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Federal Circuit Affirms TTAB Discovery Sanction Cancelling Trademark Registration
Practical Law Legal Update 7-517-0654 (Approx. 4 pages)
Federal Circuit Affirms TTAB Discovery Sanction Cancelling Trademark Registration
by PLC Intellectual Property & Technology
| Published on 30 Dec 2011 • USA |
The US Court of Appeals for the Federal Circuit affirmed the Trademark Trial and Appeal Board's (TTAB) entry of a default judgment cancelling the registration of G THE GOODYMAN as a sanction for the trademark owner's repeated failure to provide discovery in a TTAB cancellation proceeding. The Federal Circuit cancelled the registration despite the trademark owner's filing of a dispositive motion and the court's finding that the owner's discovery obligations were unclear because of the ambiguous language and effect of the case suspension rule (Trademark Rule 2.127(d)).
Speedread
In Benedict v. Super Bakery, Inc., on December 28, 2011, the US Court of Appeals for the Federal Circuit affirmed the Trademark Trial and Appeal Board's (TTAB) entry of a default judgment ordering cancellation of a pro se individual's trademark registration as a sanction for his repeated non-compliance with discovery orders in a trademark cancellation proceeding. Although the Federal Circuit affirmed the default judgment, it questioned the TTAB's interpretation of Trademark Rule 2.127(d), which suspends a TTAB proceeding when a party files a dispositive motion. The court reasoned that:
- The Rule is ambiguous as to whether it is self-executing or takes effect only after the TTAB's issuance of a suspension order.
- Because the Rule is unclear, the individual, Ward Benedict's withholding of discovery after filing a summary judgment motion did "not support the extreme sanction of default judgment."
(Benedict v. Super Bakery, Inc., No. 2011-1131, slip op. at 8 (Fed. Cir. Dec. 28, 2011)).
Key Litigated Issues
In Benedict v. Super Bakery, Inc., the two key issues before the US Court of Appeals for the Federal Circuit were whether:
- Trademark Rule 2.127(d) automatically suspends a Trademark Trial and Appeal Board (TTAB) proceeding on the date that a party files a summary judgment motion, making the sanctions of default and trademark cancellation improper against a party who fails to produce ordered discovery due after that date.
- Sanctions of default judgment and trademark cancellation were in any event warranted by the non-producing party's repeated, willful evasion of discovery.
Background
Super Bakery, owner of the registration in the mark GOODY MAN for cupcakes, had petitioned the TTAB to cancel Ward Benedict's registration of G THE GOODYMAN for bakery goods and other snack products for fraud and abandonment. Super Bakery filed a motion to compel after Benedict, representing himself, failed to respond to Super Bakery's discovery requests.
Benedict did not respond to the motion to compel and the TTAB ordered him to produce the requested discovery within thirty days. Because of Benedict's failure to comply with this order, the TTAB granted Super Bakery's requests for admissions and issued another order requiring Benedict to produce the directed discovery. The day before Benedict was required to produce the discovery, he filed a motion for summary judgment dismissing Super Bakery's petition for cancellation because Super Bakery's pending application had been rejected by the USPTO based on likelihood of confusion with Benedict's registered mark.
In withholding the ordered discovery, Benedict argued that Trademark Rule 2.127(d) automatically went into effect when he filed the motion for summary judgment. Rule 2.127(d) states that the TTAB will suspend the case concerning all matters that are not relevant to a pending dispositive motion.
On appeal, the Federal Circuit vacated the default judgment against Benedict and remanded the proceeding to the TTAB to determine the applicability of Trademark Rule 2.127(d) to the case. On remand, the TTAB held that:
- The suspension of the case under Rule 2.127(d) is not automatic on the filing of a motion. Instead, Benedict was obligated to comply with the TTAB's discovery order until the TTAB announced a formal suspension of the proceeding.
- Benedict's failure to comply with the discovery order without good cause was a willful evasion of discovery.
The TTAB reinstated its default judgment against Benedict and cancelled his trademark registration. Benedict again appealed.
Outcome
The Federal Circuit found Trademark Rule 2.127(d) ambiguous as to whether a pending proceeding is suspended automatically when a dispositive motion is filed or only once the TTAB enters a suspension order. The court, therefore, reasoned that a party's withholding of discovery due after the filing of a motion for summary judgment does not alone support a default judgment sanction. However, the Federal Circuit affirmed the TTAB's sanction and upheld the cancellation of Benedict's mark as a reasonable exercise of the TTAB's discretion in light of Benedict's repeated non-compliance with his discovery obligations over the course of two years.
Practical Implications
The Federal Circuit's decision underscores the ambiguity in Trademark Rule 2.127(d) concerning when suspension of TTAB proceedings take effect after a party files a dispositive motion. The court expressly rejected a default sanction as a proper remedy for a party's failure to comply with discovery where it results from this ambiguity. Nevertheless, the Federal Circuit sustained the TTAB's inherent power to enter a default judgment for repeated discovery abuses when a lesser sanction would not be effective.