Opinion ID: 184616
Heading Depth: 2
Heading Rank: 2

Heading: Burden of Proof in MSI's Challenge to the TTAB Decision

Text: 29 MSI argues that the district court incorrectly placed upon it the burden of proof in its challenge to the decision of the TTAB. A party to a cancellation proceeding who is dissatisfied with a decision of the TTAB has two options: First, the party may appeal to the United States Court of Appeals for the Federal Circuit. 15 U.S.C. § 1071(a)(1). Second, the party may have remedy by a civil action in district court. Id. § 1071(b)(1). With respect to these two options, a leading treatise states: 30 Congress gave such alternate remedies of review because each possessed its own unique advantages. If appeal is made to the Federal Circuit, the case proceeds on a closed record and no new evidence is permitted. But if review is sought in a federal [district] court, review is a form of de novo scrutiny and new evidence is permitted. 31 3 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 21:20, at 21-24 (4th ed.1997); see also 15 U.S.C. [331 U.S.App.D.C. 49] § 1071(b)(3) (in district court the record before the TTAB shall be admitted on motion of any party ... without prejudice to the right of any party to take further testimony). Although courts sometimes refer to the district court's review of the TTAB's decision as a de novo proceeding, see, e.g., Spraying Sys. Co. v. Delavan, Inc., 975 F.2d 387, 391 (7th Cir.1992); Wilson Jones Co. v. Gilbert & Bennett Mfg. Co., 332 F.2d 216, 218 (2d Cir.1964), that is something of a misnomer: 32 While district court review is called de novo because new evidence may be introduced, it is a unique procedure because unlike a true de novo proceeding, findings of fact made by the [TTAB] are given great weight and not upset unless new evidence is introduced which carries thorough conviction. 33 3 McCarthy, supra, § 21:21, at 21-26; see Esso Standard Oil Co. v. Sun Oil Co., 229 F.2d 37, 40 (D.C.Cir.1956) (adopting standard of review for decisions of Patent Office set forth in Morgan v. Daniels, 153 U.S. 120, 125, 14 S.Ct. 772, 38 L.Ed. 657 (1894), i.e., finding of fact made by TTAB must be accepted as controlling, unless the contrary is established by evidence 'which, in character and amount carries thorough conviction' ); accord, Spraying Sys., 975 F.2d at 391; Coach House Restaurant, Inc. v. Coach & Six Restaurants, Inc., 934 F.2d 1551, 1557 (11th Cir.1991); Wells Fargo & Co. v. Stagecoach Properties, Inc., 685 F.2d 302, 306 (9th Cir.1982); Aloe Creme Laboratories, Inc. v. Texas Pharmacal Co., 335 F.2d 72, 74 (5th Cir.1964); Wilson Jones Co., 332 F.2d at 218; Century Distilling Co. v. Continental Distilling Co., 106 F.2d 486, 489 (3d Cir.1939); see also 3 McCarthy, supra, § 21:22, at 21-27 (vast majority of courts apply the thorough conviction standard); 1 Jerome Gilson & Jeffrey M. Samuels, Trademark Protection & Practice § 3.05(b)(ii), at 3-200 (1997) (same). 34 In this case, however, the TTAB did not resolve any disputed issue of fact. Rather, it entered summary judgment in favor of Sunmatch because MSI failed to raise a material issue of fact by submitting an affidavit based upon the affiant's personal knowledge. As the Seventh Circuit pointed out in Spraying Systems Co. v. Delavan, Inc., 975 F.2d at 391, the thorough conviction standard cannot apply to the TTAB's grant of summary judgment. When the TTAB grants summary judgment it does not make findings of fact; rather, it applies Federal Rule of Evidence 56 and concludes as a matter of law that there are no material issues of fact in dispute. See id. at 391-92; see also Sunmatch Indus. Co. v. Material Supply Int'l, Inc., Cancellation No. 20,482, at 4-5 (T.T.A.B.1994) (applying Rule 56 in this case); cf. 37 C.F.R. § 2.116(a) (Except as otherwise provided, and wherever applicable and appropriate, procedure and practice in inter partes proceedings shall be governed by the Federal Rules of Civil Procedure). Moreover, courts apply the thorough conviction standard to the TTAB's findings of fact largely in deference to the TTAB's expertise in handling trademark cases. There is no reason, however, for the district court to defer to the TTAB when that body grants summary judgment; the district court is just as able as the TTAB to determine an issue of law. We conclude that because the TTAB granted summary judgment to Sunmatch on the issue of who owned the SUNTECH trademark, the district court upon remand should review the decision of the TTAB based upon a true de novo standard, as it would any question of law. 35 As the petitioner seeking cancellation before the TTAB, Sunmatch had the burden of proving by a preponderance of the evidence that it owned the SUNTECH mark. See, e.g., Cerveceria Centroamericana, S.A. v. Cerveceria India, Inc., 892 F.2d 1021, 1023 (Fed.Cir.1989); Massey Junior College, Inc. v. Fashion Inst. of Tech., 492 F.2d 1399, 1402-04, 181 U.S.P.Q. 272 (1974); see also 3 McCarthy, supra, § 20:64, at 20-106 (petitioner to cancel must rebut presumption of validity by preponderance of evidence). Because the TTAB decided against MSI and MSI sought review of that decision in district court, we think MSI had the burden of going forward, that is, of submitting to the court evidence or argument to counter the decision of the TTAB. Nevertheless, because Sunmatch had the burden of proof before the [331 U.S.App.D.C. 50] TTAB and because the district court must review the TTAB's decision de novo, Sunmatch must bear the burden of persuasion in district court.