906    Standards Of Review Of Board Decisions

As stated at the outset of this chapter, after the Board determines and decides "the respective rights of registration" under Trademark Act § 17, 15 U.S.C. § 1067, any party dissatisfied with the Board’s decision may seek review of the decision either by appealing to the United States Court of Appeals for the Federal Circuit or by filing a civil action in a federal district court. [ Note 1.]

NOTES:

 1.   Trademark Act § 21, 15 U.S.C. § 1071.

906.01    Appeal To Federal Circuit Or Review By Civil Action

In an appeal to the Federal Circuit, the case proceeds on the closed administrative record and no new evidence is permitted. [ Note 1.] In contrast, an appeal to the district court is both an appeal and a new action, which allows the parties to submit new evidence and, in inter partes cases, to raise additional claims. [ Note 2.]

Questions of fact. TIn a district court civil action under Trademark Act § 21(b), 15 U.S.C. § 1071(b), the district court’s standard of review for agency factfinding depends on whether new evidence is introduced on a disputed issue of fact. If new evidence is introduced on a disputed question of fact, the district court "must make de novo factual findings that take account of both the new evidence and the administrative record before the PTO" on the issue about which the new evidence is offered. [ Note 3.] In cases where no new evidence is adduced on a disputed factual issue, the district court applies the same deferential APA substantial evidence standard in reviewing the TTAB fact findings on that issue as would the Federal Circuit reviewing the same issue. [ Note 4.] In inter partes cases where additional legal causes of action have been pled, the district court will make its own factual findings as to those additional claims. [ Note 5.]

The degree of deference that the reviewing courts must afford Board’s findings of fact was decided by the U.S. Supreme Court in Dickinson v. Zurko, 527 U.S. 150, 50 USPQ2d 1930 (1999). In that decision, the Supreme Court held that the proper standard of judicial review of findings of fact made by the USPTO is not the traditional "clearly erroneous" standard of review, but rather the "slightly more" deferential standard of the Administrative Procedure Act (APA), 5 U.S.C. § 706(2). [ Note 6.] Thus, whether a party elects direct review by the Federal Circuit or initiates a new action in the district court, the APA standard of review should be applied to the Board’s fact-finding. [ Note 7.]

The Supreme Court did not decide which of the two standards of review under APA § 706(2), 5 U.S.C. §§ 706(2)(A) and (E), the "arbitrary, capricious" test under APA §§ 706(2) and 706(2)(A) or the "substantial evidence" test under § 706(2)(E), should be applied. [ Note 8.] Of the two tests, the Federal Circuit has determined that the "substantial evidence" standard is the appropriate standard of review for USPTO findings of fact. [ Note 9.] A number of circuit courts of appeals have also indicated that "substantial evidence" review is appropriate. [ Note 10.]

The substantial evidence standard requires the reviewing court to ask whether a reasonable person might accept that the evidentiary record supports the agency’s conclusion. [ Note 11.] Considered to be less deferential than the "arbitrary, capricious" standard of the APA, "substantial evidence" requires a stricter judicial review of agency fact-finding. [ Note 12.] A review for substantial evidence "involves examination of the record as a whole, taking into account evidence that both justifies and detracts from an agency’s decision." [ Note 13.] Moreover, "the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency’s finding from being supported by substantial evidence." [ Note 14.] "Where two different conclusions may be warranted based on the evidence of record, the Board’s decision to favor one conclusion over the other is the type of decision that must be sustained by this court as supported by substantial evidence." [ Note 15.]; Substantial evidence is "‘more than a mere scintilla’ and ‘such relevant evidence as a reasonable mind would accept as adequate’ to support a conclusion." [ Note 16.]

Examples of findings of fact include abandonment [ Note 17.]; functionality [ Note 18.]; descriptiveness [ Note 19.]; and whether trade dress is product design. [ Note 20.]

Conclusions of law. While the Board’s findings of fact are reviewed for substantial evidence, conclusions of law are reviewed de novo. [ Note 21.]

Examples of legal conclusions that receive de novo review include whether the Board properly granted summary judgment or a motion to dismiss. [ Note 22.] The U.S. Court of Appeals for the Federal Circuit treats the issue of likelihood of confusion as a question of law, based on underlying factual determinations. [ Note 23.]

