Yangtse River Co., Inc.v.Concept Housewares, Inc.

Trademark Trial and Appeal Board

Aug 25, 1999

No. 92026685 (T.T.A.B. Aug. 25, 1999)

Paper No. 17
RFC
THIS DISPOSITION IS NOT
CITABLE AS PRECEDENT OF THE TTAB AUG. 25,99
U.S. DEPARTMENT OF COMMERCE
PATENT AND TRADEMARK OFFICE
_____
Trademark Trial and Appeal Board
_____
Yangtse River Company, Inc.
v.
Concept Housewares, Inc.
_____
Cancellation No. 26,685
_____
Alan J. Haus of Haus & Carlin for Yangtse River Company,
Inc.
David Barry Whitehead of Whitehead, Porter & Gordon LLP for
Concept Housewares, Inc.
_____
Before Cissel, Chapman and Bottorff, Administrative
Trademark Judges.
Opinion by Cissel, Administrative Trademark Judge:
Registration No. 2,050,992 issued on the Principal
Register to Concept Housewares, Inc. on April 8, 1997, based
on an application filed on June 11, 1996. The mark shown
below
Cancellation No. 26,685
2
was registered for "pot racks and mounting hardware sold
therewith, in Class 20." The term "RACK" was disclaimed
apart from the mark as shown. First use and first use in
commerce was claimed as of July 1, 1995.
On September 3, 1997, a petition for cancellation was
filed by Yangtse River Company, Inc. As grounds for
cancellation, petitioner alleged that it is the successor to
Smart Kids, a California corporation, Norman Ng, an
individual, and Victor Moye, also an individual, in the
business known as Taylor & Ng; that as of July 1, 1995, the
date upon which the registration claims first use, Smart
Kids was the owner of all rights to the registered mark, and
had been since 1993 or earlier; that as of July 1, 1995,
registrant did not even exist; that the registration was
obtained by means of fraud; that petitioner has purchased
the rights of Smart Kids, Norman Ng and Victor Moye, which
rights include the rights to the registered mark; and that
allowing respondent’s registration to subsist damages
petitioner.
Respondent denied the essential allegations set forth
in the petition to cancel. Respondent further asserted as
"affirmative defenses" that petitioner’s predecessors
abandoned the registered trademark; that there never was a
valid assignment of the trademark to any of petitioner’s
predecessors; that there never was an assignment of the good
Cancellation No. 26,685
3
will or business associated with the mark to any of
petitioner’s predecessors; that the only entity with
standing to file the petition to cancel is the bankruptcy
estate of Norman Ng; that petitioner’s knowledge of
respondent’s use of the mark since 1995 and failure to
institute an infringement action based on that use
constitutes laches; that neither petitioner nor any of its
purported predecessors have priority of use over respondent;
that petitioner’s allegations of fraud do not meet the
requirements of the Federal Rules of Civil Procedure that
fraud must be pleaded with particularity; and, finally, that
petitioner’s predecessor Norman Ng has unclean hands, in
that he has filed forged instruments with the Patent and
Trademark Office and has misrepresented ownership of assets,
including intellectual property, in order to secure bank
financing, such that a federal grand jury indictment has
been issued against him for bank fraud.
During the testimony period established by the
Trademark Trial and Appeal Board, petitioner submitted as
its testimony the declarations of Gary Fonzi, Norman Ng,
Victor Moye, and Alan Haus. Respondent then timely
submitted as its testimony the declarations of Craig Adams
and David Barry Whitehead. Over a month and a half later,
and 17 days after the close of the period for rebuttal
Cancellation No. 26,685
4
testimony, petitioner submitted an additional declaration
from Mr. Haus.
Plaintiff filed its brief. Then respondent filed its
brief, together with an additional declaration from Mr.
Whitehead and a "Document Packet," which includes Exhibits A
through Q, which consist of further declarations and other
exhibits characterized as materials which had been
previously submitted. Petitioner filed a reply brief, and
then respondent did so as well.
Petitioner objected to respondent’s brief because it
was filed two days late. The Board finds that respondent’s
explanation for the late filing of its brief constitutes
excusable neglect. In the hope it would clarify some of the
confusion generated by petitioner’s brief, the objected-to
brief has been considered.
There is no provision in the rules for the submission
of a reply brief by the party in position of defendant,
however, so we have not considered respondent’s reply brief.
See TBMP Section 801.02(d).
