Electronic Payments Inc. DBA Electronic Payments

Trademark Trial and Appeal Board

May 12, 2021

87239532 (T.T.A.B. May. 12, 2021)

This Opinion is not a
Precedent of the TTAB

Oral Hearing: April 7, 2021 Mailed: May 12, 2021

UNITED STATES PATENT AND TRADEMARK OFFICE
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Trademark Trial and Appeal Board
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In re Electronic Payments Inc.
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Serial No. 87239532
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Sean L. Ingram of Ingram IP Law PA,
for Electronic Payments Inc.
George Murray, Jr., Trademark Examining Attorney, Law Office 121,
Richard White, Managing Attorney.
_____

Before Taylor, Goodman and English,
Administrative Trademark Judges.

Opinion by Goodman, Administrative Trademark Judge:
Electronic Payments Inc. (“Applicant”) seeks registration on the Principal
Register of the mark ELECTRONIC PAYMENTS (in standard characters,
“Payments” disclaimed) for
Business to business commerce services, namely, providing
a network of independent sales representatives that earn
bonus incentives to promote multi-function point of sale
credit card and debit card processing equipment and
supplies of others to merchants that enable payment
authorization processing and inventory management
Serial No. 87239532
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solutions for merchants; and not available to cardholder
markets in International Class 35.1
The Trademark Examining Attorney has refused registration of Applicant’s mark
on the basis that the activity recited in the identification is not a registrable service2
and on the basis of genericness, both under §§ 1, 2, 3, and 45 of the Trademark Act,
15 U.S.C. §§ 1051, 1052, 1053, and 1127.3 The Examining Attorney also has refused
registration on the basis of mere descriptiveness under Trademark Act Section
2(e)(1), 15 U.S.C. § 1052(e)(1), and that Applicant’s evidence of acquired
distinctiveness is insufficient due to the highly descriptive nature of the mark.

1 Application Serial No. 87239532 was filed on November 16, 2016, under Section 1(a) of the
Trademark Act, 15 U.S.C. § 1051(a), based upon Applicant’s claim of first use anywhere and
first use in commerce since at least as early as January 29, 2004. Section 2(f) claimed for the
entire mark.

Page references to the application record refer to the online database pages of the USPTO’s
Trademark Status & Document Retrieval (TSDR) system. One of Applicant’s requests for
reconsideration, filed June 29, 2020, was filed only with the Board via ESTTA, so reference
to that document will be made to TTABVUE, the Board’s docket system. References to the
briefs on appeal refer to TTABVUE. Applicant’s brief appears at 15 TTABVUE and the
Examining Attorney’s brief appears at 21 TTABVUE. Applicant’s reply brief appears at 22
TTABVUE.

2 In the initial refusal, the Examining Attorney described the refusal as “failure to function
as a service” stating that Applicant’s services are not registrable. October 18, 2019 Office
Action at TSDR 1. In the final Office Action, the Examining Attorney stated that Applicant
was not providing registrable services. April 24, 2020 Office Action at TSDR 1. In its brief,
the Examining Attorney describes the refusal as failure to function as a service mark arguing
that the services are not “registrable services.” 21 TTABVUE 3, 6.
3 The Examining Attorney’s brief references Trademark Act Sections 23(c) and 45 as the basis
for the genericness refusal. However, Applicant seeks registration on the Principal Register
and did not amend its application to the Supplemental Register during prosecution. On
reconsideration, (May 2, 2018) Applicant did submit a disclaimer of “payments” which the
Examining Attorney indicated would be necessary for registration on the Supplemental
Register but the TSDR status shows that the application remains on the Principal Register.
November 03, 2017 Office Action at TSDR 1; May 2, 2018 Request for Reconsideration at
TSDR 1.

Serial No. 87239532
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When the refusals were made final, Applicant appealed and requested
reconsideration multiple times.4 After the Examining Attorney denied each request
for reconsideration, the appeal ultimately was resumed on October 31, 2020. An oral
hearing was held in which Applicant’s counsel and the Examining Attorney appeared.
We affirm the refusal to register that Applicant is not offering a registrable service
and, because we find that Applicant is not offering a registrable service, we do not
reach the refusals based on genericness or the insufficiency of the Section 2(f)
evidence.

