International Beauty Exchange, Inc.v.K & N Distributors

Trademark Trial and Appeal BoardAug 11, 2017

No. 92063647 (T.T.A.B. Aug. 11, 2017)

MW Mailed: August 11, 2017 Cancellation No. 92063647 International Beauty Exchange, Inc. v. K & N Distributors Before Taylor, Mermelstein, and Hightower, Administrative Trademark Judges. By the Board: International Beauty Exchange, Inc. (“Petitioner”) seeks to cancel the registered mark AFRICAN CLAIR FORMULA PLUS, in standard characters, for “cosmetics” in International Class 3.1 In its amended petition for cancellation, filed February 13, 2017, Petitioner alleges the following grounds for cancellation: (1) likelihood of confusion; (2) that there was “no lawful use in commerce” because Respondent’s goods failed to indicate the country of origin in violation of federal law;2 and (3) that there was no use in commerce because of “the alleged first shipment of goods bearing the 1 Registration No. 4941822 was registered on April 16, 2016 with a disclaimer of the words “AFRICAN” and “FORMULA” apart from the mark. In the statement of use, filed July 1, 2015, Respondent claims June 1, 2015 as the date of first use anywhere and the date of first use in commerce. 2 Amended Petition for Cancellation, at ¶ 10, 19 TTABVUE 9. UNITED STATES PATENT AND TRADEMARK OFFICE Trademark Trial and Appeal Board P.O. Box 1451 Alexandria, VA 22313-1451 General Contact Number: 571-272-8500 THIS OPINION IS NOT A PRECEDENT OF THE TTAB Cancellation No. 92063647 2 mark being intrastate and not interstate.”3 Respondent denies the salient allegations in the petition for cancellation. This case now comes before the Board for consideration of Petitioner’s motion, filed April 24, 2017, for partial summary judgment on the grounds that Respondent’s goods were not in lawful use in commerce and that Respondent filed a “false and fraudulent statement of use”4 because Respondent’s use in commerce was intrastate not interstate. The motion is fully briefed. With respect to Petitioner’s claim that Respondent’s use of the mark was unlawful, Petitioner alleges that Respondent’s use of its mark is in violation of Section 1304 of the Tariff Act of 1930, 15 U.S.C. 1304(a), which requires that products imported into the U.S. be marked with the country of origin for the ultimate purchaser. Petitioner contends that Respondent’s products, which are manufactured in Côte d’Ivoire (Ivory Coast), only contain a notification of the country of manufacture on the shipping container and not on the packaging of the goods for the ultimate consumer. According to Petitioner, the sale of Respondent’s goods without the required labeling is a per se violation of the federal statute and, therefore, cannot be recognized as lawful use in commerce for establishing trademark rights. With regard to its claim that Respondent filed a false and fraudulent statement of use, Petitioner alleges that, according to Respondent’s discovery responses, the date of Respondent’s first shipment of the goods in commerce is almost five months 3 Amended Petition for Cancellation, at ¶ 11, 19 TTABVUE 9. 4 23 TTABVUE 6. Cancellation No. 92063647 3 after the date of first use set forth in the statement of use. In addition, because the first shipment of the goods was to a customer located in Miami, Florida, Petitioner contends that the goods shipped in the first shipment were merely transported in intrastate commerce, not in interstate commerce. According to Petitioner, the intrastate shipment could not be the basis for federal trademark registration and Respondent’s statements in the statement of use “were made fraudulently.”5 In response to Petitioner’s claim that Respondent’s use of the mark was unlawful, Respondent argues that Petitioner has not demonstrated by clear and convincing evidence that Respondent violated the statutory labeling requirements. Respondent further argues that, even assuming Respondent violated the federal labeling requirements, Petitioner “has made no effort to allege, let alone prove, a nexus between the violation and the purported unlawfulness of the product, or the materiality of the alleged violation.”6 Inasmuch as the penalty for noncompliance with the labeling requirements is merely “additional duties,”7 Respondent argues that the illegality does not rise to the level necessary to justify cancellation. With respect to Petitioner’s second ground for summary judgment, Respondent contends that Petitioner’s allegation of fraud in the filing of the statement of use was not pleaded in the amended petition for cancellation and is being raised for the first time on summary judgment. In addition, with its response to the motion, Respondent 5 Id. at 6. 