Court Opinion

ID: 5135939
Source: CourtListenerOpinion
Date Created: 2021-12-17 17:00:59.116124+00
Date Added: 2024-06-11T08:23:52.309073
License: Public Domain

Case: 21-1575    Document: 48    Page: 1   Filed: 12/17/2021

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                SKY INTERNATIONAL AG,
                       Appellant

                            v.

                   SKY CINEMAS LLC,
                         Appellee
                  ______________________

                        2021-1575
                  ______________________

     Appeal from the United States Patent and Trademark
 Office, Trademark Trial and Appeal Board in No.
 91223952.
                  ______________________

                Decided: December 17, 2021
                  ______________________

     JACQUELINE LESSER, Baker & Hostetler LLP,
 Philadelphia, PA, argued for appellant. Also represented
 by LISA BOLLINGER GEHMAN; MARK HARRELL TIDMAN,
 Washington, DC.

    BAXTER W. BANOWSKY, Banowsky & Levine PC, Dallas,
 TX, argued for appellee.
                  ______________________

   Before TARANTO, BRYSON, and STOLL, Circuit Judges.
Case: 21-1575    Document: 48     Page: 2     Filed: 12/17/2021

 2                  SKY INTERNATIONAL AG    v. SKY CINEMAS LLC

 BRYSON, Circuit Judge.
     Appellant Sky International AG opposed a trademark
 application filed by appellee Sky Cinemas LLC due to Sky
 International’s prior registration of several similar marks.
 The Trademark Trial and Appeal Board found in favor of
 Sky Cinemas on the opposition, finding no likelihood of
 confusion between Sky International’s marks and Sky
 Cinema’s mark. We affirm.
                              I
     In 2014, Sky Cinemas filed an application to register
 the mark SKY CINEMAS for “movie theaters.” Several
 months later, Sky International opposed the registration of
 the SKY CINEMAS mark, claiming a likelihood of
 confusion with several of Sky International’s marks
 containing the word “SKY.” 1 In its counterclaims, Sky
 Cinemas asserted that several of Sky International’s
 pleaded registrations were filed without a bona fide intent
 to use. Sky Cinemas later alleged that some of Sky
 International’s marks had been abandoned through non-
 use. Sky International replied in part by limiting its
 pleaded registrations to cover only the goods and services
 for which there was actual use.
     On July 21, 2020, the Board ruled on Sky
 International’s claims, finding that there was no likelihood
 of confusion between Sky Cinemas’ mark and Sky
 International’s U.S. registrations. The Board therefore
 allowed Sky Cinemas’ application to move forward. J.A.
 80. The Board elected not to rule on Sky Cinemas’
 counterclaims at that time, but instead directed Sky
 Cinemas to elect whether it wished to pursue the
 remaining counterclaims. Id.

     1   A full list of Sky International’s           pleaded
 registrations can be found at J.A. 26–27.
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 SKY INTERNATIONAL AG   v. SKY CINEMAS LLC                  3

     Sky Cinemas indicated that it wished to pursue the
 counterclaims. As a result, in an order issued on November
 19, 2020, the Board significantly reduced the scope of Sky’s
 registrations. Sky Int’l AG v. Sky Cinemas LLC, No.
 91223952, 2020 WL 6887759, at *9–11 (T.T.A.B. Nov. 19,
 2020).
     In its July 2020 order analyzing Sky International’s
 likelihood-of-confusion claim, the Board focused its
 analysis on two of Sky International’s marks, which we
 refer to as the “standard character registrations”:
         •   SKY NEWS for “broadcasting and
             transmission of news programmes by
             satellite, television, and radio” and “news
             agency services, namely, gathering and
             dissemination of news; news reporting
             services” (Registration No. 2932761); and
         •   SKY NEWS for “television and radio news
             reporting services; production of radio and
             television news programmes” (Registration
             No. 2912783).
 J.A. 38. The Board focused its review on those two marks
 because it concluded that they were “more similar to [Sky
 Cinemas’] mark SKY CINEMAS” than Sky International’s
 other marks. Id. The Board noted that because those two
 registrations were standard character marks, they were
 “devoid of potentially distinguishing graphical elements.”
 Id. Additionally, the Board found that “the recitation of
 services [in the standard character registrations] is no less
 similar to [Sky Cinemas’] services than the services in any
 of the other pleaded registrations.” J.A. 39. 2

