TTAB Dismisses AMERICAN APPAREL Cancellation Petition: Claims Should Have Been Raised as Counterclaims in Pending Opposition

On summary judgment, the Board dismissed this petition for cancellation because Grateful American's claims (genericness and lack of acquired distinctiveness) should have been raised in a pending opposition as compulsory counterclaims. Grateful American waited nearly a year after filing its answer in Gildan Activewear's opposition to registration of the mark GRATEFUL AMERICAN APPAREL before filing this petition for cancellation. Grateful American Apparel LLC v. Gildan Activewear SRL, Cancellation No. 92081329 (March 8, 2024) [not precedential].

Trademark Rule 1.114(b)(3)(i) provides that "[a] defense attacking the validity of any one or more of the registrations pleaded in the petition shall be a compulsory counterclaim if grounds for such counterclaim exist at the time when the answer is filed." Gildan asserted that Grateful American knew of the grounds as evidenced by a letter it sent to Gildan six weeks before its answer, stating that "[t]he trademark AMERICAN APPAREL is notable [sic] weak given half the mark, the term APPAREL, is generic and afforded no protection as a trademark. The other half of the mark, AMERICAN, is blatantly descriptive."

The Board noted that Gildan did not expressly plead, as an affirmative defense, that Grateful American's counterclaims were untimely compulsory counterclaims. However, Gildan did plead that "as a result of Petitioner’s own acts and/or omissions, Petitioner has waived any right to pursue its Cancellation." Grateful American did not move to strike this statement, and the Board concluded that the statement "can be construed to allege that [Grateful American] waived its claims by failing to timely assert them in the Opposition."

Furthermore, Grateful American did not object to the summary judgment motion as being directed to an unpleaded issue, but rather addressed the issue on the merits. The Board therefore deemed Gildan's pleading as amended to include a defense of untimeliness.

The Board then found no genuine dispute of material fact that the newly raised grounds of genericness and lack of acquired distinctiveness existed at the time Grateful American filed its answer in the opposition.

It is well established that a defendant that fails to timely plead a compulsory counterclaim cannot avoid the effect of its failure by thereafter asserting the counterclaim grounds in a separate petition to cancel. * * * Inasmuch as Petitioner’s claims were compulsory in the Opposition, and were not timely asserted in that proceeding, they are waived.

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TTABlogger comment: In Jive Software, Inc. v. Jive Communications, Inc., 125 USPQ2d 1175 (TTAB 2017) [precedential] [TTABlogged here], the Board ruled that the failure to plead a compulsory counterclaim in an original answer is not a per se bar to its later assertion in the same proceeding. There, however, the delay was a mere few weeks and was excusable.

Text Copyright John L. Welch 2024.