6 25 TTABVUE 5-6. 7 Id. at 7 (quoting 19 U.S.C. § 1304(i)). Cancellation No. 92063647 4 has submitted an amended response to Petitioner’s interrogatory request regarding Respondent’s date of first shipment of the goods in commerce. Respondent argues that “[t]he supplemental response makes clear that the first use in commerce was the date listed in the Statement of Use, when a shipment of the products bearing the mark was sent by Registrant to a freight forwarder for shipment from Florida to Jamaica.”8 In reply, Petitioner argues that “the issue of fraudulent use in commerce was adequately pleaded”9 in the amended petition for cancellation. In addition, Petitioner contends that the date of Respondent’s first use “remains in question”10 because the customer identified in Respondent’s supplemental response is located in Florida. Thus, according to Petitioner, the transportation of the goods was not an interstate or foreign shipment. The Pleadings As an initial matter, a decision on summary judgment necessarily requires a review of the operative pleadings to determine the legal sufficiencey of the claims asserted in the motion. See Fed. R. Civ. P. 56(a); Asian & Western Classics B.V. v. Selkow, 92 USPQ2d 1478, 1478 (TTAB 2009). Upon review of the amended petition for cancellation, we find that the amended pleading is legally sufficient to the extent that it contains allegations which, if proven, would establish Petitioner’s standing 8 Id. at 8. 9 26 TTABVUE 3. 10 Id. Cancellation No. 92063647 5 and its asserted claim that there was no lawful use in commerce under Sections 1 and 45 of the Trademark Act, 15 U.S.C. §§ 1051 and 1127, due to incorrect labeling. In addition, we note that the amended pleading contains a legally sufficient claim of likelihood of confusion under Section 2(d), 15 U.S.C. § 1052(d), which Petitioner does not assert in the motion. However, we find Respondent’s allegations of fraud in the amended petition for cancellation insufficient to support the fraud claim in the motion for summary judgment. To assert a viable claim of fraud, the plaintiff must allege with particularity, rather than by implied expression, see Fed. R. Civ. P. 9(b), that the defending party knowingly made a false, material representation in the procurement of, maintenance of, or renewal of a registration with the intent to deceive the U.S. Patent and Trademark Office. In re Bose Corp., 580 F.3d 1240, 91 USPQ2d 1938, 1942 (Fed. Cir. 2009). Intent to deceive the USPTO is a required element of a fraud claim which must be pleaded. Id. Here, Petitioner merely sets out a conclusory allegation that “[t]he date of first use of the mark of Registrant in commerce as shown in the application for registration was false and fraudulent.”11 However, the amended petition for cancellation contains no factual allegations regarding Respondent’s knowledge of the purportedly false statement or of its intent to deceive the USPTO into issuing a registration to which it is not entitled. Id. 11 Amended Petition for Cancellation, at ¶ 12, 19 TTABVUE 9. Cancellation No. 92063647 6 Additionally, the supporting allegations in paragraphs 11 and 12 of the amended petition do not identify a misrepresentation in the statement of use that is material to the procurement of a registration. Petitioner merely alleges that the date of first use is false because Respondent’s first shipment of the goods on that date does not amount to use in interstate commerce. However, the mere fact that Respondent’s date of first use may be incorrect is insufficient to state a claim for relief. See Seaporcel Metals, Inc. v. Am. Siporex Corp., 125 USPQ 664, 667 (TTAB 1960) (misstatement of date of first use in a registration cannot, in and of itself, justify fraud). A plaintiff alleging a claim of nonuse under Section 1 of the Trademark Act, 15 U.S.C. § 1051, must plead and prove that there was no use in commerce prior to the filing of the use based application or the deadline for filing the statement of use (as extended). See Embarcadero Tech., Inc. v. Delphix Corp., 117 USPQ2d 1518, 1526 (TTAB 2016) (petitioner must plead that Respondent did not use its mark with the goods in the registration within the time for filing its statement of use as extended).12 Thus, to the extent that Petitioner asserts, in the amended pleading, a claim of nonuse in commerce under Section 1(d) based on allegations that there was no use in interstate commerce as of Respondent’s asserted date of first