Environmental Dynamics, Inc.v.Stamford Scientific Int’l., Inc.

Trademark Trial and Appeal Board

Sep 30, 2008

No. 92045054 (T.T.A.B. Sep. 30, 2008)

Oral Hearing: Decision Mailed:
June 10, 2008 September 30, 2008
GDH/gdh

UNITED STATES PATENT AND TRADEMARK OFFICE
_____

Trademark Trial and Appeal Board
_____

Environmental Dynamics, Inc.
v.
Stamford Scientific International, Inc.
_____

Cancellation No. 92045054
_____

Richard R. Johnson and David L. Rein Jr. of Blackwell Sanders LLP
for Environmental Dynamics, Inc.

Albert Robin of Cowan, Liebwitz & Layman, P.C. for Stamford
Scientific International, Inc.
_____

Before Hohein, Holtzman and Mermelstein, Administrative Trademark
Judges.

Opinion by Hohein, Administrative Trademark Judge:

Environmental Dynamics, Inc. ("petitioner" or "EDI")
has petitioned to cancel the registration owned by Stamford
Scientific International, Inc. ("respondent" or "SSI") of the
mark "AIRFLEX" for "water cleaning equipment, namely diffusing
units for aerating sewage and industrial wastewater" in
International Class 11.1

1 Reg. No. 2,819,700, issued on March 2, 2004 from an application filed
on October 10, 2002, which sets forth a date of first use anywhere and
in commerce of the mark of July 20, 1998.

THIS OPINION IS
NOT A PRECEDENT
OF THE TTAB
Canc. No. 92045054
2
Petitioner, in seeking cancellation, alleges among
other things that it "is and has been for many years engaged in
the design, manufacture, advertising and sale of water and
wastewater treatment equipment and components of such equipment,
including diffusing units for aerating sewage and industrial
wastewater"; that "[c]ontinuously since at least 1986, ...
petitioner has referred to a line of its diffusing units as
FLEXAIR diffusers in correspondence, literature, packaging,
manuals and on the diffusers"; that "petitioner has continuously
used in interstate commerce the trademark FLEXAIR on its
diffusing units since long prior to the registrant's first use of
the trademark AIRFLEX on its diffusing units"; that "petitioner
sells diffusing units under its mark FLEXAIR that are identical
to and directly competitive with the diffusing units sold by the
registrant under the mark AIRFLEX"; and that "[t]he trademark
AIRFLEX is confusingly similar to the trademark FLEXAIR when used
on the identical goods of the parties, and its registration and
continued use by the registrant is likely to cause confusion,
deception and mistake ...."
As an additional ground, petitioner alleges that "[t]he
registration should be cancelled because it was obtained
fraudulently in that (a) the petitioner was using its mark
FLEXAIR in connection with diffusers at the time the federal
application was signed by the registrant, (b) the petitioner had
superior rights in its mark FLEXAIR, (c) the registrant knew of
the petitioner's prior use of the mark FLEXAIR and the
petitioner's superior legal rights, and knew that confusion was
Canc. No. 92045054
3
likely if the parties used their confusingly similar marks on
identical goods, and had no reasonable basis for believing there
is no likelihood of confusion, and (d) the registrant failed to
disclose its knowledge of items (a)-(c) to the PTO with the
intent to obtain a registration to which it is not entitled";
that prior to registrant's first use of its AIRFLEX mark,
petitioner and registrant "collaborated in connection with the
sale of diffusers, and in the course of this relationship the
registrant was aware that the petitioner had a line of FLEXAIR
tubular diffusers and had actually purchased FLEXAIR tubular
diffusers from the petitioner"; that "registrant was aware that
these tubular diffusers were sold under the petitioner's mark
FLEXAIR because such mark was on the diffusers purchased by the
registrant from the petitioner, as well as on accompanying
installation, operation and maintenance manuals and technical
support documents"; that "[w]ith knowledge of the petitioner's
FLEXAIR tubular diffusers, the registrant began manufacturing
components of the petitioner's disk diffusers" and, "[a]t the
request of the petitioner, the registrant marked those components
of the petitioner's products with the petitioner's mark FLEXAIR";
that "registrant later began using the mark AIRFLEX on the same
disk diffuser components it had manufactured for the petitioner
under the petitioner's mark FLEXAIR with full knowledge that
confusion is likely"; that "[a]t the time the registrant first
used the mark AIRFLEX, the registrant was well aware that the
petitioner's mark FLEXAIR was known and highly regarded in the
trade, and the registrant deliberately intended to usurp and
Canc. No. 92045054
4
benefit from the petitioner's reputation and goodwill when it
began using the confusingly similar mark AIRFLEX"; and "[d]espite
knowing of the petitioner's prior use and superior rights, the
confusingly similar nature of the petitioner's mark FLEXAIR, and
the fact that confusion was likely, the registrant failed to
inform the PTO of this information with deceptive intent, bad
faith, and to fraudulently obtain a registration to which it knew
it is not entitled."
Respondent, in its answer, admits that petitioner "is
and has been for many years engaged in the design, manufacture,
advertising and sale of water and wastewater treatment equipment
and components of such equipment, including diffusing units for
aerating sewage and industrial wastewater"; that petitioner has
used the mark "FLEXAIR" on some of its diffusing units; that with
knowledge of petitioner's "FLEXAIR" tubular diffusers, respondent
began manufacturing components of petitioner's disc diffusers;
and that, at the request of petitioner, respondent marked such
components of petitioner's products with petitioner's mark
"FLEXAIR." Respondent denies, however, the remaining salient
allegations of the petition to cancel, including the allegation
that the diffusing units which petitioner sells under the mark
"FLEXAIR" are identical to the diffusing units sold by registrant
under the mark "AIRFLEX."
In addition, respondent alleges as affirmative defenses
that petitioner was aware that respondent was using the mark
"AIRFLEX" on diffusers as early as 1998; that as early as 1999,
respondent not only supplied petitioner with products marked with
Canc. No. 92045054
5
petitioner's mark "FLEXAIR," but also supplied petitioner with
products marked with respondent's mark "AIRFLEX"; that the
application which matured into respondent's involved registration
was published on October 7, 2003 and petitioner should have been
aware of such application by that time; that notwithstanding
petitioner's knowledge of registrant's use and registration of
the "AIRFLEX" mark, petitioner "never complained about
registrant's use or registration of AIRFLEX until June 30, 2005";
that "[b]y reason of the matters aforesaid, Petitioner has
acquiesced in Registrant's use and registration of AIRFLEX and is
estopped to seek cancellation of its Registration [N]o. 2819700";
and that likewise, "[b]y reason of the matters aforesaid,
Petitioner is guilty of laches which disentitle it to the relief
sought in the Petition for Cancellation."2
The record consists of the pleadings; the file of the
involved registration; the testimony and exhibits thereto,
submitted by petitioner as part of its case-in-chief, of its
owner and president, Charles E. Tharp;3 respondent's admissions