     2  The standard character registrations were not
 included in Sky Cinemas’ counterclaims for lack of bona
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 4                  SKY INTERNATIONAL AG     v. SKY CINEMAS LLC

     The Board conducted its likelihood-of-confusion
 analysis using the DuPont factors that the Board
 traditionally uses when addressing whether a likelihood of
 confusion exists. See In re E.I. DuPont De Nemours & Co.,
 476 F.2d 1357, 1361 (C.C.P.A. 1973). In evaluating those
 factors, the Board found that the marks are “more similar
 than they are dissimilar,” and that “the classes of
 consumers are the same.” J.A. 80. The Board also found,
 however, that “the services are not related, nor are they
 offered through the same trade channels,” and that Sky
 International has not shown that Sky Cinemas’ movie
 theaters are within Sky International’s “natural area of
 expansion.” Id. The Board determined that, on balance,
 the factors indicated that Sky Cinemas’ mark “was not
 likely to cause confusion” with Sky International’s
 registrations. Id.
                              II
     Sky International raises three issues on appeal. First,
 Sky International argues that the Board impermissibly
 bifurcated the proceedings before it when it decided Sky
 International’s claim before deciding Sky Cinemas’
 counterclaims. Second, Sky International argues that the
 Board erred in considering only the standard character
 registrations in its likelihood-of-confusion analysis. Third,
 Sky International argues that the Board’s finding that
 movie theaters are outside of Sky International’s natural
 zone of expansion is unsupported by substantial evidence.
                              A
     With respect to Sky International’s claim that the
 Board impermissibly bifurcated the case, we disagree with
 the premise that the case was bifurcated. And in any
 event, the Board’s choice to consider the counterclaims

 fide intent to use and non-use abandonment. See Sky Int’l,
 2020 WL 6887759, at *1.
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 SKY INTERNATIONAL AG   v. SKY CINEMAS LLC                 5

 separately from the opposition was not the source of the
 prejudice that Sky International alleges it suffered from
 the Board’s treatment of the case.
      In cases that are bifurcated, courts or agencies
 typically complete the proceedings as to one issue before
 moving on to address a second issue in the case. See, e.g.,
 Robert Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305, 1308
 (Fed. Cir. 2013) (hearing an appeal on patent infringement
 while damages discovery and trial were yet to occur);
 AT&T Mobility LLC v. Thomann, No. 91218108, 2020 WL
 730362, at *3 (T.T.A.B. Feb. 10, 2020) (allowing for
 discovery and trial on standing and then, if necessary,
 discovery and trial on other issues). Here, by contrast, all
 of the evidence on both Sky International’s claims and Sky
 Cinemas’ counterclaims was before the Board at the time
 it issued its July order. Moreover, the Board addressed the
 counterclaims in its July order to the extent that those
 counterclaims were resolved by Sky International’s
 adjustments to its recitations of goods and services. See
 J.A. 37–38 (ruling in part on the counterclaims); J.A. 5780–
 5896 (briefing on both the opposition and the
 counterclaims). Disposition of the remaining counterclaim
 issues was simply postponed until the November order.
 Because the Board merely addressed the issues in two
 different orders, this case was not bifurcated as that term
 is normally understood.
     Sky International argues that the Board erred by
 “expressly limit[ing] its review and analysis” to the two
 standard character registrations. Appellant’s Br. 12. Sky
 International suggests that a statement made by the Board
 after it issued its July order indicates that the Board did
 not review the full record when it considered whether a
 likelihood of confusion existed. Specifically, before ruling
 on Sky Cinemas’ counterclaims the Board instructed the
 parties to cite to specific evidence supporting each
 allegation of use or non-use and noted that it would “not
 attempt to guess which piece of evidence supports which
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 6                  SKY INTERNATIONAL AG     v. SKY CINEMAS LLC

