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COMMONWEALTH BUSINESS MEDIA, INC. v. THE MASSACHUSETTS INSTITUTE FOR A NEW COMMONWEALTH.

MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

RICHARD STEARNS, District Judge

On April 25, 2006, plaintiff Commonwealth Business Media (CBM) brought this action for declaratory judgment pursuant to 28 U.S.C. § 2201. CBM is seeking a declaration (1) that the use of the mark "Commonwealth Business Media" does not infringe upon the more senior "Commonwealth" mark of defendant Massachusetts Institute for a New Commonwealth (MassINC), and (2) that CBM is entitled to the registration of its mark at the Principal Register of the United States Patent and Trademark Office (PTO). MassINC moves to dismiss the action pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. According to MassINC (1) it has never threatened CBM with a suit for copyright infringement, and (2) the dispute centers solely on trademark registration issues that are appropriately left to the expertise of the PTO.

BACKGROUND

CBM publishes magazines, directories and database products targeted at the global trade and transportation market. CBM registered the "Commonwealth Business Media" mark with the PTO on April 22, 2003. MassINC is a non-profit organization that publishes a magazine in both print and online editions featuring articles on Massachusetts political and governmental affairs. MassINC has been using the "Commonwealth" mark in conjunction with its magazines since at least December 31, 1998.

On December 7, 2004, MassINC submitted an application to the PTO to register the "Commonwealth" mark. On July 12, 2005, the PTO Examining Attorney rejected MassINC's application because of the likelihood of confusion with CBM's "Commonwealth Business Media" mark. On July 25, 2005, MassINC wrote to CBM stating that its priority in using the mark would entitle it to a cancellation of CBM's registration. The letter stated that MassINC's counsel had prepared a notice of cancellation, "but rather than proceed down that path," MassINC was "willing to consider an amicable resolution of the matter." The draft notice was enclosed with the letter. The notice stated that CBM's mark incorporating the word "Commonwealth" was "likely to cause confusion, mistake, and deception . . . all to Petitioner's [MassINC's] damage" as "[a]ny dissatisfaction with the goods of the Respondent [CBM] will be attributed to [MassINC]."

An exchange between counsel by electronic mail then ensued. CBM's counsel stated that "my client stands ready and willing to grant to your client a consent to use and register its `Commonwealth' marks as a far more expedient alternative to filing a cancellation proceeding." CBM and MassINC then entered negotiations regarding limitations on CBM's use of the "Commonwealth" mark. MassINC proposed (1) that CBM not use the word "Commonwealth," or any colorable variation thereof, as all or part of a title for a publication, (2) that CBM not use the word "Commonwealth" as all or part of the title or domain name of a website (other than the one already established by CBM), and (3) that CBM not use the registered mark in connection with publications relating to politics and public affairs. The parties were unable to reach an agreement.

On January 6, 2006, MassINC filed the cancellation petition with the PTO. CBM filed an answer to the petition, and after a second unsuccessful attempt to reach a compromise with MassINC, on April 25, 2006, filed this Complaint. On May 4, 2006, the PTO suspended the cancellation proceeding in light of the district court action.

STANDARD OF REVIEW

In ruling on a motion to dismiss for lack of subject matter jurisdiction, a court must construe the complaint liberally, accept all well-pleaded facts as true, and indulge all reasonable inferences in favor the plaintiff. See Aversa v. United States, 99 F.3d 1200, 1209-1210 (1st Cir. 1996); Murphy v. United States, 45 F.3d 520, 522 (1st Cir. 1995). A court should not dismiss a complaint unless it is clear that the plaintiff will be unable to prove any set of facts which would entitle it to recovery. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Miranda v. Ponce Fed. Bank, 948 F.2d 41, 44 (1st Cir. 1991). When deciding a motion to dismiss, a court may consider whatever evidence has been submitted, such as depositions and exhibits. Aversa, 99 F.3d at 1210.

