Trademark Trial and Appeal Board
Patent and Trademark Office (P.T.O.)
*1 LIBERTYVILLE SADDLE SHOP, INC.
v.
E. JEFFRIES & SONS LIMITED
Cancellation No. 19,719
August 27, 1992
Before Sams, Rice and Cissel
Members
Opinion by Cissel
Member
Registration No. 1,389,905 issued to E. Jeffries & Sons, Limited, a United Kingdom Company, on April 15, 1986. The registered mark is "E JEFFRIES" for "saddlery and harness; and ladies (sic) shoulder bags, in class 18." The registration was issued under Section 2(f), with a claim of distinctiveness based on applicant's use since 1860 and use in commerce since December 31, 1975.
Libertyville Saddle Shop, Inc., an Illinois corporation, filed a petition to cancel the registration on March 28, 1991. As grounds for cancellation petitioner states that since 1980 it has sold "bridlery, saddlery and horse equipment, namely halters, leads, cribbing straps and protective horse boots" under the trademark "JEFFREY & LORD"; that petitioner applied to register its mark on May 22, 1989; that respondent filed Opposition No. 81,960 against petitioner on January 12, 1990 alleging likelihood of confusion; that prior to petitioner's answer in that proceeding petitioner and respondent filed cross-motions for summary Judgment; that the Board granted respondent's cross-motion for summary judgment; [FN1] that respondent's registration had been granted on a claim of acquired distinctiveness based on substantially exclusive and continuous use in interstate commerce from January 15, 1980 to January 15, 1985; that respondent's use was not, however, substantially exclusive and continuous; that respondent had not used the mark as a trademark prior to its application to register it, so that it had not acquired distinctiveness under Section 2(f) of the Act; that respondent's registration was therefore obtained fraudulently; and further that respondent committed additional fraud when it claimed exclusive use of its mark, when in fact respondent was aware of petitioner's prior use of petitioner's mark at the time when respondent applied to register its mark.
On August 14, 1991 prior to filing its answer to the petition for cancellation, respondent filed a motion to dismiss. Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, respondent asserted that the petition should be dismissed for failure to state a claim for which relief can be granted. Respondent argued that petitioner's failure to counterclaim for cancellation of respondent's registration, which was asserted against petitioner in Opposition No. 81,960, should result in petitioner's being barred or estopped from seeking cancellation of respondent's registration now. Respondent cited Trademark Rule 2.106(b)(2)(i) and (ii) relating to compulsory counterclaims for cancellation of registrations pleaded as the basis for opposition.
As another basis for dismissal of the instant petition to cancel, respondent asserted that the petition fails to allege specific facts which would establish petitioner's standing and set forth a statutory ground for cancelling the registration.
*2 Responsive to the motion to dismiss, petitioner asserted that because it had never filed an answer in Opposition No. 81,960 before that case was decided on cross-motions for summary judgment, the rule concerning compulsory counterclaims does not come into play, so that the claim for cancellation of respondent's registration is not now barred by petitioner's failure to assert it in the earlier proceeding. Petitioner further argued that even if the rules were misconstrued to require the filing of the counterclaim to cancel prior to the answer, petitioner did not have sufficient knowledge of the facts which provide the basis for the cancellation claim until after respondent filed its cross-motion for summary judgment in the opposition, which was long after proceedings had been suspended pending resolution of petitioner's own motion for summary judgment. Petitioner also argued that it would be unfair to deny petitioner the chance to show that the registration should be cancelled at this time.
On March 17, 1992 the Board issued a ruling which advised the parties that because the motion involved matters outside the pleadings, it would be treated as a motion for summary judgment, rather than as a motion to dismiss. The Board explained that it would apply the rule that where a party confronted with a motion for summary judgment knows of a claim or defense which might defeat the motion, it is obligated to assert that claim at the time, failing which it will be estopped from doing so later. The Board noted that from the papers before it on the motion to dismiss, it appeared probable that petitioner had been aware, at the time the cross-motions for summary judgment were pending in the opposition, of the facts upon which its present claim for cancellation is based. Because petitioner may not have been aware, in opposing the motion to dismiss the cancellation, that the motion would be treated as one for summary judgment, the Board provided petitioner with notice and allowed additional time for petitioner to show that there exists for trial a genuine issue as to whether, at the time the cross-motions for summary judgment in the opposition were under consideration, petitioner had knowledge of the facts upon which the present claim for cancellation is based.
