Monday, May 21, 2018

Precedential No. 17: TTAB Grants Section 2(d) Petition for Cancellation of KEMI OYL Registration; Laches Defense Fails

The Board granted this petition for cancellation of a registration for the mark KEMI OYL for cosmetics and personal care products, finding the mark likely to cause confusion with opposer's identical mark previously used for overlapping goods. In stipulating to invoke the Board Accelerated Case Resolution procedure, the parties agreed that the sole issue for resolution with regard to the Section 2(d) claim was priority, but that Respondent Gupta could pursue his affirmative defense of laches. Kemi Organics, LLC v. Rakesh Gupta, 126 USPQ2d 1601 (TTAB 2018) [precedential] (Opinion by Judge Christopher Larkin).

Priority/Abandonment: Respondent was allowed to rely on the filing date of his underlying trademark application, which in turn claimed the priority of his U.K. filing under Section 44(d) (in 2010). While there was some question as to what exact date respondent was entitled to because respondent misstated the foreign filing date in his application, that was of no consequence since petitioner established its use before the earlier priority date.

Section 2(d) provides a ground for cancellation based upon likelihood of confusion with "a mark ... previously used in the United States ... and not abandoned .... A mark is deemed abandoned when its use has been discontinued with intent not to resume use." Respondent asserted abandonment as a defense to petitioner's claim of prior use.

Looking at the record as a whole, as required, the Board found that petitioner's documentary evidence had little or no probative value. However, its principal witness testified that petitioner sold hair and skin care product under the KEMI OYL mark for more than thirty years, that the products are sold throughout the United States, and that annual sales for the years 2010 through 2016 have been in the six-figure range.

Respondent contended that petitioner's testimony failed to establish that the KEMI OYL mark was in continuous use, but the Board pointed out that "continuous use is not required to establish petitioner's priority."

Section 2(d) “does not speak of ‘continuous use,’ but rather of whether the mark or trade name has been ‘previously used in the United States by another and not abandoned.’” West Fla. Seafood, 31 USPQ2d at 1665. *** Although the record as a whole suggests sporadic past use of the KEMI OYL mark, Petitioner is only required to show “proprietary rights in its pleaded common-law mark that precede [Respondent’s] actual or constructive use of its involved mark,” Exec. Coach Builders, 123 USPQ2d at 1180, which rights were not thereafter abandoned. West Fla. Seafood, 31 USPQ2d at 1665.

The Board observed that even if petitioner abandoned the KEMI OYL mark through non-use from 2001-2005, as respondent claimed, or at some other point, it was respondent's burden to show that petitioner did not resume use before respondents priority date.

Respondent's attacks on the probative value and credibility of petitioner's witness were rejected by the Board. "[O]ral testimony of even a single witness may be adequate to establish priority ... if sufficiently probative. Such testimony should not be characterized by contradictions, inconsistencies, and indefiniteness but should carry with it conviction of its accuracy and applicability." Although the witness's testimony declaration was "far from being a model of clarity and completeness" and was not accompanied by "the type or quantity of documentary evidence that one would expect to be readily available" to show use of a supposedly famous mark, the critical portions of his testimony were clear and neither contradicted by respondent nor indefinite or internally inconsistent.

The Board found that this testimony "established, at minimum, that Petitioner used the KEMI OYL mark at least as early as 2010, prior to Respondent's constructive use date, and that Petitioner has not abandoned the mark." The Board was also persuaded by two third-party witnesses who sold petitioner's products from a time prior to respondent's constructive use date.

"Petitioner's evidence of prior use stands unrebutted." Therefore, the Board concluded, petitioner was entitled to cancellation of respondent's registration, unless respondent could establish his claim of laches.

Laches: Section 19 provides that in "all inter partes proceeding equitable principles of laches, estoppel, and acquiescense, where applicable, may be considered and applied." Laches requires undue or unreasonable delay and resulting prejudice.

Respondent's registration issued on June 3, 2014 and this proceeding was commenced on March 14, 2017. Respondent contended that petitioner was on notice of his mark on May 1, 2013, when petitioner's pending application was suspended based on respondent's (non-use based) underlying application. The Board was unimpressed, noting that respondent cited no authority for the proposition that "the prospective citation of Respondent's intent-to-use application . . . put Respondent on notice of Respondent's use of his mark." There was no evidence that the mark was in use at the time, and in fact respondent's statement of use alleged a first use date of November 1, 2013.

In the absence of evidence of Petitioner’s actual knowledge of Respondent’s actual use of his mark prior to the close of the opposition period, the June 3, 2014 date of registration is the operative date for laches. Ava Ruha Corp., 113 USPQ2d at 1580.

Although petitioner's delay was a bit less than three years, shorter and slightly longer periods of delay have sufficed to support a laches defense. The Board then turned to consideration of the reasons for the delay.

Shortly after the registration issued, the parties exchanged correspondence but after respondent provided information about his mark, petitioner was silent for two years. During that period, petitioner's pending application was abandoned and revived on three separate occasions, but ultimately went abandoned. In a letter in June 2016, petitioner stated that it had priority and accused respondent of being the infringer. There was no testimony explaining why petitioner waited another nine months or so to file its petition.

Petitioner's claim that its delay was justified by the claim that respondent's use of the marks was inconspicuous was supported by discovery responses, which indicated that his sales between 2014 and 2016 were negligible.

The Board observed that "The defense of laches is not determined by adherence to rigid legal rules; rather, we analyze laches by a consideration of the specific facts and a balancing of the respective interests and equities of the parties, as well as of the general public.” Jansen Enters. Inc. v. Rind, 85 USPQ2d 1104, 1117 (TTAB 2007). Noting respondent's negligible sales and his inaction after July 2014, the Board found petitioner's delay to be not unreasonable, and it concluded that respondent failed to prove his laches defense.

For completeness, the Board also considered respondent's claim of prejudice but found it unsupported. Respondent's sales increased 18-fold from 2015 to 2016, but that was only from about $500 to $7000, and his sales trended downward in 2017. Thus respondent did not, as he claimed, build up "valuable business and goodwill" during the relevant period. The Board concluded that this lack of prejudice was a further ground for denial of the laches defense.

And so the Board dismissed the petition for cancellation.

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Text Copyright John L. Welch 2018.


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