2 Although respondent also alleges, as an affirmative defense, that
"[i]nsofar as the Petition for Cancellation purports to state a claim
based upon fraud, it fails to state the elements constituting fraud
with the particularity required by Rule 9(b) of the Federal Rules of
Civil Procedure, and fails ... [therefore] to state a claim upon which
relief can be granted," we find such defense is without merit inasmuch
as the claim of fraud is pleaded with the requisite particularity.

3 Respondent, in its brief, correctly notes that following the
deposition on November 16, 2006, the witness "made two sets of errata
sheets, the first dated December 21, 2006, and the second dated
February 14, 2007." While also accurately observing that "many of the
changes made in the errata sheets were to correct 'typographical'
errors," respondent strenuously asserts that as to other changes, "at
least two were made to the substance of the testimony." As to the
substantive changes, respondent refers to TBMP §703.01(n) (2d ed. rev.
2004), which provides in relevant part that:

Canc. No. 92045054
6
with respect to certain of petitioner's requests for admissions,
submitted by petitioner pursuant to a notice of reliance thereon
as the remainder of its case-in-chief; the testimony and exhibits
thereto, filed by respondent as its case-in-chief, of its co-
founder and co-owner, Thomas E. Frankel;4 and respondent's

While corrections may be made in a transcript, to make the
transcript an accurate record of what the witness said
during the taking of his or her testimony, material changes
in the text are not permitted--the transcript may not be
altered to change the testimony of the witness after the
fact.

Further asserting that the witness "not only changed the substance of
his testimony, but he also changed the substance of the questions" in
some instances, respondent maintains that "[i]t would not be a
sufficient remedy for such conduct for the Board simply to ignore the
improper changes"; instead, "[t]he only sufficient remedy is to
disregard all of Tharp's testimony on the subject of EDI's knowledge
of SSI's use of AIRFLEX in the United States," which would result in
striking substantial portions of the deposition.

Petitioner, in its reply brief, states in response that it
"agrees that to the extent that a correction made a substantive change
in the testimony, the change may be disregarded," citing Marshall
Field & Co. v. Mrs. Fields Cookies, 25 USPQ2d 1321, 1325 (TTAB 1992).
It also concurs that a certain change complained of should not have
been made and indicates that if, as to others, "SSI would like the
testimony ... to remain as it is without the corrections so that the
reference is to all SSI products instead of AIRFLEX products
particularly," then it "does not have any objection to leaving the
testimony uncorrected." Finally, petitioner points out that
respondent "does not offer any authority for the suggestion that the
Board should strike Mr. Tharp's testimony" and correctly notes,
instead, that "SSI's own authority states that the remedy is that if
the objected change is substantive, the Board should disregard the
change," which we have done. See, e.g., Entex Indus., Inc. v. Milton
Bradley Co., 213 USPQ 116, 117 n.2 (TTAB 1982).

