Monday, July 19, 2021

TTAB Gives District Court Judgment Only Partial Res Judicata Effect, Strikes 8 of 10 Affirmative Defenses in EASYLING Cancellation Proceeding

Having successfully defeated an action for unfair competition brought in the Massachusetts federal court, Respondent Skawa Innovation moved for summary judgment in this cancellation proceeding that had been suspended pending the outcome of the litigation. Petitioner Smartling sought cancellation of a registration for the mark EASYLING (standard form) for a wide range of services, including language interpreter services, on the grounds of likelihood of confusion with its registered mark SMARTLING, abandonment, and lack of bona fide intent. Skawa asserted that claim and issue preclusion barred Smartling's claims. The Board agreed as to abandonment and lack-of-bona-fide-intent, but not as to likelihood of confusion. Smartling, Inc. v. Skawa Innovation Kft., Cancellation No. 92063654 (June 25, 2021) [not precedential.].

Affirmative Defenses:
The Board found that Respondent Skawa had sufficiently pleaded its affirmative defenses of claim preclusion and issue preclusion, but eight others failed to pass muster. Neither failure to state a claim nor lack of "standing" is an affirmative defense. Likewise, "no likelihood of confusion" and the alleged weakness of petitioner's mark are not affirmative defenses. Skawa's affirmative defenses of "laches, waiver, estoppel, and/or acquiescence" and "inequitable conduct, unclean hands, and fraud" were stricken because they were not supported by any factual allegations. Finally, the purported defense that Smartling's registration could be restricted under Section 18 to avoid confusion, was stricken because Skawa did not plead a Section 18 claim in its answer or file a motion to restrict. Finally, the Board rejected Skawa's assertion that it was reserving the right to add additional defenses.
Claim Preclusion: In the civil action, Smartling had claimed unfair competition under Section 43(a), alleging infringement of Smartling's mark and name. Smartling had also asserted a claim for cancellation of Skawa's registration under Section 18. The jury found that Smartling did not prove that Skaw "engage[d] in unfair competition by infringing on [Petitioner's] trademark" and the court entered judgment in favor of Skawa "on all counts."
The Board found that Smartling could have raised the claims of abandonment and lack of bona fide intent in the civil action, and therefore those claims were barred by claim preclusion. Those claims are based on the same transactional facts as were available in the civil action. And so the Board granted Skawa's motion for summary judgment as to those claims.

As to Smartling's Section 2(d) claim, however, the Board declined to enter judgment summarily because the trademark infringement claim before the court "involves different transactional facts than the likelihood of confusion claim or the issue of registrability before the Board in a cancellation proceeding." See Jet, Inc. v. Sewage Am. Sys., 55 USPQ2d 1854, 1856 (Fed. Cir. 2000) (“Th[e] array of differences in transactional facts conclusively demonstrates that claim preclusion cannot serve to bar a petition for cancellation based upon an earlier infringement proceeding.”).

Issue Preclusion: Issue preclusion was inapplicable because the "neither the jury verdict nor the court's judgment explained the basis for the finding of no likelihood of confusion in the context of the Section 43(a) claim, and it is not apparent what specific facts were litigated and decided as necessary to entering judgment in Respondent's favor on the claim." And so, the Board denied Skawa's issue preclusion defense.

Conclusion: The Board allowed Skawa one month to file an amended answer in which it may attempt to adequately re-plead the stricken affirmative defenses of laches, waiver, estoppel, acquiescence, inequitable conduct, trademark misuse, unclean hands,  and fraud, and its Section 18 defense based on a proposed amendment and restriction of its registration.

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TTABlogger comment: Do you think these two marks are confusingly similar?

Text Copyright John L. Welch 2021.


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