Thursday, December 18, 2014

Precedential No. 43: TTAB Dismisses XBOX 360 Cancellation Petition as Sanction for Misconduct

The Board granted Microsoft's Rule 12(b)(6) motion to dismiss a petition to cancel its registration for the mark XBOX 360 for publications in the field of computer games, finding that petitioners had failed to state a claim upon which relief can be granted. Petitioners, appearing pro se, failed to establish standing, and furthermore their claims of fraud and of misrepresentation of source under Section 14(3) were woefully inadequate. The Board also granted Microsoft's motion for sanctions, based upon petitioners' conduct in this and other proceedings in which it asserted similarly dubious claims. NSM Resources Corp. and Huck Doll LLC v. Microsoft Corp., 113 USPQ2d 1029 (TTAB 2013) [precedential]

Motion to Dismiss: Petitioners' claims centered on Microsoft's user manual for a game called "Stoked," which manual displayed the term "Huck" in its pages. Apparently, the game "Stoked" runs on the XBOX 360. Petitioners claimed ownership of twelve applications for marks comprising or containing the word "Huck." However, the Board observed, the HUCK marks bear no resemblance to the mark XBOX 360.

Petitioners maintained that use of the term "Huck" in the "Stoked" user manual infringed the HUCK marks. But this claim of damage was not based on the continued existence of the XBOX 360 registration.

The fact that the word "Huck" may be used in respondent's written materials that happen also to bear respondent's registered mark, a mark not remotely similar to "Huck," does not establish a basis upon which to allege standing to cancel the registration of the subject mark.

Even if petitioners had suffered damage by distribution of the Microsoft user manuals, that damage was unrelated to the XBOX 360 mark. Consequently, petitioners do not have a personal stake in this proceeding and have no reasonable belief of damage caused by continuation of the registration. Because standing is a necessary element of a petition for cancellation, the petition must be dismissed.

Nonetheless, the Board went on to consider the two claims asserted by petitioners. As to their fraud claim, one part concerned use of the R-in-a-circle symbol with the mark STOKED, but the petition did not seek cancellation of a registration for STOKED. The other part concerned allegedly false statements made in Microsoft's Section 8 & 15 declaration for the XBOX 360 registration, but this claim was based merely on "information and belief" and failed to include a recitation of specific facts constituting the alleged fraud, as required by Rule 9(b), Fed. R. Civ. P.

Turning to the Section 14(3) misrepresentation of source claim, petitioners did not allege that Microsoft's use of the XBOX 360 mark was calculated to trade on petitioners' goodwill and reputation, but instead focused on use of the term "Huck." The facts alleged did not constitute a viable claim under Section 14(3) since there was no allegation that the XBOX 360 mark was in any way associated with petitioners.

Thus petitioners failed to state a claim upon which relief can be granted, and the Board's dismissal of the petition was again warranted. [In a footnote, the Board pointed out that it is empowered to determine only the right to register, and has no authority to determine the right to use, nor to award the $1 billion dollars in damages sought by petitioners.]

Motion for Sanctions: Petitioner NSM filed twenty-nine oppositions, cancellations, and requests for extension of time to oppose since 2008. [Who do they think they are? Leo Stoller? - ed.]. It instituted nine cancellations or oppositions against marks that bear "absolutely no resemblance to its asserted marks," and six extensions of time to oppose marks that "do not appear to resemble petitioners' HUCK marks." Petitioners' repeated and inadequate assertions of fraud, claims of false connection under Section 2(a), deceptiveness and immoral or scandalous matter, likelihood of confusion, and dilution evidence the abuse of the Board's procedures. Petitioners have alleged ownership of marks that are, with few exceptions, entirely dissimilar from the marks they challenged.

Petitioners’ pattern of behavior leaves no doubt that the noted proceedings were initiated in bad faith, and at least with the intent to harass third parties who have lawfully registered their marks, or to unnecessarily delay those seeking to register their marks.

On five prior occasions the Board granted motions dismissing Petitioner NSM's pleadings based either on lack of standing or failure to state a claim. The Board concluded that in this case petitioners could not have had a good faith belief that the assertion of the same claims was warranted.

Indeed, petitioners’ vexatious conduct unnecessarily disrupts the fair allocation of Board resources. The filing of such frivolous cases requires that the Board sift through each case filed by petitioners, including pages upon pages of unsupported claims that in turn trigger further motion practice to prevent unnecessary litigation from going forward. These are resources and time better devoted to more meritorious matters. The Board has an interest in seeing that its processes are not abused for purposes of harassment and delay.

The Board concluded that, under Rule 11 and its inherent authority to sanction, "any sanction short of judgment would be futile and unfair to respondent and any other party targeted by petitioners." Therefore, it dismissed this case with prejudice as a sanction for petitioners' conduct in this case.

Furthermore, the Board ordered the petitioners to show cause why they, their shared principal, Zane Murdock, and any entity owned or controlled by Murdock, should not face additional sanctions to deter this pattern of filing frivolous petitions. Included in the proposed additional sanctions were requirements that these persons must retain outside counsel for any future filings, that they not file any request for extension of time for one year, and that they never file a notice of opposition or petition for cancellation where the challenged mark bears no resemblance to the HUCK marks and where the legal basis for the claim is fraud.

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TTABlog note: Well, at least Leo Stoller isn't forgotten, since one of his sanction decisions was cited.

Text Copyright John L. Welch 2014.


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