Tuesday, September 06, 2011

TTABlog Query: What's the Remedy When a Party Proves Lack of Bona Fide Intent?

Last year, several readers and I chewed on this topic: Fraud and Lack of Bona Fide Intent: Some Thoughts on Remedies. My view was that "[i]f one proves fraud based upon a false verification of use, even as to one item in a list of items, the Board will hold the challenged application or registration void as to the entire class of goods or services involved." But "a successful claim of lack of bona fide intent knocks out only the particular goods or services as to which there was no intent, not the entire class." Now, in view of a recent precedential Board decision, I'm not so sure about the second assertion.

My conclusion regarding the ramifications of a finding of lack of bona fide intent was based on The Wet Seal, Inc. v. FD Management, Inc., 82 USPQ2d 1629 (TTAB 2007) [precedential], where the Board stated:

[C]ontrary to opposer's contention, an application will not be deemed void for lack of a bona fide intention to use absent proof of fraud, or proof of a lack of bona fide intention to use the mark on all of the goods identified in the application, not just some of them. Thus, we will decide this issue in terms of whether the items, if any, for which opposer has shown applicant's lack of bona fide intention to use the mark should be deleted from the application. See, with regard to use-based applications, Grand Canyon West Ranch, LLC v. Hualapai Tribe, 78 USPQ2d 1696 (TTAB 2006). Thus, we will decide this issue in terms of whether the items, if any, for which opposer has shown applicant's lack of bona fide intention to use the mark should be deleted from the application.

Note that this may be dicta, since the Opposer in Wet Seal failed to prove a lack of bona fide intent, and so the remedy issue was not actually decided.

Now compare Wet Seal to the recent Board decision (by a different panel) in Spirits International, B.V. v. S.S. Taris Zeytin Ve Zeytinyagi Tarim Satis Kooperatifleri Birligi, 99 USPQ2d 1545 (TTAB 2011) [precedential]. Applicant S.S. Taris sought to register the mark MOSKONISI (in stylized form) for various beverages in classes 32 (some alcoholic, some not) and 33 (alcoholic). Opposer Spirits claimed likelihood of confusion vis-a-vis Applicant's alcoholic beverages, on the basis of Opposer's ITU application for the mark MOSKOVSKAYA for vodka; and it also asserted that Applicant lacked a bona fide intent to use the applied-for mark on the alcoholic products. The Board declined to address the 2(d) issue but found that Applicant lacked a bona fide intent to use its mark on alcoholic beverages. It then sustained the opposition as to all the Class 32 goods, including the non-alcoholic goods. The Board explained its approach in footnote 3:

Although the notice of opposition refers specifically to the likelihood of confusion with respect to applicant’s use of the mark for alcoholic beverages, and applicant’s lack of a bona fide intention to use its mark for alcoholic beverages, the opposition was brought against all the goods in Classes 32 and 33. Therefore, to the extent that opposer is successful in proving likelihood of confusion or lack of a bona fide intention to use the mark with respect to any of the goods in each class, and specifically alcoholic beverages, the opposition against the classes in their entirety would be sustained. In this connection, if applicant believed that opposer’s objection to registration of the mark was limited to the alcoholic beverages listed in the identification of each class, it could have availed itself of the divisional procedure, as it did when it requested that Classes 1, 2, 3, 29, 30, 39 and 40 be divided out from the application. Or, with respect to the lack of a bona fide intent to use ground, applicant could have moved to delete alcoholic beverages from its identification if applicant did not have a bona fide intention to use its mark in commerce with respect to such goods, but did with respect to the non-alcoholic beverages. Although all of the goods in Class 33 are alcoholic beverages, applicant’s identified goods in Class 32 include both alcoholic beverages and non-alcoholic items. Opposer could then have determined whether it wished to contest the division and/or proceed with the opposition in connection with non-alcoholic beverages as well as alcoholic beverages, or whether a registration could have issued for the non-alcoholic beverages in Class 32. Compare, Grand Canyon West Ranch LLC v. Hualapai Tribe, 78 USPQ2d 1696 (TTAB 2006), in which an opposition was brought, inter alia, on the ground that the applicant had not used its mark on all of the identified services as of the filing date of the use-based application and the application was therefore void ab initio [on the ground of fraud - ed.].

So under Spirits, a finding of lack-of-bona fide intent as to any goods in a class results in a knocking out of the entire class, which is the opposite of what Wet Seal says. The Spirits ruling was clearly not dicta. Is Spirits now the law? Is Wet Seal all wet? What do you think?

Text Copyright John L. Welch 2011.


At 11:36 AM, Anonymous Orrin A. Falby said...

John - I am do not think that the TTAB is creating a bright line rule here. You have to look closely at the facts of this particular case. The applicant did not submit any evidence to refute the opposer's prima facie showing that there was no intent to use on any of the goods identified in the application, nor did it file a brief. I believe your previous analysis and reliance on the Wetseal case is still valid. The applicant simply abandoned this case.

At 11:47 AM, Blogger John L. Welch said...

So, Orrin, are you saying that the footnote from Spirits is mere dicta, since this was not a case in which there was no bona fide intent as to only some of the goods?

At 6:29 PM, Anonymous Anonymous said...

What about in a cancellation proceeding where a petitioner can show that a respondent has never used and never intended to use a mark in connection with some of the goods or services in a particular class. Would the Board strike the whole class or effect a partial cancellation for the goods or services in connection with which the mark was never used or intended to be used?

At 10:52 AM, Anonymous Orrin A. Falby said...

John - after reading the footnote for the tenth time, I cannot say that it is mere dicta. When we had the discussion on this last year, the issue raised was whether lack of bona fide intent was a way around having to plead fraud, post Bose. Then someone chimed in and pointed to the Wetseal case, which seemed to resolved the question. This recent decision now puts the uncertainty back into this.

At 12:32 PM, Anonymous Tom Casagrande said...

I agree with Orin Falby.

Although the opinion is less than clear on the point, my reading is that it does not create a categorical rule that lack of BFI for any good in the class knocks out the whole class. The opinion states that the lack of BFI count was pleaded as to the two classes in their entirety. So I am inferring that the specific allegation that there was no BFI as to alcoholic beverages was not a limitation on the scope of the claim, but simply a factual allegation that the opposer pleaded in support of its broader "whole class" claim.

Later, the opposer introduced evidence in the form of lack of any documents as to some of the goods (alcoholic). This was sufficient to shift the burden of production the the applicant, who then submitted nothing to try to defeat the "whole class" claim. Thus, when the applicant failed to put in any evidence whatsoever and failed to file a merits brief, the claim adjudicated was the "whole class" claim.

I infer from this that if the applicant had submitted sufficient evidence of BFI as to non-alcoholic goods, then the Wet Seal principle would have applied, the opposition would have been only partially sustained, and only the alcoholic products would have been struck. Still, you're absolutely right to highlight that this ruling is unclear enough that it could be argued to support a more categorical rule. Thanks for pointing this out.


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