4 Applicant sought reconsideration on May 2, 2018, July 22, 2019, June 29, 2020, September
21, 2020, and January 20, 2021.
The prosecution history of this case is long and convoluted. The Examining Attorney initially
refused registration on mere descriptiveness grounds under Section 2(e)(1). After the final
refusal on the Section 2(e)(1) grounds, Applicant sought reconsideration, amending its
application to alternatively claim acquired distinctiveness under Section 2(f) based on five
years use. The Examining Attorney then refused registration based on the finding that the
claim of five years use was insufficient, maintaining the Section 2(e)(1) refusal. The
Examining Attorney concurrently suggested registration on the Supplemental Register, also
requiring Applicant to disclaim “payments,” if so amended. After the Section 2(e)(1) refusal
and insufficient evidence of acquired distinctiveness refusals were made final, Applicant
appealed and sought reconsideration, submitting additional evidence of acquired
distinctiveness. The Examining Attorney then approved the mark for publication under
Section 2(f). Subsequently, the application was withdrawn from publication, and the
Examining Attorney issued a genericness refusal, while also maintaining the Section 2(e)(1)
refusal and stating that the submitted Section 2(f) evidence was insufficient. These refusals
were made final and Applicant once again sought reconsideration. Based on statements made
by Applicant on reconsideration, the Examining Attorney issued a new refusal of “failure to
function as a [service] mark” based on Applicant not offering a registrable service. On April
24, 2020, the Examining Attorney made the genericness and failure to function as a service
mark refusals final, and stated that a Section 2(f) claim cannot overcome a genericness
refusal. Applicant filed its final request for reconsideration on September 21, 2020 in which
it claimed ownership of prior registrations. (It appears that a duplicate request for
reconsideration was filed on January 20, 2021 in TSDR.). The Examining Attorney denied
reconsideration on October 28, 2020, finding that the prior registrations did not overcome the
refusals, and maintained and continued the following refusals: “failure to function”; “acquired
distinctiveness claim denied”; and the “mark is generic.” After the October 28, 2020 denial of
reconsideration, this appeal resumed.

Serial No. 87239532
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I. Whether Applicant is offering services in connection with the mark.
We consider the refusal that the identified services are not registrable services as
contemplated by Trademark Act Sections 1, 2, 3, and 45.
The Examining Attorney argues that Applicant’s services are not registrable
services “because they are merely incidental and necessary activities to Applicant’s
principal activity of merchant acquiring and offering payment processing services.”
21 TTABVUE 7-9. In particular, the Examining attorney argues that
Applicant’s “sales representatives are not the service
Applicant provides but rather the means by which
Applicant sells and provides its payment processing and
merchant acquirer services to merchants. Applicant cannot
provide its payment processing and merchant acquiring
services without the merchants having the payment
processing equipment supplied by these sales
representatives.”
Id. at 9.
Applicant, on the other hand, contends that providing independent sales
organizations (ISO) are real activities, are “separate and distinct services,” and are
recognized as separate services by the merchant processing industry and by the
Office. 15 TTABVUE 12-13. Applicant argues that its services confer a benefit on
third-party product suppliers, stating that its “ISO services are provided for the
benefit of third-parties that provide equipment and supplies to merchants in the
relevant payments industry.” Id. at 13. Applicant references its substitute specimen
as reflecting that the network of independent sales representatives “utilize
applicant’s ELECTRONIC PAYMENTS incentive program to promote products of
others.” Id. (emphasis in original).
Serial No. 87239532
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To qualify as a “service,” a service must be (1) a real activity; (2) performed to the
order of, or for the benefit of, someone other than the applicant; and (3) the activity
performed must be qualitatively different from anything necessarily done in
connection with the sale of the applicant’s goods or the performance of another
service. In re Can. Pac. Ltd., 754 F.2d 992, 224 USPQ 971, 973-74 (Fed. Cir. 1985); In
re Husqvarna Aktiebolag, 91 USPQ2d 1436, 1437 & n.3 (TTAB 2009); TRADEMARK
MANUAL OF EXAMINING PROCEDURE (TMEP) §§ 1301.01(a) and 1301.01(a)(i)-(iii) (Oct.
2018).
In assessing this refusal, “[w]e must look closely at what is being offered here and
to whom it is being offered.” In re Can. Pac. Ltd., 224 USPQ at 973; see also In re
Landmark Commc’ns., Inc., 204 USPQ 692, 695 (TTAB 1979) (“we should first
ascertain what is an applicant’s principal activity under the mark in question ... and
then determine whether the activity embraced by the description of services or goods
in the application is in any material way a different kind of economic activity than
what any purveyor of the principal service or tangible product necessarily provides”).
As stated, Applicant submits that the ISO service is a real activity. In support, it
references trade show materials that identify an ISO as a separate category of service.
June 29, 2020 Request for Reconsideration, exhibits, 11 TTABVUE 16-20. Applicant
also points to third-party registrations as offering cognizable services under an ISO
such as “Installation, maintenance, repair, updating of card readers and electronic
devices all for handling financial and associated transactions” and “equipment
leasing, namely, leasing of computer hardware and peripheral equipment for use in
Serial No. 87239532
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point of sale transactions.” Id. exhibits, at 11 TTABVUE 21-31. However, none of
these third-party registrations specifically recite the ISO services that Applicant has
identified in its application.5 Moreover, while those above-referenced third-party
activities may by recognized and registered as cognizable services, they are not
among the services for which Applicant currently seeks registration. Nonetheless, we
acknowledge that providing an independent sales organization is a real activity, as it
is a sales force that employs independent contractors to sell products or services of
others.
We next consider whether the identified activity in Applicant’s application is
performed to the order of, or for the benefit of, someone other than Applicant, and
whether the activity is something necessarily done in connection with the
performance of Applicant’s other services.
Applicant identifies itself as a “merchant acquirer within the payment card
industry,” “offering services … directly to merchants and acquiring banks.”6