The Board’s interpretations of the Lanham Act are legal determinations, but under general principles of administrative law, courts have given deference to the Board’s reasonable interpretations of the statute the agency is charged with administering. [ Note 24.] "Substantial deference" is given to the USPTO's interpretation of its own regulations. [ Note 25.]

NOTES:

 1.   Trademark Act § 21(a)(4), 15 U.S.C. § 1071(a)(4).

 2.   See Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 109 USPQ2d 1291, 1295 (4th Cir. 2014) (when an inter partes TTAB decision is challenged by filing a civil action in district court, the parties have the right to submit further evidence and additional claims); Autodesk, Inc. v. Lee, 113 USPQ2d 1161, 1162 (E.D. Va. 2014) (where new evidence is submitted in civil action under § 1071(b), court "reviews the record de novo and acts as the finder of fact based on the entire record"), appeal withdrawn (4th Cir. Jan. 28, 2015); CAE Inc. v. Clean Air Engineering Inc., 267 F.3d 660, 60 USPQ2d 1449, 1458 (7th Cir. 2001) (appeal from district court's review of Board’s finding of no likelihood of confusion, and from district court's decision on added claims of infringement, unfair competition and dilution).

 3.   See Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 109 USPQ2d 1291, 1295 (4th Cir. 2014) ("[W]here new evidence is presented to the district court on a disputed fact question, a de novo finding will be necessary to take such evidence into account together with the evidence before the board") (internal citations omitted); Kappos v. Hyatt, 132 S. Ct. 1690, 1701, 102 USPQ2d 1337 (2012) (interpreting 35 U.S.C. § 145). Although Kappos v. Hyatt concerned a district court civil action under 35 U.S.C. § 145 challenging the USPTO’s rejection of a patent application, the Court’s holding on this point applies to district court civil actions challenging refusals to register trademarks because of the relationship and similarities between 35 U.S.C. § 145 and 15 U.S.C. § 1071 (b)  . Prior to 1962, the Lanham Act incorporated the patent review procedures in 35 U.S.C. § 145. In 1962, Congress revised 15 U.S.C. § 1071 (b)  , to incorporate "with necessary changes in language, the various provisions of title 35 relating to such appeals and review." See S. Rep. No. 87-2107 (1962), 1962 U.S.C.C.A.N. 2844, 2850.

 4.   See CAE Inc. v. Clean Air Engineering Inc., 267 F.3d 660, 60 USPQ2d 1449, 1458 (7th Cir. 2001)

 5.   See Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 109 USPQ2d 1291, 1295 (4th Cir. 2014) ("The district court has authority independent of the PTO to . . . decide any related matters such as infringement and unfair competition claims."); CAE Inc. v. Clean Air Engineering Inc., 267 F.3d 660, 60 USPQ2d 1449, 1458 (7th Cir. 2001).

 6.   See CAE Inc. v. Clean Air Engineering Inc., 267 F.3d 660, 60 USPQ2d 1449, 1458 (7th Cir. 2001); quoting Dickinson v. Zurko, 527 U.S. 150, 165, 50 USPQ2d 1930 (1999).

 7.   Dickinson v. Zurko, 527 U.S. 150, 50 USPQ2d 1930, 1936 (TTAB 1999) (rejecting the argument that the "two paths" for review would create "an anomaly" in the standard of review). See Pro-Football Inc. v. Harjo, 284 F. Supp. 2d 96, 68 USPQ2d 1225, 1239 (D.D.C. 2003) (district court review of Board decision is "commensurate with the ‘substantial evidence’ standard of review articulated in the APA."), remanded, 415 F.3d 44, 75 USPQ2d 1525 (D.C. Cir. 2005), aff’d, 565 F.3d 880, 90 USPQ2d 1593 (D.C. Cir. 2009), cert. denied, 130 S. Ct. 631 (2009).

 8.   5 U.S.C. §§ 706(2)(A) and (E). See In re Gartside, 203 F.3d 1305, 53 USPQ2d 1773, 1773 (Fed. Cir. 2000).

 9.   Coach Inc. v. Triumph Learning LLC, 668 F.3d 1356, 101 USPQ2d 1713, 1716 (Fed. Cir. 2012); In re Gartside, 203 F.3d 1305, 53 USPQ2d 1773, 1775 (Fed. Cir. 2000). See also Aycock Engineering Inc. v. Airflite Inc., 560 F.3d 1350, 90 USPQ2d 1301, 1304 (Fed. Cir. 2009) ("Substantial evidence is ‘more than a mere scintilla’ and ‘such relevant evidence as a reasonable mind would accept as adequate to support a conclusion.’ [internal cites omitted]"); On-line Careline Inc. v. America Online Inc., 229 F.3d 1080, 56 USPQ2d 1471, 1475 (Fed. Cir. 2000) ("The substantial evidence standard requires the reviewing court to ask whether a reasonable person might find that the evidentiary record supports the agency’s conclusion.").

