Trademark Trial and Appeal Board
Patent and Trademark Office (P.T.O.)
*1 TBC CORPORATION
v.
GRAND PRIX LTD.
Opposition No. 79,168
May 30, 1989
Before Sams, Rice and Quinn
Members
By the Board:
J.D. Sams, J.E. Rice and T.J. Quinn
Members
Grand Prix Ltd. filed an application to register the mark GRAND PRIX for car wash services. [FN1]
TBC Corporation opposed the registration of applicant's mark. As grounds for opposition, opposer alleges that it has used the mark GRAND PRIX for a variety of automotive parts and products since long prior to applicant's claimed date of first use; that opposer has made a substantial investment in advertising and promoting automotive parts and products under the mark GRAND PRIX; that opposer has built up extensive goodwill; that opposer is the owner of eight (8) registrations for the mark GRAND PRIX for automotive parts and products; [FN2] and that applicant's mark so resembles opposer's marks as to be likely, when used in connection with the services rendered by applicant, to cause confusion, to cause mistake or to deceive.
Applicant denied the essential allegations in the opposition. As an affirmative defense, applicant alleges that there are a multitude of third-party users of the mark GRAND PRIX and that opposer's mark is entitled only to a narrow and limited scope of protection.
This case now comes up on applicant's motion to file an amended answer, including affirmative defenses and a counterclaim. [FN3] In support of the motion to amend its answer, applicant argues that justice requires the Board to allow applicant to amend its answer so that all matters relating to the opposition are properly before the Board.
Opposer filed a brief in opposition to applicant's motion to amend its answer. In opposition to applicant's motion to amend its answer to assert a counterclaim, opposer argues that applicant has not met the standards set forth in Fed.R.Civ.P. 13(f) for assertion of a counterclaim omitted from the original answer; that the counterclaims asserted by applicant are legally insufficient; that, in particular, the third-party use of the mark GRAND PRIX does not constitute abandonment by opposer, does not constitute a valid defense for applicant and is irrelevant to the proceeding before the Board.
Applicant filed a reply brief. In its reply brief, applicant argues that it has met the "when justice requires" element of Fed.R.Civ.P. 13(f) because the compulsory counterclaim, if not raised in this action, will be barred and that the counterclaim states a claim upon which relief can be granted.
Although, in discussing the propriety of applicant's filing of the proposed counterclaim (and, in particular, whether the counterclaim may be asserted at this point in the proceedings), the parties have referred to Fed.R.Civ.P. 13(f), counterclaims for cancellation of pleaded registrations in Board proceedings are governed by Trademark Rule 2.106(b)(2)(i), which provides as follows:
A defense attacking the validity of any one or more of the registrations pleaded in the opposition shall be a compulsory counterclaim if grounds for such counterclaim exist at the time when the answer is filed. If grounds for a counterclaim are known to the applicant when the answer to the opposition is filed, the counterclaim shall be pleaded with or as part of the answer. If grounds for a counterclaim are learned during the course of the opposition proceeding, the counterclaim shall be pleaded promptly after the grounds therefor are learned....
*2 It is not clear, from applicant's submissions in connection with its motion to amend, whether the grounds for its counterclaim were known by applicant at the time it filed its original answer and, therefore, whether the counterclaim is now timely, under Rule 2.106(b)(2)(i). In view thereof, applicant is allowed twenty days from the mailing date of this order to explain why the counterclaim was not pleaded with or as part of the original answer, as required by the rule.
As to the substance of the counterclaim, opposer argues that applicant's counterclaim is without merit and will not withstand a motion to dismiss. Opposer asserts that applicant cannot be damaged by the existence of the three challenged registrations issued to opposer for its GRAND PRIX mark, in light of the other five, unchallenged, registrations for that mark which will continue to exist. Morehouse Manufacturing Corporation v. Strickland & Co., 407 F.2d 881, 160 USPQ 715 (CCPA 1969).
