Foreign registrations provide U.S. standing for cancellation counterclaims under treaty, says TTAB

The United States Trademark Trial and Appeal Board (“TTAB” or the “Board”) recently considered the effects of a foreign trademark owner’s prior rights outside the U.S. under the Pan-American Convention on U.S. trademark enforcement proceedings in Lacteos de Hondura SA v. Industrias Sula S. De RL de CV (Opp. No. 91243095, February 28, 2020) (precedential). The decision highlights a somewhat obscure route to achieve standing in US trademark proceedings before the TTAB. Ownership of an international registration in a member country to the Convention may, the TTAB held, be sufficient to establish standing sufficient to enable trademark owners to pursue cancellation of problematic marks in the United States. In this way, the Convention is an exception to the territoriality principle foundational to trademark law that provides that trademark rights are strictly territorial in scope.

What’s the Pan-American Convention?

The General Inter-American Convention for Trade Mark and Commercial Protection of Washington, 1929 (the "Pan-American Convention" or “Convention”) is an international treaty between the United States, Peru, Paraguay, Panama, Honduras, Haiti, Guatemala, Cuba, and Columbia governing the trademark rights and obligations of member states and private parties within those member states.

A Tale of Two SULAs

Industrias Sula (the “Applicant”), a Honduran company which owned and previously registered the trademark RICA SULA in Honduras, sought to register the same mark in the U.S. for “snacks, namely, plantain chips, tortilla chips, and potato chips” in Class 29 and “cheese curls and cheese balls” in Class 30. Lacteos de Honduras (the “Opposer”) opposed registration of Applicant’s mark citing priority and likelihood of confusion with its own SULA and SULA (& Design) trademark registrations in the US covering “spreads, namely vegetable oil and dairy cream based blends” in Class 29. In response, Applicant filed a counterclaim under Article 8 of the Convention alleging that it was entitled to seek cancellation of Opposer’s marks based on its alleged rights in Honduras that predated Opposer’s use and registration of its marks in the U.S. Opposer filed a motion to dismiss the counterclaims for, inter alia, lack of standing.

While the Board agreed that the Convention provided a mechanism for a foreign trademark owner to establish the standing required to seek cancellation of a registration in the U.S., it ultimately dismissed Applicant’s counterclaim for failure to state a claim.

Under Article 8 of the Convention, a foreign trademark owner may petition for cancellation of an interfering mark in the U.S. when registration is “refused.” At issue was the question of the meaning of the term “refusal” under the Convention. Although Applicant’s registration did not receive a final refusal of registration, the TTAB held that the refusal requirement “includes not only a refusal resulting from ex parte examination, but also the potential for refusal resulting from the institution of an opposition proceeding.” Construing otherwise “would deprive a potential counterclaimant of its ability to file a compulsory counterclaim.” Accordingly, the TTAB concluded that Opposer’s opposition proceeding established the potential for refusal sufficient to establish standing within the meaning of Article 8 of the Convention.

Next, the Board considered whether Applicant’s allegations were sufficient to assert a counterclaim based on priority. For a trademark owner of a “refused” application to successfully seek cancellation of an interfering mark in the United States, it must prove: (1) that it has priority in its mark in a contracting country; and (2) show either that (a) the cancellation defendant had actual knowledge of the trademark owner’s rights for specific goods on which the interfering mark is used; or (b) the trademark owner/cancellation plaintiff had actually used the applied-for mark in the U.S. before the application or registration of the interfering mark.

The Board concluded that Applicant failed to meet its burden of proof regarding Opposer’s actual knowledge because the parties’ goods (as outlined in their trademark filings) were not the same. As the phrase “specific goods” under Article 8 means “the same goods” in the TTAB’s view and Applicant failed to allege that it “provides the same goods under its RICA SULA marks as Opposer provides under its marks,” Applicant “failed to allege in its counterclaim that Opposer had prior knowledge of Applicant’s use in Honduras for the same goods for which Opposer applied to register its ‘interfering’ mark.”

Lessons Learned & Key Takeaways

The case demonstrates that the Pan American Convention, a treaty that is likely unknown to many trademark litigants, offers a potentially important exception to the standard territoriality principles that govern trademark law. The Convention embues foreign trademark applicants with priority in other countries with the necessary standing, in some situations, to petition to cancel a U.S. trademark registration on the basis of these foreign registrations, either when their mark has been refused registration during ex parte examination or during an opposition proceeding. Usually foreign rights and registrations only are relevant when the trademark owner is able to establish a threshold level of fame in its mark – a finding reserved to a very special and narrow category of marks. The Convention offers another potentially valuable tool for a foreign registrant’s arsenal when seeking protection for a longstanding foreign mark in the U.S.

Hogan Lovells Trademark group is available to advise clients on questions concerning the TTAB’s decision.

Authored by Julia Anne Matheson, Brendan C. Quinn, and Toni D. Cannady