5 Notably, during prosecution of its application, Applicant sought to amend the recitation of
services to “providing a network of independent sales representatives that earn bonus
incentives to install, maintain, repair, and update multi-function point of sale credit and
debit card processing equipment and supplies of others to merchants that enable payment
authorization processing and inventory management solutions for merchants; and not
available to cardholder markets.” June 29, 2020 Request for Reconsideration 11 TTABVUE
6-7.
The Examining Attorney rejected the amendment as outside the scope of and unrelated to
the services of promotion. July 20, 2020 Denial of Reconsideration at TSDR 1.
6 A merchant acquirer is generally a bank service provider that facilitates the communication
and settlement of payments. April 24, 2020 Office Action at TSDR 3. The merchant acquirer
maintains a merchant’s account so that the merchant can accept credit and debit cards and
it settles debit and credit card transactions for a merchant. Id. Under merchant acquirer
agreements, the merchant acquirer will charge a per transaction fee, a monthly fee, and other
fees to service the account. Id.; See also October 18, 2019 Office Action at TSDR 2
ithandbook.ffiec.gov. (“Acquiring banks typically do not process their merchants’ transactions
Serial No. 87239532
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Declaration of Michael Nardy, CEO and founder of Applicant (Nardy Declaration),
¶¶ 3, 4, May 2, 2018 Request for Reconsideration, at TSDR 1. Applicant is the 30th
largest merchant acquirer in the United States. Id. at ¶¶ 3, 4, 5. Applicant’s “principal
activity is obtaining transaction authorization codes from an acquiring bank to
approve or decline a sales transaction while cardholders remain at a point of sale
such as a merchant’s store.” April 10, 2020 Response to Office Action at TSDR 1
(referencing Declaration of Michael Nardy, ¶ 18 submitted with the May 2, 2018
Request for Reconsideration at TSDR 4). Merchants are “relevant consumers of
applicant’s services.” Nardy Declaration, ¶¶ 4, 6, 26-27, May 2, 2018 Request for
Reconsideration, at TSDR 1. “[P]lacing equipment and supplies of others with
merchants is an overhead expense to merchant acquirers.” April 10, 2020 Response
to Office Action at TSDR 1. Applicant provides the point of sale (POS) devices to
merchants through its independent sales representatives. Nardy Declaration, ¶¶ 13,
27, May 2, 2018 Request for Reconsideration, at TSDR 1. The POS devices are
programmed to send “an authorization request to [Applicant] that includes
information identifying the cardholder, the merchant, the acquiring bank, and the
issuer” during the checkout process. Id. ¶15, Applicant then “relays the identifying
information to an acquiring bank for ultimate delivery to the issuer” for a response
either granting or declining authorization to complete the checkout. Id. at ¶¶ 16-17.