The "record" in this proceeding appears to be the
product of misunderstandings concerning the nature of a
cancellation proceeding before the Board and how to make
testimony and evidence of record in connection with the
pleaded claims and defenses. See TBMP Section 702.
Cancellation No. 26,685
5
Normally, the parties to a proceeding such as this
conduct discovery, then take the testimony, including both
examination and cross-examination, of any witness who is
knowledgeable concerning the facts (with supporting
documentation) for the respective theories of petitioner and
respondent. Then these theories of the case are presented
in the briefs in such a way that the relative strengths and
weaknesses of the positions of both parties can be
determined.
In the instant case, however, neither party appears to
have taken discovery or testimony, at least not in
accordance with the Trademark Rules of Practice. Instead,
the Board is presented with the pleadings, including one of
the grounds for cancellation (fraud), as well as various
affirmative defenses, which are never again mentioned by the
parties which raised them, and a series of declarations
submitted by one party or the other, some within the
testimony period of the submitting party, others outside of
such period.
The way in which testimony may be taken and made of
record is set forth clearly in Rule 2.123 of the Trademark
Rules of Practice. The only way to make a declaration part
of the record is by written stipulation of the parties.
Because the burden of proving that the challenged
registration should be canceled is on the petitioner, in
Cancellation No. 26,685
6
circumstances where no evidence or testimony has been
properly made of record, the petition would necessarily be
denied for failure of proof.
The instant case, however, is different from the
example just given. In the case at hand, respondent was
apparently under the same mistaken impression as
petitioner, i.e., that declarations would be acceptable,
even without a written agreement wherein the parties
stipulated that such documents are to be considered by the
Board. Respondent did not object to petitioner’s submission
of declarations; rather, respondent likewise submitted its
own declarations, although, as with petitioner’s
declarations, they were not all filed within the testimony
period established by Board order for the party, and both
parties treated them as if they were properly introduced
testimony. Then both parties presented their arguments in
the briefs (and the one reply brief we considered) as if the
declarations were in fact properly of record.
In view of these facts, we have considered the
declarations which were timely submitted during the
appropriate testimony periods as if they had been stipulated
into the record. The declarations submitted by petitioner
which fall into this category are those of Mr. Fonzi, Mr.
Ng, Mr. Moye, and the April 15, 1998 declaration of Mr.
Haus. We have considered the declarations of Craig Adams
Cancellation No. 26,685
7
and David Barry Whitehead, submitted by respondent and
received on June 16, 1998 with a certificate of mailing
dated June 12, 1998, on the same basis that we considered
the above-referenced declarations submitted by petitioner.
Each of these declarations was submitted during the
designated testimony period of the party seeking to have it
considered, with the implied consent of both parties.
We have not, however, accorded the declarations and
materials submitted outside of the respective testimony
periods the same consideration. The parties cannot by
stipulation (either actual or implied) alter the Trademark
Rules of Practice in such a way as to extend the testimony
periods without prior approval by the Board. This authority
remains with the Board, and cannot be circumvented by an ex
post facto, implied agreement of the parties. See TBMP
Section 717.
Further, we decline petitioner’s invitation to take
judicial notice of the record in the cited case before the
United States District Court for the Northern District of
California. We also deny petitioner’s assertion in its
brief, p. 3, that we may take judicial notice of the fact
that ECI, the original registrant, had its corporate powers
suspended by the State of California on August 1, 1990.
These are not the kinds of facts which may be judicially
noticed under Rule 201 of the Federal Rules of Evidence,
Cancellation No. 26,685
8
i.e., facts which are not subject to reasonable dispute in
that they are generally known within the territorial
jurisdiction of the Board, or are capable of accurate and
ready determination by resort to sources whose accuracy
cannot be reasonably questioned. If petitioner sought to
establish these matters as facts, it should have introduced
evidence or testimony concerning them. See TBMP Section
712.
With this limited record in mind, we thus turn to a
discussion of the merits of the pleaded claims. As noted
above, the grounds for cancellation pleaded by petitioner
are that respondent obtained the registration by means of
fraud, and that respondent is not the owner of the mark or
the registration. Respondent denied both of these claims,
and asserted the aforementioned affirmative defenses.
In that this record contains no evidence, testimony, or
even argument from plaintiff on the issue of fraud, that
claim has not been further considered. In any event, fraud
is a claim that must be "proved to the hilt" by "clear and
convincing evidence." [See Smith International, Inc. v. Olin
Corporation, 209 USPQ 1033 (TTAB 1981)]. Petitioner has
plainly not met this standard in the instant case. The
petition to cancel on the ground of fraud is accordingly
denied.
