ABSTRACT

The Tenth Circuit overruled its prior precedent, in light of the Supreme Court's decision in MedImmune, supplanting the "reasonable apprehension of suit" test for declaratory judgement ("DJ") jurisdiction to focus on whether "all the circumstances" show a substantial controversy between adverse parties "of sufficient immediacy and reality." The Circuit Court found the new test was met where the senior user of the SURE FOOT mark had filed several pending TTAB proceedings against a junior user's applications to register the SUREFOOT mark and also, seven years earlier, had sent cease-and-desist letters and threatened infringement litigation against the junior user. Remand was required, however, for the district court to consider five discretionary factors in ultimately deciding whether to exercise DJ jurisdiction.

CASE SUMMARY

PROCEDURAL HISTORY

The district court dismissed Surefoot LC's ("Surefoot UT") DJ suit against Sure Foot Corp. ("Sure Foot ND"), seeking a declaration of noninfringement for the SUREFOOT mark, based on a lack of a reasonable apprehension of imminent suit under then-current Tenth Circuit precedent. After the district court entered judgment, the Supreme Court appeared to expressly reject the "reasonable apprehension test" in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 119 (2007), and articulated new standards for DJ cases or controversies under Article III. Surefoot UT appealed, arguing that DJ jurisdiction existed under the new MedImmune standards.

FACTS

Sure Foot ND has sold shoe traction and shoe-related products under the SURE FOOT mark since 1985, which it registered in connection with nonskid shoe pads. Surefoot UT started manufacturing custom-fit ski boots and selling them under the SUREFOOT mark in 1994. In 1998, Sure Foot ND learned of Surefoot UT's use and sent a cease-and-desist letter alleging a likelihood of confusion. The parties initially corresponded and attempted to settle, but each held their ground and ended communications in late 1999 without any resolution.

Surefoot UT subsequently filed an application to register SUREFOOT in connection with certain of its products, which was published without opposition by Sure Foot ND, and eventually registered in June 2002. Sure Foot ND filed a cancellation action with the TTAB almost immediately thereafter and, over the next few years, opposed four other Surefoot UT applications for the SUREFOOT mark covering different goods, all of which were eventually consolidated into a single proceeding at the TTAB (Opposition No. 91153685).

In June 2006, believing that Sure Foot ND would continue to oppose its marks and also eventually sue for infringement, Surefoot UT filed its DJ action in the District of Utah. Under the then-precedential "reasonable apprehension of imminent suit" test, the district court dismissed the suit because (1) any apprehension of suit based on the 1998-99 discussions had dissipated by 2006; and (2) the TTAB action did not offer a reasonable basis to fear litigation.

ANALYSIS

The Tenth Circuit reversed and remanded. Most importantly, it reversed its previous precedent requiring a "reasonable apprehension of imminent suit" to support DJ jurisdiction in light of the Supreme Court's MedImmune decision. Even though MedImmune did not expressly overrule the previous test and discussed it only in a footnote, the Supreme Court found that DJ jurisdiction existed, even where the existence of a live controversy hinged on a future contingency entirely within the DJ plaintiff's control, i.e., whether to continue paying royalties under a license agreement. The Tenth Circuit found the MedImmune facts squarely at odds with the reasonable apprehension test, thus requiring a change in precedent. The Circuit Court also rejected Sure Foot ND's arguments that MedImmune was restricted only to patent cases or that it only applied to parties in privity, such as a licensee.

The Tenth Circuit relied upon MedImmune's own language and decided that "the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Appreciating that the facts here were far more concrete than those in MedImmune's "unfulfilled future contingency," the Court easily found DJ jurisdiction existed based upon all the circumstances and that jurisdiction would be unquestionable in a "counterfactual" straight infringement suit brought by Sure Foot ND. The years-old infringement allegations factored into the analysis, since they had never been withdrawn. And even though the pending TTAB proceedings were not conclusive evidence of a live infringement dispute, the "burst of activity" at the TTAB some years after those allegations were originally made signaled Sure Foot ND's continued belief of infringement. Notably, however, the Court also declined to rule whether DJ jurisdiction would exist beyond the exact combination of facts present in this case and specifically noted that it did not decide whether a single TTAB action or single cease-and-desist letter would give rise to DJ jurisdiction under MedImmune.

On remand, the Court offered five factors for the district court to consider, in its discretion, in determining whether or not to exercise DJ jurisdiction, including "whether a declaratory action would settle the controversy," "whether it would serve a useful purpose in clarifying the legal relations at issue," and "whether there is an alternative remedy which is better or more effective."

CONCLUSION

Although limited to its facts, the Tenth Circuit's opinion replaces the "reasonable apprehension of suit" test in favor of an assessment of the totality of the circumstances. Notably, those circumstances can include years-old, unwithdrawn infringement allegations followed by instituting standard TTAB proceedings. Despite the potentially lower bar for DJ actions, however, the final decision to exercise DJ jurisdiction rests in the district court's discretion.