directly so this function may be outsourced to a third-party service provider (merchant
acquirer) that performs the data processing functions of authorization and clearing and
settlement.”). Applicant confirms that “Merchant acquirers such as applicant generate
revenue through sales commissions tied to merchant sales.” April 10, 2020 Response to Office
Action at TSDR 1.
Serial No. 87239532
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Once Applicant “obtains authorization codes or results from the acquiring bank” it
“forwards these authorization codes to the POS device located at the merchant site”
so that the checkout transaction can be completed or declined. Id. at ¶ 18.
Applicant explains the primary purpose or function of its independent sales
representatives:7
The purpose/function of the independent sales
representatives is to promote multi-function point of sale
credit and debit card processing equipment and supplies to
merchants that enable payment authorization processing
and inventory management solutions for merchants. . . .
Specifically, the independent sales representatives
promote POS equipment and supplies to merchants that
enable payment authorization processing through EPI.
(Nardy Declaration, ¶¶ 13 and 15). The POS equipment is
also capable of providing merchants with inventory
management solutions. (Nardy Declaration, ¶ 13). ... To
date, EPI’s network of independent sales representatives
has placed EPI’s POS devices at over 40,000 merchant
outlets across the 50 U.S. States. (Nardy Declaration, ¶ 5).
EPI’s POS devices are programmed to route the
authorization process through EPI. (Nardy Declaration,
¶ 15). . . . Merchants understand that EPI’s POS devices
participate in the authorization process prior to transfer of
any funds to the merchant. (Nardy Declaration, ¶ 19).
May 2, 2018 Request for Reconsideration, at TSDR 1.
Applicant also explains that “acquirers such as applicant generate revenue
through sales commissions tied to merchant sales. … merchant acquirers such as
applicant pay commissions to independent sales representatives for securing new
merchant accounts.” April 10, 2020 Response to Office Action at TSDR 1.

7 The reference to “EPI” in the following quotation is a reference to Applicant.
Serial No. 87239532
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Following is the substitute specimen submitted during prosecution which appears
to be directed at the independent sales representatives that form Applicant’s ISO.

In its July 22, 2019 Request for Reconsideration at TSDR 1, Applicant stated that
“[t]he ELECTRONIC PAYMENTS mark is used with applicant’s incentive program,
having the purpose and nature of providing a network of independent sales
representatives that earn bonus incentives for converting a potential merchant to a
merchant account.”8

8 Although Applicant’s counsel, without support, has stated that the primary beneficiaries of
Applicant’s independent sales representative services are third-party suppliers who
experience increased sales volume, we find that Mr. Nardy’s declaration and the
accompanying explanation of Applicant’s services referencing the Nardy Declaration which
declare merchants as the primary beneficiaries of Applicant’s services are entitled to more
weight in our analysis. Mr. Nardy, as Applicant’s CEO, is in a position to know intimately
the nature of his business, including the primary role of the independent sales
representatives. May 2, 2018 Request for Reconsideration at TSDR 2-7; April 10, 2020
Serial No. 87239532
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Applicant further explained that:
The specimen of record illustrates that applicant’s
ELECTRONIC PAYMENTS incentive program provides a
network of independent sales representatives who earn
financial incentives “to score bonuses like never before!”
The “ELECTRONIC PAYMENTS” incentive program
provides a network of independent sales representatives
who earn financial incentives to promote applicant’s
products and services. For example, the network of
independent sales representatives may include
independent sales organizations (“ISO”) that earn financial
incentives to convert a potential merchant to a merchant
account and to place equipment and supplies at a merchant
facility.
July 22, 2019 Request for Reconsideration at TSDR 1.
It is apparent that offering POS equipment is a necessary and integral part of
Applicant’s merchant acquiring services. Applicant’s website indicates that Applicant
offers “all services under one roof” such as customizable state of the art equipment
and affordable processing packages to make credit card acceptance easy. October 28,
2020 Denial of Reconsideration at TSDR 2. Original specimen, November 16, 2016 at
TSDR 1. For example, Applicant offers “innovative equipment packages, intuitive
software, and reliable support at no upfront cost” and offers a “flagship point of sale
product Exatouch” and a “Vault Payment Gateway.” Original specimen, November

Response to Office Action at TSDR 1; June 29, 2020 Request for Reconsideration 11
TTABVUE 6-9.
We note that Applicant’s argument in the June 29, 2020 Request for Reconsideration 11
TTABVUE 6-7, was in the context of its proposed amended recitation of services that the
Examining Attorney rejected. See n.5.

Serial No. 87239532
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16, 2016 at TSDR 2-3; October 18, 2017 Response to Office Action at TSDR 2; April
6, 2017 Office Action at TSDR 8.
Excerpts of November 16, 2016 Original Specimen at TSDR 1 and 2.

