COREMetadata, citation and similar papers at core.ac.ukProvided by Santa Clara University School of LawSanta Clara High Technology Law JournalVolume 10 Issue 1Article 9January 1994Eastman Kodak v. Bell & Howell: A Reaffirmationof the Reasonableness StandardVincent T. SampsonFollow this and additional works at: http://digitalcommons.law.scu.edu/chtljPart of the Law CommonsRecommended CitationVincent T. Sampson, Eastman Kodak v. Bell & Howell: A Reaffirmation of the Reasonableness Standard, 10 Santa Clara High Tech.L.J. 251 (1994).Available at: /9This Case Note is brought to you for free and open access by the Journals at Santa Clara Law Digital Commons. It has been accepted for inclusion inSanta Clara High Technology Law Journal by an authorized administrator of Santa Clara Law Digital Commons. For more information, please [email protected].
EASTMAN KODAK v BELL & HOWELL." A REAFFIRMATIONOF THE "REASONABLENESS" STANDARDEastman Kodak Company v. Bell & Howell Document ManagementProducts Company, 994 F.2d 1569 (Fed. Cir. 1993)Vincent T. SampsontINTRODUCTIONOn June 2, 1993, the United States Court of Appeals for the Federal Circuit, in Eastman Kodak Co. v. Bell & Howell Document Management Products Co.,' affirmed the decision of the Trademark Trialand Appeal Board (Board) of the Patent and Trademark Office (PTO)that held numeric designators (or "marks") are not presumptively descriptive under the Lanham Act (Act).2 The court further held thatthis presumption was valid when the marks were applied for in intentto-use applications.3 The court also noted that the issue of whether themarks are descriptive cannot be resolved until the marks are used. Finally, the court stated that the numeric marks in this case did not require a secondary meaning in order for the marks to be validtrademarks.BACKGROUNDBell and Howell Document Management Company (B&H) is inthe business of manufacturing microfilm reader/printers. On October12, 1990, B&H filed intent-to-use applications to register the numbers"6200", "6800" and "8100" on the Principal Register.4 Eastman Kodak Company (Kodak), a competitor in the manufacture of microfilmreader/printers, filed a timely opposition to each of the three marks.Kodak alleged that marks were merely descriptive in that they were toCopyright 1994 Vincent T. Sampson.t B.A., University of California, Los Angeles; J.D., Santa Clara University School ofLaw, 1994.1. 994 F.2d 1569 (Fed. Cir. 1993).2. ch. 540, 60 Stat. 427 (1946) (codified as amended in the Trademark Law Revision Actof 1988, 15 U.S.C. §§ 1051-1127 (1988)).3. Pursuant to 15 U.S.C. § 1051(b)(1), an intent-to-use application is filed when "a person who has a bona fide intention, under circumstances showing the good faith of such person, touse the trademark in commerce."4. Eastman Kodak Co. v. Bell & Howell Document Management Products Co., 23U.S.P.Q.2d (BNA) 1878 (T.T.A.B. June 8, 1992).
