Monday, January 25, 2016

Precedential No. 1: TTAB Clarifies Statement of Use Timing Requirement

The Board batted away another bogus fraud claim in this consolidated opposition and cancellation proceeding, but perhaps more significantly it ruled on an important point regarding the filing of Statements of Use and so-called "insurance extensions." Petitioner Embarcadero sought cancellation of a registration for the mark DELPHIX & Design (shown below) for database management software. Delphix moved for summary judgment as to Embarcadero's claim that the registration was obtained by fraud. Embarcadero filed a cross-motion to amend its petition to add several claims: Section 2(a) false association, "false representation," and nonuse. The Board granted the summary judgment motion and part of the motion to amend, as explained below. Embarcadero Technologies, Inc. v. Delphix Corp., 117 USPQ2d 1526 (TTAB 2016) [precedential].

Fraud: Embarcadero alleged that Delphix filed fraudulent Statements of Use in order to obtain the challenged registration. Embarcadero pointed to the fact that Delphix's president, who signed and submitted the Statement of Use, was a "highly educated Harvard graduate" [so what? - ed.] with previous trademark experience, who was "well aware of the importance of reading and verifying the accuracy of documents he signs." According to Embarcadero, he "could not have reasonably believed that Delphix's two claimed 'installations' constituted use in commerce of software goods."

Delphix asserted that summary judgment was appropriate because the facts relied upon by Embarcadero did not support an inference that Delphix filed the statements with the requisite fraudulent intent, and thus there was an absence of evidence to support Embarcadero's claim.

The Board observed that, although it must view the claim of fraud in a light most favorable to the non-movant, Embarcadero "was required to set forth specific facts, by declarations or as otherwise provided in [FRCP 56(e)], evidence supporting an inference of Respondent's fraudulent intent ...." See FRCP 56(e). See also Copelands’ Enters. Inc., 20 USPQ2d at 1298, and Octocom Sys. Inc. v. Houston Computers Servs. Inc., 918 F.2d 937, 16 USPQ2d 1783, 1786 (Fed. Cir. 1990).

Here, Embarcadero failed to raise a genuine issue as to Delphix's intent to deceive the USPTO. The Board noted that the reasonableness of Delphix's belief is irrelevant to the fraud analysis. See In re Bose Corp., 91 USPQ2d 1938, 1945 (Fed. Cir. 2009).

Testimony regarding the education and trademark experience of Respondent’s CEO who signed the statement of use is not evidence, direct or indirect, of fraudulent intent, a necessary element of the fraud claim. Accordingly, Respondent’s motion for summary judgment on the ground of fraud is GRANTED.

Motion to Amend: The Board quickly disposed of Embarcadero's proposed claims for false association under Section 2(a) and for "false representation" as being both untimely and futile. As to the former, Embarcadero failed to allege that the challenged mark is Embarcadero's identity or "persona" (See Hornby v. TJX Cos., Inc., 87 USPQ2d 1411, 1424 (TTAB 2008)), and as to the latter, there is no statutory claim for cancellation based on "false representation." Daimlerchrysler Corp. and Chrysler, LLC v. Am. Motors Corp., 94 USPQ2d 1086, 1089 (TTAB 2010) (citing Bose, 91 USPQ2d at 1942 ("There is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive.").

The Board, however, granted Embarcadero's motion to amend its petition for cancellation to add the ground of nonuse. Timing was not an issue since, the Board observed, nonuse may be considered "without requiring a separate pleading." See ShutEmDown Sports, Inc. v. Carl Dean Lacy, 102 USPQ2d 1036, 1045 (TTAB 2012).

Embarcadero's nonuse claim was based on a "faulty legal premise." Embarcadero maintained that, after Delphix filed a first, flawed Statement of Use on August 12, 2009, Delphix could not later file another Statement of Use claiming a first use date after August 12, 2009. Not so, said the Board. It held that in an inter partes proceeding, it will "consider evidence of use which occurred after the filing of the statement of use but within the original or extended period for filing the statement of use."

During ex parte examination, the actual filing of a statement of use does not cut off the deadline for meeting the requirements for a statement of use. The applicant may amend its statement of use so long as the amendment demonstrates that the requirements for the statement of use were met before the expiration of the deadline for filing the statement of use. Trademark Rule 2.88(e), 37 C.F.R. § 2.88(e). *** Thus, an applicant may amend its statement of use to state dates of use which fall after the statement of use filing date, but before the expiration of the deadline for filing the statement of use. See Trademark Rule 2.71(c)(2), 37 C.F.R. § 2.71(c)(2).

Here the Notice of Allowance issued on July 28, 2009, giving Delphix until January 28, 2010 to file its Statement of Use. It filed a first Statement of Use on August 12, 2009, and on January 25, 2010 filed a request for an "insurance extension of time" for six months, i.e., to July 28, 2010. The Board found that giving Delphix the benefit of the insurance extension "satisfies the letter and the spirit of the statement of use rules."

Therefore, to set forth a legally sufficient claim of nonuse, Embarcadero "must plead that Respondent did not use the DELPHIX mark with the software listed in the registration within the time for filing its statement of use as extended, i.e., no later than July 28, 2010."

The Board allowed Embarcadero fifteen days within which to amend its petition for cancellation accordingly.

Read comments and post your comment here.

TTABlog comment: Makes sense to me. How about you?

Text Copyright John L. Welch 2016.


At 10:02 AM, Anonymous Anonymous said...

Makes sense to me, but was this ever in doubt? SOU timing and "insurance" extensions are set forth plainly in TMEP Section 1109.

At 10:15 AM, Blogger John L. Welch said...

The TMEP is not the law. The TTAB opinion is the law.

At 10:23 AM, Anonymous Anonymous said...

37 C.F.R. §2.71 is the law, but I take your point that some clarification as to "insurance" extensions is appreciated as the regs are silent on that point.

At 12:14 PM, Anonymous Miriam Richter, Ft. Lauderdale, FL said...

I think it is important to note that the only reason they were able to do this was that the first filed specimen was rejected and they had an open office action. Otherwise, the registration would have issued by the following January.


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