It has been held that where a proceeding is based on descriptiveness or fraud, the equitable defenses of laches, acquiescence or estoppel are not applicable. See Bausch & Lomb, Inc. v. Leupold & Stevens Inc., 1 USPQ 2d 1497, 1499 (TTAB 1986) and the cases cited therein. The equitable defenses do not apply because it is in the public interest to preclude registration of merely descriptive designations or registration procured by fraud. Southwire Company v. Kaiser Aluminum & Chemical Corporation, 196 USPQ 566, 573 (TTAB 1977) and McCarthy, Trademarks and Unfair Competition, Section 20:11, 1045 (2d ed. 1984).
The prior registration, or Morehouse, defense is an equitable defense in the nature of laches or acquiescence. See Bausch & Lomb Inc. v. Leupold & Stevens Inc., supra. Where the proposed ground for cancellation is abandonment, equitable defenses should be unavailable for the same reason they have been held unavailable when the ground asserted is descriptiveness or fraud. It is in the public interest to remove abandoned registrations from the register. We therefore hold that the prior registration defense is unavailable in a proceeding where the issue is abandonment.
There is an additional reason for the unavailability of opposer's prior registration defense to the counterclaim. The defense is proper where the existing registration or registrations relied upon are for the same or substantially identical mark and the same or substantially identical goods as the challenged application or registration. See: Jackes-Evans Manufacturing Co. v. Jaybee Manufacturing Corporation, 481 F.2d 1342, 179 USPQ 81 (CCPA 1973); Key Chemicals, Inc. v. Kelite Chemicals Corporation, 465 F.2d 1040, 175 USPQ 99 (CCPA 1972); Mason Engineering and Design Corporation v. Mateson Chemical Corporation, 225 USPQ 956, 961 (TTAB 1985); and Liberty & Co., Ltd. v. Liberty Trouser Co. Inc., 216 USPQ 65 (TTAB 1982). The prior registration defense will apply where the mark and goods in the pre-existing registration are substantially identical to the mark and goods which are the subject of the involved application. La Fara Importing Co. v. F. Lil de Cecco di Filippo Fara S. Martino S.p.A., 8 USPQ2d 1143, 1147 (TTAB 1988). In the instant case, it is clear that the goods in the five registrations opposer relies upon for its prior registration defense are related to and within the natural scope of expansion of a producer of the goods listed in the three registrations applicant seeks to cancel. Nevertheless, the goods in the registrations are different. Therefore, opposer's ownership of the five other registrations cannot serve to preclude applicant from contesting opposer's right to maintain the three registrations applicant seeks to cancel.
*3 Finally, in discussing the substance of the counterclaim, opposer asserts that proof of third-party uses of a mark does not constitute proof of abandonment. Section 14(c) of the Trademark Act provides that a registration may be cancelled at any time if the registered mark has been abandoned.
The following definition of abandonment is set forth in Section 45 of the Trademark Act:
Abandonment of mark. A mark shall be deemed to be "abandoned"--
(b) When any course of conduct of the registrant, including acts of omission as well as commission, causes the mark to lose its significance as an indication of origin.
In this case, in order to state a claim upon which relief can be granted for the ground of abandonment, applicant must plead facts which show a course of conduct by opposer which has caused opposer's mark to lose its trademark significance. Colgate-Palmolive Company v. Colton Razor Blade Company, 153 USPQ 370 (TTAB 1966). See also, Wallpaper Manufacturers, Ltd. v. Crown Wallcovering Corporation, 680 F.2d 755, 214 USPQ 327, 332 and 334 (CCPA 1982). Applicant has stated a claim of abandonment by alleging that opposer has failed to properly police its marks by allowing numerous third parties to use opposer's marks without objection (paragraph 15); that opposer's failure to assert its rights has resulted in the abandonment of opposer's rights in the term GRAND PRIX (paragraph 16); and that opposer has made assignments in gross of its marks by assigning the marks without transfering the goodwill associated with the marks (paragraph 17). Whether applicant would be able to prove these allegations would be a matter to be determined at trial (if the counterclaim is ultimately found to be timely filed).