use, the allegations are insufficient to state a claim for relief for the reasons set forth above. See CarX Service 12 Under Trademark Rule 2.88(e), 37 C.F.R. § 2.88(e), an applicant may amend its statement of use to state dates of use which fall after the statement of use filing date but before the expiration of the deadline for filing the statement of use. See Trademark Rule 2.71(c)(2), 37 C.F.R. § 2.71(c)(2). Thus, where a claim of nonuse is asserted in an inter partes proceeding, “the Board also will consider evidence of use which occurred after the filing of the statement of use but within the original or extended period for filing the statement of use.” Embarcadero Tech., Inc., 117 USPQ2d at 1524. Cancellation No. 92063647 7 Systems, Inc. v. Exxon Corp., 215 USPQ 345, 351 (TTAB 1982) (a misstatement of the date of first use is not fatal to securing a registration). Moreover, Petitioner’s allegation that Registrant’s first use was “intrastate and not interstate,” Amended Petition at ¶ 11, 19 TTABVUE 9, is likewise insufficient. The statutory requirement is for use of a mark “in commerce,” not interstate commerce. Trademark Act § 45. As it is used in the Trademark Act, “[t]he word ‘commerce’ means all commerce which may lawfully be regulated by Congress,” id., and the mere fact that an activity occurs within one state does not mean that Congress is wholly without authority to regulate it. See, e.g., Christian Faith Fellowship Church v. adidas AG, 841 F.3d 986, 120 USPQ2d 1640 (Fed. Cir. 2016). In view of the foregoing, Petitioner’s fraud claim and the claim of nonuse in commerce that is the basis for the fraud claim are insufficiently pleaded. Accordingly, we have given no consideration to Petitioner’s motion for summary judgment on the improperly pleaded claims. See Asian & Western Classics B.V., 92 USPQ2d at 1480 (petitioner cannot obtain summary judgment on an insufficiently pleaded fraud claim); see also Consolidated Foods Corp. v. Berkshire Handkerchief Co., 229 USPQ 619, 621 (TTAB 1986) (stating that the rule that only properly pleaded issues may be the subject of a grant of summary judgment “is especially important where the asserted ground for summary judgment is fraud since in pleading fraud, ‘the circumstances … shall be stated with particularity.’ Fed. R. Civ. P. 9(b)”).13 13 We note, in any event, that even if we were to consider the merits of Petitioner’s motion for summary judgment on the fraud claim, the motion would be denied because, in addition to failing to identify a material misrepresentation, Petitioner has not submitted any arguments or attached any evidence to the motion regarding Respondent’s knowledge or intent to deceive Cancellation No. 92063647 8 Standing Standing is a threshold issue that must be pleaded and proven by the plaintiff in every inter partes case. See Empresa Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270, 111 USPQ2d 1058, 1062 (Fed. Cir. 2014), cert. denied, 135 S. Ct. 1401 (2015); Ritchie v. Simpson, 171 F.3d. 1092, 50 USPQ2d 1023, 1025-26 (Fed. Cir. 1999); see also Sinclair Oil Corp. v. Kendrick, 85 USPQ2d 1032, 1037 (TTAB 2007). Here, Petitioner has asserted a prima facie claim of likelihood of confusion based on prior use of its mark in commerce and ownership of an existing registration. In addition, with its original petition for cancellation, Petitioner attached a copy of the information from the Office’s TSDR database showing the current status and title of its pleaded registration. See Trademark Rule 2.122, 37 CFR § 2.122. Thus, Petitioner has demonstrated its belief in likely damage by establishing a direct commercial interest in the proceeding and, therefore, has established its standing to maintain the proceeding. See Cunningham v. Laser Golf Corp., 222 F.3d 943, 55 USPQ2d 1842, 1844 (Fed. Cir. 2000); Research in Motion Ltd. v. Defining Presence Mktg. Grp. Inc., 102 USPQ2d 1187, 1190 (TTAB 2012) (standing established by pleaded registrations of record). Once standing is established as to one ground, Petitioner may pursue any legally sufficient claim which negates Respondent’s right to the subject registration. Jewelers Vigilance Committee, Inc. v. Ullenberg Corp., 823 F.2d 490, 2 USPQ2d 2021, 2024 (Fed. Cir. 1987); see also Corporacion Habanos SA v. Rodriquez, 99 USPQ2d the USPTO with respect to the allegedly false date of first use. Further, the factual question of intent is particularly unsuited to disposition on summary judgment. Copeland’s Enters. Inc. v. CNV Inc., 945 F.2d 11563, 20 USPQ2d 1295, 1299 (Fed. Cir. 1991). Cancellation No. 92063647 