Thursday, July 29, 2021

TTAB Denies Fraud Claim But Grants Petition to Cancel SEYIDOGLU Registration on Section 2(a) False Connection Ground

In a case decided under the TTAB's ACR regime, the Board granted a petition for cancellation of Nema Foods' ten-year old registration for the mark SEYIDOGLU (in standard form) for various food items, finding that the mark falsely suggests a connection with Petitioner, a major manufacturer of food products, including Turkish desserts and jams. However, the Board dismissed petitioner's claim of fraud, and it rejected Nema's affirmative defense of acquiescence. Gaziantepli Habes Seyidoglu Baklavalari Uluslararasi Nakliyat ve San. Tic. Ltd. Sti. v. Nema Food Distribution Inc., Cancellation No. 92070059 (July 26, 2021) [not precedential] (Opinion by Judge Robert H. Coggins).

Fraud: In 2007, petitioner began exporting its food products bearing the mark SEYIDOGLU to the United States through Nema Kimya, an Istanbul subsidiary of Respondent. In 2009, Respondent Nema Foods filed an application to register the mark, When Nema Kimya became defunct, petitioner began exporting its products directly to respondent. In 2018, petitioner terminated its arrangement with respondent. Respondent then sent a cease-and-desist letter to petitioner, prompting the subject petition for cancellation.

Nema Foods claimed to have an "understanding" with petitioner that Nema would own the trademark, but it provided no evidence to support that claim. The Board observed that "[m]erely being a distributor does not confer ownership of a mark for the goods being distributed. On the contrary, as between a manufacturer and distributor, the manufacturer is presumed to own a trademark applied to the goods."

Petitioner created the mark, registered the mark in Turkey, manufactured the goods, participated in trade shows in the USA, and held itself out as the source and the guarantor of the product. Many of the examples of the goods bore the founding date of 1952, which could point only to petitioner. The Board found that Petitioner was the owner of the SEYIDOGLU mark at the time Respondent filed the application to register the mark.Therefore, Nema Foods' statement that it owned the mark when it filed the underlying application was false and, because only the owner of a mark may apply to register, the statement was material to the issuance of the registration.

However, petitioner failed to provide clear and convincing evidence that Nema Foods intended to deceive the USPTO when it filed the underlying application. Petitioner did not take any testimony, but instead relied on circumstantial evidence of intent, which was not good enough.

Section 2(a): . Petitioner's products are well known within the Turkish-American community, and SEYIDOGLU is a close approximation of Petitioner’s name and identity. Considered in the context of the goods identified in the registration, the term SEYIDOGLU points unmistakably to Petitioner.

One witness testified that “Seyidoglu” is to baklava in Turkey as “Kentucky Fried Chicken” is to fried chicken in the United States. Another witness stated that SEYIDOGLU is known among his Turkish customers because Petitioner is “very old and well-established, dating back to the 1950s." Respondent did not dispute Petitioner’s fame or reputation, either as of the registration date or at the time of trial.

In light of the evidence that SEYIDOGLU is famous in the United States in connection with Turkish food products, including baklava, and given Respondent’s use of SEYIDOGLU for Turkish food products, including baklava, “we may draw an inference that [Respondent] inten[ded] to create a connection with” Petitioner, and that the public would make the false association.

The Board found that all four elements of the Notre Dame Section 2(a) test were met, and so it concluded that petitioner had proven its Section 2(a) claim

Acquiescence: The Board point out that in order to establish the defense of acquiescence, Nema Foods had to show that it suffered undue prejudice as a result of the delay. Here, there was no evidence of Nema's advertising or other expenditures, nor evidence of its sales or growth.

Respondent provided no economic information, and has not shown any economic or other damage resulting from Petitioner’s assumed delay in seeking to cancel the registration, nor any change of position as a result of Petitioner’s assumed delay. Because material prejudice is a necessary element of acquiescence, Respondent has not met its burden of establishing that the petition is barred by acquiescence.

And so, the Board granted the petition for cancellation on the Section 2(a) ground.

Read comments and post your comment here.

TTABlogger comment: I note that the Board did not refer to Nema's ten-year old registration as "incontestable." That's good, because there is no such thing as an inconestable registration.

 Text Copyright John L. Welch 2021.


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