Monday, January 10, 2011

Precedential No. 48: TTAB Enters Summary Judgment, Ruling That Res Judicata Bars Cancellation after Defaulted Opposition

The Board denied Petitioner Orouba Agrifoods a second bite of the (frozen?) apple by entering summary judgment on Petitioner's various claims for cancellation of the design mark shown below for frozen fruit and vegetables. Orouba had previously opposed the application that matured into the challenged registration, but the opposition was dismissed with prejudice when Orouba failed to take testimony or submit evidence. Orouba Agrifoods Processing Company v. United Food Import, 97 USPQ2d 1310 (TTAB 2010) [precedential].

The defunct opposition was based on allegations that Respondent United Food did not own the applied-for mark (i.e., it was merely the importer) and that United Food committed fraud by claiming ownership. In its petition for cancellation, Orouba added claims of likelihood of confusion under Section 2(d), false suggestion of a connection under Section 2(a), and "misrepresentation of source" under Section 14(3) of the Trademark Act.

Respondent asserted that Orouba "is asserting the same set of transactional facts as were asserted in its prior Opposition proceeding," and "there is nothing in the pending Cancellation petition that could not have been raised in the earlier Opposition." Orouba argued that the Board "may have rendered a final decision on the Opposition proceeding, but it did so without reaching the substantive merits of the case." Furthermore, Orouba contented that the petition is based on different facts (particularly regarding confusion), that some allegations are "newly discovered," and that the graveness of the allegations regarding misappropriation of a mark by a distributor requires their consideration by the Board.

The Board granted United's summary judgment motion on the ground of claim preclusion. The judgment in the opposition was a final judgment on the merits and it "bars a second suit involving the same parties or their privies based on the same cause of action." The Board noted that "[w]hile the Board’s dismissal of the prior opposition would not be sufficient for issue preclusion purposes, it is a final judgment on the merits for purposes of claim preclusion."

The question, then, was whether the allegations in the petition for cancellations "are based on the same transactional facts as, and could have been litigated in, the prior opposition."

The Board found the transactional facts in the two proceedings to be the same: allegations of ownership, priority of use, and fraud. Orouba's assertions that the "allegations" were newly discovered is just "another way of saying that they are positing a new legal theory on the same transactional facts."

Petitioner cannot avoid the application of claim preclusion by merely bringing additional claims in this proceeding based on the same transactional facts as the prior opposition. *** Here, while the grounds for the prior opposition did not include priority and likelihood of confusion, false suggestion of a connection or misrepresentation of source, all of these claims are based on the same facts alleged in the opposition, perhaps with slightly more detail.

The Board observed that Petitioner Orouba "could (and should) have asserted each of these [additional] claims in the earlier case."

Finally, Orouba plea regarding the "grave allegations" of the case did not move the Board. The Board pointed out that Orouba failed to pursue the opposition, and also failed to respond to the Board's inquiry regarding the status of a pending civil action between the parties.

And so the Board dismissed the petition for cancellation.

TTABlog comment: I guess that United Food will be frozen out from distributing Orouba's goods, don't you think? Can United now stop Orouba from using the mark? Or does Orouba have common law rights that can't be taken away?

Last April, the Las Vegas Trademark Attorney blog discussed a related trademark infringement action (here) brought by United Foods, wherein the defendant asserted a jus tertii defense based on Orouba's claims of ownership in its cancellation petition. How will that now shake out?

Text Copyright John L. Welch 2010.


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