4
Petitioner, in its reply brief, reiterates the objections it raised
during the deposition to the admissibility of documents constituting
respondent's exhibits L, M, N, O, P, Q, R, S, T, V, and AA and Mr.
Frankel's testimony with respect thereto. Petitioner insists that
such documents should have been produced pursuant to one or more of
the following requests for production: Request No. 18 for "[a]ll
documents relating to each project in the United States or its
territories and possession involving the sale by SSI of AIRFLEX
diffusers"; Request No. 20 for "[a]ll documents relating to each
project where SSI AIRFLEX diffusers were offered for sale"; and
Request No. 27 for "[a]ll documents relating to competition between
SSI and EDI regarding the sale of diffusers." Respondent, citing TBMP
§414(3) (2d ed. rev. 2004) for the proposition that "the names of
Canc. No. 92045054
7
responses to petitioner's requests for production of documents,
filed by petitioner pursuant to a notice of reliance thereon as
its rebuttal evidence.5 Both parties filed a main brief and

customers constitute confidential information, and generally are not
discoverable, even under protective order," objected to each of such
requests on the grounds that "the documents sought neither relate to
the subject matter involved in this proceeding nor are reasonably
calculated to lead to the discovery of admissible evidence" and that
"the names of its customers constitute confidential information which
are not discoverable even with a protective order." Respondent also
objected to Request No. 27 on the ground that because "registrant is a
direct competitor of petitioner and such competition occurs on a
regular basis," the request "is unduly burdensome." Petitioner
contends, however, that the Board "should not allow a party to refuse
to respond to a discovery request on the ground of confidentiality and
then introduce in its trial testimony the very information it refused
to produce," citing Super Valu Stores Inc. v. Exxon Corp., 11USPQ2d
1539, 1543 (TTAB 1989) ["a party may not refuse to furnish information
in response to a discovery request on the ground of 'confidentiality,'
as applicant did here, and then introduce evidence on such matters
during its trial period"] and Visual Information Institute, Inc. v.
Vicon Indus. Inc., 209 USPQ 179, 182 (TTAB 1980) ["[i]t is established
that a party may not refuse to furnish information in response to a
discovery request on the ground of 'confidentially' or 'relevancy' and
then turn around and introduce evidence on these matters during its
trial period. To condone a practice such as this would serve only to
thwart the purpose and intent of the discovery practice outlined in
the Federal Rules of Civil Procedure designed to provide an
expeditious procedure for the acquisition of information necessary to
prepare a party for trial"]. Petitioner therefore maintains that
"[e]xhibits L, M, N, O, P, Q, R, S, T, V, and AA and the corresponding
testimony should not be considered."

While petitioner's production requests are overbroad in seeking
"all documents," respondent nonetheless was obligated to have produced
a representative sample of documents in the case of those requests
which are not otherwise objectionable. Here, the fact that respondent
sought to introduce certain documents requested by petitioner shows
that, contrary to respondent's objections, it regarded the documents
as relating to the subject matter involved in this proceeding and was
not concerned with preserving the confidentiality of customer names.
In view thereof, we are constrained to agree with petitioner that
respondent's tactics are impermissible and that consequently the
documents marked as exhibits L, M, N, O, P, Q, R, S, T, V, and AA to
the Frankel deposition and the corresponding testimony with respect
thereto must be deemed inadmissible. Petitioner's objections are
accordingly sustained and such evidence has not been given further
consideration.

5 Although responses to requests for production of documents are not
proper subject matter for a notice of reliance, see Trademark Rule
2.120(j)(3)(ii) and TBMP §704.11 (2d ed. rev. 2004), respondent in its
brief has acknowledged that such responses form part of the record
herein. Accordingly, the responses are deemed to have been stipulated
Canc. No. 92045054
8
petitioner submitted a reply brief. Both parties were also
represented by counsel at the oral hearing held on this case.
According to the record, petitioner was incorporated in
1975 and started doing business in 1976. Petitioner began with
the marketing of home wastewater treatment plants and small
package wastewater treatment plants, with developers being the
primary customers for such goods. From initial annual sales
thereof of $20,000, petitioner expanded its activities nationally
in the United States to providing wastewater treatment aeration
solutions for major municipalities and private industrial
companies. Petitioner's most recent sales of such goods were
about $11.8 million in 2004, $18.3 million in 2005 and a
projection of about $19 million for 2006.
Wastewater treatment involves three general steps or
processes. Primary treatment involves removal of large organic
and inorganic solids, which settle out (that is, fall to the
bottom) because their specific gravity is greater than that of
water. The wastewater which remains then typically goes to a
bioreactor for secondary treatment involving an aerobic process
designed to foster or optimize the growth of aerobic organisms
through the introduction of oxygen. While, without help, such
organisms would float to the bottom rather than staying in
solution and interacting with the material they are supposed to

into the record pursuant to Trademark Rule 2.123(b) for whatever
probative value they may have as rebuttal evidence, notwithstanding
that it appears that the responses were submitted by petitioner solely
to substantiate its objections to certain exhibits and the testimony
with respect thereto offered by respondent in its deposition of Mr.
Frankel.