252COMPUTER &HIGH TECHNOLOGY LAW JOURNAL[Vol. 10be used only as model designators. Based on this argument, Kodakclaimed that registering the marks would be improper.The issue of descriptiveness was brought before the Board. B&Hfiled a motion for summary judgment arguing that there were no issues of material fact regarding the alleged mere descriptiveness of thenumeric marks and, in the alternative, that Kodak had no standing tooppose the intent-to-use applications. Kodak then filed a cross motionfor summary judgment. The Board held that (1) Kodak did havestanding to oppose the applications and (2) the issue of mere descriptiveness could not be resolved until use had begun. Accordingly, theBoard denied Kodak's motion for summary judgment on the issue ofdescriptiveness and dismissed the oppositions without prejudice. As aresult of the Board's decision, B&H was granted a notice of allowance. 5 Kodak appealed the Board's decision. Kodak's appeal wasbased only on the issue of descriptiveness.DISCUSSIONThe court stated at the outset of its decision: "The principal issuein this case is whether the Board's implied creation of a presumptionin favor of the applicant for a numerical mark intended for use as morethan a model designator is a reasonable interpretation of the Board'sauthority under the Lanham Act."6 The Eastman Kodak court concluded that the Board's decision was a reasonable exercise of its authority under the Chevron doctrine.7In Chevron U.S.A. Inc. v. Natural Resources Defense Council,Inc.,8 the Supreme Court established a test to determine the validity ofan agency's interpretation of a statute that an agency administers. TheChevron doctrine consists of a two-step analysis.9 The first step requires the court "to determine whether Congress has directly addressed the precise issue in question."'" If Congress has directlyaddressed the issue, the agency and court reviewing the agency's interpretation are required "to give effect to the unambiguously ex5. Under the Lanham Act the procedure is as follows: after the Patent and TrademarkOffice (PTO) issues a notice of allowance, the applicant has six months to file a statement thatconfirms that the mark is being used in commerce. 15 U.S.C. § 1051 (d)(1) (1988). At the endof this six month period, the intent to use statement is reexamined by the PTO to satisfy itselfthat the mark is registerable. If the PTO is satisfied, the mark is issued a registration. Id. § 1051(d)(1).18.104.22.168.Eashan Kodak, 994 F.2d at 1571.Id. at 1571.467 U.S. 837 (1984).IM at 842.10. Id
1994]EASTMAN KODAK v. BELL & HOWELLpressed intent of Congress."" If, however, the statute does notdirectly address the precise issue in question, the second step of Cheron is to determine whether the agency's decision was based on apermissible construction of the statute.' 2 Thus, a reviewing court3must determine if the agency's interpretation was "reasonable."'The court in Eastman Kodak began its analysis of the Board'sdecision by noting that in order for the Board to dismiss Kodak's oppositions without prejudice, the Board would have had to concludethat the numeric marks were presumptively not descriptive under section 2(e) of the Act when those marks are applied for in intent-to-useapplications under section l(b) of the Act.' 4 As the starting point ofits analysis under the Chevron doctrine, the court examined the language of the Act, specifically § 2(e), which addresses denial of registration if a mark is descriptive. As a result of this examination, thecourt concluded that the statute "on its face" did not preclude theBoard's decision. The court then turned to the 1988 legislative historyof the Act and concluded that the legislative history did not speakdirectly to the issue. 5 The court noted that Congress intended mostmarks applied for by way of intent-to-use applications were to be reviewed for descriptiveness at the initial examination stage. This wasinterpreted by the court to mean that the PTO has the duty to confirmthat the mark applied for actually functions as a mark. The courtstated that the legislative history emphasized that the Act permittedthe PTO to "raise issues of registrability that might not be evidentuntil the applicant makes available specimens showing the mark asused and/or clarifying the nature of the goods and services involved."' 6 The court concluded that although the legislative historyand the express language of the statute did not address the issue precisely, Congress had provided for situations similar to the case at bar.The court's final point in its discussion of the first step of the Chevrondoctrine was that Congress, in order to reduce an applicant's uncertainty with respect to his financial investment before a mark is put intocommercial use, dictated that the opposition process be in place beforean "intent-to-use mark" had been put into use. The court added thatCongress was aware of some issues that may arise that cannot be resolved in the opposition proceedings and must wait until the post-use11.Id. at 842-43.12.Chevron, 467 U.S. at 822.214.171.124.16.Id. at 868; Eastman Kodak, 994 F.2d at 1571.Eastman Kodak, 994 F.2d at 1571.Id. at 1572.Id. at 1572, citing H.R. REP. No. 1028, 100th Cong., 2d Sess. 9 (1988) reprinted in1988 U.S.C.C.A.N. 5577.
