Monday, September 16, 2019

Precedential No. 26: TTAB Dismisses Cancellation Proceeding Due to Petitioner's Fabrication of Evidence

Finding that Petitioner Optimal Chemical had perpetrated a fraud on the Board through fabricated evidence and untruthful testimony, the TTAB invoked its inherently authority to sanction Optimal by dismissing its petition for cancellation. Optimal Chemical Inc. v. Srills LLC, 2019 USPQ2d 338409 (TTAB 2019) [precedential] (Opinion by Judge George C. Pologeorgis).

In seeking cancellation of seven registrations for the mark BULLY and formatives thereof, for insecticides, pesticides, fungicides, and herbicides, Optimal Chemical relied on its alleged prior common law use of various BULLY marks for pest-control products. 

Spoliation: Respondent Srills LLC asserted that Optimal effectively destroyed relevant evidence by blocking access to certain webpages that Optimal had submitted in attempting to prove priority of use. Spoliation refers to "the destruction or material alteration of evidence or the failure to preserve property for another's use as evidence in pending or foreseeable litigation." Silvestri v. Gen. Motors Corp., 271 F. 3d 583, 590 (4th Cir. 2001). FRCP 37(e) deals with destruction of electronically stored information (ESI). Four elements must be met before sanctions may be considered:

(1) the ESI should have been preserved; (2) the ESI was lost; (3) the loss was due to a party’s failure to take reasonable steps to preserve the ESI; and (4) the ESI cannot be restored or replaced through additional discovery. Fed. R. Civ. P. 37(e); see also Steves & Sons, Inc. v. JELD-WEN, Inc., 327 F.R.D. 96, 104 (E.D. Va. 2018).

The website pages at issue were relied upon in a summary judgment motion filed by Optimal, but by the time Srill's response was due, the pages had been rendered inaccessible. Optimal maintained that it excluded portions of its website from recordation and archival to prevent or minimize security risks to the website. The Board concluded that Optimal's blocking access to this portion of its website was a form of spoliation. However, because there was no evidence of bad faith on the part of Optimal, the Board opted for the lesser sanction of refusing to consider this particular website evidence.

Fabrication: Respondent Srills called into question various invoices submitted by Optimal, as well as website screenshots and an advertisement, all purporting to show Optimal's use of its marks since 2005. Optimal's own press releases contradicted that evidence, as did third-party testimony, including testimony that the sales reflected on the invoices never happened.

The Board found that Srills had established "by clear and convincing evidence that Petitioner participated in a pattern of submitting testimony and evidence which is inaccurate, fabricated, altered, and untruthful in order to demonstrate priority of use, an integral element of its claims of likelihood of confusion." The Board further found that Optimal's actions regarding these documents and this testimony tainted its entire case.

Petitioner’s pattern of litigation misconduct in this proceeding constitutes fraud on the Board and is deserving of such a severe sanction. Although there is other evidence of record that is not subject to Respondent’s construed motion for sanctions, the credibility and authenticity of such evidence has been severely tainted and, therefore, we do not consider it.

The Board, invoking its inherent authority to sanction Optimal, granted Srill's motion for sanctions and dismissed the petition for cancellation.

Read comments and post your comment here.

TTABlog comment: Petitioner was represented by counsel. How did this happen?

Text Copyright John L. Welch 2019.


At 10:50 AM, Anonymous Anonymous said...

Putting aside the evidence of fabrication and fraud, the lack of familiarity with TTAB practice -- including, notably, procedural and evidentiary rules -- suggests petitioner's counsel is not a reader of TTABlog. Perhaps, akin to courts on occasion ordering participation in training or treatment with sanctions for certain actions, the TTAB should consider ordering a period of mandatory participation in TTABlog?

At 1:40 PM, Anonymous Paul Reidl said...

I have had this happen several times before but could never prove what I strongly suspected. I hope the Board takes a hard look at counsel's involvement in this (if any) and, if it was sanctioned by counsel, that it impose appropriate sanctions.

Many years ago I had an antitrust case where counsel engaged in hiding documents and instructing the third party bank to destroy them (which they did not do), knowing full well that the documents trashed his client's case. I mad a motion for sanctions and the hearing was one of the most enjoyable I've ever attended. The Judge did not want to hear from me; he went right at the plaintiff (whose counsel promptly dissembled and attempted to defend the conduct as "no harm, no foul.") He declined to dismiss the case as a sanction, but he fined counsel and the client, awarded us our attorneys fees for the motion, and said that we could re-take every deposition (and there were many) BUT at plaintiff's expenses (including all costs and attorneys fees.) Needless to say, the case settled within a week.


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