Corcamore v. SFM — Trademarks | Outside IP Counsel

The Federal Circuit held that the Supreme Court's Lexmark framework governs who may petition to cancel a trademark registration, while affirming default judgment as a sanction for bad-faith litigation.

When a grocery chain that had sold under SPROUTS since 2002 went after a vending-machine operator’s SPROUT registration, the resulting appeal did something larger than resolve a supermarket-versus-snack-machine squabble. In Corcamore, LLC v. SFM, LLC, 978 F.3d 1298 (Fed. Cir. 2020), decided October 27, 2020, the Federal Circuit announced that the Supreme Court’s Lexmark framework — the same zone-of-interests and proximate-cause analysis used for Lanham Act false-advertising claims — controls who may petition to cancel a federal trademark registration under Section 14 of the Lanham Act, 15 U.S.C. § 1064. Writing for a panel of Judges Reyna, Chen, and Hughes, Judge Reyna also affirmed the Trademark Trial and Appeal Board’s decision to enter default judgment against Corcamore as a sanction for a sustained campaign of litigation misconduct.

At a glance

Case: Corcamore, LLC v. SFM, LLC, No. 2019-1526, 978 F.3d 1298 (Fed. Cir. Oct. 27, 2020).
Court: U.S. Court of Appeals for the Federal Circuit; opinion by Judge Reyna, joined by Judges Chen and Hughes.
Posture: Appeal from a TTAB cancellation proceeding in which the Board denied Corcamore’s motion to dismiss for lack of standing and later entered default judgment as a sanction.
Holding: The Lexmark zone-of-interests and proximate-causation requirements govern the statutory cause of action to cancel a registration under § 1064; the Board did not abuse its discretion in cancelling Corcamore’s SPROUT registration by default for willful misconduct.
Significance: Aligned trademark cancellation standing with the Supreme Court’s general framework for statutory causes of action, while confirming the Board’s power to sanction abusive litigants severely.

SFM, LLC operates the Sprouts Farmers Market chain and has used SPROUTS for retail grocery services since 2002. Corcamore owns a federal registration for SPROUT covering vending-machine services, claiming use since 2008. SFM petitioned to cancel Corcamore’s registration. Corcamore moved to dismiss, arguing SFM lacked standing because it could not show the kind of injury the statute required. The Board denied the motion, and the dispute over the proper standing test set up the central legal question on appeal.

The standing question: from “real interest” to Lexmark

For decades the Board and the Federal Circuit had described cancellation standing in terms drawn from Empresa Cubana del Tabaco v. General Cigar Co.: a petitioner needed a “real interest” in the proceeding and a “reasonable belief of damage.” In Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014), the Supreme Court had recast the analysis of who may sue under the Lanham Act, asking whether a plaintiff falls within the statute’s “zone of interests” and whether the claimed injury was “proximately caused” by the challenged conduct.

The Federal Circuit held that the Lexmark framework supplies the governing test for § 1064 cancellation as well. Judge Reyna explained that Lexmark sets out the analytical approach for determining whether a party may invoke a statutory cause of action, and that there is “no meaningful, substantive difference” between the Lexmark requirements and the older Empresa Cubana formulation. Because the two converge, the Board reached the correct outcome: SFM, a direct competitor whose senior SPROUTS mark could be damaged by Corcamore’s registration, plainly fell within the zone of interests and could show proximately caused injury.

”Standing” by another name

A recurring point in the opinion is terminological. Courts and litigants often call this inquiry “standing,” but the panel was careful to note that it is not Article III standing — the constitutional doctrine about cases and controversies — but rather a question of whether the plaintiff has a cause of action under the statute. Lexmark itself made that distinction, observing that the zone-of-interests test is a matter of statutory interpretation, not jurisdiction.

The practical consequence is that the bar to bring a cancellation remains low and is satisfied by ordinary commercial competitors and others within the statute’s protective reach. What Corcamore added was doctrinal tidiness: it harmonized cancellation standing with the broader body of Lanham Act cause-of-action law, so that the same vocabulary now governs false-advertising suits in district court and cancellation petitions before the Board. The change is more about analytical pedigree than about expanding or contracting the universe of eligible petitioners.

Default judgment as a sanction

The second half of the opinion concerns conduct, not doctrine. During the cancellation proceeding, Corcamore engaged in what the Board found to be willful, bad-faith procedural maneuvering. It filed an inordinate number of motions and disregarded discovery obligations, prompting the Board to impose two separate sanctions orders restricting its filings. When Corcamore violated those orders as well, the Board entered default judgment, cancelling the SPROUT registration outright.

The Federal Circuit reviewed the sanction for abuse of discretion and affirmed. The court emphasized the Board’s broad authority to manage proceedings and to impose sanctions, including the ultimate sanction of entering judgment, when a party repeatedly defies its orders. The decision is a pointed reminder that a registrant can forfeit a registration without any adjudication of the mark’s validity or the merits of the competing claims — sustained obstruction is enough. Corcamore later sought Supreme Court review, which was denied, leaving both rulings intact.

Open questions

How far does the harmonization reach? Corcamore aligns cancellation with Lexmark, but courts continue to work out whether every Board proceeding — oppositions, for instance — should be analyzed identically.
Where are the zone-of-interests edges? The decision confirms competitors qualify, but the outer boundary of who is “within the zone” for cancellation purposes remains to be tested in harder cases.
What conduct crosses the sanction line? The opinion blesses default judgment for egregious, repeated defiance, but offers limited guidance on the threshold between aggressive litigation and sanctionable abuse.

Implications

Plead standing in Lexmark terms. Petitioners and respondents should frame the cause-of-action inquiry around the zone of interests and proximate causation, not just “real interest” and “reasonable belief of damage.”
Standing is generous; do not over-litigate it. A direct competitor with a plausibly injured senior mark almost always clears the bar, so motions to dismiss for lack of standing rarely pay off.
Conduct can be dispositive. A registrant that flouts Board orders and discovery can lose by default, independent of the strength of its registration.
It is a cause of action, not Article III. Treating the inquiry as statutory rather than constitutional affects how arguments are framed and what authorities apply.
The merits may never be reached. Corcamore shows that procedural posture and sanctions can decide a cancellation as decisively as any likelihood-of-confusion analysis.

Frequently asked questions

Did Corcamore change who can file a trademark cancellation? Not in result, but in framing. The Federal Circuit held that the Supreme Court’s Lexmark zone-of-interests and proximate-causation test governs standing under 15 U.S.C. § 1064, replacing the older “real interest plus reasonable belief of damage” phrasing. The court found no substantive difference between the two, so the same petitioners qualify.

Why did Corcamore lose its SPROUT registration? Not on the merits. The Trademark Trial and Appeal Board entered default judgment as a sanction after Corcamore repeatedly defied two earlier sanctions orders and discovery obligations. The Federal Circuit held the Board did not abuse its discretion in cancelling the registration for that misconduct.

What is the practical takeaway from Corcamore? Standing to cancel is generous but litigation conduct matters. A petitioner need only fall within the statute’s zone of interests and show proximately caused injury, but a registrant who stonewalls discovery and flouts Board orders can lose by default rather than on the strength of its mark.