Monday, March 02, 2020

Precedential No. 9: TTAB Dismisses Faulty Counterclaim and Affirmative Defense Based on the Pan-American Convention

In this Section 2(d) opposition to registration of the mark RICA SULA for snack chips, Applicant Industria Sula counterclaimed for cancellation of Opposer's two pleaded registrations for the mark SULA in standard form and in the design form shown below, for "spreads, namely, vegetable oil and dairy cream based blends," under Article 8 of the Pan-American Convention. Applicant also asserted an affirmative defense of "priority" under Articles 7 and 8. The Board granted Opposer's motion to dismiss the counterclaims and the affirmative defense, finding that Applicant failed to allege that it has rights in Honduras for its goods that are the same as those of Opposer, that Article 7 does not allow an assertion of priority against a mark registered in the United States, and that Article 8 does not provide such an affirmative defense. Lacteos de Honduras S.A. v. Industrias Sula, S. De R.L. de C.V., 2020 USPQ2d 10087 (TTAB 2020) [precedential].

The United States is a party to the General Inter-American Convention for Trade Mark and Commercial Protection (1929) ("Pan-American Convention"), along with Colombia, Cuba, Guatemala, Haiti, Honduras, Nicaragua, Panama, Paraguay and Peru. The Convention concerns trademarks, trade names, unfair competition, and false indications of geographical origin or source. It  "provides a novel approach" by giving the owner of a trademark in a contracting state protection of its mark "where the mark was known to have been previously used in the region." [quoting the abstract of the highly informative article, "The Pan-American Trademark Convention of 1929: A Bold Vision of Extraterritoriality Meets Current Realities," by Professor Christine H. Farley of American University - Washington College of Law (download here)). Also see comment of Marty Schwimmer, below.]

Counterclaim Under Article 8?: The Board first faced the question of whether Article 8 of the Pan-American Convention authorizes an applicant whose mark was approved for publication and then opposed, to bring a counterclaim seeking cancellation of an opposer's registration. Article 8 authorizes a claim for cancellation if a "registration or deposit is refused." Here, registration was not "refused." The Board observed, however, that that the phrase "is refused" is not limited by the word "examination."

Therefore, we hold that the requirement in the Article 8 Preamble, i.e., for a refusal of registration in order to invoke the right to apply for and obtain a cancellation of the interfering mark, includes not only a refusal resulting from ex parte examination by the United States Patent and Trademark Office, but also the potential for refusal resulting from the institution of an opposition proceeding before the Board, which determines registrability of a trademark.

The Board noted that to construe the Article otherwise would be to deprive the counterclaimant its right to file a compulsory counterclaim. see Jive Software, Inc. v. Jive Comm., Inc., 125 USPQ2d 1175, 1177 (TTAB 2017)7 and Trademark Rule 2.106(b)(3)(i). British-American Tobacco, 55 USPQ2d at 1589 (citing Bacardi Corp. of America v. Domenech, 311 U.S. 150, 161, 47 USPQ 350, 355 (1940)) ("[the court] should construe the treaty liberally to give effect to the purpose which animates it. Even where a provision of a treaty fairly admits of two constructions, one restricting, the other enlarging rights which may be claimed under it, the more liberal interpretation is to be preferred.").

Applicant's Counterclaim?: In order to state a claim for cancellation under Article 8, a plaintiff (or counterclaimant) must allege the following:

(1) Counterclaim-plaintiff seeks registration in the United States of a mark which originated in another Contracting State;

(2) During ex parte examination by the United States Patent and Trademark Office, registration to the counterclaim-plaintiff has been refused because of the previous registration of an interfering mark, or an opposition has been instituted by the Trademark Trial and Appeal Board for the owner of the interfering mark;

(3) Counterclaim-plaintiff enjoyed legal protection for its mark in another Contracting State to the Pan-American Convention and that legal protection existed prior to the date of the application for the registration it seeks to cancel;

(4) The owner of the registration of the interfering mark (counterclaim-defendant) had knowledge of the use, employment, registration or deposit of counterclaim-plaintiff’s mark in any of the Contracting States for the specific goods to which the counterclaim-defendant’s interfering mark is applied; and,

(5) The goods or services of the parties must be identical and the counterclaim-defendant knew of the counterclaim-plaintiff’s mark prior to adoption and use of the interfering mark, or prior to the filing of the application for or deposit of the mark which is sought to be cancelled.

[Emphasis supplied].

The Board interpreted the phrase "specific goods" in the Article 8 to mean the same goods. [Emphasis by the Board]. Here, opposer's goods are "spreads," not snack chips. Applicant did not allege that it owns rights in Honduras or elsewhere for "spreads," and therefore its allegations did not satisfy the fourth requirement. Accordingly, applicant failed to state a claim upon which relief can be granted, and the Board granted opposer's motion to dismiss the counterclaim.

Affirmative Defense: Applicant asserted that opposer could not prove priority under Section 2(d) because Applicant has priority under Articles 7 and 8 of the Convention. The Board noted that it has the authority under FRCP 12(f) to strike from a pleading any insufficient defense.

The Board pointed out that in a Section 2(d) opposition priority is not an issue when the opposer owns a pleaded registration, absent a proper counterclaim for cancellation. Here, as discussed above, applicant had no viable counterclaim. Moreover, Article 7 provides the right to an affirmative defense of priority only when the other party's purported rights are based on use of the interfering mark, not when the other party is relying on a registration. As to Article 8, there is no such affirmative defense set forth there.

And so the Board granted opposer's motion to strike applicant's affirmative defense of priority.

Read comments and post your comment here.

TABlog comment: In Diaz v. Servicios De Franquicia Pardo's S.A.C., 83 USPQ2d 1320 (TTAB 2007) [TTABlogged here], the Board awarded priority to the junior user of the mark PARDO'S CHICKEN & Design in the U.S.. ruling that it had established priority under Article 7 of the Pan-American Convention.

See also Marty Schwimmer's 2008 comment on the workings of the Pan American Convention, here, including this summary:

"The Pan American priority clause is somewhat unique. Unlike the Paris Convention priority clause, it is neither limited in time nor applied as of right. Nor is it quite like a "famous mark" protection clause in that the senior user does not have to prove fame in the country where the dispute takes place, but merely that junior user was aware of senior user’s rights in the home country."

Text Copyright John L. Welch 2020.


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