Precedential No. 3: Dismissal with Prejudice but Without Judgment Suffices for Claim Preclusion Defense

In this cancellation proceeding involving four registrations for the mark FARAM, in various forms, for furniture and parts therefor, petitioner claimed abandonment and nonuse, but respondent pointed to the dismissals of two prior proceedings as a basis for claim preclusion. In view of the parties' stipultation that the prior proceedings be dismissed "WITH PREJUDICE, with CONSENT of both parties, and without the entry of judgment against either party," the proceedings were accordingly dismissed with prejudice. The Board here ruled that these dismissals sufficed to support a claim preclusion defense, and so it partially granted respondent's motion for summary judgment. <1i>Faram Holding and Furniture, Inc. v. Faram 1957 S.p.A., Cancellation No. 92084197 (February 24, 2025) [precedential] (by the Board).

For claim preclusion to apply, the following requirements must be satisfied: (1) the parties (or their privies) must be identical; (2) there must be an earlier final judgment on the merits of a claim; and (3) the second claim must be based on the same set of transactional facts as the first.

There was no dispute as to the first element. As to the second, although the parties stipulated that the withdrawals should be "without entry of judgment," the fact that they were then dismissed "with prejudice" by Board order, "[a]s a matter of law, operates as a final judgment for purposed of claim preclusion." [see cited cases]. Thus, the second element was satisfied. 

As to the third element, things were complicated. One of the registrations had not issued at the time of termination of the prior opposition proceeding on June 21, 2019, and so an abandonment claim could not have been brought in that proceeding. Similarly, as to nonuse, since that application was filed under the Madrid Protocol, such a claim was available only after three years of registration. And so that claim was not precluded.

As for the other three registrations, with respect to abandonment, claim preclusion does not bar claims based on activities occurring after the termination of the prior cancellation proceedings on June 21, 2019. However, the current petition for cancellation did not include any allegations regarding respondent's alleged nonuse after 2019, and so these abandonment claims did not arise out of the same set of transactional facts as the pre-2019 claims and thus were not precluded.

As to the never-been-used claims against these three registrations, such a claim under Section 1046(6) was not available until December 18, 2021 - after termination of the prior cancellations - when the Trademark Modernization Act of 2020 took effect. However, in each of the prior proceedings, petitioner alleged that "Registrant has never used the Trademark in commerce." Thus, petitioner raised this never-been-used claim in the prior cancellations and it did not allege any new facts here. And so, these claims are based on the same transactional facts as the prior abandonment claims, and so the third element of claim preclusion was met.

In sum, claim preclusion barred the abandonment claims based on activities prior to June 21, 2019, and with respect to the "never used" claims against the latter three registrations. The Board entered summary judgment dismissing those claims. However, claim preclusion does not apply to the abandonment and Section 1064(6) claims against the first registrations, nor the abandonment claims based on events occurring after June 21, 2019 against the latter three registrations.

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TTABlogger comment: I'm puzzled as to why the "never used" claims were barred against the latter three registrations. Claiming "never used" as of 2019 is not the same a claiming "never used" after 2019.

Text Copyright John L. Welch 2025.