Canc. No. 92045054
9
treat, the process that keeps the organisms suspended and bumping
into the material being treated is accomplished by the goods
which petitioner specializes in: aeration and mixing systems,
including air or oxygen diffusers. As Mr. Tharp explained, the
aeration process typically involves a piping system located on
the floor of the bioreactor to which diffusers are attached. Air
is pumped through the pipes and into each diffuser unit which
bubbles or diffuses the air into the wastewater being treated.
Diffusers come in different configurations, including disc
diffusers, tube diffusers and panel diffusers. After aeration
treatment, the organisms are allowed to settle to the bottom,
with some returned to the bioreactor to continue the process, and
the rest are removed from the bottom and disposed of along with
usually a tertiary stage of final treatment of the remaining
wastewater, such as disinfecting and/or filtering.
Petitioner "offer[s] a family of diffusers that are all
membrane diffusers." (Tharp dep. at 20.) Starting, in
particular, "in 1987, '88," petitioner "developed the flexible
membrane diffuser type in the FlexAir trade name and then used it
for the tube diffusers" as well. (Id.) According to Mr. Tharp,
when asked if it is "fair to say that all of the diffusers that
have been offered since 1988 have been labeled ... with the
FlexAir mark," he replied: "That's correct." (Id. at 21.)
Likewise, he testified that:
Q. You have used the FlexAir mark
continuously since 1988?

A. That is correct.

Canc. No. 92045054
10
(Id. at 25.) While petitioner owns a federal registration on the
Principal Register for the mark "FLEXAIR" in standard character
form for "air diffusers for aerating water and wastewater"6
{petitioner's Ex. 16), the testimony and exhibits establish that
it primarily uses such mark in the following format: "FlexAir."
As to the percentage of petitioner's sales which are
attributable to its sales of diffusers and diffuser systems, Mr.
Tharp testified that:
Well, the diffusers are an integral part
of anything we sell. We may sell only the
membranes for the replacement for someone
else's product. We may sell the entire
assembly out of our Diffuser Express group
where it's sold as a commodity item. We may
sell the entire assembly with piping and the
pipe supports. In some cases, we have the
blowers and other items that go with it, but
if it doesn't have a diffuser and it isn't
biological treatment, we probably do not
participate.

(Id. at 21.) Petitioner typically markets its
"FlexAir" products in a variety of marketing channels. With
respect to the municipal market, it has "multiple representatives
... throughout the United States where they are calling on
consulting engineers ... or customers and presenting either the
product for sale directly or presenting a specification and
detailed technical support to a consulting engineer for him to
specify the equipment, so that we can hopefully be successful
with a contractor after those come out for bid." (Tharp dep. at
31.) Petitioner does not sell through distributors, however.

6 Reg. No. 3,132,263, issued on August 22, 2006 from an application
filed on September 2, 2005, which sets forth a date of first use
anywhere and in commerce of the mark of June 1, 1988.

Canc. No. 92045054
11
On the other hand, in terms of sales to US industry,
Mr. Tharp noted that:
[W]e typically sell direct in many cases
with our own technical sales staff. We have
an online sales group called Diffuser Express
that's a division of EDI. Those are sold
online where people simply call in and
describe the product out of our catalog. We
furnish that product that they ask for with
no technical requirements or system design
requirements.