 10.   See CAE Inc. v. Clean Air Engineering Inc., 267 F.3d 660, 60 USPQ2d 1449, 1459 (7th Cir. 2001). See also In re Gartside, 203 F.3d 1305, 53 USPQ2d 1773, 1775 (Fed. Cir. 2000).

 11.   In re Gartside, 203 F.3d 1305, 53 USPQ2d 1773, 1775 (Fed. Cir. 2000), (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229-30 (1938) ("substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.... Mere uncorroborated hearsay or rumor does not constitute substantial evidence."); Dickinson v. Zurko, 527 U.S. 150, 165, 50 USPQ2d 1930 (1999).

 12.   In re Gartside, 203 F.3d 1305, 53 USPQ2d 1773, 1775 (Fed. Cir. 2000) (the "arbitrary, capricious" standard of review is the most deferential of the APA standards of review).

 13.   In re Gartside, 203 F.3d 1305, 53 USPQ2d 1773, 1775 (Fed. Cir. 2000).

 14.   In re Gartside, 203 F.3d 1305, 53 USPQ2d 1773, 1775 (Fed. Cir. 2000) (quoting Consolo v. Federal Maritime Commission, 383 U.S. 607, 620 (1966)).

 15.   In re Bayer Aktiengesellschaft, 488 F.3d 960, 82 USPQ2d 1828, 1836 (Fed. Cir. 2007) (citing In re Jolley, 308 F.3d 1317, 64 USPQ2d 1901, 1904 (Fed. Cir. 2002)).

 16.   Coach Inc. v. Triumph Learning LLC, 668 F.3d 1356, 101 USPQ2d 1713, 1716 (Fed. Cir. 2012) (quoting Consolidated Edison v. NLRB, 305 U.S. 197, 229 (1938)); see also In re Mouttet, 686 F.3d 1322, 1331 (Fed. Cir. 2012) ("Substantial evidence is something less than the weight of the evidence but more than a mere scintilla of evidence.") (citation omitted).

 17.   On-line Careline Inc. v. America Online Inc., 229 F.3d 1080, 56 USPQ2d 1471, 1476 (Fed. Cir. 2000) (abandonment is a question of fact).

 18.   Valu Engineering Inc. v. Rexnord Corp., 278 F.3d 1268, 61 USPQ2d 1422, 1424 (Fed. Cir. 2002) (functionality is a question of fact).

 19.   Towers v. Advent Software Inc., 913 F.2d 942, 16 USPQ2d 1039, 1040 (Fed. Cir. 1990) (descriptiveness is a question of fact). See also In re Chippendales USA, 622 F.3d 1346, 96 USPQ2d 1681, 1684 (Fed. Cir. 2010) ("The issue of inherent distinctiveness is a factual determination made by the Board.") (quoting Hoover Co. v. Royal Appliances Mfg. Co., 238 F.3d 1357, 1359, 57 USPQ2d 1720 (Fed. Cir. 2001)); In re Oppedahl & Larson LLP, 373 F.3d 1171, 71 USPQ2d 1370, 1371 (Fed. Cir. 2004) ("The Board’s placement of a mark on the fanciful-suggestive-descriptive-generic continuum is a question of fact, which this court reviews for substantial evidence."); In re Compagnie Generale Maritime, 993 F.2d 841, 845, 26 USPQ2d 1652, 1654 (Fed. Cir. 1993) ("Whether a mark is primarily geographically descriptive or deceptively misdescriptive is a question of fact.").

 20.   In re Slokevage, 441 F.3d 957, 78 USPQ2d 1395, 1397 (Fed. Cir. 2006) (similar to question of descriptiveness, issue of whether trade dress is product design is question of fact, as is inquiry into whether mark is unitary).