 allegation.” J.A. 5995. Sky International asserts that
 “[h]ad the Board reviewed the complete record, it would
 have concluded that the record supported a likelihood of
 confusion.” Appellant’s Br. 15. However, the Board’s
 statements appear to be limited to the issue of use, and we
 see nothing to suggest that the Board did not consider the
 entire record when assessing the likelihood-of-confusion
 issue.
     The Board’s decision to rule on Sky Cinemas’
 counterclaims separately from the opposition thus did not
 prejudice Sky International. The real claim of prejudice
 that Sky International asserts appears to be that the Board
 should have focused on a third registration in its likelihood
 of confusion analysis, and that if the Board had done so, it
 might have reached a different result. See Appellant’s Br.
 13–14. We address that claim in the following section.
                              B
     In challenging the Board’s finding as to the likelihood
 of confusion, Sky International argues that, in addition to
 the two Sky International registrations the Board
 considered, the Board should have considered Registration
 No. 4771128 (“the ’128 Registration”) for           . We
 agree that the Board should have considered the ’128
 Registration, but we conclude that the error was harmless.
         The ’128 Registration recites many services,
     including:
        •   “broadcasting and/or transmission of radio
            and/or television programs and/or films”;
        •   “streaming delivery of video on demand
            streams to viewers”; and
        •   “production and distribution of sports, news,
            entertainment videos.”
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 SKY INTERNATIONAL AG   v. SKY CINEMAS LLC                   7

 Sky Int’l, 2020 WL 6887759, at *11–12. 3 The Board chose
 not to focus on the ’128 Registration in evaluating the
 likelihood of confusion for two reasons: (1) because the ’128
 Registration     contained    “potentially     distinguishing
 graphical elements,” and (2) because the recitations of
 services for the standard character registrations were “no
 less similar than” that for the ’128 Registration. J.A. 38–
 39.
     The Board was incorrect to conclude that the services
 in the standard character registrations were “no less
 similar” than those in the ’128 Registration. See J.A. 39.
 The standard character registrations are directed mainly
 at broadcasting, reporting, and dissemination of news. The
 ’128 Registration, by contrast, covers services that include
 broadcasting, production, and distribution of films, as well
 as video streaming services. Production and distribution
 of films are services that have more in common with
 operating movie theaters than do news reporting and
 dissemination. The Board therefore should not have
 disregarded the ’128 Registration on the ground that the
 services set forth in the two block letter registrations were
 “no less similar” to operating movie theaters than those in
 the ’128 Registration. See id.
    That error was harmless, however, in light of the
 Board’s evaluation of whether movie theaters were within
 Sky International’s natural zone of expansion. The Board’s
 analysis of that question focused heavily on whether movie

     3    A full recitation of the services covered by the ’128
 Registration can be found at Sky Int’l, 2020 WL 6887759,
 at *11–12. The parties agree that those services, which
 remained in the ’128 Registration after the Board’s
 November order, are the operative services for purposes of
 this appeal. See Oral Argument at 3:05–6:04, 24:47–25:28,
 https://oralarguments.cafc.uscourts.gov/default.aspx?fl=21
 -1575_12092021.mp3.
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 8                  SKY INTERNATIONAL AG     v. SKY CINEMAS LLC