(Id. at 31.) Petitioner's Diffuser Express division thus "is
used to handle ... diffusers and replacement parts that do not
require an extensive amount of engineering support." Such
division basically sells "commodity items that we would have in
stock" in that petitioner receives "an order for a given number
[of non-engineered products] and there's a fixed price," which is
"much like going to the grocery store and picking out what you
want" only "doing this online." (Id. at 34-35.) Although
petitioner also sells internationally, "it's a little bit
different in the fact that we may have what we call key accounts
or market partners ..., and it's typically sold where it is an
integral part of a system where someone designs, builds,
installs" often in partnership with petitioner. (Id. at 31-32.)
Although presently competitors in the sale of diffusers
and related products, the parties initially worked together in
the sale of such goods. Starting with a letter dated February 6,
1998, respondent wrote petitioner requesting the right to sell
abroad diffuser units purchased from petitioner. Prior to such
time, Mr. Tharp was not aware of respondent and the parties were
not competitors in the United States. Petitioner agreed to
Canc. No. 92045054
12
supply respondent with diffusers and membranes for diffusers but
only if respondent sold such goods internationally, that is,
outside of the United States, inasmuch as petitioner did not want
to be in competition with respondent domestically. Building on
respondent's development of a holder for petitioner's 9"-disc
membrane, petitioner subsequently began buying such holders from
respondent for use in the sale of petitioner's "FLEXAIR"
diffusers. In short, by mid 1998, petitioner was selling its
"FLEXAIR" tube diffusers to respondent and by late 1998
petitioner was selling its "FLEXAIR" membranes to respondent;
petitioner was also purchasing membrane holders from respondent
for use with petitioner's "FLEXAIR" membranes so as to form
petitioner's "FLEXAIR" disc diffusers. Although, during the time
in 1998 that the parties were first buying and selling diffusers
and holders to each other, petitioner learned that respondent was
marking products as "AIRFLEX" which respondent was selling
abroad, Mr. Tharp testified that such "was of no concern to us
because we were only discussing international sales activities
for SSI" and that petitioner's "FLEXAIR" mark "was not of any
concern internationally" to petitioner. (Id. at 57.) Petitioner
was only "doing a modest amount of international sales," with the
bulk of its sales being domestic. (Id. at 59.)
Eventually, petitioner stopped buying membrane holders
from respondent in early 2003, which was when petitioner started
manufacturing its own disc diffuser holders. However, from 1998
through 2003, petitioner was not aware of respondent selling
products in the U.S. marketplace bearing the "AIRFLEX" mark.
Canc. No. 92045054
13
According to Mr. Tharp, during such period the parties did not
compete directly in the United States and petitioner only
occasionally competed with respondent internationally. Mr. Tharp
maintains that petitioner did not discover that respondent was in
fact selling "AIRFLEX" diffusers in the United States until
approximately June of 2005, when petitioner failed to win a
project bid as it had expected. Specifically, petitioner had
worked with St. John the Baptist Parish in Louisiana to specify
that a project would require petitioner's "FLEXAIR" diffusers.
Upon losing the bid in which its own brand of equipment had been
specified, petitioner investigated and discovered that respondent
had not only submitted, at a lower price, a bid to use its
"AIRFLEX" diffusers instead of petitioner's "FLEXAIR" diffusers
on such project, but had also submitted supporting documents
which contained identical or nearly identical language to
petitioner's maintenance manuals and specifications.
Petitioner insists that until learning of respondent's
successful bid for such project, it did not know that respondent
had been selling any products using the "AIRFLEX" mark in the
United States.7 As part of its investigation, petitioner also
searched records and discovered that respondent had registered
with the U.S. Patent & Trademark Office ("USPTO") the "AIRFLEX"
mark which is the subject of this proceeding. However, as noted

7 While, on cross examination, Mr. Tharp admitted in this regard that
petitioner knew that respondent was using the mark "AIRFLEX" on disc
diffuser rings in 1998 or 1999, it never objected to such "because our
entire discussion and agreement was that we were going to be marketing
both domestically and internationally. They were doing only
international as they had done previously." (Tharp dep. at 105.)

Canc. No. 92045054
14
previously, petitioner subsequently obtained a registration from
the USPTO for its "FLEXAIR" mark for "air diffusers for aerating
water and wastewater." Nonetheless, petitioner has experienced
incidents of actual confusion involving the parties' marks, which
instances involved individuals writing to petitioner with
requests that it repair, replace or otherwise resolve issues
relating to products which upon investigation involved
respondent's "AIRFLEX" units rather than petitioner's "FLEXAIR"
diffusers. Petitioner has also had certain documents which
appear to have been copied by respondent in that they are
identical in all respects to its originals except that the marks
"FlexAir" and "AIRFLEX" appearing thereon have been "exchanged"
and the company name "EDI has been changed to SSI." (Id. at 84.)
However, until this cancellation proceeding with respondent,
petitioner was not aware that a third party, AquaTec, was using
the mark "FlexAir" because petitioner doesn't compete with
AquaTec, due to the fact that it offers systems which petitioner
does not.8 Moreover, the record is silent as to the extent of
such use by AquaTec.
Respondent, on the other hand, is a corporation which
Thomas E. Frankel and his colleague and business partner Todd
Ritter started around June 1, 1995. Respondent "began as an
export management company reselling central vacuum systems,
blowers and pumps" to "a broad client base around the world, but

8 Mr. Tharp added, on cross examination, that while he would be
concerned about such use if AquaTec were a competitor of petitioner,
he insisted that in 18 years of sales he has never encountered AquaTec
in the marketplace.

