Wednesday, August 12, 2020

CAFC Affirms TTAB Entry of Judgment As Sanction for Failure to Comply with Discovery Orders

In a nonprecedential decision, the CAFC affirmed the TTAB's entry of judgment against Respondent Kris Kaszuba, granting a petition for cancellation of his registration for the mark HOLLYWOOD BEER for beer, as a sanction for Kaszuba's repeated and willful refusal to comply with Board orders requiring him to respond to discovery. [TTAB decision here]. The court also found no abuse of discretion or error in several earlier Board rulings. Kaszuba d/b/a Hollywood Group v. Iancu, 2020 USPQ2d 10887 (Fed. Cir. 2020) [not precedential].

The CAFC noted that this proceeding was "peppered with unnecessary filings," and the pleading and discovery stages were "belabored." Kaszuba never responded to Petitioner HVL's discovery requests, despite being ordered by the Board to do so, given extra time to respond, and warned that his failure to comply could result in judgment against him.

Excusable Neglect: The CAFC found no abuse of discretion in the Board's accepting an amended petition for cancellation that was filed three days late. Applying the Pioneer factors, the Board found no evidence of prejudice to Kaszuba, nor any "surprise" or disruption of the orderly administration of the proceeding, nor any bad faith. Although the reason for the delay was in Petitioner HVL's control, the Board found "excusable neglect." As the court noted, "the excusable neglect inquiry is an equitable one," and the Board duly considered the circumstances surrounding the delay.

"Standing" The court pointed out that "standing" is not the proper term for the issue of whether a petitioner has pled a statutory cause of action. Since HVL's application to register HOLLYWOOD VODKA was blocked by Kaszuba's registration, the Board did not err in concluding that HVL was entitled to bring this cancellation proceeding.

Fraud: The CAFC ruled that HVL's allegations of fraud (false statements of use and phony specimens) provided "the specific who, what, when, where, and how of material misrepresentation or omission committed before the [US]PTO." The court held that the Board did not err in concluding that HVL sufficiently pled its fraud claim.

Default Judgment: The court observed that In cases of repeated failure to comply with Board orders, and when a lesser sanction would not be effective, the Board may order appropriate sanctions under Trademark Rule 2.120(h)(1) and Fed. R. Civ. P. 37(b)(2), including entry of judgment. Kaszuba lamented being denied his "day in court," but offered no explanation for his refusal to comply with the Board's orders compelling discovery, nor any basis for concluding that the Board abused its discretion.

The record supports the conclusion that the Board did not abuse its discretion in imposing the sanction of default judgment, harsh as it may be. The Board found that no less drastic remedy would be effective and that there was a strong showing of willful evasion by Kaszuba. See J.A. 5 (“We believe [such a] situation exists here.”). In entering default judgment, the Board concluded that, rather than complying with its orders, Kaszuba "repeatedly and willfully acted in a manner to evade” the discovery requests.

Read comments and post your comment here.

TTABlogger comment: The CAFC states that petitioner "filed an application for cancellation of Kaszuba’s mark." Actually it filed a petition for cancellation, not an application. And it sought cancellation of a registration, not a mark.[Conceivably, Kaszuba may still have common law rights in his (now unregistered) mark.] Why can't the CAFC get the terminology right?

Text Copyright John L. Welch 2020.


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