Wednesday, October 06, 2021

Precedential No. 26: Claim Preclusion Inapplicable in Concurrent Use Proceeding After Cancellation or Opposition Proceeding

Applicant Haider Capital sought a concurrent registration for the mark SKIN DEEP for beauty salon and health spa services, naming registrant Skin Deep Laser as an excepted user. Skin Deep Laser filed a motion for summary judgment on the ground of claim preclusion in light of an earlier petition for cancellation brought by Haider against Skin Deep Laser and dismissed with prejudice. The Board denied the motion, ruling that because the transactional facts relevant in a concurrent use proceeding are different from those involved in a cancellation (or opposition) proceeding, claim preclusion is inapplicable. Haider Capital Holding Corporation LLC v. Skin Deep Laser MD, LLC, 2021 USPQ2d 991 (TTAB 2021) [precedential].

Issue Preclusion: The Board first considered the issue of collateral estoppel (a/k/a issue preclusion). Registrant Skin Deep Laser argued that Haider had an opportunity to prove priority in the prior proceeding and "should not now have a second bite at the apple." The Board pointed out, however, that the cancellation proceeding was dismissed with prejudice for failure to prosecute under Section 2.132(a). Therefore the issue of priority was not actually litigated, and so issue preclusion cannot apply.

In any case, "priority" in the context of a concurrent use proceeding presents a different issue than "priority" in an opposition or cancellation proceeding. In a concurrent use proceeding, the only way in which priority is considered is in determining whether the concurrent use applicant can establish the jurisdictional requirement for institution of the proceeding: i.e., can the applicant show use in commerce prior to the defendant's (registrant's) application filing date? In an opposition or cancellation proceeding, priority may be established constructively, but not so in a concurrent use proceeding, where "constructive use has little (if any) significance" because the applicant must prove actual use of its mark.

New Application Required?: Registrant Skin Deep Laser argued that, according to TBMP Section 1112, Haider was required to file a new application for concurrent use when its petition for cancellation was dismissed, rather than merely convert its pending application. The Board disagreed. [N.B.: The TBMP is not the law. - ed.].

The "requirement" of TBMP Section 1112 that a new application must be filed applies only in two circumstances. First, when an application for an unrestricted registration was opposed successfully, the applicant must file a new application. Second, when a registrant whose unrestricted registration is cancelled, the registrant must file a new concurrent use application. In both cases, the party required to file a new concurrent use application was an unsuccessful defendant in the prior proceeding. 

Here, Haider was the plaintiff in the cancellation proceeding and its application remained pending. Therefore, when its petition for cancellation failed, it needed only to amend its application to seek concurrent use.

Claim Preclusion: The Board held that "claim preclusion does not apply to a concurrent use proceeding when the prior proceeding is either an opposition or cancellation proceeding between the parties." 

In opposition and cancellation proceedings based on likelihood of confusion, the issue is whether a party is entitled to a geographically unrestricted registration when the involved marks are used in the same geographic area. In a concurrent use proceeding, however, the Board must consider the likelihood of confusion when the marks are used "under conditions and limitations as to the mode or place of use of the marks, i.e., different geographic areas."

Thus, a critical element for determining whether claim preclusion applies to a later concurrent use proceeding cannot be satisfied in a concurrent use proceeding. Specifically, to establish claim preclusion, the movant must show that “the second claim is based on the same set of transactional facts as the first.” Jet Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 55 USPQ2d 1854, 1857 (Fed. Cir. 2000).

In short, the facts on which the Board must decide a concurrent use proceeding are not the same as those considered in a prior opposition or cancellation proceeding. Therefore, claim preclusion cannot apply.

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TTABlogger comment: Surprised that this issue never came up before.

Text Copyright John L. Welch 2021.


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