Tuesday, March 06, 2007

CAFC Affirms TTAB Denial of Motion to Re-open and Dismissal of Counterclaim in "FIRSTCAROLINACARE" Opposition

In a precedential ruling, FirstHealth of the Carolinas, Inc. v. CareFirst of Maryland, Inc., Appeal No. 2006-1148 (Fed. Cir., February 27, 2007), the CAFC affirmed the TTAB's dismissal of Applicant's counterclaim in Carefirst of Maryland, Inc. v. FirstHealth of the Carolinas, Inc., 77 USPQ2d 1492 (TTAB 2005). [TTABlogged here and here].

First, CareFirst challenged the CAFC's jurisdiction, claiming that the appeal was mooted when CareFirst dismissed its own appeal from the TTAB's ruling of no likelihood of confusion and no dilution. It argued that the TTAB ruling had preclusive effect and so CareFirst cannot assert its mark against First Health. Therefore there is no potential damage to Applicant that would support the cancellation counterclaim.

The CAFC disagreed, pointing out that the TTAB decision deals only with registration issues and "does not bar CareFirst from using the CAREFIRST mark or from asserting that mark in subsequent claims against FirstHealth for trademark infringement or unfair competition."

The "primary issue" on appeal concerned the Board's denial of FirstHealth's motion to reopen its testimony period because, the Board ruled, FirstHealth failed to show excusable neglect. The counterclaim was based almost entirely on the discovery testimony of one witness, which testimony was not properly introduced and therefore was not of record. FirstHealth sought the opportunity to introduce that testimony, as well as other evidence.

The CAFC applied an "abuse of discretion" standard of review. In considering the issue of "excusable neglect," the Board, in Pumpkin Ltd. v. The Seeds Corp., 43 USPQ2d 1582 (TTAB 1997), adopted the Supreme Court's four-factor test set out in Pioneer Invest. Services Co. v. Brunswick Assoc. Ltd., 507 U.S. 280 (1993). According to Board precedent, the third factor -- the reason for the delay and whether it was within the movant's control -- is of "paramount importance."

Here, the reasons for the delay were "wholly within FirstHealth's reasonable control." Its claim of a docketing error was "belied by its reference to the ... deadline in a motion it filed before the deadline had expired." And as to the assertion that "an attorney's family matters caused delay," there was no explanation as to why others in the same law firm could not have carried on.

The CAFC therefore held that the Board did not abuse its discretion in denying the motion to re-open. Moreover, the Board's finding that FirstHealth failed to prove the allegations of its counterclaim -- abandonment via uncontrolled licensing and failure to use the mark -- was supported by substantial evidence.

And so the CAFC affirmed the TTAB's decision dismissing the counterclaim.

Text Copyright John L. Welch 2007.


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