 theaters would be in the natural zone of expansion of a
 company that engages in “motion picture production and
 distribution.” See J.A. 70–74. The standard character
 registrations do not recite any services that can be read to
 include motion picture production or distribution. Those
 services, however, are present in the ’128 Registration. In
 other words, the Board considered the services recited in
 the ’128 Registration when it evaluated whether Sky
 International’s natural zone of expansion includes movie
 theaters, despite its statement that it was only considering
 the standard character registrations.
     As a general matter, the “natural zone of expansion”
 doctrine grants a senior user of a mark superior rights as
 to “any goods or services which purchasers might
 reasonably expect to emanate from it in the normal
 expansion of its business under the mark.” Mason Eng’g &
 Design Corp. v. Mateson Chem. Corp., 225 U.S.P.Q. 956,
 962 (T.T.A.B. 1985).
      The Board found that operating movie theaters was not
 within Sky International’s natural zone of expansion. As
 discussed below, that finding is supported by substantial
 evidence. Because the Board found that operating movie
 theaters would not be within the natural zone of expansion
 for a company that produces and distributes films, it would
 have been illogical for the Board to conclude that the film
 production and distribution services listed in the ’128
 Registration are similar to operating movie theaters for
 purposes of the likelihood-of-confusion analysis. The
 Board’s error in failing to consider the ’128 Registration on
 the likelihood-of-confusion issue is therefore harmless. 4

     4   We reach this conclusion without considering the
 impact of the potentially distinguishing visual
 characteristics of the mark in the ’128 Registration. We
 note, however, that if the Board had explicitly considered
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 SKY INTERNATIONAL AG   v. SKY CINEMAS LLC                 9

                              C
     Sky International’s final argument is that the Board’s
 finding as to the natural zone of expansion for Sky
 International’s services was unsupported by substantial
 evidence. We disagree.
      Sky International first contends that the Board
 incorrectly applied a timing requirement in its analysis of
 Sky International’s natural zone of expansion.          The
 determination of a natural zone of expansion must be
 “made on the basis of circumstances prevailing at the time
 when the subsequent user first began to do business under
 its mark.” Mason, 225 U.S.P.Q. at 962. Sky International
 argues that the Board erred by requiring “evidence of a
 consumer expectation of . . . expansion by the date of [Sky
 Cinemas’] filing.” Appellant’s Br. 26. But the Board
 adopted no such requirement. To the contrary, the Board
 specifically found that “[e]ven if we measure from the time
 of [Sky Cinemas’] actual opening of its theaters in January
 2018, rather than [the application filing date], the result
 would be the same.” J.A. 69. The Board therefore did not
 commit an error with regard to the time period for its
 natural zone of expansion analysis.
     Sky International next argues that in view of the
 record evidence the Board should have concluded that
 movie theaters were within Sky International’s natural
 zone of expansion. The Board evaluated the likelihood that
 Sky International could “bridge the gap” between its
 services and the operation of movie theaters in view of four
 factors:

 the ’128 Registration, the stylized nature of that mark, as
 compared to the standard character registrations, may
 have cut against Sky International with regard to the
 similarity of the marks.
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 10                 SKY INTERNATIONAL AG   v. SKY CINEMAS LLC

        •   “Whether the operation of movie theaters is
            a distinct departure from those services Sky
            International has performed under its
            marks”;
        •   “Whether the nature and purpose of movie
            theaters and movie/film production are
            similar”;
        •   “Whether the channels of trade and classes
            of customers for the two areas of business
            are the same”; and
        •   “Whether other companies have expanded
            from one area to the other.”
 J.A. 70–73 (adapting the factors from Mason, 225
 U.S.P.Q.2d at 962).
     As to the first factor, the Board found that “a motion
 picture production company” would be unlikely to “go into
 the business of operating a movie theater without
 significant new technology or know-how.” J.A. 70. Sky
 International appears to suggest that because modern
 movie theaters “show films without projectors, using
 digital content that is streamed onto screens,” Sky
 International has the basic know-how to operate a movie
 theater. Appellant’s Br. 29, 31–32. Sky Cinemas, however,
 presented evidence that Sky International’s services do not
 “employ[] any digital projection technology at all.”
 Appellee’s Br. 35. Sky Cinemas also pointed to numerous
 services involved in operating a movie theater that Sky
 International does not offer, such as “food and beverage
 services,” “large auditoriums with luxury seating,” and
 “wall-to-wall curved screens.” Id. Substantial evidence
 supports the Board’s finding on that factor.
     As to the second factor, the Board found that “while the
 purpose of each company’s services is similar, the nature of
 each is dissimilar.” J.A. 71. Specifically, the Board
 observed that “production, distribution, and exhibition are
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 SKY INTERNATIONAL AG   v. SKY CINEMAS LLC                  11

