DUKE UNIVERSITY v. UNIVERSAL PRODUCTS INC.

Filing 17

MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 5/6/2014; that Defendant's Motion to Stay (Docket Entry 9 ) is DENIED. (Sheets, Jamie)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

DUKE UNIVERSITY,

)
)
)
)
)
)
)
)
)

Plaintiff,
v.
UNIVERSAL PRODUCTS INC.,
Defendant.

1:13CV701

MEMORANDUM OPINION AND ORDER
This

case

comes

before

the

undersigned

United

States

Magistrate Judge on Defendant’s Motion to Stay Proceedings (Docket
Entry 9).

(See Docket Entry dated Feb. 25, 2014.)

For the reasons

that follow, the Motion will be denied.1
I.

Background

The Complaint identifies Plaintiff as “a private nonprofit
research university that provides graduate, undergraduate and other
educational programs in North Carolina and at other locations
around the world and that, among many other endeavors, fields

1

The undersigned Magistrate Judge will enter an order
because pretrial motions of this sort do not appear in the list of
matters requiring a recommendation, see 28 U.S.C. § 636(b)(1)(A) &
(B), and because federal appellate courts uniformly have approved
disposition of such motions by Magistrate Judges, see S.E.C. v.
CMKM Diamonds, Inc., 729 F.3d 1248, 1259-60 (9th Cir. 2013);
PowerShare, Inc. v. Syntel, Inc., 597 F.3d 10, 14 (1st Cir. 2010);
see also Virgin Islands Water and Power Auth. v. General Elec.
Int’l Inc., __ F. App’x __, __, 2014 WL 1045414, at *2 (3d Cir.
Mar. 19, 2014) (unpublished) (finding Magistrate Judge authorized
to rule on motion to compel arbitration, effectively staying the
case).

nationally prominent Division 1 athletic teams” (Docket Entry 1,
¶ 7) and Defendant as “a corporation of the State of Maryland”
(id., ¶ 3) that manufactures, among other things, automobile
cooling systems leak sealants (see id., ¶ 17).

Plaintiff brings

this suit for trademark infringement and related claims against
Defendant for unauthorized use of Plaintiff’s registered marks.
(Id., ¶¶ 1, 27-64.)
According

to

the

Complaint,

Plaintiff

“owns

many

marks

consisting of the terms BLUE DEVIL and BLUE DEVILS and variants
thereof, as well as marks consisting in whole or substantial part
of the terms BLUE and DEVIL, and design marks including its famous
BLUE DEVIL mascot.”

(Id., ¶ 8.)

Plaintiff reports using said

marks since approximately 1923 (id., ¶ 9) and possessing at least
13 United States Trademark Registrations for them (id., ¶ 11).
Further, the Complaint states that Plaintiff sells and/or licenses
a wide variety of products bearing its marks, including automotive
accessories, both at retail premises and on the Internet, and
provides “educational and entertainment services related to motor
vehicle engineering and racing, including its Motorsports team,
founded in 1996, which utilizes BLUE DEVIL Marks on its race cars
and in other ways.”

(Id., ¶ 14.)

The Complaint alleges that, in 2009, Defendant “applied to
register the unitary word “BLUEDEVIL” as a trademark for automobile
cooling system leak sealants . . . .”

2

(Id., ¶ 17.)

Plaintiff

allegedly entered into discussions with Defendant and ultimately
agreed to forego any opposition of Defendant’s application in
exchange for restrictions on the use of Defendant’s mark.
¶ 19.)

(Id.,

As a result, Defendant owns a United States Trademark

Registration for that mark.

(Id.)

According to the Complaint, “[i]n 2011, Defendant filed two
new trademark applications for BLUEDEVIL PRODUCTS for ‘wholesale
and retail store services and on-line retail and wholesale store
services featuring automotive accessories and automotive leak
sealants, namely, air conditioning leak sealants, cooling system
leak sealants, oil system leak sealants, power steering leak
sealants,

hydraulic

leak

sealants,

head

gasket

leak

sealant,

windshield washer fluid, fuel additives for gas and diesel engines,
radiator flush, and air conditioning coolant and coolant booster.’”
(Id., ¶ 20 (citation omitted).)