9 1873, 1877 (TTAB 2011) (because petitioners alleged standing as to at least one ground, they may assert any other legally sufficient claims). The Record For purposes of the summary judgment motion, the evidentiary record includes the pleadings and, by rule, the file of the involved registration. Trademark Rule 2.122(b). In addition, Petitioner submitted the following exhibits in support of its motion: (1) copies of a section of the Tariff Act of 1930; (2) Respondent’s supplemental objections and responses to Petitioner’s first set of interrogatories; (3) Respondent’s objections and responses to Petitioner’s second set of interrogatories; and (4) copies of packaging for Respondent’s product bearing the mark along with the supporting affidavit of John Graterol, an officer of Petitioner, who purchased the product on December 17, 2015. Respondent relies on the declaration of Jean-Robert Cesar, President of Respondent, attesting to, inter alia, the manner of Respondent’s first use of the mark on the claimed date of first use. In addition, Respondent submitted an amended supplemental response to Petitioner’s interrogatory No. 7. Summary Judgment We turn next to the merits of the motion for summary judgment. Summary judgment is an appropriate method of disposing of cases in which there are no genuine disputes as to any material facts and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). In reviewing a motion for summary judgment, the evidentiary record and all justifiable inferences to be drawn from the Cancellation No. 92063647 10 undisputed facts must be viewed in the light most favorable to the non-moving party. See Lloyd’s Food Prods. Inc. v. Eli’s Inc., 987 F.2d 766, 25 USPQ2d 2027, 2029-30 (Fed. Cir. 1993); Olde Tyme Foods Inc. v. Roundy’s Inc., 961 F.2d 200, 22 USPQ2d 1542, 1546 (Fed. Cir. 1992). In addition, the Board may not resolve disputes of material fact; it may only ascertain whether a genuine dispute regarding a material fact exists. See Lloyd’s Food Prods., 25 USPQ2d at 2029; Olde Tyme Foods, 22 USPQ2d at 1544. A party moving for summary judgment has the burden of demonstrating a particular fact is not disputed by citing to particular parts of materials in the record, including affidavits or declarations, admissions or interrogatory answers; or showing that the cited materials do not establish the absence or presence of a genuine dispute, or that the adverse party cannot produce admissible evidence to support the fact. Fed. R. Civ. P. 56(c)(1). See generally Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has supported its motion with sufficient evidence that, if unopposed, indicates there is no genuine dispute of material fact, the burden of production shifts to the non-moving party to demonstrate the existence of a genuine dispute of material fact to be resolved at trial. Enbridge, Inc. v. Excelerate Energy LP, 92 USPQ2d 1537, 1540 (TTAB 2009). With respect to Petitioner’s pleaded claim that the mark was not in lawful use in commerce, the Board has stated that use of a mark should be found unlawful under one or more regulatory acts only when a court or government agency having competent jurisdiction under that statute has found non-compliance, or where there Cancellation No. 92063647 11 has been a per se violation of a statute regulating the sale of a party’s goods. General Mills Inc. v. Health Valley Foods, 24 USPQ2d 1270, 1273 (TTAB 1992); Kellogg Co. v. New Generation Foods Inc., 6 USPQ2d 2045, 2047 (TTAB 1988). In addition, a party that seeks to show that use by the adverse party was unlawful due to noncompliance with a labeling statutory provision must demonstrate by clear and convincing evidence not only that the use violated the applicable law, but also “that the non- compliance was material, that it was of such gravity and significance that the usage must be considered unlawful – so tainted that, as a matter of law, it could create no trademark rights – warranting cancellation of the registration of the mark involved.” General Mills, 24 USPQ2d at 1273-74. In this case, Petitioner does not contend that any court or agency having competent jurisdiction under Section 1304 of the Tariff Act has made a final determination of noncompliance by Respondent.14 Rather, Petitioner argues that, based on Respondent’s answers to interrogatories, Respondent’s product sales were per se violations of the labeling requirements of the Tariff Act because the country of origin only appears on “the master box of the products.”15 According to Petitioner, “[t]his is inferred to be the shipping container and not the individual container that 14 Section 1304 of the Tariff Act, 15 U.S.C. 1304(a), states, in part: every article of foreign origin (or its container, as provided in subsection (b) hereof) imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. 