Thursday, August 12, 2010

TTAB Tosses Out Three Fraud Claims, Dismisses "ZYTNIA" Vodka Cancellation Petition

Does it seem to you, dear reader, that the TTAB decides an inordinate number of cases involving vodka? Here's another one, this with a twist of fraud. The Board dismissed a petition for cancellation of a registration for the mark ZYTNIA for "liquor," finding that Petitioner had failed to prove its three fraud claims "to the hilt with clear and convincing evidence." Slaska Wytwornia Wodek Gatunkowtch “Polmos” SA v. Stawski Distributing Co., Inc., Cancellation No. 92044806 (July 27, 2010) [not precedential].

Petitioner Slaska charged that Respondent Stawski committed fraud when it (1) failed to tell the PTO that "zytnia" is Polish for "rye," (2) claimed to be owner of the mark, although it is only an importer, and (3) stated a first use date it had no right to claim.

The Board first disposed of Respondent's affirmative defenses of laches and waiver. Those defenses are inapplicable in a proceeding based on fraud, because "it is in the public interest to remove registrations from the register when they were fraudulently obtained."

The Board next observed that "in order to prove fraud, a plaintiff must show that a statement was false, the falsity was intentional, and that the false statements were material to obtaining or maintaining a registration. Moreover, fraud must be proven to the hilt with clear and convincing evidence."

Here, none of the record evidence dated back to the filing of the underlying application in 1992, and so Petitioner Slaska was forced to rely on indirect and circumstantial evidence to prove Respondent's intent to deceive.

First Use Date: Even if a claimed first use date is false, there is no fraud if the subject mark was in use at the time an application was filed. Petitioner Slaska did not assert that Respondent's mark was not in use as of the filing date, and so there was no fraud.

Ownership: Petitioner urged that, as the producer of the vodka, it owns the mark, and that Respondent Stawski is merely an importer and distributor. The Board noted that, because the challenged registration is more than five years old, it may be cancelled only on specific grounds enumerated in Section 14 of the Trademark Act. Ownership is not one of the specified grounds, and that's why Petitioner claimed fraud instead.

The evidence regarding ownership, however, was "hardly a model of clarity" and "raises almost as many questions as it answers." The underlying facts were largely not in dispute, but the legal consequences were.

The parties continue to do business with each other, Respondent supplies the recipe for the vodka and exercises quality control, and the labels state that the product is "produced for and imported by" Respondent. The Board found it "likely that the public believes that respondent is responsible for the vodka sold under the mark."

However, there was no agreement between the parties that "clearly defines ownership of the mark ZYTNIA in the United States." Absent an agreement, the presumption is that the manufacturer owns the mark.

[N]o witness has testified as to ownership dating back to the filing, and respondent’s state of mind at that time. Moreover, certain facts arguably rebut the presumption that petitioner owned the mark in the United States, but most certainly such facts make a finding of fraud untenable.

Even if Petitioner were to be found the owner of the mark, the issue here is fraud, and Petitioner failed to prove fraud to the hilt. "To find otherwise would require us to speculate, surmise or infer on the question of respondent's intent to deceive, which we are prohibited from doing."

Translation of ZYTNIA: The testimony and evidence regarding the meaning of "zytnia" was inconsistent and competing. "If nothing else, the record shows that there is no precise translation of the term." Moreover, there was no direct evidence of Respondent's intent to deceive by withholding any purported translation. And so, once again, Petitioner Slaska failed to prove this fraud claim to the hilt.

TTABlog comment: Well, it looks like the final curtain has come down on the TTAB's long-running "Fraud Follies." I just wish the Board could come up with a more modern metaphor than "to the hilt." Any suggestions?

Text Copyright John L. Welch.


At 8:29 AM, Anonymous Anonymous said...

maybe "to the pain..."

At 9:28 AM, Anonymous Orrin A. Falby said...

"to infinite and beyond"

At 11:17 AM, Anonymous Anonymous said...

"to the Nth degree..."

At 5:19 PM, Anonymous Mark Edw. Andrews said...

Out the wazoo? But seriously, how about clearly and convincingly?

At 9:18 AM, Anonymous Anonymous said...

Re: "to the pain" - I immediately thought of that too, but then I thought others would say "I'm not familiar with that phrase ..." and the explanation would just be too gruesome.

Thanks S. Morgenstern!

At 3:42 PM, Anonymous Anonymous said...

Anonymous said... As you noticed recently, the Board seems to have a penchant for taking up "Q's" on Booze.


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