Monday, August 08, 2022

Precedential No. 18: TTAB Denies LAGUNA CANDLES Cancellation Petition, Finding Acquired Distinctiveness and No Claim Preclusion

Petitioner Flame & Wax found itself on the short end of the candlestick when the Board denied its petition for cancellation of a registration for the mark LAGUNA CANDLES for "aromatherapy candles; candles; scented candles" (CANDLES disclaimed), finding that the mark had acquired distinctiveness and therefore was not primarily geographically descriptive of the goods. The Board rejected petitioner's invocation of the doctrine of claim preclusion based on its earlier successful opposition to respondent's prior application to register the same mark, also on the ground of geographic descriptiveness, finding that this cancellation proceeding involved a different set of transactional facts. Flame & Wax, Inc. v. Laguna Candles, LLC, 2022 USPQ2d 714 (TTAB 2022) [precedential] (Opinion by Judge Albert Zervas).

Acquired Distinctiveness: Because the challenged registration was issued under Section 2(f), inherent distinctiveness was not an issue. See Cold War Museum, Inc. v. Cold War Air Museum, Inc., 586 F.3d 1352, 92 USPQ2d 1626, 1629 (Fed. Cir. 2009) (“where an applicant seeks registration on the basis of Section 2(f), the mark’s descriptiveness is a nonissue; an applicant’s reliance on Section 2(f) during prosecution presumes that the mark is descriptive.”). A registration may be cancelled if the mark lacks distinctiveness either when registered or at the time of trial. Neapco Inc. v. Dana Corp., 12 USPQ2d 1746, 1747 (TTAB 1989). The Board construed the petition as alleging geographical descriptiveness and acquired distinctiveness at the time of trial.

A cancellation petitioner bears the initial burden to establish a prima facie case of no distinctiveness. If it does so, then the burden shifts to the respondent to submit evidence and argument in its favor. However, the ultimate burden of proof remains with the petitioner. Cold War Museum, 92 USPQ2d at 1620.

The Board first was required to determine the degree of geographical descriptiveness of the mark LAGUNA CANDLES. See, for example, In re Boston Beer Co., 198 F.3d 1370, 1373 (Fed. Cir. 1999) (“[T]he greater the degree of descriptiveness the term has, the heavier the burden to prove it has attained secondary meaning” (quoting In re Bongrain Int’l (Am.) Corp., 894 F.2d 1316, 13 USPQ2d 1727, 1727 n.4 (Fed. Cir. 1990)). Relevant inquiries include evidence that the place named in the mark is very well known, and that third parties in the same industry use the geographic place name in connection with their goods. Spiritline Cruises, 2020 USPQ2d 48324, at *6.

There was no evidence of third-party uses, or newspaper or magazine articles referring to third-party use, of "Laguna." "Even the Orange County Wikipedia pages do not contain much information about Laguna Beach." Respondent's website states that it is located in Laguna Beach, while the petitioner presented testimony that Laguna Beach is often referred to as "Laguna." The Board concluded that the degree of geographic descriptiveness of LAGUNA CANDLES is "modest."

Because petitioner relied on outdated evidence (evidence submitted in the earlier opposition some nine years previously), the Board found that petitioner failed to make a prima facie case that overcame Respondent's claim of five years of continuous and substantially exclusive use. Moreover, even had petitioner made out a prima facie case, it did not overcome respondent's evidence that its sales and gross income figures have incresaed from 2011; from then until the trial, respondent sold 324,318 "units" and has received press coverage in several national magazines.

The Board concluded that petitioner had failed to carry its burden of proof.

Claim preclusion: In 2013, the TTAB sustained Flame & Wax's opposition to the same mark for candles on the ground of geographical descriptiveness [TTABlogged here]. Four months later, respondent filed a new application, claiming acquired distinctiveness under Section 2(f) based on continuous and substantially exclusive use of the mark for five years. Flame & Wax asserted that the prior TTAB decision established that the proposed mark is primarily geographically descriptive of petitioner's goods.

Claim preclusion requires (1) an identify of parties (or their privies), (2) an earlier final judgment of a claim on the merits, and (3) a second claim based on the same set of transactional facts as the first. Jet Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 55 USPQ2d 1854, 1856 (Fed. Cir. 2000).

The decision in the opposition named Candrice Hendricks as the defendant, but she is not a principal of the respondent LLC. Not to worry. Because of the family nature of the business and because respondent did not dispute privity, the Board deemed the first Jet factor to be satisfied. As to the second factor, the decision in the opposition was on the merits.

As to the third factor, the Board observed that after an adverse final decision, an applicant may make a second attempt to register a mark if circumstances have changed. In re Honeywell Inc., 8 USPQ2d 1600, 1601-02 (TTAB 1988); In re Oscar Mayer & Co., 171 USPQ 571 (TTAB 1971). The Board found no case, however, in which an applicant claims acquired distinctiveness in a second application filed only four months after a successful opposition.

The Board noted the additional evidence in this proceeding that was not present in the first proceeding: the challenged registration enjoys a presumption of validity under Section 7; a five-year declaration under Section 2(f) was included in the new application; the mark had been in use for seven more years; respondent's sales increased; and respondent had received additional press coverage.

The Board found that these facts "establish a recognizable change of circumstances from the time of trial in the Prior Opposition and the time of trial in the cancellation." And so, it concluded that the third Jet factor was not satisfied.

Fraud: Petitioner also claimed that respondent committed fraud on the USPTO when it represented in its second application that it was entitled to register the mark when it knew that the Board had already ruled that the mark was not registrable. The Board pointed out, however, that the examining attorney knew of the prior application and knew, or should have known, of the prior Board decision, and so respondent's statement "was not material to the registrability of the mark."

Moreover, petitioner failed to prove that respondent had a deceptive intent in making its representation. Respondent disclosed the prior application to the examining attorney, which suggests there was no deliberate concealment. Also, respondent may have believed that the change of circumstances permitted a second application.

PS: the cancellation petition was filed two days before the fifth anniversary of the registration, and five years and two months after the underlying application was published for opposition. So laches seems like a pretty good defense here.

And so, petitioner's fraud claim was denied.

Read comments and post your comment here.

TTABlogger comment: The Board declined to reach respondent's affirmative defense of laches, but perhaps petitioner's delay may account for the Board seemingly leaning heavily in Respondent's favor.

PS: The petition for cancellation was filed two days before the 5th anniversary of the registration, and 5 years and two months after the underlying application was published for opposition.

Text Copyright John L. Welch 2022.


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