The Declaratory Judgment Act, 28 U.S.C. §§ 2201- 2202, "does not itself confer subject matter jurisdiction, but, rather, makes available an added anodyne for disputes that come within the federal courts' jurisdiction on some other basis. . . . Consequently, federal courts retain substantial discretion in deciding whether to grant declaratory relief." Ernst Young v. Depositors Economic Protection Corp., 45 F.3d 530, 534 (1st Cir. 1995). Both prongs of a two-part test for ripeness must be met — fitness for review and hardship. Id. at 535. See also Abbott Laboratories v. Gardner, 387 U.S. 136, 149 (1967). The fitness inquiry is directed to the question whether "the claim involves uncertain and contingent events that may not occur as anticipated, or indeed may not occur at all." Massachusetts Ass'n of Afro-American Police, Inc. v. Boston Police Dep't., 973 F.2d 18, 20 (1st Cir. 1992) (per curiam).

"The notion that disputes which turn on purely legal questions are always ripe for judicial review is a myth." Ernst Young, 45 F.3d at 537.

DISCUSSION

MassINC challenges the existence of a justiciable controversy principally on grounds of fitness. That a district court properly exercises federal question jurisdiction over a false designation of origin claim under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), is not disputed. But the issue presented here does not involve any actual claim of infringement. Rather, by invoking the Declaratory Judgment Act, CBM seeks a ruling preempting MassINC from bringing a future infringement claim. Whether CBM may properly resort to the declaratory judgment mechanism depends on the reasonableness of its anticipation of having to defend itself in the future against such a claim. PHC, Inc. v. Pioneer Healthcare, Inc., 75 F.3d 75, 79 (1st Cir. 1996).

The test for whether a controversy reasonably exists "requires a flexible approach that is oriented to the reasonable perceptions of the plaintiff." See Chesebrough-Pond's, Inc. v. Faberge, Inc., 666 F.2d 393, 396 (9th Cir. 1982).

In PHC, defendant wrote to plaintiff asserting that plaintiff's use of defendant's mark violated defendant's state registration rights. PHC, 75 F.3d at 77. The defendant also demanded that plaintiff cancel an earlier registration of the mark with the PTO. Id. The defendant then sent a second letter explicitly threatening litigation. Id. After plaintiff demurred, defendant filed a cancellation notice with the PTO on grounds of likely confusion. Id. The First Circuit deemed the exchange of letters sufficiently threatening of an infringement action to create a justiciable case and controversy.

If one looked solely at the letters sent by the Pioneer companies, one might be genuinely puzzled whether those letters threatened only a suit under Massachusetts law for the misuse of a corporate name or whether they implied as well an intent to resort to the Lanham Act. . . . The letters did request cancellation of PHC's federal trademark, but they made no specific reference to a suit for infringement or under section 43(a). On the other hand, the conduct of PHC, as described by the Pioneer companies' letters, could easily amount to a violation of section 43(a); the second letter alleged that PHC's alleged use was "misleading, confusing, and will result in irreparable harm" — language typical of a claim under section 43(a). . . . In all events, the question under the case law on declaratory judgments is not whether the Pioneer companies made a specific threat to bring a section 43(a) claim or even had such a claim in mind. The federal declaratory judgment statute aims at resolving potential disputes, often commercial in character, that can reasonably be feared by a potential target in light of the other side's conduct.
Id. at 79.

MassINC argues that its letter, in contrast to the letters inPHC, neither referenced the possibility of an infringement action nor alluded to the elements of an infringement claim. The letter raised only the issue of alleged wrongful registration, and the possibility that MassINC would file a cancellation petition with the PTO. MassINC states that its letter is no different than the letter found nonactionable in American Pioneer Tours, Inc. v. Suntrek Tours, Ltd., 1998 WL 60944, at *1 (S.D.N.Y. Feb. 13, 1998). InAmerican Pioneer Tours, plaintiff sent a letter to defendant demanding that the defendant cease and desist using the contested mark.

During oral argument, MassINC's counsel flatly stated that it had no intention of bringing an infringement suit against CBM on the facts as presently known to it. While the reasonableness test focuses on the objective apprehension of CBM as the plaintiff, and not on the subjective intention of MassINC, a binding statement by MassINC's attorney in a court proceeding deserves at least some weight in the objective calculus. Cf. Levinsky's, Inc. v. Wal-Mart Stores, Inc., 127 F.3d 122, 134 (1st Cir. 1997).