The Complaint alleges that these

applications violate the agreement between Plaintiff and Defendant
concerning Defendant’s original mark and that Defendant’s proposed
marks infringe upon Plaintiff’s registered marks. (Id., ¶¶ 24-26.)
In light of the foregoing facts, Plaintiff’s Complaint asserts
the

following

trademark

claims:

infringement

breach
(id.,

¶¶

of

contract

32-46);

(id.,

false

¶¶

27-31);

designation

of

origin, false descriptions, false representation of association,
dilution (id., ¶¶ 47-52); trademark infringement (common law) (id.,

3

¶¶ 53-59); and unfair and deceptive trade practices (id., ¶¶ 60-64).
Prior to commencing this action, Plaintiff filed an Opposition
to Defendant’s 2011 trademark registration applications before the
Trademark Trial and Appeal Board (“TTAB”).
1.)

(See Docket Entry 13-

In its instant Motion (Docket Entry 9), Defendant “requests

that this action be stayed pending the outcome of the Opposition
action before the TTAB.”

(Docket Entry 10 at 1.)2

Plaintiff

responded (Docket Entry 13) and Defendant replied (Docket Entry
14).
II.

Discussion

Defendant’s instant Motion focuses on the doctrine of primary
jurisdiction to support its request for a stay.
10 at 2-7.)

(See Docket Entry

“The doctrine of primary jurisdiction allows a court

to stay or dismiss a case without prejudice to give the parties a
reasonable opportunity to seek an administrative ruling on ‘some
issue within the special competence of an administrative agency.’”
Sprint Commc’ns Co., L.P. v. NTELOS Tel. Inc., No. 5:11cv00082,
2012 WL 3255592, at *10 (W.D. Va. Aug. 7, 2012) (unpublished)

2

Within the body of its brief in support of the instant
Motion, Defendant also requests an extension of time to answer the
Complaint. (Docket Entry 10 at 1.) This request does not conform
to this Court’s Local Rules. See M.D.N.C. LR 7.3(a) (“Each motion
shall be set out in a separate pleading.”). Moreover, Defendant
filed its Answer to the Complaint (Docket Entry 11) on the same day
it filed the instant request for extension of time. As Plaintiff
acknowledges (see Docket Entry 13 at 1 n.1), that filing, which
falls within the time the Court gave Defendant to answer (see Text
Order dated Dec. 3, 2013), renders Defendant’s extension request
moot.
4

(quoting

Reiter

v.

Cooper,

507

U.S.

258,

268

(1993)).

The

doctrine, in part, “is intended to recognize that, with respect to
certain matters, ‘the expert and specialized knowledge of the
agencies’ should be ascertained before judicial consideration of
the legal claim.”

Goya Foods, Inc. v. Tropicana Prods., Inc., 846

F.2d 848, 851 (2d Cir. 1988) (quoting United States v. Western Pac.
R.R. Co., 352 U.S. 59, 64 (1956)).
The First, Second, and Ninth Circuits have addressed the
applicability of primary jurisdiction to the realm of trademark law
and determined that, for the most part, the doctrine does not
justify a stay of federal court proceedings pending completion of
a registration proceeding before the TTAB.

See Rhoades v. Avon

Prods., Inc., 504 F.3d 1151, 1165 (9th Cir. 2007); PHC, Inc. v.
Pioneer Healthcare, Inc., 75 F.3d 75, 80-81 (1st Cir. 1996); Goya
Foods, 846 F.2d at 852-54.

The first of those cases involved a

party seeking a declaration that it had not infringed on another’s
marks

and

registration.

requesting

cancellation

of

Goya Foods, 846 F.2d at 850.

the

other

party’s

The Second Circuit,

recognizing at the time that neither the United States Supreme
Court nor any of the Courts of Appeal had addressed the impact of
primary jurisdiction in trademark cases, began with a discussion of
the process of trademark registration:
The Lanham Act provides for federal trademark
registration and authorizes the PTO [Patent and Trademark
Office] to refuse registrations of a mark that “so
resembles a mark registered in the [PTO] or a mark or
5