 21.   Coach Services Inc. v. Triumph Learning LLC, 668 F.3d 1356, 101 USPQ2d 1713, 1716 (Fed. Cir. 2012) ("We review the Board’s legal conclusions de novo …) (citing In re Pacer Tech., 338 F.3d 1348, 1349, 67 USPQ2d 1629 (Fed. Cir. 2003)); On-line Careline Inc. v. America Online Inc., 229 F.3d 1080, 56 USPQ2d 1471, 1475 (Fed. Cir. 2000); Glendale International Corp. v. USPTO, 374 F. Supp. 2d 479, 75 USPQ2d 1139, 1143 (E.D. Va. 2005).

 22.   See Herbko International Inc. v. Kappa Books Inc., 308 F.3d 1156, 64 USPQ2d 1375, 1377 (Fed. Cir. 2002) (conclusions of law are reviewed without deference, and on grant of summary judgment, court must decide for itself whether moving party has shown that it is entitled to judgment as a matter of law); Sunrise Jewelry Mfg. Corp. v. Fred, S.A., 175 F.3d 1322, 50 USPQ2d 1532, 1534 (Fed. Cir. 1999) (whether Board properly granted defendant’s motion to dismiss is a question of law that is reviewed "independently"); Spraying Systems Co. v. Delavan Inc., 975 F.2d 387, 24 USPQ2d 1181, 1184 (7th Cir. 1992) (Board’s grant of summary judgment is reviewed de novo).

 23.   See In re Mighty Leaf Tea, 601 F.3d 1342, 94 USPQ2d 1257, 1259 (Fed. Cir. 2010) ("The Board’s legal conclusion receives plenary review, while the factors relevant to likelihood of confusion are reviewed for support by substantial evidence, in accordance with the criteria of the Administrative Procedure Act."); Palm Bay Imports Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d 1369, 73 USPQ2d 1689, 1691 (Fed. Cir. 2005); In re Majestic Distilling Co., 315 F.3d 1311, 65 USPQ2d 1201, 1203 (Fed. Cir. 2003).

 24.   See ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 159, 82 USPQ2d 1414, 1429 (2nd Cir. 2007) (under general principles of administrative law deference is due to the Board’s interpretation of the statute the agency is charged with administering); Star Industries Inc. v. Bacardi & Co. Ltd., 412 F.3d 373, 75 USPQ2d 1098, 1102 n.2 (2nd Cir. 2005); International Bancorp, LLC v. Societe des Bains de Mer et du Cercle des Etrangers a Monaco, 329 F.3d 359, 66 USPQ2d 1705, 1719-20 (4th Cir. 2003); In re Hacot-Colombier, 105 F.3d 616, 41 USPQ2d 1523, 1525 (Fed. Cir. 1997) ("[T]his court defers to the agency’s reasonable statutory interpretation."); Eastman Kodak Co. v. Bell & Howell Document Management Prods., Co., 994 F.2d 1569, 26 USPQ2d 1912, 1915-16 (Fed. Cir. 1993) (applying Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) to a decision of the Board, which is treated as if it were the "agency," and holding the Board’s interpretation of an ambiguous provision of the trademark statute reasonable, rather than undertaking a de novo interpretation of law); Kohler Co. v. Moen Inc., 12 F.3d 632, 634, 29 USPQ2d 1231, 1243 (7th Cir. 1993) (affording Chevron deference to the Board’s interpretation of the Lanham Act). But see In re Save Venice New York Inc., 259 F.3d 1346, 59 USPQ2d 1778, 1781 (Fed. Cir. 2001) (validity of the Board’s adaptation of the related goods test to geographic marks is a question of law that is reviewed de novo); In re International Flavors & Fragrances, Inc., 183 F.3d 1361, 51 USPQ2d 1513, 1515 (Fed. Cir. 1999).

 25.   See Custom Computer Services Inc. v. Paychex Properties Inc., 337 F.3d 1334, 67 USPQ2d 1638, 1639 (Fed. Cir. 2003).

906.02    Petition To Director

In reviewing non-final rulings of the Board, the Director will exercise supervisory authority under 37 CFR §  2.146 (a)(3)  and reverse the Board’s ruling only where there is a clear error or abuse of discretion. [ Note 1.]

NOTES:

 1.   See In re Sasson Licensing Corp., 35 USPQ2d 1510, 1511 (Comm’r 1995); Huffy Corp. v. Geoffrey Inc., 18 USPQ2d 1240, 1242 (Comm’r 1990); Paolo's Associates Ltd. Partnership v. Bodo, 21 USPQ2d 1899, 1902 (Comm’r 1990).