied the defendants’ motion to dismiss for lack of personal jurisdiction.

Expensify also filed a cancellation proceeding before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office. That proceeding concerns whether the defendants’ registration should be cancelled because they lacked a genuine intent to use the mark. The defendants moved to stay, or pause, the federal case until the Board proceeding ended. They argued that the Board’s decision could have a preclusive effect and that a stay would promote efficiency. If the motion were denied, they requested fourteen days to respond to the complaint.

Legal standards

The court considered two possible grounds for a stay. First, the primary-jurisdiction doctrine can allow a court to pause a case or dismiss a complaint without prejudice while an administrative agency resolves an issue within the agency’s special competence. The court explained that this doctrine is used only in limited circumstances, including when an agency’s expertise or uniform administration is needed.

Second, under the Supreme Court’s decision in Landis, a federal court has discretionary authority to stay proceedings. The court must balance possible harm from a stay, hardship to the party required to proceed, and whether a stay would simplify or complicate the issues, evidence, and legal questions.

Analysis

The court denied the motion under either proposed basis. It reasoned that the federal case raised issues not presented in the Board cancellation proceeding. In particular, even if the Board cancelled the defendants’ registration and that decision had preclusive effect, Expensify’s request for a declaration that it did not infringe common-law trademark rights would remain unresolved.

The court also found that discovery would likely overlap in the two proceedings, so continuing the federal case would not necessarily create unnecessary duplication. The federal case was still at an early stage, and the same progress could occur during that time and still be required after a stay ended. The court further noted that Congress had not made the Board the exclusive expert on trademark matters and that overlapping proceedings in this area are not uncommon.

Disposition

The court denied the defendants’ motion to stay. It ordered that the defendants’ answer was due December 4, 2023, and stated that the order disposed of ECF No. 40. The order did not decide the underlying trademark claims.