On May 18, 1992 petitioner timely filed a supplemental response and opposition to respondent's motion to dismiss (being considered as a summary judgment motion). Petitioner now asserts that at the time the cross-motions for summary judgment in the opposition were under consideration, petitioner did not have knowledge of the facts which form the basis for the claim now being asserted in the petition to cancel. In support of this assertion, petitioner submitted the declaration of its president, Jack Martin. Mr. Martin states that petitioner has never had knowledge of facts bearing on the issues pleaded as the basis for cancellation, either at the time the cross-motions were pending in the opposition proceeding, or even now. Petitioner also contends that further discovery is required under Rule 56(f) of the Federal Rules of Civil Procedure in order for petitioner to present evidence in support of its position, so that granting summary judgment at this juncture would be improper.
*3 Along with its opposition to the summary judgment motion, petitioner reiterated its argument that a counterclaim for cancellation was not compulsory in the opposition prior to the filing of an answer. At a minimum, argues petitioner, its failure to file a counterclaim was excusable neglect, and under the circumstances, the interest of justice requires that the petition for cancellation be permitted.
Respondent's timely response was received on June 15, 1992. Respondent contends that petitioner has not demonstrated the existence of genuine issues of fact material to the issue of whether it knew of the factual basis for counterclaiming for cancellation during the pendency of the cross-motions for summary judgment in the opposition, and further, that petitioner has not demonstrated the need for discovery under Rule 56(f) in order to respond to the summary judgment motion in the instant cancellation proceeding. Respondent's position is that petitioner had ample opportunity for discovery in the opposition, but chose instead to seek summary judgment rather than file an answer and proceed with discovery. Respondent argues that petitioner should not now be permitted to avoid the consequences of these actions and be allowed to engage in discovery in a belated hope of developing factual support for the cancellation it now seeks.
Respondent then contends that petitioner knew in the opposition proceeding of the facts which are the basis of the claims now being made for cancellation. In support of this assertion, respondent points to Mr. Martin's second affidavit, submitted in this opposition by petitioner in support of petitioner's position on the cross-motions for summary judgment. In this affidavit Mr. Martin explained that since 1980 he had had no knowledge of respondent's use of its mark in the United States, and that if the mark had been in use here, he would have been aware of it. Respondent also quotes from petitioner's response to opposer's cross-motion for summary judgment in the opposition, wherein petitioner argues that respondent's claimed use of its mark in this country was not supported by any evidence.
Respondent challenges the sufficiency of petitioner's petition for cancellation with the argument that petitioner failed to allege sufficient facts supporting the claim. Further, respondent argues that it has been prejudiced by petitioner's actions because, with the two actions pending, respondent has been unable to file an affidavit of incontestability under Section 15 of the Act.
In our view petitioner has not demonstrated the existence of any genuine issue of fact material to the issue of its knowledge of the basis for the claim that respondent's registration should be cancelled. Based on the undisputed facts, respondent is entitled to judgment as a matter of law because petitioner is barred from now asserting its cancellation claim in light of its failure to do so in the opposition proceeding.
Petitioner, by its own admission, now has the same information relative to the pleaded claim for cancellation that it had when the cross-motions for summary judgment were pending. If these facts are sufficient to make a good-faith pleading now, then they were sufficient then. As demonstrated by the portion of Mr. Martin's second affidavit quoted by respondent, petitioner claimed, at the time the cross-motions for summary judgment were pending before the Board in the opposition, to have no knowledge of any use by respondent of respondent's mark; and petitioner professes its belief that it would have known about respondent's use of its mark if such use had occurred. A telling indication of what petitioner knew about the basis for the claim and when petitioner knew it appears in petitioner's September 16, 1991 response to respondent's motion to dismiss in the present cancellation proceeding, wherein petitioner was taking the position that the critical question was whether or not it had sufficient knowledge for the counterclaim at the time an answer could have been filed, rather than later, when the cross-motions were pending. We quote from p. 7, wherein petitioner states as follows:
*4 Applicant in Opposition No. 81,960 (petitioner here) did not in any event have sufficient knowledge of grounds for filing a counterclaim in that proceeding at the time that an answer could have been filed or at the time it filed its motion for summary judgment. It did not have sufficient knowledge until after opposer filed its cross-motion for summary judgment which was long after further proceedings had been suspended by the Patent and Trademark Office. Consideration of the contents of opposer's cross-motion, including the affidavit of its managing director, David Seipel, and further investigation led to the belief that it was highly questionable whether opposer's mark had had sufficiently widespread use to have acquired sufficient distinctiveness to support the Section 2(f) registration of the surname E JEFFRIES. With its papers accompanying its cross-motion, opposer presented no evidence of use of the trademark E JEFFRIES anywhere in the United States at anytime and particularly in the decade preceding the filing of its application to register. At that time it obviously was too late to file a counterclaim.
