On Remand from the CAFC, TTAB Denies Petition for Cancellation of "NAKED" Registration for Condoms

The NAKED condom case returned to the TTAB after a CAFC reversal [TTABlogged here] and the Supreme Court's denial of the registrant's petition for writ of certiorari (September 2021). The CAFC ruled that the Board erred in concluding that Petitioner Australian Therapeutic lacked "standing" to bring its petition for cancellation, pointing out that a petitioner need not have a proprietary interest in a mark to have standing. On remand, the Board has denied all three of Australian's claims: Section 2(d) likelihood of confusion (due to lack of proprietary rights in its purported marks NAKED and NAKED CONDOMS), lack of bona fide intent, and Section 2(a) false suggestion of a connection. Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC, Cancellation No. 92056381 (December 16, 2021) [not precedential] (Opinion by Judge Marc A. Bergsman).

In its December 2018 decision, the Board concluded that Petitioner Australian lacked "standing": it could not show an interest in the proceeding or a reasonable belief of damage because it had contracted away its proprietary rights in its unregistered marks. In July 2020, the CAFC reversed and remanded, holding that "[a]n absence of proprietary rights does not in itself negate an interest in the proceeding or a reasonable belief of damage." The court concluded that Australian had established its entitlement to bring a cancellation proceeding under Section 1064 because it had a real interest in the proceeding and a reasonable belief of damage "regardless of whether petitioner lacks a proprietary interest in an asserted unregistered mark."

Section 2(d) likelihood of confusion: Petitioner Australian claimed a likelihood of confusion between the registered mark NAKED and its purported common law marks NAKED and NAKED CONDOMS, for condoms. [equally oxymoronic? - ed.] According to Section 2(d), Australian was required to show ownership of a mark "previously used in the United States . . . and not abandoned." Establishing priority requires proof of proprietary rights in the mark that produces a likelihood of confusion.

The Board again reviewed in detail the communications between the parties and concluded that they had reached an oral agreement:

Petitioner’s proprietary interest in its purported common law NAKED trademarks is intrinsically connected with the question of whether the parties have an enforceable agreement that precludes Petitioner from using or registering the mark NAKED or NAKED CONDOMS and from challenging Respondent’s use and registration of the NAKED mark for condoms. Petitioner’s actions and communications stating that it no longer had any NAKED brand condoms in the United States so that it should be 'clear sailing' for Respondent to launch its NAKED brand condoms caused Respondent to reasonably believe that any rights Petitioner had in the NAKED trademark for condoms had been abandoned. Therefore, we find that Petitioner agreed that it would not use or register the mark NAKED for condoms in the United States and that Respondent could use and register the mark NAKED for condoms in the United States.

Therefore, the Board concluded that, because Australian failed to prove a proprietary interest in its purported common law NAKED trademark and failed to prove priority, "having contracted away its right to use and register NAKED and by extension NAKED CONDOMS."

Lack of Bona Fide Intent: Australian argued that, prior to filing the underlying application (on September 22, 2003), respondent did not have a written business plan, did not have any agreements for design or manufacture of condom wrappers featuring the NAKED mark, did not have any agreements with distributors, wholesalers, or retailers, and did not have a website. Nor did respondent have advertising material or seek FDA approval. Moreover, in the two-year period 2003-2005, respondent's principal cause 27 intent-to-use applications for various marks for condoms, despite admittedly not knowing the legal meaning of "intent to use."

Respondent's evidence and testimony showed that its principal had worked in the birth control industry since 1989, designing a "relaxed-fit" condom. He conducted clinical trials in 2000 and manufacturing began in 2002-2003. He developed his own formula for a lubricant, as well as special packaging.

The Board observed that an applicant may file more than one intent-to-use application for the same goods, and still have the required bona fide intention to use each mark. See Commodore Elecs. Ltd. v. CBM Kabushiki Kaisha, 26 USPQ2d at 1506 n.7 (citing S. Rep. No. 100-515, 100th Cong. 2d Sess. at 24-25 (1988)). It then concluded that respondent did have a bona fide intention to use the NAKED mark at the time of its filing.

In sum, consideration of the evidence as a whole supports finding that Respondent had a bona fide intent to use the mark NAKED for condoms at the time it filed the application. Ireland’s testimony is credible, clear, uncontradicted and supported by enough documents to comprise objective facts that establish Respondent’s bona fide intent to use the mark. Lane Ltd. v. Jackson Int’l Trading Co., 33 USPQ2d 1351, 1355 (TTAB 1994).

False Suggestion of a Connection: The Board applied the well known four-part test set fourth in Univ. of Notre Dame du Lac v. J.C. Gourmet Food Imps. Co., 703 F.2d 1372, 217 USPQ 505 (Fed. Cir. 1983). 

• 1. The mark is the same as, or a close approximation of, the name or identity previously used by another person or institution; 
• 2. The mark would be recognized as such, in that it points uniquely and unmistakably to that person or institution; 
• 3. The person or institution named by the mark is not connected with the activities performed by the defendant under the mark; and 
• 4. The fame or reputation of the person or institution is such that, when the mark is used with the defendant’s goods, a connection with the person or institution would be presumed.

The Board concluded that Petitioner Australian failed to meet the first, second, and fourth elements of the test. It found that NAKED is not petitioner's name, and there was no evidence that consumers perceive NAKED as Petitioner's identity or persona. Moreover, even assuming that NAKED is petitioner's identity, there was no evidence that the mark points uniquely and unmistakably to petitioner. Finally, petitioner's minimal advertising and sales figures were insufficient to prove that petitioner enjoyed a reputation that would cause consumers to presume that respondent's use of NAKED would be associated or connected with petitioner.

And so, the Board dismissed the Section 2(a) false association claim.

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TTABlogger comment: If you think, as I do, that this opinion should be precedential, you can tell the TTAB so via this nomination form: (link here).

Text Copyright John L. Welch 2021.