trade name previously used in the United States by
another and not abandoned, as to be likely, when applied
to the goods of the applicant, to cause confusion, or to
cause mistake, or the deceive . . . .”
15 U.S.C.
§ 1052(d).
An opposition to a registration may be
initiated by “[a]ny person who believes that he would be
damaged by the registration of a mark,” 15 U.S.C. § 1063,
and the TTAB is established “to determine and decide the
respective
rights
of
registration”
in
contested
proceedings, 15 U.S.C. § 1067.
An applicant for
registration or party to an opposition or cancellation
proceedings disappointed with the decision of the TTAB
may either appeal the decision to the United States Court
of Appeals for the Federal Circuit, 15 U.S.C. § 1071(a)
(Supp. IV 1986), or bring a civil action in a United
States District Court, 15 U.S.C. § 1071(b).
Id. at 852 (alterations in original).
The

court

then

noted

that

the

provision

allowing

a

disappointed party to bring a civil action in a District Court, 15
U.S.C. § 1071(b), “is not, strictly speaking, an ‘appeal’ at all,
but an independent judicial proceeding provided as an alternative
to a direct appeal,” and that, although the determination of the
TTAB “is considered controlling in the civil action on issues of
fact unless the contrary is established by testimony which in
character and amount carries thorough conviction, . . . the civil
action before the District Court is intended to be a trial de
novo.”

Id. at 852-53 (internal quotation marks and citations

omitted). Based on the foregoing considerations, the court decided
that “[t]his scheme of ‘review’ is thus some distance from the
traditional arena of primary jurisdiction, a doctrine allocating
the law-making power over certain aspects of commercial relations.”

6

Id.

at

853

(emphasis

in

original)

(internal

quotation

marks

omitted).
In that regard, the court observed that, under the Lanham Act,
“a certificate of registration . . . is prima facie evidence of the
validity of the registration, of the registrant’s ownership of the
mark, and of the registrant’s exclusive right to use the mark in
commerce on the goods or services specified therein,” but that,
because the presumption remains rebuttable, “by obtaining (or
resisting cancellation of) a federal registration a party does not
significantly affect the course of an infringement action.” Id. at
854 (internal quotation marks omitted).

Similarly, if a party

fails to obtain the desired registration, such failure “would
establish no legally compelled adverse consequences” against said
party in an infringement action.

Id.

Ultimately, the Second

Circuit concluded that, although a stay may be warranted where “a
district court action involves only the issue of whether a mark is
entitled to registration,” id. at 853, in a suit that concerns
infringement, “the interest in prompt adjudication far outweighs
the value of having the views of the PTO,” id. at 853-54.

Accord

Homemakers, Inc. v. Chicago Home for the Friendless, 313 F. Supp.
1087

(N.D.

Ill.

1970)

(dismissing

as

premature

action

for

declaratory judgment that plaintiff’s trademark was duly registered
and blocking cancellation action), aff’d, 169 U.S.P.Q. 262, 1971 WL
16689 (7th Cir. 1971).

7

The First Circuit, considering a similar case in which the
plaintiff sought declaratory judgment that its own mark had not
infringed upon the rights of another and that it possessed the
right to maintain its registration of said mark, noted two factors
it found compelling in denying a request for a stay.
F.3d at 78, 80.

PHC, Inc., 75

First, similar to the Second Circuit’s discussion

in Goya Foods, the court noted that “the [TTAB] is not an ordinary
administrative agency whose findings control unless set aside after
court review under a highly deferential standard.”

Id. at 80.

It

also acknowledged the availability of a de novo proceeding in the
district court, as well as the availability of suits in federal
court without any prior resort to the TTAB.

Id.

Second, the court

stated that, “at least where an infringement claim is involved whether

directly

asserted

by

an

‘owner’

or

challenged

declaratory action - there is often some urgency.”

Id.

in

a

Moreover,

“the [TTAB] cannot give relief for an infringement claim, either
injunctive or by way of damages.”

Id.

The court, in adopting the same conclusion as the Second
Circuit, went on to observe that “[t]he Second Circuit did not
decide whether, given that the infringement claim was to be heard
by the district court at once, a companion declaratory claim
addressed to the validity of a federally registered mark should
also be heard despite the pendency of the [TTAB] proceeding.”

Id.

It concluded that “both claims should be heard if this course is

8

more efficient; otherwise, not.”

Id. at 81.

It explained that,

where an infringement action will proceed, “it normally makes sense
for the court to resolve a companion validity claim at the same
time, if the issues underlying the two claims overlap to an extent
that makes this course sensible.”

