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March 2016 Issue

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Wheat, Weed, and Pizza: What Impacts Interstate Commerce for Trademark Filings? An Evidentiary Tale

by Rose Kautz, Irell & Manella LLP


Rose Kautz

In a recent nonprecedential opinion, Doctor's Associates Inc. v. Janco, LLC, Opposition No. 91217243 (January 7, 2016), the Trademark Trial and Appeal Board (TTAB) held that a local "Readi Spaghetti" restaurant in Washington state did not operate in interstate commerce, and thus could not obtain federal registration for its FLATIZZA trademark. Does this decision contradict Supreme Court precedent holding that local business activities, including running a restaurant, can impact interstate commerce? Or does it make the point that no matter how logical a position may appear, it is still the job of the litigant to put in evidence to prevail in the TTAB, as with any Court? You decide.

When Janco filed its application for registration of the mark FLATIZZA in February 2014, Readi Spaghetti was a single restaurant in Bothell, Washington. The registration was opposed by Doctor's Associates, Inc., which owns and operates more than twenty-seven thousand Subway restaurants nationwide. Subway provided evidence that it also began using the term FLATIZZA in February 2014. Doctor's Associates argued that Janco did not "use" its FLATIZZA mark in interstate commerce, nor did its activities have any impact on interstate commerce, and thus, Janco was not entitled to a federal trademark registration. Trademark Act Section 1(a), 15 U.S.C. § 1051(a), allows registration of marks used in commerce, which includes "all commerce which may be lawfully regulated by Congress." This generally means interstate commerce and commerce between the United States and a foreign country. 15 U.SC. § 1127. Because Janco did not provide any evidence on the record that its restaurant served out-of-state customers, that its website had any out-of-state state viewers, or that it was listed in any travel or restaurant guide to attract out-of-state customers, the TTAB agreed with Doctor's Associates that Janco was not involved in interstate commerce and denied Janco's federal trademark registration.

For over fifty years, however, Federal Courts have held that certain local business activities do impact interstate commerce and are subject to federal protections and regulations. The Supreme Court held in Wickard v. Filburn, 317 U.S. 111 (1942), and Gonzales v. Raich, 545 U.S. 1 (2005), for example, that local activities such as growing wheat and even marijuana for personal used have an impact on interstate commerce, bringing them within Congressional regulation under the Commerce Clause.

Katzenbach v. McClung, 379 U.S. 294 (1964), provides an even closer analogy. In Katzenbach, the Supreme Court considered the impact local restaurants have on interstate commerce. During the Civil Rights movement, a local restaurant in Birmingham, Alabama named Ollie's Barbecue challenged a provision of the Civil Rights Act requiring it to serve black customers. Ollie's argued that it was a local restaurant with local customers, that was not located near a highway, and that it did not advertise out of state. Therefore, Ollie's claimed, it was not involved in interstate commerce and Congress could not require it to comply with the Civil Rights Act. The Supreme Court disagreed, holding that even local restaurants like Ollie's had some minimal impact on interstate commerce. Thus, they were subject to Congress' broad powers of regulation granted by the Commerce Clause.

Since Katzenbach clearly held that a local restaurant had an impact on interstate commerce, how could the TTAB come to the opposite conclusion? One possible explanation is that the Supreme Court in Katzenbach and the TTAB in Janco used different standards. The focus of Katzenbach was whether the activity had an impact on interstate commerce. The Supreme Court held it did, since even local discrimination, when aggregated, could discourage commerce and travelers. By contrast, trademark law focuses on actual use of a mark in interstate commerce, not just the impact an activity has. The TTAB concluded that Janco neither used FLATIZZA in interstate commerce, nor did its restaurant services impact interstate commerce. The TTAB acknowledged that use and impact are intertwined, noting that a service does not need to be used in more than one state to meet satisfy the Lanham act, as long as the service impacts interstate commerce. However, the TTAB overlooks Katzenbach's suggestion that Janco's restaurant does operate in interstate commerce. Assumedly, therefore, any use of the FLATIZZA mark in the restaurant would be a use in interstate commerce.

A much simpler explanation for these contradictory outcomes rests on the applicant's evidentiary shortcomings. In Katzenbach, there was undisputed evidence on the record that 46% of Ollie's food was purchased from a supplier who bought the food outside of the state, showing at least some connection to interstate commerce. The TTAB cited other cases where local businesses established interstate impact by submitting evidence of ties to interstate commerce, e.g., Larry Harmon Pictures Corp. v. Williams Rest. Corp., 929 F. 2d 662 (Fed. Cir. 1991). Applicant Janco, by contrast, apparently did not submit any evidence, aside from assertions in its brief (which are not recognized as evidence), showing any connection to interstate commerce.

Applicant's brief argued that its Bothell restaurant was located less than a mile from I-405 and 3 miles from Interstate-5 "which is the major North/South corridor of the West Coast." The TTAB actually took judicial notice of Bothell's location, and found it about 20 miles northeast of Seattle, but found nothing on the record to "compel a presumption that Applicant's services have had an effect on interstate commerce." It is not the job of the TTAB to presume evidence favorable to a party that did not supply any, or, having taken judicial notice of the location of a restaurant, to take judicial notice of its patrons' travel patterns. And of course, another explanation is that the TTAB just got this one wrong. Selling FLATIZZA pizzas in a commercial restaurant certainly seems to have a greater impact on interstate commerce than growing wheat or marijuana for personal use, and Ollie's Barbecue doesn't seem very different from Readi Spaghetti.

Whether you think this case presents a shortcoming in applicant's evidence or in the TTAB's application of the law, there is a potential evidentiary lesson here. Local businesses seeking to apply for federal registration should consider developing a factual record demonstrating ties to and impact on interstate commerce. As the TTAB noted, that evidence can include advertisements in travel guides or online, reviews from out-of-state customers on sites such as Yelp, affidavits from out-of-state customers, and even evidence of geographic factors such as showing that a business is near a metropolitan area with interstate business or easily accessible from an interstate highway. Invoices for out-of-state sources for materials or supplies, another factor noted by the TTAB, should not have been difficult to supply. Ingredients even indirectly sourced from other states could be documented, as, of course, could evidence that telephone and internet forms a part of the applicant's marketing transaction. Being a "local" business is not a bar to registering a federal trademark. But failing to provide sufficient evidence might be.

Janco has since opened a second restaurant in Kirkland, Washington. It is also interesting to note that the TTAB focused on Janco's "services" even though the FLATIZZA mark was for an article of pizza, not a pizza service. However, it's unclear whether correcting this distinction would have changed the TTAB's analysis.

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Rose Kautz is a litigation associate in the Los Angeles office of Irell & Manella LLP. She can be reached at rkautz@irell.com. 

 

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