15 23 TTABVUE 3, 20. Cancellation No. 92063647 12 the ultimate customer will see.”16 However, “the proofs submitted by a party charging noncompliance must leave no room for doubt, speculation, surmise or interpretation.” Santine Societa v. P.A.B. Produits, 209 USPQ 958, 965 (TTAB 1981). Thus, in determining on summary judgment whether Respondent’s use was a per se violation of a statute that is outside of the Board’s area of expertise, we may not infer facts from the evidence to Opposer’s benefit17 that are not clearly in the record. In view of the foregoing, we find that the evidence in the record falls short of the clear and convincing standard required to demonstrate that Respondent violated the country of origin labeling requirements of the Tariff Act.18 In addition, Petitioner has provided no arguments and submitted no evidence that the alleged violation of the labeling requirements was material or so grave and significant to the use of the mark that it could create no trademark rights. Thus, even if we found that Respondent had violated the labeling requirements of the Tariff Act, there is no evidence in the record that the alleged violation was of such a nature that Respondent’s use in commerce must be considered unlawful – warranting cancellation of the subject registration. See General Mills, 24 USPQ2d at 1274-75 (finding that many of the relevant labeling requirements “are purely technical in 16 Id. at 3. 17 In deciding a motion for summary judgment, all reasonable inferences must be drawn in favor of the nonmovant. See Opryland USA Inc. v. The Great American Music Show Inc., 970 F.2d 847, 23 USPQ2d 1471, 1472 (Fed. Cir. 1992) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). 18 Additionally, we note that Petitioner’s evidence consisting of copies of Respondent’s product packaging purchased on December 17, 2015 is insufficient to support a claim of unlawful use in commerce prior to the July 1, 2015 filing date of the statement of use. Cancellation No. 92063647 13 nature and that violations of such requirements may be relatively harmless and may be subsequently corrected”); see also Santine, 209 USPQ at 967 (Kera, concurring) (“There must be some nexus between the use of the mark and the alleged violation before it can be said that the unlawfulness of the sale or shipment has resulted in the invalidity of an application or registration.”). In view of the foregoing, we find that Petitioner has failed to carry its burden of showing that there is no genuine dispute of material fact that Respondent’s mark was not in lawful use in commerce prior to the filing of its statement of use. Decision Based on the record and the applicable law, we find that genuine disputes of material facts remain with respect to Respondent’s use of the mark in commerce prior to filing the statement of use.19 Accordingly, Petitioner’s motion for partial summary judgment based on the claim of no lawful use in commerce is DENIED. Proceedings are resumed. Discovery and trial dates are reset as follows: Expert Disclosures Due 11/7/2017 Discovery Closes 12/7/2017 Plaintiff's Pretrial Disclosures 1/21/2018 Plaintiff's 30-day Trial Period Ends 3/7/2018 Defendant's Pretrial Disclosures 3/22/2018 Defendant's 30-day Trial Period Ends 5/6/2018 Plaintiff's Rebuttal Disclosures 5/21/2018 Plaintiff's 15-day Rebuttal Period Ends 6/20/2018 19 The fact that we have identified only certain genuine disputes as to material facts should not be construed as a finding that these are necessarily the only disputes which remain for trial. In addition, the evidence submitted in connection with a motion for summary judgment or opposition thereto is of record only for consideration of that motion. Any such evidence to be considered at final hearing must be properly introduced in evidence during the appropriate trial period. See Levi Strauss & Co. v. R. Joseph Sportswear Inc., 28 USPQ2d 1464 (TTAB 1993). Cancellation No. 92063647 14 In each instance, a copy of the transcript of testimony, together with copies of documentary exhibits, must be served on the adverse party within thirty days after completion of the taking of testimony. Trademark Rule 2.125. Briefs shall be filed in accordance with Trademark Rules 2.128(a) and (b). An oral hearing will be set only upon request filed as provided by Trademark Rule 2.129.