COMPUTER & HIGH TECHNOLOGY LAW JOURNAL[Vol. 10PTO examination period. The court thus concluded that the Board'sinterpretation of the Act "does not contravene any clear and unambiguous statutory meaning."' 7In part II of the court's analysis, it concluded that "the Board'sconstruction is a reasonable interpretation of the Lanham Act.""8 It isat this point that the court set out Kodak's arguments and addressedthem individually. Kodak's five arguments were: (1) "the Board's decision [was] unreasonable because it . preclude[d] asserting meredescriptiveness as a basis for denying word and number marks in intent-to-use applications;"'" (2) the Board's decision was unreasonablein that it effectively eliminated § 2(e) of the Act;2 0 (3) "the Board'sdecision [was] unreasonable because it allegedly create[d] a differentstandard for registrability for intent-to-use applications from use-basedapplications with regard to descriptiveness, contrary to statutory design;' 2 1 (4) the timing difference allowed by the Board was prejudicialin that the challenger faces a presumption that the mark is valid andalso allows an applicant to "tie up" several numeric marks; and (5) themarks in this case were merely descriptive and required a showing ofsecondary meaning.22 The court dismissed each argument raised byKodak.The court's response to Kodak's first argument, that descriptiveness would be precluded as a reason for denying registration, wasthreefold. First, the court reasoned that the examining attorney couldinitially determine that some marks bearing certain words and phrasesare prima facie merely descriptive.23 Thus, this type of mark wouldnot survive the initial screening step. Second, § 1051(d)(1) of the Actprovides for a second examination of the mark after the statement ofuse is filed, thus ensuring that descriptive marks will not be automatically passed to registration. The court also noted that this subsectioneven requires, in some instances, "a complete reexamination" of theapplication.2 4 Third, the court pointed out that the Trademark Examination Guide (TEG) 3-89 set forth the standard for examination of thestatement of use. This standard is for legal error (i.e., descriptiveness)in an application that is being reviewed. The attorney examining theapplication must make a "de novo determination on any issue that126.96.36.199.188.8.131.52.Eastman Kodak, 994 F.2d at 1572.Id. at 1572.Id.Ma at 1574.Id at 1574.Eastman Kodak, 994 F.2d at 1576.Id. at 1573.Id.
1994]EASTMAN KODAK v. BELL & HOWELLwould effect the legal correctness of registration."' The court statedthat the descriptiveness of a mark is such an issue and under reexamination, the examining attorney must not refuse the mark unless it ismandated by "changed circumstances." 2 6 The court stated that even ifthe use of the mark constituted "changed circumstances," these circumstances would not be known until after the statement of use isfiled and the marks are being reexamined. At this time, if the marksare determined to be descriptive, the examining attorney must refusethe marks or face registering a mark in violation of the Act.The court regarded Kodak's contention that § 2(e) of the Actwould be in effect eliminated as "unavailing."'27 The court stated thatKodak's analysis "would eliminate the use of intent-to-use applications for any mark that could possibly be used as a model designator."2 8 The court's reading of the statute showed no languageprecluding intent-to-use applications that have any type of numericmark. For this reason, the court concluded that the Board's decisionnot to adopt Kodak's position was reasonable.As to Kodak's assertion that the Board created separate standardsfor intent-to-use applications and use-based applications, the court reasoned that the Board only adopted a presumption that a mark is notmerely descriptive "in the absence of evidence of how it is actuallyused."'2 9 The court stated that if the PTO judges a mark to be merelydescriptive in an intent-to-use application, it will deny registration forthat mark just as it would if applied for in a use based application.Thus, "the standard that the PTO applies in either case is the same only the timing of such review is different."30 Again, the court concluded that the Board's interpretation was reasonable.Kodak had attacked this difference in timing, claiming that thedifference "relegates questions of descriptiveness to post-registrationcancellation proceedings."'" Kodak claimed that this delay was prejudicial in that there is a presumption of validity in cancellation proceedings. The court responded by stating that the burden of proof in bothopposition and cancellation proceedings is a preponderance of the32evidence.184.108.40.206.220.127.116.11.TaAKsId. at 1573.Id.Eastman Kodak, 994 F.2d at 1574.Id.Id. at 1574.Id. at 1574.Id. at 1575.Eastman Kodak, 994 F.2d at 1575, citing 2 J. THOMAS McCARTHY, McCARTHYAND UNFAM CoMPE moN § 20.16 (3d ed. 1992).ON
