Tuesday, February 10, 2015

Precedential No. 5: TTAB Grants Partial Summary Judgment On Laches Ground

In this consolidated cancellation proceeding alleging likelihood of confusion, dilution, and fraud, the parties filed cross-motions for summary judgment on respondent's affirmative defense of laches. Because laches is not an available defense to a fraud claim, the Board considered laches only with respect to the dilution and likelihood of confusion claims. It concluded that laches barred petitioner's dilution claim, but that as to likelihood of confusion a genuine issue of material fact as to whether confusion was inevitable precluded summary judgment. Ava Ruha Corporation dba Mother's Market & Kitchen v. Mother's Nutritional Center, Inc., 113 U.S.P.Q.2d 1575 (T.T.A.B. 2015) [precedential].

Because the public interest is served by prohibiting registrations obtained by fraud, the defense of laches does not lie against a fraud claim. Hornby v. TJX Cos., 87 U.S.P.Q.2d 1411, 1419 (T.T.A.B. 2008); see also La Republique Francaise v. Saratoga Vichy Spring Co., 191 U.S. 427, 439 (1903). However, laches is an available defense against claims of likelihood of confusion and dilution. 15 U.S.C. Section 1069; National Cable Tel. Ass'n, Inc. v. American Cinema Editors, Inc. 937 F.2d 1572, 19 U.S.P.Q.2d 1424, 1431 (Fed. Cir. 1991); Hornby, 87 U.S.P.Q.2d at 1119.

In order to establish the defense of laches, a party must show that there was undue or unreasonable delay by the other party in asserting its rights, and prejudice resulting from the delay. Bridgestone/Firestone Research Inc. v. Automobile Club de l"Ouest de la France, 245 F.3d 1359, 58 U.S.P.Q.2d 1450, 1462-63 (Fed. Cir. 2001); Lincoln Logs Ltd. v. Lincoln Pre-Cut Log Homes Inc., 971 F.2d 732, 23 U.S.P.Q.2d 1701, 1703 (Fed. Cir. 1992).

The Board first turned to a calculation of the delay. In a cancellation proceeding, laches is calculated from a date "no earlier than the date the involved mark was published for opposition (if there was actual knowledge), and no later than the issue date of the registration (when Plaintiff is put on constructive notice, see 15 U.S.C. Section 1072)." Here, the petitioner had actual knowledge of the respondent's trademark use prior to the date when the applications that issued as the challenged registrations were published for opposition (both on June 16, 2009). The petitions for cancellation were filed on August 21, 2012. Thus the period of delay was just over three years and two months. The Board concluded that this length of delay "could support a defense of laches." See, e.g., Trans Union Corp. v. Trans Leasing Int'l, Inc., 200 U.S.P.Q. 748, 756 (T.T.A.B. 1978) (finding laches based on a delay of two and one-half years).

The question, then, was whether this length of delay was undue or unreasonable. The petitioner argued that it had no reason to seek cancellation until the respondent re-directed its business to compete directly with the petitioner. It claimed that not until 2011 did it know the that respondent had more than one store, that the respondent changed the focus of its services, and that the respondent had reversed its position after an "admission of likelihood of confusion" in a third-party litigation. The respondent, however, maintained that it had continuously used its marks for its chain of grocery stores focused on the federal supplemental Food Program for Women, Infants and Children (WIC) since 1995.

The Board observed that the doctrine of progressive encroachment looks to whether the defendant "redirected its business so that it more squarely competed with plaintiff and thereby increased the likelihood of public confusion of the marks." Jansen Enters. Inc. v. Rind, 85 U.S.P.Q.2d 1104, 1116 (T.T.A.B. 2007), quoting ProFitness Physical Therapy Center v. Pro-Fit Orthopedic and Sports Physical Therapy P.C., 314 F.3d 62, 65 U.S.P.Q.2d 1195, 1199-1200 (2nd Cir. 2002).

In its registrations, the respondent identified its services as "retail grocery stores that exclusively feature foods authorized for purchase by pregnant women, new mothers and young children participating in the federal supplemental Food Program for Women, Infants and Children (WIC)." The petitioner's evidence of supposed encroachment referred merely to advertising featuring specific types of foods that the respondent was offering, but did not signal a change in the nature of the services. "For purposes of an attack on a registration, there can be no 'progressive encroachment' where the alleged encroachment is within the scope of the registration at issue."

The third-party lawsuit that the petitioner referenced likewise did not indicate that the respondent was offering service beyond those recited in its registrations. In sum, the Board found the evidence of progressive encroachment to be insufficiently probative to raise a genuine issue of fact as to whether the petitioner's delay was excusable on that ground.

