Tuesday, November 17, 2009

CAFC Affirms TTAB's Dismissal of "BINT ALARAB" Cancellation on Res Judicata Ground

The U.S. Court of Appeals for the Federal Circuit has affirmed the decision of the TTAB (here) dismissing a petition for cancellation of a registration for the mark BINT ALARAB for rice. The Board had ruled that the petition was barred by res judicata and it denied petitioner's request for time to take discovery regarding a newly-posed claim of fraud. American Rice, Inc. v. Dunmore Properties S.A., Appeal No. 2009-1313 (Fed. Cir. November 16, 2009. (not precedential).

Petitioner ARI first sought cancellation of the registration in 2003 (on dilution and Section 2(d) grounds), but after the answer was filed it withdrew the petition without Dunmore's consent. The Board dismissed the proceeding with prejudice.

In 2007, ARI filed a virtually-identical petition for cancellation, and Dunmore moved for judgment on the ground of res judicata (claim preclusion). ARI then amended its petition to add a claim for fraud in obtaining the registration, and it asked for time to take discovery.

The Board denied the request regarding discovery and granted ARI's summary judgment motion on the ground of res judicata. ARI appealed.

The CAFC pointed out that two of the three requirements for claim preclusion were undisputed: the parties remain the same and there was an earlier judgment on the merits of the claim. The third requirement was in dispute: whether the second petition is based on the same set of transactional facts as the first.

The court noted that the second petition (as filed) and the first are identical (except for a single, non-material change in one phrase), Therefore the court ruled that the two petitions arise out of the same transactional facts, and thus the second petition is barred by res judicata.

As to the subsequently-added fraud claim, ARI asserted that Dumore falsely executed a declaration when it applied for the BINT ALARAB mark because it claimed to have the exclusive right to use the mark despite knowledge of ARI's mark ABU BINT. Not good enough, said the court:

In short, ARI now alleges nothing concerning Dunmor's alleged fraud that was not already known to it at the time it filed its first Petition for Cancellation. Moreover, these allegations arise from the same series of transactional facts as its other claims in the 2003 Petition alleging confusion and dilution and could have been raised by ARI in its Petition at that time.

The court observed that claim preclusion extends to claims and defenses that could have been raised in a prior action, as long as they arise from the same transactional facts as the original claims. Because ARI could have litigated the fraud claim in its 2003 petition, it is barred by res judicata.

As to ARI's request for discovery, the Board found that ARI failed to demonstrate any need for discovery that was reasonably related to obtaining facts essential to opposing Dunmore's motion for summary judgment. ARI contended that it needed discovery with respect to facts occurring after withdrawal of its first petition, but it failed to explain how "the nature of those facts (whatever they might be) will assist in overcoming the res judicata bar of the 2007 petition."

The court therefore affirmed the Board's decision.

TTABlog comment: ARI's attempt to find facts that would support a new fraud claim was pretty lame. After Bose, a party better have its ducks in a row before crying "fraud." One can't expect the Board or the court to permit a fishing expedition for a possible fraud claim.

Text Copyright John L. Welch 2009.


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