Canc. No. 92045054
15
not at that time in the U.S. market." (Frankel dep. at 8.)
Respondent expanded its business into export sales of "FlexDisc"
membrane diffusers and "SnapCap" tube diffusers and coarse bubble
diffusers offered by EnviroQuip Instrument, Inc. A diffuser,
according to Mr. Frankel, diffuses compressed air into a body of
wastewater with the purpose of transferring a mass of oxygen to
that water. Respondent continued doing business with EnviroQuip
until early 1997, when EnviroQuip was acquired by U.S. Filter
Corp., at which point the latter's sales staff took over and
respondent "lost the line." (Id. at 15.)
Deciding that "we no longer wanted to sell somebody
else's brand," respondent "decided to make our own diffusers."
(Id.) In connection therewith, respondent selected the name
"AIRFLEX" because "we wanted some segue from the product we had
been selling"; that is, it wanted a mark with continuity to the
"FlexDisc" diffusers which it had been selling. Respondent
typically uses its mark in either the format "Airflex" or
"AIRFLEX"; it does not use "AirFlex." Respondent has
continuously used its "AIRFLEX" mark on disc diffusers since
1998, including sales thereof in the United States. Besides such
sales, respondent also sells blowers and vacuum systems,
"complete systems with piping" and "replacement membranes for our
own and other companies' products." (Id. at 162.) Respondent
agrees that petitioner and respondent presently are competitors
in the sale of disc diffusers, selling such to the same
customers, and that there is at least some overlap in the use of
sales agents. Respondent also does not dispute that petitioner
Canc. No. 92045054
16
first used its "FLEXAIR" mark prior to respondent's first use of
its "AIRFLEX" mark.
Although respondent's actual sales were testified to be
confidential, Mr. Frankel noted that U.S. sales of respondent's
"AIRFLEX" products are "maybe 20 to 25 percent, at most" of
respondent's overall diffuser sales. (Id. at 26.) Respondent
has experienced continued increases in sales volume since its
initial sales in the period spanning 1998-1999. While Mr.
Frankel testified that he could not remember whether the date of
first use anywhere and in commerce of July 20, 1998 stated in its
involved registration was to a U.S. company, the first U.S. sale
which he does recall was to a company in Texas in October of
1998. Respondent, furthermore, admits that it was aware of the
use of the mark "FLEXAIR" by petitioner in connection with tube
diffusers before respondent used its mark "AIRFLEX." Similarly,
respondent admits that it was aware of the use of the mark
"FLEXAIR" by petitioner in connection with disc diffuser
membranes, disc diffusers and tube diffusers before respondent
filed its application to register its mark "AIRFLEX." Respondent
also admits that it was aware of literature relating to
petitioner's "FLEXAIR" diffusers prior to the July 20, 1998 date
of first use anywhere and in commerce claimed in its respondent's
involved registration.
In connection with the sale of it goods, respondent
attends the WEFTEC trade show, an annual affair which is "the
largest American wastewater show" according to Mr. Frankel, and
has done so every year since 1998. (Id. at 40.) Respondent
Canc. No. 92045054
17
sells its products in the U.S. primarily through agents, although
it also sells to distributors and OEM customers. Its principal
competitors for sales of its "AIRFLEX" products in the U.S. are
the Sanitary division of ITT Industries, the Envirex division of
U.S. Filter/Siemens and petitioner. While Mr. Frankel does not
recall seeing petitioner at WEFTEC, he has no reason to doubt its
attendance at such trade show. Respondent also advertises its
"AIRFLEX" products in trade magazines and on the Internet.
According to Mr. Frankel, in 1998 respondent was
looking for a membrane supplier. Petitioner, however, also
represented a potential client to purchase plastic parts from
respondent. Mr. Frankel contends that there was no discussion of
