Tuesday, June 05, 2007

Precedential No. 37: Cancellation Respondent's Laches Claim Survives Section 8 Cancellation of its Registration

In a rare precedential interlocutory ruling, the Board held that a cancellation Respondent may pursue a laches defense even though its challenged registration has been cancelled due to the inadvertent failure to file a Section 8 declaration. The Board, however, denied Respondent's summary judgment motion grounded on laches because there exist genuine issues of material fact regarding when Petitioner had actual notice of respondent's use or registration of its mark, and whether any economic prejudice resulted from the delay. Fishking Processors, Inc. v. Fisher King Seafood Ltd., 83 USPQ2d 1762 (TTAB 2007) [precedential].

Petitioner sought to cancel, on Section 2(d) grounds, Respondent's registration for the mark FISHER KING SEAFOODS for "fresh and frozen seafood," based on alleged prior use of FISHKING and FISHKING PROCESSORS INC. for fresh and frozen fish. Respondent raised the affirmative defense of laches and moved for summary judgment on that issue.

While the cancellation proceeding was pending, the subject registration was cancelled because Respondent failed to file the requisite Section 8 declaration of use. Pursuant to Trademark Rule 2.134, the Board gave Respondent time to show cause why judgment should not be entered against it. Respondent responded that the failure was inadvertent. The Board then gave Petitioner the option of continuing with this proceeding or having it dismissed as moot. Petitioner decided to proceed in order to have the priority and likelihood of confusion issues decided sooner than later. [Respondent had already filed a new application and Petitioner had opposed it].

Petitioner argued that, in view of the cancellation of the FISHER KING SEAFOODS registration under Section 8, the basis for the laches defense "no longer exists because there is no registration upon which to base a claim of laches." I.e., Petitioner's constructive knowledge of the registration had been eliminated, since the registration is now cancelled.

Respondent countered by arguing that, regardless of cancellation of the subject registration, Petitioner had "actual knowledge of respondent and sat on its rights."

The Board sided with Respondent, ruling that Respondent may attempt to prove laches even though the subject registration has been cancelled. "The expiration of the registration does not extinguish either actual notice or constructive notice during the term of the registration."

Turning to the merits of the summary judgment motion, the Board found that conflicting statements made by the parties created a genuine issue of material fact regarding when Petitioner had actual knowledge of Respondent's use or registration.

Moreover, although Respondent submitted evidence of increased sales, it "has not demonstrated that any economic prejudice resulted from petitioner's delay." [TTABlog note: Respondent's president did testify, however, that "the company has grown exponentially since its incorporation in 1996" and that "the damage to our reputation and our recognition if we were to have to rebuild a brand under a new trademark if inestimable."]

And the Board found a genuine factual issue regarding when Petitioner knew or should have known about respondent's registration. [TTABlog question: Wasn't Petitioner on constructive notice as of the issue date of the registration?]

"Thus we cannot say that Respondent has met the requirement of showing that there is no genuine issue that petitioner's delay was unreasonable or inexcusable and that it was prejudiced by petitioner's inaction ...."

The parties also filed cross-motions for summary judgment (for the second time) on the Section 2(d) issue, but again genuine issues of material fact precluded the grant of summary judgment. The Board went on to tell the parties that further summary judgment motions may not be filed without leave.

TTABlog comment: The Board stated that Respondent must show economic prejudice resulting from the delay, but is the Board saying that the delay must somehow cause the economic harm? Isn't it enough that some change of economic position occurred during the delay period?

In the recent precedential decision in Teledyne Technologies, Inc. v. Western Skyways, Inc., 78 USPQ2d 1203 (TTAB 2006), affirmed, Appeal Nos. 2006-1366 and 2006-1367 (Fed. Cir. 2006) [TTABlogged here and here], a three-and-one-half year delay was sufficient for laches when "respondent has asserted economic prejudice based on its development of a valuable business and good will around its GOLD SEAL mark during the time petitioner raised no objection." Such recognizable damage may ensue "whether or not the plaintiff overtly lulled the defendant into believing that plaintiff would not act, or whether or not the defendant believed that the plaintiff would have grounds for action."

Isn't Respondent arguing the same thing here? I.e., that it developed its business during the delay period? Why was the change in economic position in Teledyne sufficient for a finding of laches, but not sufficient here? And why wasn't the Teledyne decision even cited in this case?

There's something fishy here!

Text Copyright John L. Welch 2007.


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