 different phases in the process of creating and bringing
 content” to customers, and therefore “the point at which
 each company links into the distribution channel differs.”
 Id. Sky Cinemas points to record evidence suggesting that
 “film distributors license films to movie theaters to exhibit”
 and that “theaters offer a ‘night out’ experience” different
 from that offered by streaming services. Appellee’s Br. 36;
 see also J.A. 3862, 3869. The Board’s finding as to the
 second factor is likewise supported by substantial evidence.
     As to the third factor, the Board found that there is an
 overlap of customers and direct competition between Sky
 Cinemas’ and Sky International’s services. The Board thus
 found that factor weighed in Sky International’s favor.
     As to the fourth factor, the Board found that “there is
 no record evidence showing that companies that produce
 films or distribute films over users’ personal devices have
 expanded to owning or running movie theaters.” J.A. 73–
 74. The only evidence relevant to this factor that Sky offers
 on appeal is that Sky International has movie theater
 facilities in the United Kingdom. Appellant’s Br. 29; see
 also J.A. 2604, 3506–3507, 5909. The Board excluded
 evidence of Sky International’s use outside the United
 States, however, and Sky International does not challenge
 that exclusion on appeal. J.A. 26 n.2.
     Sky International cites two TTAB cases in which the
 Board found a likelihood of confusion to exist for types of
 services generally similar to those at issue here. See In re
 Live Nation Worldwide, Inc., No. 87240723, 2018 WL
 2357291, at *1–2 (T.T.A.B. May 9, 2018); In re Olympia
 Ent., Inc., No. 76277821, 2008 WL 885951, at *5–7
 (T.T.A.B. Mar. 28, 2008).       Both of those cases are
 distinguishable from this case, however.
     In Live Nation, the Board found “live entertainment
 events” services to be confusingly similar to services under
 a registered mark for “motion picture theaters.” 2018 WL
 2357291, at *1–2. In that case, the evidence showed that
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 12                 SKY INTERNATIONAL AG   v. SKY CINEMAS LLC

 movie theaters host live entertainment events in the same
 venue, which demonstrated to the Board that confusion as
 to the source of the respective services was likely. Id. at
 *3.    Here, by contrast, Sky International has not
 demonstrated that businesses offering news reporting, film
 production, or video streaming services also operate movie
 theaters.
     In Olympia, the Board found an application for live
 entertainment productions such as “plays, musicals, . . .
 [and] concerts” to be confusingly similar to a registrant’s
 series of marks including services such as “entertainment
 services in the nature of live musical, dramatic and
 comedic performances.” 2008 WL 885951, at *5–7. The
 registrant also owned marks for production and
 distribution of movies, as in this case, but the Board’s
 decision rested primarily on the fact that “essentially
 identical” services (musical and dramatic performances)
 were claimed in both the application and the issued
 registration. See id. at *5.
     We therefore hold that substantial evidence supports
 the Board’s finding that operating movie theaters is not
 within Sky International’s natural zone of expansion. And
 because the Board’s natural zone of expansion analysis is
 supported by substantial evidence, we hold that the
 Board’s failure to explicitly consider the ’128 Registration
 was harmless error. We therefore uphold the Board’s
 rejection of Sky International’s opposition to Sky Cinemas’
 application.
                        AFFIRMED