the geographic territory in which either petitioner or respondent
would operate and, in particular, insists that he "absolutely
[did] not tell Tharp that [respondent] was interested in
confining activities to foreign markets" or that respondent was
going to concentrate its efforts in a different marketing area
from that of petitioner. (Id. at 67.) He also claims that all
tube diffusers which respondent sold to petitioner had the mark
"AIRFLEX" thereon because respondent could not change the mold to
remove such mark. Respondent's business relationship with
petitioner, which started in 1998, consisted of the "purchase of
membranes and the sale of plastic parts." (Id. at 75.) Mr.
Frankel maintains that, of the items which respondent purchased
from petitioner, respondent asked for and petitioner delivered
"plain" boxes, including "unmarked" membranes. (Id. at 75-76.)
Mr. Frankel also insists that it was Mr. Tharp's wish, "not our
Canc. No. 92045054
18
agreement, that we not participate in the U.S. market," but that
"it was very clear to him from early on that we were
participating in the U.S. market." (Id. at 86-87.) Moreover, in
addition to respondent's use of its "AIRFLEX" mark in the United
States, Mr. Frankel noted that the following third-party "Flex"-
formative marks are in use, although the extent thereof has not
been indicated: "Flex-A-Tube"; "Roeflex"; "Uniflex'; "FlexDisc';
"FlexLine"; "Flexazur"; and "RexFlex." Also, as mentioned
earlier, Mr. Frankel noted that a company called AquaTec was
using the mark "FlexAir" for fine bubble diffusers and tube
diffusers.
Turning now to the merits of this case, it should first
be noted with respect to the ground of priority of use and
likelihood of confusion that there is no real issue that
petitioner, rather than respondent, has priority of use. As
petitioner states in its main brief and the record makes clear,
while "EDI has sold its air diffusers under the mark FLEXAIR
since 1988 in the United States," it was not until "1998,
approximately ten years after EDI's first use, [that] SSI adopted
the mark AIRFLEX for its diffusers." Respondent, in its brief,
concedes that "the record is clear that SSI was selling diffusers
in the United States in 1998 and that SSI competed with EDI in
the United Sates as early as 1999 and that ... SSI ... was using
[the mark] AIRFLEX in connection with that competition." In
consequence thereof, the only issue to be determined in this
proceeding with respect to petitioner's claim of priority of use
and likelihood of confusion is whether confusion is likely from
Canc. No. 92045054
19
contemporaneous use by the parties of their respective "FLEXAIR"
and "AIRFLEX" marks in connection with air diffusers.
Our determination of whether there is a likelihood of
confusion is based on an analysis of all of the facts in evidence
which are pertinent to the factors bearing on such issue as set
forth in In re E. I. du Pont de Nemours & Co., 476 F.2d 1357, 177
USPQ 563, 567 (CCPA 1973). See also In re Majestic Distilling
Co., 315 F.3d 1311, 65 USPQ2d 1201, 1203 (Fed. Cir. 2003); and
Recot, Inc. v. Becton, 214 F.3d 1322, 54 USPQ2d 1894, 1896 (Fed.
Cir. 2000). However, as indicated in Federated Foods, Inc. v.
Fort Howard Paper Co., 544 F.2d 1098, 192 USPQ 24, 29 (CCPA
1976), in any likelihood of confusion analysis, two key
considerations are the similarity or dissimilarity in the goods
at issue and the similarity or dissimilarity of the respective
marks in their entireties.9 Here, inasmuch as it is plain that
petitioner's "air diffusers for aerating water and wastewater"
and registrant's "water cleaning equipment, namely diffusing
units for aerating sewage and industrial wastewater" are legally
identical products, which are commonly known in the trade as
simply "air diffusers" and are necessarily sold through the same
channels of trade to the same classes of customers, the focus of
our inquiry is accordingly on the similarities and
dissimilarities in the marks at issue along with such factors as
the conditions under which and buyers to whom sales are made,