The next question was whether the respondent suffered economic prejudice as a result of the delay. The Board found that, since the publication date of its applications, Respondent expanded its business by adding fifteen stores, spending $7.5 million on advertising and promotions. Petitioner argued that a genuine dispute existed as to whether any prejudice was due to Petitioner's delay, but the Board pointed out that reliance is not a element necessary to proof of economic prejudice. Bridgestone/Firestone, 58 U.S.P.Q.2d 1463. Because there was no dispute that Respondent changed its economic position during the period of delay, the Board found as a matter of law that Respondent would be subject to economic prejudice if the challenged registrations were cancelled.

Therefore, the Board concluded that Petitioner's delay in bringing its cancellation claims was unreasonable and prejudicial to Respondent, and thus laches was established.

With regard to Petitioner's dilution claim, because a dilution claim involves a personal interest of the petitioner in protecting the strength of its mark, rather than a general interest of the public in avoiding confusion, the defense of laches is available to a defendant. The Board therefore held that laches barred Petitioner's claim of dilution.

With regard to likelihood of confusion, laches will not bar a Section 2(d) claim for cancellation when confusion is inevitable. Ultra-White Co. Inc. v. Johnson Chem. Indus., Inc., 465 F.2d 891, 175 U.S.P.Q. 166, 167 (C.C.P.A. 1972); Hornby, 87 U.S.P.Q.2d at 1419, n.9. Although Petitioner failed to raise this issue, and although relevant evidence had not yet been introduced, the Board decided that the public interest in avoiding consumer confusion would be served by considering the issue.

We rely on the public interest and the possibility that evidence of confusion, when presented, might show that confusion is inevitable, as well as the particular procedural posture in which the question of laches was raised for consideration, to exercise our discretion not to find waiver. However, because Respondent has shown that there is no genuine dispute on the issue of laches, at trial Petitioner cannot prevail on a showing of mere likelihood of confusion. Rather, Petitioner will have to put in evidence of confusion that shows confusion to be inevitable, which is “an increment higher than that required for a finding of likelihood of confusion.” Turner v. Hops Grill & Bar Inc., 52 USPQ2d 1310, 1313 n.5 (T.T.A.B. 1999) (citation omitted).

And so the Board denied the cross-motions for summary judgment with regard to the likelihood of confusion claim.

The Board then ordered that proceedings be resumed on the issues of fraud and likelihood of confusion, with Petitioner having the burden to prove inevitable confusion lest the Section 2(d) claim be barred by laches.

Read comments and post your comment here

TTABlog note: If a claim is barred by the doctrine of laches, could you say the claim is "lached?"

Text Copyright John L. Welch 2015.


At 11:00 AM, Anonymous joe dreitler said...

I would hope that this decision will be appealed. Or the next one. The Board made a major mistake several years ago ruling on a laches defense for a registration less than 5 years old and laches has now trumped the statute in Board practice. From a commercial standpoint there are many valid reasons why a business does not want to spend the time or money to bring a lawsuit in the TTAB against a company that may go out of business in a year or 2. From a legal standpoint, everyone always knew that there was a 5 year cut-off of someone filing a petition to cancel under any of the grounds of Section 2.
The Board has now come dangerously close to creating a presumption that if a Registrant raises laches as defense to a 3 year old registration, the burden is on the Petitioner to prove the almost unprovable so far as confusion being "inevitable".
The statute reads: § 14 (15 U.S.C. § 1064). Cancellation
A petition to cancel a registration of a mark, stating the grounds relied upon, may, upon payment
of the prescribed fee, be filed as follows by any person who believes that he is or will be
damaged, including as a result of a likelihood of dilution by blurring or dilution by tarnishment
under section 1125(c) of this title, by the registration of a mark on the principal register established
by this chapter, or under the Act of March 3, 1881, or the Act of February 20, 1905:
(1) Within five years from the date of the registration of the mark under this chapter.
Recent Board decisions have rendered the clear wording of the statute as a nullity. Anyone can say "laches" he knew about me because my registration is more than 3 years old. If the cut-off for bringing a cancellation should be 3 years from the date of registration, then amend the statute, but do not continue with this fiction which virtually creates a presumption of laches because the Petitioner didn't do anything until year 4 to trump the clear language of the statute.

At 2:58 PM, Anonymous Anonymous said...

What is the purpose of 5-year incontestability if laches will bar a claim for cancellation made 2.5-3 years after either publication or registration?

At 7:09 AM, Blogger John L. Welch said...

I would not call it "5-year incontestability". Incontestability refers to exclusive use, not registration (see Section 15). Section 14 provides a 5-year statute of limitations on many, but not all, claims for cancellation.


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