For the first time in history, a court has ruled that the U.S. Postal Service can be sued for trademark infringement.
The U.S. Court of Appeals for the Fourth Circuit late last month ruled in favor of Global Mail Ltd., Sterling, VA, which is seeking to stop the USPS from using the service mark “Global Priority Mail.”
The decision reversed a lower court's ruling that said the USPS' sovereign immunity meant it was not subject to such action. The USPS has 90 days to appeal to the U.S. Supreme Court, which is likely. If the decision is upheld, the postal service would have to quit using the infringing name.
Other members of the mailing industry, including United Parcel Service, and the Air Courier Conference of America (ACCA), a trade association that represents the same-day and overnight small package delivery industry, had filed briefs supporting Global Mail's position.
“If it turns out that the USPS can use anybody's trademark with impunity, then what's to stop them from using UPS or FedEx as their trademark,” said Edward A. Pennington, a Washington-based lead trial attorney for intellectual property law firm Morgan & Finnegan, LLP, which represented Global Mail in the suit. “The [ACCA] is also concerned because many of its members are companies that provide services that compete with the postal service.”
The case began in 1996, when Global Mail, a $35 million international mailing services company, sued the USPS for using a product name confusingly similar to its own service mark, “Global Mail,” a competing expedited international parcel delivery service. Global Mail came up with its name 10 years ago; the USPS changed the original name for its comparable service — World Post — to Global Priority Mail in March 1996, even though Global Mail had asked the USPS not to use the name.
In December 1996, the U.S. District Court for the Eastern District of Virginia ruled that Global Mail could not sue because the USPS' sovereign immunity barred recovery under the federal trademark act known as the Lanham Act.
In 1997, Global appealed, saying that although the USPS is seeking immunity from the Lanham Act, it has used it to register its own marks, to cancel the registrations of competitors through administrative procedures and to sue competitors in federal court for trademark infringement.
“The postal service has on several occasions used the Lanham Act against others,” Pennington said. “Denying USPS' competitors the use of the statute against the service seemed more than unfair.”
According to Pennington, the USPS avoided these accusations at the oral arguments. John Hoyle, an appellate attorney at the Justice Department who tried the case for the USPS, did not return calls to DM News.
The court noted in its April 24 decision that: “In competing with private firms, USPS advertises aggressively on television, in print [and] on billboards … and USPS has utilized the Lanham Act to register its marks and to ensure that other firms do not infringe upon them. We cannot conclude that Congress intended … simultaneously to 'launch [USPS] into the commercial world' and to immunize USPS from liability for federally created commercial torts such as the Lanham Act. Such a reading would be wholly inconsistent with Congress' stated purpose in enacting the [Postal Reorganization Act].”
Pennington said that by making its decision public, the Fourth Court wants it to have “precedential value.”
“I think they want this to be a guiding light for future cases that involve the postal service,” he said. “For the first time, you have the government not only competing, but being accused of competing unfairly.”
According to normal statutory hierarchy for federal cases, cases tried after the Fourth Circuit then can go to the Supreme Court. Joe Morris, executive director of ACCA, Washington, said that if the Supreme Court upholds the decision, “it means that when the postal service competes with independent business, it's subject to the same rules and laws as those businesses.” ACCA's members include UPS, FedEx and Global Mail
“A company spends a lot of time to build up the good will that goes with its name — and that good will has value,” Morris said. “Others can't come and take advantage of that value. The postal service has tried to do this with one of our members and then say, 'You can't do anything about it because you can't sue us, we're the government.'
Although trademark cases typically do not result in large damages awards, Morris said, “if the Appeal Court's decision is upheld, the USPS' print advertising materials, radio and television advertisements and related promotional material would have to cease and be destroyed.”