COMPUTER & HIGH TECHNOLOGY LAW JOURNAL[Vol. 10The court went on to refer to the policy reasons behind placingthe opposition proceeding before actual use had occurred. Thus, "anyprejudice flowing to Kodak from this arrangement cannot render theBoard's decision an unreasonable one in light of the statute." 33 As tothe contention that applicants would be able to "tie up" certain marksby requesting extensions for filing a statement of use, the court notedthat Kodak's argument "failed to acknowledge. certain importantrequirements that the applicant must meet during the application process." 34 In particular the court pointed out that: (1) an applicant mustspecify in the original application the bona fide intention to use themark and the manner in which it is to be used pursuant to 15 U.S.C.1051 (b)(1)(A); (2) in order for an applicant to receive the first extension, an applicant must file a verified statement showing a continuedbonafide intention to use the mark in commerce; and (3) there mustbe a showing of good cause for each extension thereafter. The courtconcluded that, since the applicant must provide the PTO with substantive information to delay a filing of a statement of use, an applicant may not indefinitely extend the filing period and "tie up" marksas Kodak argued.Kodak's final contention was that B&H's marks were to be usedas model designators; thus, there needed to be a showing of secondarymeaning. Without this showing, Kodak claimed, the marks were notregisterable. The court stated that even if Kodak was correct in assuming that the marks may be used for model designators, the conclusion that the marks are not registerable is "not dispositive. '3 5 Thecourt held that "in order for B&H's marks to be found to be merelydescriptive, they must be solely used as model designators and in anysource indicating function."3 The court turned to prevailing Boardauthority which held that the nature and manner of use of an alphanumeric designation can show that the designation is inherently distinctive. 37 As a final comment to Kodak's conclusion that the markswould necessarily be merely descriptive, the court noted that the PTO33. Eastman Kodak, 994 F.2d at 1575.34. Id. at 1575 n.8.35. Id. at 1576.36. Id. at 1576. It is interesting to note that the court did not cite Intel Corp. v. AdvancedMicro Devices, Inc., 756 F. Supp. 1292 (N.D. Cal. 1991) in its discussion of secondary meaning.The cases are distinguishable in that they involve different issues. In Intel, the court was con-cerned with whether Intel had shown by a preponderance of the evidence that the mark "386"was not generic in the trademark sense. In the instant case, the court was faced with a trademarkissue, but the main focus was the reasonableness of the Board's decision. Thus, although thecases may have appeared somewhat similar, they involve much different issues.37. Eastman Kodak, 994 F.2d at 1576, citing Neapco Inc. v. Dana Corp., 12 U.S.P.Q.2d(BNA) 1746 (T.T.A.B. Aug. 30, 1989).
19941EASTMAN KODAK v. BELL &HOWELLhad already granted registration of one numeric mark and one alphanumeric mark. sCONCLUSIONThe court was charged with addressing the issue of whether theBoard created a presumption that was an unreasonable exercise of itsauthority under the Lanham Act. The court's ultimate conclusion wasthat the Board's decision was reasonable in light of the Chevron doctrine. The court held that the Board's decision passed both steps setforth in the doctrine. First, the decision did not conflict with any Congressional mandate. Second, the decision was a reasonable interpretation of the Act to which the Board is associated. Every argumentadvanced by Kodak was rebuffed in favor of the Board. Since Kodakcould not convince the court that the Board's decision was unreasonable, the court affirmed the decision of the Board as a reasonable exercise of its authority under the Chevron test.38. Eastman Kodak, 994 F.2d at 1576, citing Eastman Kodak v. Bell & Howell DocumentsManagement Prods. Co., Nos. 86083, 86093, and 86101, slip op. at 4 (T.T.A.B. June 8, 1992).
Board denied Kodak's motion for summary judgment on the issue of descriptiveness and dismissed the oppositions without prejudice. As a result of the Board's decision, B&H was granted a notice of allow-ance.5 Kodak appealed the Board's decision. Kodak's appeal was based only on the issue of descriptiveness. DISCUSSION