The flow chart from the Nardy Declaration, shown below, illustrates Applicant’s
services in conjunction with payment processing. May 2, 2018 Request for
Reconsideration at TSDR 7.
This chart shows the Acquirer/ISO is identified as “Electronic Payments Inc.” and
that the “Merchant contracts with Acquiring bank via Acquirer/ISO for credit card
terminal, Chargeback mitigation and risk/fraud prevention on credit/debit card auth
activity.”
Serial No. 87239532
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The flow chart demonstrates that Applicant’s principal business is as a merchant
acquirer who requests authorization for merchant sales and gives the approval code
to the merchants that process payments through it. These transactions must be sent
and received through a point of sale (POS) terminal that has payment authorization
enabled through Applicant. Thus, promoting POS hardware and placing it at a
merchant’s business is an inherent part of marketing Applicant’s merchant acquiring
services that require POS terminals to process the requests for authorization via
Applicant and to transmit the approval back via Applicant to the merchant. Applicant
Serial No. 87239532
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earns its revenue from these sales transactions by placing the POS hardware at the
merchant business, programmed to request authorization through Applicant.
In making our findings, we also may consider “the customs and practices of the
industry or business” together with other record evidence in determining whether
Applicant’s purported service is qualitatively different from its other services.
Landmark Commc’ns, 204 USPQ at 695.
The Examining Attorney submitted evidence showing that:
 Merchant service providers (MSPs) are companies that set businesses up to
accept credit cards and have established marketing channels and large
sales forces. January 25, 2019 Denial of Reconsideration at TSDR 5-6; July
11, 2018 Office Action at TSDR 8; October 18, 2019 at TSDR 2.

 Businesses that offer electronic payment processing solutions (hardware,
software and payment processing) to merchants have sales forces. January
25, 2019 Denial of Reconsideration at TSDR 2-3, 5; July 11, 2018 Office
Action at TSDR 8.

 Businesses in the payment processing industry offering integrated payment
processing and credit card services include POS systems hardware as part
of the package. January 25, 2019 Denial of Reconsideration at TSDR 3, 5.
November 3, 2017 Office Action at 2.

Based on the evidence of record, we find that the independent sales agent services
that obtain new merchant accounts for Applicant, and promote the POS hardware of
others to these merchants, is a routine activity provided in connection with
Applicant’s primary service, merchant acquisition services, and is not a sufficiently
separate activity to constitute a service rendered for the benefit of others. Therefore,
even though the third-party hardware manufacturers may derive some benefit from
the placement of their hardware with these merchants, we find that this benefit is
incidental to the benefit Applicant obtains from the ISO, which operates primarily
Serial No. 87239532
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for Applicant’s benefit to convert a potential merchant to a merchant account so that
Applicant can earn fees for sales transactions and servicing the account.
Consequently, Applicant’s recited “Business to business commerce services,
namely, providing a network of independent sales representatives that earn bonus
incentives to promote multi-function point of sale credit card and debit card
processing equipment and supplies of others to merchants that enable payment
authorization processing and inventory management solutions for merchants; and
not available to cardholder markets” is not a cognizable service that is separate and
distinct from Applicant’s merchant acquiring services because it is not qualitatively
different from anything necessarily done in connection with the performance of those
services. Cf. In re Dr. Pepper Co., 836 F.2d 508, 5 USPQ2d 1207, 1209 (Fed. Cir. 1987)
(“activities which are ‘necessarily done’ in connection with the sale of one’s goods are
the quintessential ‘routine or ordinary’ activities associated with the sale of one’s
goods”).
II. We do not reach the genericness and insufficient evidence of acquired
distinctiveness refusals.
Because the designation ELECTRONIC PAYMENTS fails to identify a registrable
service and is ineligible for registration on the Principal Register, we need not reach
the genericness or insufficient evidence of acquired distinctiveness refusals. Both of
these refusals bear on the same ultimate issue of registrability of the designation
ELECTRONIC PAYMENTS based on the present application. Cf. In re Carlton
Cellars, LLC, 2020 USPQ2d 10150, at *6 (TTAB 2020) (declining to reach the Section
Serial No. 87239532
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2(d) refusal because of affirmance of requirement to amend the identification of goods
due to indefiniteness and failure to pay additional filing fees).
Moreover, our ability to fully and accurately assess the merits of the genericness
refusal and the refusal based on insufficient evidence of distinctiveness are hampered
by the lack of a registrable service. Cf. In re DTI P’ship LLP, 67 USPQ2d 1699, 1702
(TTAB 2003) (“Applicant’s failure to comply with the Trademark Rule 2.61(b)
requirement is a sufficient basis, in itself, for affirming the refusal to register
applicant’s mark. Moreover, our ability to fully and accurately assess the substantive
merits of the mere descriptiveness issue has been hindered by applicant’s failure to
submit the information and materials which were properly requested by the
Trademark Examining Attorney under Trademark Rule 2.61(b).”).
Decision: The refusal to register Applicant’s mark on the basis that the recited
activity is not a registrable service is affirmed.