Friday, December 30, 2011

CAFC Affirms TTAB Default Judgment Cancelling Registration Due to Failure to Comply with Discovery Orders

In a precedential opinion, the U.S. Court of Appeals affirmed the TTAB's decision in Super Bakery, Incorporated v. Ward E. Benedict, 96 USPQ2d 1134 (TTAB 2010) [precedential]. [TTABlogged here]. The Board, on remand from an earlier CAFC appeal, ruled that Rule 2.127(d) does not provide an automatic stay of a proceeding when a party files a motion for summary judgment. "Rather, only an order of the Board formally suspending proceedings has such effect." As a consequence, the Board again granted Super Bakery's petition for cancellation as a sanction against Respondent Benedict for failure to comply with a Board discovery orders. The CAFC here disagreed with the Board's interpretation of the Rule, but nonetheless affirmed the Board's entry of judgment by default. Ward E. Benedict v. Super Bakery, Incorporated, 101 USPQ2d 1089 (Fed. Cir. 2011) [precedential].

In the first CAFC appeal, the court remanded the case [here] with a directive that the Board consider the impact of Rule 2.127(d) on its decision to grant judgment by default. Benedict claimed that under the Rule, the proceeding was stayed automatically when he filed his motion for summary judgment, and therefore that he did not have to respond to discovery by the date set in the Board's order compelling discovery (the day after Benedict filed his summary judgment motion).

On remand, the Board took the view that despite the language of the Rule that "the case will be suspended," the suspension did not occur until the Board actually issued a suspension order. In this second appeal, the CAFC ruled that the Board had misinterpreted the Rule, and that the proceeding was automatically stayed on the day the summary judgment motion was filed. [TTABlog note: see the first comment to this post, which makes an excellent point, urging that the CAFC did not say the Board's interpretation of the Rule was wrong, but rather that the Rule was not clear enough for purposes of the imposition of the sanction of default].

In any event, the CAFC ruled that the entry of judgment by default was "well supported without this event."

There had been two years of failure to comply with discovery requests and orders. The Board discussed Mr. Benedict’s repeated non-compliance with Super Bakery’s discovery requests, as well as his non-compliance with the Board’s orders concerning discovery. Although the Board criticized the "meritless" motion for summary judgment as "an effort to further obstruct petitioner's rights to obtain discovery under the Board's rules, the Board's order compelling discovery, and the Board's order granting discovery sanctions," 96 USPQ2d at 1136, the 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," id., is supported by the entire experience of this case.

The question was whether the Board abused its discretion by entering default judgment. The CAFC said no. "On the entirety of the record, the Board’s orders were reasonable, and within its authority in seeking to advance the proceedings. The remedy of default judgment was within the Board’s discretion in view of Mr. Benedict’s repeated failures to comply."

TTABlog comment: So the CAFC remanded in order that the Board might apply Rule 2.127(d), and then when the Board applied the Rule, the CAFC said the Board got it wrong. But the CAFC affirmed anyway. So what was the point of the remand?

Text Copyright John L. Welch 2011.


At 10:41 AM, Anonymous Anonymous said...

The only aspect of this summary and analysis with which I disagree is that I don't think the CAFC held that the Board's misinterpretated 2.127(d). Rather, it just said the Board's construction of 2.127(d) was not sufficiently obvious to justify the harsh remedy of default judgment. Though admittedly not crystal clear, my read of the CAFC's opinion is that it left the Board's construction of 2.127(d) intact, and it continues to be the case that supensions upon the filing of a dispositive motion are effective only when the Board says so, and not automatically upon filing.

At 10:52 AM, Blogger John L. Welch said...

Good point. I've added a note in the text of the post, incorporating your comment.

At 6:49 PM, Anonymous Rob said...

It's worth noting that the (now affirmed) Board opinion suggests that there may be instances in which suspension may be deemed automatic following the filing of a dispositive motion. They held that it wasn't the case this time, because the dispositive motion therein was frivolous (pro se party filed a motion for SJ arguing that the examiner's ex parte determinations had the res judicata effect of barring further litigation in inter-partes proceedings). Moreover, this was not just a discovery request outstanding, but an actual order to compel discovery and an order granting discovery sanctions already issued. The filing of a frivolous SJ motion at that point does seem to have been in bad faith.

At 3:16 PM, Blogger John L. Welch said...

The CAFC found that Rule 2.127(d) was ambiguous as to whether the suspension was automatic. The current version of the TBMP, at Section 5.28.03, states that the suspension is not automatic. Proceedings are suspended only when the Board issues an Order:

"[O]n a case-bycase basis, the Board may find that the filing of a motion for summary judgment provides a party with good cause for not complying with an otherwise outstanding obligation, for example, responding to discovery requests. *** Notwithstanding, the Board has found that the filing of a motion for summary judgment does not provide a party good cause not to timely comply
with a Board order granting discovery sanctions which required the services of complete. [citing its Super Bakery decision].


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