Id.

In a similar case, the

Ninth Circuit adopted the same standard of efficiency in such
circumstances.

Rhoades, 504 F.3d at 1165.

In the instant case, Defendant asks this Court to stay the
action pending a resolution before the TTAB because the TTAB’s
decision “will ultimately be a material aid in resolving the
pending litigation . . . .”

(Docket Entry 10 at 4.)

Defendant

also argues that “staying the federal litigation would permit the
use of discovery already conducted by the parties in the TTAB
matter without subjecting them to duplicate discovery in the
federal litigation or further delaying the resolution of their
issues.” (Id. at 5.) Defendant cites several older district court
cases in support of its argument (id. at 4-5), but the Court does
not find such authority compelling in this context.

The sole case

cited by Defendant that deals with the question of stay pending
existing TTAB proceedings involved claims “seeking injunctive
relief which would grant plaintiff the exclusive use of the name
[at issue].”

Driving Force, Inc. v. Manpower, Inc., 498 F. Supp.

21, 22 (E.D. Pa. 1980). That circumstance appears to represent the
type of case (unlike this case) which the First and Second Circuits

9

contemplated as the exception to the general inapplicability of
primary jurisdiction in trademark suits. See PHC, Inc., 75 F.3d at
81 (“If no infringement claim were made in the district court but
only a claim that a federal registration was or was not valid, a
good argument might exist . . . for awaiting the completion of any
pending [TTAB] proceeding addressed to the mark’s validity.”); Goya
Foods, 846 F.2d at 853 (“If a district court action involves only
the issue of whether a mark is entitled to registration . . . the
doctrine
. . . .”).

of

primary

jurisdiction

might

well

be

applicable

Moreover, as Plaintiff points out (Docket Entry 13 at

10), the court in Driving Force later refused to continue the stay
pending appeal of the TTAB decision, recognizing the limited impact
of the decision and the fact that the issues before the court
remained broader than the matters before the TTAB and its appellate
body.

The Driving Force, Inc. v. Manpower, Inc., 538 F. Supp. 57,

59-60 (E.D. Pa. 1982).
Defendant also cites two cases involving patent disputes in
which courts stayed the claims pending resolution of proceedings
before the PTO to resolve contests over priority of invention.
(Docket Entry 10 at 4 (citing American Tel. & Tel. Co. v. Milgo
Elec. Corp., 416 F. Supp. 951 (S.D.N.Y. 1976); Research Corp. v.
Radio Corp. of Am., 181 F. Supp. 709 (D. Del. 1960)).)

These cases

do not address TTAB proceedings. Moreover, those cases and Driving
Force all predate the above-discussed First, Second, and Ninth

10

Circuit

cases.

This

Court

finds

those

appellate

decisions

persuasive in the context of evaluating the merits of a stay
pending resolution of TTAB proceedings, particularly as to cases
involving circumstances of the sort present here.
Most notably, the instant case involves claims that the TTAB
cannot directly resolve, including damages claims for various types
of infringement, as well as breach of contract.
1, ¶¶ 27-64.)

(See Docket Entry

Where “a district court suit concerns infringement,

the interest in prompt adjudication far outweighs the value of
having the views of the [TTAB].”

Goya Foods, 846 F.2d at 853-54.

Arguably, however, the instant case may present the type of
situation contemplated by the Second Circuit, where a “declaratory
claim addressed to the validity of a federally registered mark”
accompanies an infringement claim.

PHC, Inc., 75 F.3d at 80-81.

Plaintiff’s Complaint does not ask the Court to rule on the
validity

of

registered

either

or

its

proposed

own

registered

marks.

(See

marks

Docket

or

Entry

Defendants
1

at

19.)

However, it does request that the Court “[p]ermanently enjoin[]
Defendant . . . from infringing Plaintiff’s BLUE DEVIL Marks.”
(Id.)

To

the

extent

this

demand

addresses

the

question

of

registration validity, this Court will nevertheless deny any stay
because allowing all of the claims to proceed together represents
the more efficient course.

See Rhoades, 504 F.3d at 1165; PHC,

Inc., 75 F.3d at 81.

