Federal Circuit Affirms Service Mark is Owned by Group, Not by Departing Group Member

Lyons v. Am. Coll. of Veterinary Sports Med. & Rehab., No. 2016-2055, (June 8, 2017) (Before Lourie, Wallach, and Stoll, J.) (Opinion for the court, Lourie, J.)

The Federal Circuit affirmed the Trademark Trial and Appeal Board’s (“Board”) cancellation of Sheila Lyons’s registration of the service mark, THE AMERICAN COLLEGE OF VETERINARY SPORTS MEDICINE AND REHABILITATION (“the mark”) on the Supplemental Register on the grounds that she does not own the mark.

Several years ago, Lyons, an equine veterinarian, joined with a few other veterinarians to form a veterinary specialist organization (“VSO”) for treating athletic animals. For a VSO to become accredited by the American Veterinary Medical Association (“AVMA”), a group of veterinarians must form an organizing committee and submit a letter of intent to the AVMA. Lyons and the other veterinarians formed an organizing committee, and the committee began using the mark. Lyons contributed to many aspects of creating and gaining accreditation of the VSO but was subsequently dismissed from the organizing committee “for reasons not relevant to this appeal.”

Nearly a year after her dismissal, Lyons applied for registration of the mark on the Principal Register for “veterinary education services namely conducting classes, seminars, clinical seminars, conferences, workshops and internships and externships in veterinary sports medicine and veterinary rehabilitation” based on her assertion of a bona fide intention to use the mark in commerce. The PTO denied her application, finding the mark to be geographically descriptive. Lyons then amended the application to seek registration on the Supplemental Register, and the PTO granted her application.

Meanwhile, the organizing committee had continued to work on the VSO petition. The AVMA published the petition to its large membership and subsequently granted provisional recognition to the VSO, which was entitled the “American College of Veterinary Sports Medicine and Rehabilitation” (“the College”) and was incorporated as a non-profit organization in Colorado. Thereafter, the College began administering certification tests and issuing certifications to over 115 veterinarians, established residency programs at veterinary colleges and was involved in various meetings, conferences, and continuing education programs.

The College petitioned to cancel Lyon’s registration on the Supplemental Register, arguing priority of use, the likelihood of confusion, misrepresentation of source, and fraud. After a nearly three-year suspension of proceedings during the pendency of infringement litigation between the parties before a district court, the Board found that, although the cancellation proceeding was originally brought on other grounds, “the ‘true issue [was] ownership of the mark’ as between ‘a former organizing committee member and . . . the veterinary specialty organization she helped found.’” The Board concluded that Lyons was not the owner of the mark and that the underlying application for her registration on the Supplemental Register was void ab initio. Lyons appealed, arguing that the Board erred in finding that she did not own the mark at the time she filed her application because she was the first to use the mark in commerce.

“[T]o meet the use requirement for a service mark, an applicant must use the mark in advertising or sale of a service, and show that the service was actually rendered in interstate commerce or in more than one state, or in this and a foreign country, by a person engaged in commerce.” The Court reviewed the Board’s legal conclusions de novo and the Board’s factual findings for substantial evidence.

The Court examined the Board’s evaluation of ownership, noting that although several relevant tests have been delineated, they all substantively include three main factors to be considered in ownership disputes surrounding service marks as between a departing member and the remnant group: (1) the parties’ objective intentions or expectations; (2) who the public associates with the mark; and (3) to whom the public looks to stand behind the quality of goods or services offered under the mark.

The Court approved of the Board’s articulation of the relevant factors and accepted the Board’s legal framework in deciding ownership of the mark.

Turning first to the parties’ collective objective intent, the Court found that while she was a part of the organizing committee, Lyons held herself out to the AVMA as a member of the committee and “[a]t no point did she communicate to any of the other committee members her belief that she owned the mark, any prior use of the mark, or any objection to the committee naming the VSO after the mark.” Thus, while Lyons’s subjective belief may have been that she owned the mark, “her objectively manifested expectations contradict that notion.” Thus, the Court found that substantive evidence supported the Board’s determination that “the parties’ objective intentions or expectations” favored the College.

In evaluating who the public associates with the mark, the Board determined that the relevant public—the AVMA and veterinary community—associates the mark with the College and not Lyons. The evidence shows that Lyons’s first use of the mark was in a document indicating her plans to form a VSO with the name of the mark but this document was not published “in a systematic or public way.” Further, Lyons has no employees, students, volunteers, or certification programs and never engaged in advertising or marketing expenditures. In contrast, the College has engaged in a great deal of veterinary activities and certifications, and the AVMA published the committee’s VSO petition to over 80,000 veterinary members. The Court thus found that substantial evidence supports the Board’s finding that relevant public looks to the College, and not Lyons, for services in connection with the mark.

Finally, the Court evaluated to who the public looks for quality control. Because the College holds AVMA accreditation, the veterinarians it certifies may hold themselves out as AVMA-approved specialists. Lyons held no similar certification and did not show that she offers any certification programs at all. Thus, the Court found that substantial evidence supports the Board’s conclusion that the third and final factor also favors the College. Therefore, the Court affirmed the Board’s decision, concluding that all of its findings are supported by substantial evidence.

Ownership of a service mark, as between a group and a departing member, depends on the objective intentions and expectations of the parties and on who the public associates with the mark and stands behind the quality of services offered under the mark.

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Robert Schaffer

Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

Robert Schaffer

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