We turn, finally, to the motion to amend the answer with respect to applicant's affirmative defenses. Applicant's motion to amend paragraphs 7, 8 and 10 of its affirmative defenses is not well taken. The identified paragraphs attack the validity of opposer's pleaded registrations. An attack upon the validity of a registration pleaded by an opposer will not be heard unless a counterclaim to cancel or a separate petition is filed to seek the cancellation of the registration. Trademark Rule 2.106(b)(2)(ii). Applicant has elected not to file a counterclaim to cancel five of opposer's pleaded registrations, so the affirmative defenses attacking the validity of those five registrations are improper.
IT IS ORDERED:
Decision on applicant's motion to assert a counterclaim for cancellation is deferred pending submission of applicant's explanation of the reasons for its failure to assert the counterclaim with the original answer (as discussed above).
Applicant's motion for leave to amend its answer to add affirmative defenses is granted to the extent that paragraphs 4-6 and 9 of the amended affirmative defenses are accepted.
Applicant's motion to amend its answer is denied to the extent that paragraphs 7, 8 and 10 of the amended affirmative defenses are stricken from the amended answer.
*4 Opposer's motion for a protective order and motion to stay the time within which opposer must respond to applicant's discovery requests filed May 8, 1989 are noted and will be decided in due course.
J. D. Sams
J. E. Rice
T. J. Quinn
Members, Trademark Trial and Appeal Board
FN1. Application Serial No. 680,289, filed August 24, 1987, alleging dates of first use on August 5, 1987.
FN2. Registration No. 690,249 for automobile tires; Registration No. 1,075,901 for motor vehicle parts, namely wheels; Registration No. 1,157,619 for filters and oil filters for land vehicles and shock absorbers; Registration No. 1,164,594 for automotive vehicle tires; Registration No. 1,183,571 for storage batteries for automobiles and trucks; Registration No. 1,224,147 for mufflers and brake parts for automotive vehicles; Registration No. 1,258,438 for battery chargers and battery cables; and Registration No. 1,461,819 for automobile parts, namely, drive shafts, boots and velocity joints.
FN3. Applicant seeks to amend the affirmative defenses by adding paragraphs alleging that applicant provides its services to a different class of consumers than the class of consumers to which opposer markets its products; that applicant's customers are sophisticated purchasers and are not likely to be confused by any similarity between applicant's mark and opposer's marks; that there have been no instances of actual confusion; that opposer has failed to police its marks and has, therefore, abandoned any exclusive proprietary ownership of its marks; that opposer has made assignments in gross of its trademark rights to third parties and has, therefore, abandoned any exclusive proprietary rights in its marks; that opposer does not have standing; and that opposer's Section 8 affidavits of continued use are false.
Applicant seeks to file a counterclaim to cancel opposer's Registration Nos. 1,075,901, 1,157,619 and 1,258,438. As grounds for the proposed counterclaim, applicant alleges that opposer has failed to properly police its marks by allowing numerous third parties to use opposer's marks; that opposer has made assignments in gross of its marks without assigning the goodwill of the business associated with the marks; and that opposer has abandoned its marks.
Applicant filed a request for an oral hearing on its motion pursuant to Trademark Rule 2.129. Trademark Rule 2.129 refers to an oral argument at final hearing. It is not the practice of the Board to conduct hearings on motions except where it appears that a hearing would aid in clarifying the issues. Societe E. Blanchard Et Fils v. Blanchard Importing & Distributing Co., Inc., 150 USPQ 221 (TTAB 1966) and Avedis Zildjian Company v. D.H. Baldwin Company, 180 USPQ 539 (TTAB 1973). In the present case, the motion under consideration has been adequately briefed. An exception to the usual practice is not warranted. Applicant's motion for an oral hearing is denied.