That petitioner was incorrect as to this conclusion does not alter the fact that at the time the cross-motions were pending it knew the facts upon which the petition to cancel would be based. Respondent cannot now claim it still has insufficient knowledge when both the statement of its president and the admission it made in its earlier argument on this motion demonstrate that it did. That petitioner's earlier position and statements are inconsistent with its statements and position now cannot be the basis for us to conclude that genuine issues exist which a trial is necessary to resolve.
As to petitioner's invocation of Rule 56(f) of the Federal Rules of Civil Procedure, we reiterate that petitioner is claiming that it does not now have, in fact never had, knowledge of the facts that form the basis for the claim it is now asserting in the petition to cancel. Petitioner argues that it cannot obtain these facts without discovery, and that without such discovery, it cannot respond to the instant summary judgment motion.
Petitioner's argument is not well taken. Leaving aside the question of how the petition could be filed in good faith with no factual basis, the issue on summary judgment is not whether respondent had sufficient use of its mark in this country, whether its allegations of use and acquired distinctiveness have a proper basis, or whether respondent fraudulently procured its registration. The issue, as stated above and in the Board's ruling of March 17, 1992, is whether "there exists for trial a genuine issue as to whether, at the time the cross-motions for summary judgment were under consideration in Opposition No. 81,960, petitioner had knowledge of the facts that form the basis for the claims now asserted in the petition to cancel." (p. 5). Contrary to petitioner's arguments, facts relating to petitioner's knowledge are solely within the knowledge of petitioner. Discovery is unnecessary in order for petitioner to discover what it knew and when it knew it. The discussion above demonstrates that there is no genuine issue as to what petitioner knew when the cross-motions were pending, and petitioner alleges that this was all that has ever been known by petitioner about respondent's use. Discovery now into the nature and extent of respondent's use of its mark could not logically have any bearing on our conclusions about what petitioner knew then about it. Petitioner's request for additional discovery is therefore denied.
*5 Similarly, we are not persuaded by petitioner's arguments that its failure to file the counterclaim was excusable neglect, or that justice requires that petitioner be allowed to proceed with this cancellation action. Our March 17, 1992 ruling explained the reasons why the filing of an answer is not a condition precedent to the requirement that a responding party file a counterclaim when that party is confronted with a motion for summary judgment and becomes aware of the factual basis for a counterclaim which might defeat the motion. The circumstances in See's Candy Shop, Inc. v. Campbell Soup Co., 12 USPQ2d 1395 (TTAB 1989) which justified maintenance of an unseasonably asserted counterclaim were discussed by the Board, which noted that the case now before us does not present similar facts. Petitioner has not explained why its failure should be considered analogous to the situation in that case, or what action or inaction on its part meets the considerable requirements for consideration as excusable neglect. In light of the effort and the expense expended by the parties as a result of this proceeding and the earlier opposition, it appears that justice is best served by adhering to the rules and to precedent by according the proper effect to petitioner's failure to file the compulsory counterclaim in the opposition proceeding.
In summary, respondent's motion to dismiss, considered, as it must be, as a motion for summary judgment, is granted. There is no dispute as to genuine issues of fact material to the issue of whether petitioner knew of the basis for the claim to cancel respondent's registration during the pendency of the cross-motions for summary judgment in Opposition No. 81,960. Based on the undisputed facts, we find that petitioner knew then of the basis for the claim it now asserts. Its failure to counterclaim then now serves as a bar to the instant action under Trademark Rule 2.106(b)(2). Petitioner has not shown how discovery is necessary to demonstrate the existence of a genuine issue, nor has it persuaded us that its failure to counterclaim constitutes excusable neglect or that dismissal of this cancellation action is unjust.
DECISION: Petitioner's request for discovery is denied and respondent is granted summary judgment. The petition to cancel Reg. No. 1,389,905 is denied. Because we are granting respondent's motion for summary judgment, we deny, as moot, respondent's alternative motion to dismiss the petition for cancellation on the grounds that petitioner's pleading fails to allege facts sufficient to support the claim.
J.D. Sams
J.E. Rice
R.F. Cissel
Members, Trademark Trial and Appeal Board