I.O.B. Realty, Inc. v. Patsy's Brand, Inc.

Background

I.O.B. Realty, Inc. and Isa Brija brought an action under the Declaratory Judgment Act seeking a declaration that their licensing of the unregistered PATSY’S trademark to a manufacturer of pizzeria ovens did not infringe the defendants’ trademarks. The complaint alleged that I.O.B. owned the common-law mark PATSY’S PIZZERIA for restaurant and franchising services, while Brija owned the common-law trademark PATSY’S for use with ovens and had applied to register it with the United States Patent and Trademark Office.

Patsy’s Brand, Inc. had opposed I.O.B.’s application before the Trademark Trial and Appeal Board, arguing that the mark was likely to cause confusion, mistake, or deception in view of the defendants’ marks. The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and under Rule 12(b)(6) for failure to state a claim. They alternatively moved under Rule 12(f) to strike portions of the complaint.

Jurisdictional Standard

The Declaratory Judgment Act permits a federal court to declare the parties’ rights only when there is an “actual controversy.” This requires a substantial dispute between parties with opposing legal interests that is sufficiently immediate and real to justify a declaratory judgment. In a trademark non-infringement action, the plaintiff generally must show that the defendant sought or threatened to prohibit the plaintiff’s use of the mark.

The court explained that a dispute before the Trademark Trial and Appeal Board about registration, standing alone, does not establish an actual controversy for a declaratory-judgment action. An opposition proceeding combined with an explicit threat of litigation may be enough, but the court found no such threat here.

Analysis

The court determined that the defendants had not sued the plaintiffs, threatened to sue them, sent a cease-and-desist letter, or engaged in another activity indicating an intention to bring an infringement action. The plaintiffs argued that the defendants’ refusal to sign a promise not to sue created an imminent threat, but the court held that refusing such a promise, without a prior threat of suit, was insufficient.

The court also held that the defendants’ opposition to registration did not amount to an indirect infringement threat. The statements about likely confusion merely asserted the standard relevant to the trademark-registration proceeding. The plaintiffs’ allegations about the defendants’ prior trademark litigation, conduct before the Patent and Trademark Office, and surveillance likewise did not establish a sufficiently immediate and real controversy because the earlier disputes involved different trademarks and applications.

Disposition

Judge Analisa Torres granted the defendants’ motion to dismiss for lack of subject matter jurisdiction. The complaint was dismissed without prejudice, and the case was closed. Because the court found that it lacked jurisdiction, it did not reach the defendants’ Rule 12(b)(6) motion for failure to state a claim or Rule 12(f) motion to strike portions of the complaint.