While the test is an objective one, MassINC points out that CBM never felt subjectively threatened by an infringement claim. In an email sent less than two months prior to the filing of this action, CBM's counsel stated that MassINC should "keep these things in perspective," in light of the fact that "[t]his is not a trademark infringement case."

[W]e do believe that your continued use of the term AMERICAN PIONEER in connection with your services will lead to confusion and mistake in that purchasers will believe there is some connection between you and our client. . . . Accordingly, we must ask that you immediately discontinue all use of the term AMERICAN PIONEER. . . .
Id. The defendant responded by asserting that it had superior common-law rights to the mark, and that "[u]nless you [American] have some further information of which we are not aware, Suntrek should be successful in petitioning to cancel your client's trademark registration." Id. at *2. After negotiations between the parties failed, Suntrek filed the threatened petition with the PTO. Id. The court held that the defendant's letter did not constitute a justiciable threat of an infringement action as "[a]t most, Suntrek [defendant] threatened that it would commence proceedings" at the PTO to cancel plaintiff's trademark registration. Id.

CBM for its part relies on the Ninth Circuit's holding inChesebrough-Pond's, 666 F.2d at 393. In Chesebrough-Pond's, plaintiff and defendant were competitors in the men's toiletries and cosmetics market. Id. at 394-395. Defendant sent plaintiff a letter stating that it believed plaintiff's "Match" mark was "confusingly similar" to its "Macho" mark, and that unless plaintiff withdrew its registration application from the PTO, defendant would file an opposition. Id. at 395. In the letter, the defendant referenced the elements of a prima facie case of trademark infringement. Id. at 396. Plaintiff refused to withdraw its application, and the defendant filed an opposition proceeding with the PTO. Id. at 395. The Ninth Circuit found the filing of an opposition to plaintiff's application to register its mark sufficient to confer jurisdiction in light of the additional factor that the parties were competitors in a highly concentrated market.

The inference [of an infringement action] that Chesebrough drew from Faberge's [defendant's] actions was also reasonable in view of the business relationship of the parties. The market for men's cosmetics is expanding and highly competitive. The practical effect of the attenuated opposition proceeding before the Patent and Trademark Office was to allow expanded marketing of the "Macho" line, while chilling Chesebrough's [plaintiff's] efforts to market "Match" products. Id. at 397.

MassINC distinguishes Chesebrough-Pond's in a way that I find persuasive, namely, that it does not share a customer base with CBM or compete in the same market, in light of the obvious differences between a relatively limited audience interested in Massachusetts politics and governmental affairs, and the larger and more dispersed community of consumers of information about global trade and transportation matters.

In the alternative, MassINC argues that should the court find a justiciable controversy, it should nonetheless invoke the primary jurisdiction doctrine and defer (at least in the first instance) to the PTO. See Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995) (the Declaratory Judgment Act does not bar a district court from declining to exercise its otherwise proper jurisdiction). "The [primary jurisdiction] doctrine is intended to `serve as a means of coordinating administrative and judicial machinery,' and to `promote uniformity and take advantage of agencies' special expertise.'" Massachusetts v. Blackstone Valley Elec. Co., 67 F.3d 981, 992 (1st Cir. 1995) (quoting Mashpee Tribe v. New Seabury Corp., 592 F.2d 575, 580 (1st Cir. 1979). The primary jurisdiction doctrine, however, is a rule of deference; it is not a rule of jurisdiction. Puerto Rico Maritime Shipping Authority v. Federal Maritime Commission, 75 F.3d 63, 65 (1st Cir. 1996). As this case raises no justiciable case or controversy, there are no grounds on which to invoke the doctrine.

ORDER

For the foregoing reasons, MassINC's Motion to Dismiss for Lack of Subject Matter Jurisdiction is GRANTED.

SO ORDERED.

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COMMONWEALTH BUSINESS MEDIA v. MASSACHUSETTS INSTITUTE
(Oct 2, 2006)