11

Defendant argues that the following factors demonstrate that
staying this action best serves the interest in efficiency:
(1) the TTAB’s determination “will at least be a material aid
in ultimately deciding the issues in this federal litigation case”
(Docket Entry 10 at 4);
(2) the proceedings before the TTAB commenced one year before
the instant case, the discovery phase has concluded in that
proceeding, and “the findings of fact already performed by the TTAB
can be utilized by this Court, which avoids the necessity for
further findings and prevents duplicated findings of fact” (id. at
4-5);
(3) “it would prejudice the parties in this case to have to
litigate and defend similar or identical claims in multiple forums
due to the risk of inconsistent rulings” (id. at 5); and
(4) no evidence exists of prejudice to Plaintiff should the
Court stay the instant proceedings (id. at 7).
Plaintiff, in turn, contends that the opposition proceeding
before the TTAB “is based on [Defendant’s] ‘intent to use’ the
marks sought to be registered,” whereas the instant litigation
“focuses on what Defendant has actually done, is continuing to do,
and likely will continue to do unless forced to stop . . . .”
(Docket Entry 13 at 2.)

It further argues that the claims in the

instant case greatly exceed the scope of the proceedings before the
TTAB (id. at 9) and that, should the Court stay the instant case

12

until the conclusion of the TTAB proceedings, the TTAB result would
not simplify or shorten the instant case (id. at 11-12).

Finally,

Plaintiff states that “[t]he only benefit from delay would be to
Defendant, which would increase its toehold in the marketplace,
increasing public confusion and diluting the recognition afforded
[Plaintiff’s] BLUE DEVIL marks.”

(Id. at 13.)

On balance, the potential harm to Plaintiff from continued
infringement outweighs any prejudice to Defendant that might arise
from simultaneous proceedings.

Moreover, the result of the TTAB

proceeding would not create any legally binding effect on the
instant case.

See Goya Foods, 846 F.2d at 854.

Finally, to the

extent the claims for injunctive relief before this Court address
the

validity

of

any

registration,

they

appear

insufficiently

distinct from the accompanying infringement claims. See PHC, Inc.,
75 F.3d at 81 (“[I]t normally makes sense for the court to resolve
a companion validity claim at the same time [as an infringement
claim], if the issues underlying the two claims overlap to an
extent that makes this course sensible.”).3

3

Defendant briefly argues that the Court should exercise
the “power inherent in every court to control the disposition of
the causes on its docket with economy of time and effort for
itself, for counsel, and for litigants” (Docket Entry 10 at 2) to
stay this proceeding for the following reasons:
The claims in this case are currently before another
tribunal and have been proceeding there for over a year.
It would be a waste of resources for this Honorable Court
to adjudicate the same issues as are currently pending
before the TTAB; in fact, the findings of fact by the
13

III.

Conclusion

No compelling reason exists to stay this action pending
resolution of the proceedings currently before the TTAB.
IT IS THEREFORE ORDERED that Defendant’s Motion to Stay
(Docket Entry 9) is DENIED.

/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
May 6, 2014

TTAB in the pending proceeding would reduce the need for
additional findings of fact by this [C]ourt and prevent
duplicated procedures that would waste the [C]ourt’s time
and resources.
Furthermore, the parties in the TTAB
proceeding have already conducted discovery. Staying the
federal litigation would permit the use of discovery
already conducted by the parties in the TTAB matter
without subjecting them to addition costs for repeated
discovery in the federal litigation. The parties have
already invested considerable time and costs into the
TTAB proceedings and are moving forward with settlement
negotiations. To add the expense and resources needed
for federal litigation amidst the current proceedings
does not weigh in the interest of justice and prejudices
the parties.
(Id. at 3-4.) For the same basic reasons previously discussed, the
Court rejects Defendant’s foregoing argument. Most significantly,
Defendant’s statement that “[t]he claims in this case are currently
before another tribunal” does not accurately reflect the actual
circumstances (detailed above). In addition, Defendant’s arguments
concerning discovery appear counterintuitive; if the parties have
completed discovery before the TTAB, reproducing that discovery for
this proceeding presumably would not impose significant costs. In
sum, Defendant offers no “‘clear and convincing circumstances
outweighing potential harm to the party against whom [the stay] is
operative.’”
(Id. at 2 (quoting Williford v. Armstrong World
Indus., Inc., 715 F.2d 124, 127 (4th Cir. 1983)).)
14