Cancellation No. 26,685
9
In order to prevail on the pleaded claim for
cancellation because respondent does not own the mark or the
registration, petitioner had the burden of establishing this
by a preponderance of the evidence. This less stringent
standard of proof is to be contrasted with the clear and
convincing evidence standard required to prove a fraud
claim. When we consider the declarations submitted during
the testimony periods of the parties, there is evidence on
this issue, and the parties did submit arguments relating to
this issue.
It is appropriate at this juncture to explain how
frustrating it has been for the Board to try to sort out the
evidence and arguments of the parties in this regard. The
declarations which we considered provide textbook examples
of the shortcomings of such documents as compared to
testimony which is taken and then tested by means of cross-
examination. Parts of what the declarants state is either
contradicted by other declarations or other evidence, or
else it is not supported by the documentation one would
expect to find memorializing the assorted agreements and
assignments asserted by the parties to have been made.
Interestingly, some of the documents which are of record do
not even appear to involve the mark at issue in this
proceeding.
Cancellation No. 26,685
10
Then there are the aforementioned briefs. Petitioner’s
two briefs, exclusive of the attachments, total only
fourteen pages, and respondent’s brief is only two pages
longer than that, notwithstanding the fact that the
arguments made in these briefs present contentions as to the
facts surrounding the nature and validity of the acquisition
and/or use of the mark by no fewer than nine different
entities. Counsel for the parties may well have had very
clear understandings of the operative facts in this regard,
probably because of the familiarity required to conduct all
the other litigation surrounding the relationship between
these two businesses and their principals, but it would have
helped the Board if a more cohesive, readily understandable
explanation had been provided as to each party’s version of
who took what from whom, when and how it was accomplished,
with references to the supporting agreements, contracts and
other documentation.
Petitioner’s theory appears to be that respondent’s
predecessor abandoned the mark and petitioner now owns it by
virtue of subsequent adoption and use of it by petitioner’s
predecessors. Petitioner argues that the original
registrant, ECI, was out of business in 1993 when Smart Kids
became the owner of the mark by virtue of Smart Kids’
continuous use since 1987; that Smart Kids assigned its
rights in the mark to Mr. Ng, whose subsequent bankruptcy
Cancellation No. 26,685
11
led the trustee in bankruptcy to transfer Mr. Ng’s rights to
the mark to Mr. Moye, who assigned them to petitioner, the
corporation Mr. Moye had just formed.
The Board has tried to evaluate the timely-filed
declarations and the exhibits to them. Neither this record
nor the briefs, however, have provided us with a clear idea
of what actually took place among the various entities that
the parties claim either used or possessed the right to use
the mark at issue in connection with the goods specified in
the registration.
The evidence just does not show what petitioner argues
took place. Petitioner offered no evidence that ECI’s
corporate status was suspended or that ECI otherwise
abandoned the mark. Petitioner’s claim that it owns the
mark also suffers from a lack of proof. It is not at all
clear that Mr. Ng’s assignment of Smart Kids’ assets to
himself included the rights to this mark, or that the sale
by his trustee in bankruptcy to Mr. Moye did so either.
Moreover, this record does not include evidence of use by
anyone in petitioner’s asserted chain of title since Mr. Ng
claims to have used it. This claim of use is contradicted
by the declaration of Mr. Adams, the owner of respondent,
which Mr. Moye concedes continues to use the mark.
Based on our consideration of the record in this case,
we cannot conclude that petitioner’s claim that respondent
Cancellation No. 26,685
12
does not own the mark or registration has been established
by a preponderance of the evidence.
In view of the fact that petitioner has not proved its
case, we need not determine the merits, or lack thereof, of
the various "affirmative defenses" asserted by respondent in
its answer. In fact, most of them are merely assertions of
facts in opposition to petitioner’s version of the facts
alleged to support the two grounds for cancellation. As to
the actual affirmative defenses of laches and unclean hands,
respondent offered neither evidence nor argument on them, so
they must fail.
In summary, petitioner has failed to meet its burden of
establishing either pleaded ground for cancellation.
Accordingly, the petition is denied.
R. F. Cissel
B. A. Chapman
C. M. Bottorff
Administrative Trademark Judges,
Trademark Trial & Appeal Board