Trademark Cancellation Affirmed After Holder Repeatedly Dodges TTAB Discovery Requests

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By Tony Dutra  

The Patent and Trademark Office's cancellation of a trademark registration was reasonable in light of the mark holder's repeated actions avoiding discovery, the U.S. Court of Appeals for the Federal Circuit ruled Dec. 28 (Benedict v. Super Bakery Inc., Fed. Cir., No. 2011-1131, 12/28/11).

The court called for restraint in granting a default judgment against a litigant before the PTO's Trademark Trial and Appeal Board, but it concluded that the mark owner in this case failed to meet his obligation to comply with reasonable procedures.

The court also chastised the board for relying on its response to a comment when it had published a final rule on a procedure at issue in the case, when the response was not reflected in the rule itself.

Repeated Avoidance of Discovery Request

Ward E. Benedict is the owner of a registered trademark (2,966,255), granted on July 12, 2005, for the mark “G the Goodyman,” registered in International Class 29 for meat snacks, namely pepperoni sticks; and in International Class 30 for cookies, cakes, tarts, rice cakes, strudels, and donuts.

Super Bakery Inc. is the owner of a trademark (2,930,398), granted four months earlier, for the word mark “Goody Man” in International Class 30 for bakery products, namely cupcakes. Six days before Benedict's registration was granted, Super Bakery also applied to extend its mark to cover marshmallow treats, glazed rings, cookies, donuts, buns, fruit pies, muffins, and snack cakes. The examiner rejected the application in light of the grant to Benedict.

Super Bakery subsequently filed in 2007 a petition to cancel the ‘255 mark on grounds of fraud and abandonment. For more than a year, Benedict failed to respond to repeated discovery requests.

He eventually filed a motion for summary judgment, requesting denial of Super Bakery's challenge on the ground that the cancellation issue was res judicata because of the examiner's prior rejection. Benedict invoked the procedure of Trademark Rule 2.127(d), 37 C.F.R. §2.127(d), which he argued called for a suspension of Super Bakery's action and further states that “no party should file any paper which is not germane to the motion except as otherwise specified in the Board's suspension order.”

Super Bakery then filed a motion for sanctions based on Benedict's failure to provide discovery. Super Bakery requested default judgment pursuant to Trademark Rule 2.120(g). The TTAB granted Super Bakery's motion, cancelled Benedict's registration of “G the Goodyman,” and denied his motion for summary judgment as moot. Super Bakery Inc. v. Benedict, 96 USPQ2d 1134 (T.T.A.B. 2010)

Benedict appealed, and the Federal Circuit, in an unpublished opinion, vacated the board's ruling for a failure to discuss the applicability of Rule 2.127(d) to the case.

On remand, the TTAB came to the same conclusion. The board relied on a comment-and-response in its notice implementing a change to Rule 2.127(d). The response rejected the idea that a suspension should be automatic after the summary judgment motion was filed. The board thus concluded it could act on Super Bakery's motion in lieu of imposing the suspension.

Benedict appealed again.

Comment Not Incorporated in Rule

This time, Judge Pauline Newman affirmed the decision, albeit after finding fault with the board's reasoning.

“We agree with Mr. Benedict that Rule 2.127(d) does not clearly present the interpretation with which the Board now endows it,” she said. “Only if one reads the PTO ‘comment' does it become clear.”

The appeals court distinguished the comment from “the rule as adopted” and concluded that the difference creates an “ambiguity [that] does not support the extreme sanction of default judgment.”

But Benedict's Actions Egregious

Nevertheless, the court concluded that the board's default judgment was not an abuse of discretion, given Benedict's prior actions. “[T]he Board's finding that ‘[t]here is no reason to assume that, given additional opportunities, petitioner will fulfill his obligations as a party to the proceeding,' … is supported by the entire experience of this case,” the court said.

The court identified the burden on a court to show restraint and conduct a thorough review before resorting to default judgment as a sanction for abuse. “Similar remedy, and restraint, applies to agency tribunals,” the court said.

However, it explained, “Default judgment may be warranted in cases of repeated failure to comply with reasonable orders of the Trademark Board, when it is apparent that a lesser sanction would not be effective.”

“The possession of a trademark registration places a routine obligation on the possessor to participate in reasonable procedures concerning rights or interests affected by that registration,” the court concluded. “The remedy of default judgment was within the Board's discretion in view of Mr. Benedict's repeated failures to comply with established and reasonable procedures orders.”

Judges Alan D. Lourie and Kimberly A. Moore joined the opinion.

Benedict represented himself. David G. Oberdick of Meyer, Unkovic & Scott, Pittsburgh, represented Super Bakery.


Opinion at http://pub.bna.com/ptcj/111131Dec28.pdf