9 The court, in particular, pointed out that: "The fundamental inquiry
mandated by §2(d) goes to the cumulative effect of differences in the
essential characteristics of the goods and differences in the marks."
192 USPQ at 29.

Canc. No. 92045054
20
i.e., "impulse" vs. careful, sophisticated purchasing, and the
nature and extent of any actual confusion as well as the length
of time during and conditions under which there has been
contemporaneous use without evidence of actual confusion.
In this regard, we note that as stated by our principal
reviewing court in Century 21 Real Estate Corp. v. Century Life
of America, 970 F.2d 874, 23 USPQ2d 1698, 1700 (Fed. Cir. 1992),
cert. denied, 506 U.S. 1034 (1994), "[w]hen marks would appear on
virtually identical goods ..., the degree of similarity [of the
marks] necessary to support a conclusion of likely confusion
declines." Respondent argues in its main brief, however, that
notwithstanding the obvious fact that the marks at issue are
composed of transpositions of the terms "FLEX" and "AIR," such
marks do not look alike, "particularly since AIRFLEX is typically
displayed in all capital letters while FlexAir is displayed with
the 'F' and the 'A' in initial caps"; the marks do not sound
alike, in that "AIRFLEX is likely to be spoken as one word while
FlexAir is likely to be spoken as two"; and the marks "AIRFLEX
and FlexAir do not share the same or a similar meaning," in that
"FlexAir appears to have been selected by EDI because it was to
be used on a 'flexible membrane diffuser' ... through which air
is pushed'" while "AIRFLEX was selected by SSI because it would
be used on and in connection with discs [as diffusers], and it
had previously sold FlexDisc discs." In view thereof, and in
light of various third-party uses of "Flex-"formative marks,
respondent insists that confusion is unlikely.
Canc. No. 92045054
21
We agree with petitioner, however, that contemporaneous
use of the marks "FLEXAIR" and "AIRFLEX" on legally identical
goods, namely air diffusers, is likely to cause confusion
inasmuch as such marks, when considered in their entireties, are
substantially similar in sound, appearance, connotation and
overall commercial impression. As petitioner points out in its
main brief, "the FLEXAIR and AIRFLEX marks have the same number
of syllables ... and both use only the terms AIR and FLEX to
comprise the mark[s]." While petitioner tends to use its mark in
the format "FlexAir" as opposed to respondent's general use of
its mark in the manner "AIRFLEX," both petitioner's registration
and that of respondent set forth the respective marks in all
capital letters and, thus, the respective marks are not limited
to any specific display. See, e.g., Phillips Petroleum Co. v. C.
J. Webb, Inc. 442 F.2d 1376, 170 USPQ 35, 36 (CCPA 1971) [a mark
registered in standard character or typed form is not limited to
being depicted in any particular manner of display]. As a
result, petitioner is free to display its mark as "FLEXAIR" while
respondent is at liberty to depict its mark as "AirFlex." Both
parties' marks, moreover, similarly denote air from a flexible
source, such as a membrane or air diffuser, and share the same
constituent elements when pronounced. Furthermore, while the
record reflects examples of third-party use of "Flex-"formative
marks, in the absence of evidence as to the extent of such use,
it cannot be said that the marks at issue in this proceeding are
so weak as to preclude any likelihood of confusion.
Canc. No. 92045054
22
Rather, it is obvious that, to the extent that there
are differences between the parties' marks, such are due to the
transposition of their "FLEX" and "AIR" components. However, if
the transposition does not change the overall commercial
impression of the marks at issue, a likelihood of confusion
generally will be found, whereas confusion is not likely if the
transposed mark creates a distinctly different commercial
impression from its counterpart mark. See TMEP Section
1207.01(b)(vii) (5th ed. 2007) and cases cited therein.10 In the
present case, it is clear that instead of creating distinctly
different commercial impressions, the marks "FLEXAIR" and
"AIRFLEX" project substantially the same overall commercial
impression, such that confusion would be likely from their
contemporaneous use in connection with air diffusers.
Additionally, as pointed out by petitioner in its main
brief, despite "an infinite range of marks" from which to select,
"SSI just happened to choose a mark that was simply the reverse
of EDI's FLEXAIR mark for identical goods" and which petitioner
had been using for about ten years. Respondent, in fact, not
only knew of petitioner's use of its "FLEXAIR" mark before
selecting its "AIRFLEX" mark, but the record reveals that
respondent copied substantial portions of an operating manual of
petitioner's by using identical language except for replacing
"FLEXAIR" with "AIRFLEX." Such evidence, as petitioner notes,
creates "a very strong inference that SSI deliberately adopted a

10 The classic example in trademark law is, of course, the difference
between a "BLIND VENETIAN" and a "VENETIAN BLIND."

Canc. No. 92045054
23
similar mark" and, being indicative of bad faith adoption,
supports a finding of a likelihood of confusion. See, e.g., Beer
Nuts, Inc. v. Clover Club Foods Co., 805 F.2d 920, 231 USPQ 913,
917 (10th Cir. 1986) ["The inference of intent is especially
strong when the parties have had a prior relationship. Such a
relationship provides evidence of the alleged infringer's intent
to trade on the plaintiff's goodwill"].
Respondent asserts, however, that "[g]iven the very
important function which the products at issue play in the
wastewater treatment process," confusion is not likely to occur
because "purchasers exercise great care in making purchase
decisions." While the record shows that the conditions under
which and buyers to whom sales are made often involve
discriminating sales and highly sophisticated purchasers rather
than impulse items and ordinary consumers, petitioner and
respondent do not sell their products only as part of a
specifically engineered wastewater treatment system. Instead,
customers for either "FLEXAIR" or "AIRFLEX" air diffusers may
purchase such products separately and, in fact, petitioner sells
certain of its "FLEXAIR" goods as commodity items requiring very
little, if any, assistance in their purchase. Thus, even though
municipalities and industrial plants are necessarily careful and
sophisticated purchasers who know their needs for air diffusers
and will be expending substantial sums for replacement diffusers,
the fact that such purchasers may be considered to be highly
discriminating buyers "does not necessarily preclude their
mistaking one trademark for another" or establish that they
Canc. No. 92045054
24
otherwise are entirely immune from confusion as to source or
sponsorship. Wincharger Corp. v. Rinco, Inc., 297 F.2d 261, 132
USPQ 289, 292 (CCPA 1962). See also In re Decombe, 9 USPQ2d
1812, 1814-15 (TTAB 1988); and In re Pellerin Milnor Corp., 221
USPQ 558, 560 (TTAB 1983). In terms of bulk or commodity sales
of air diffusers, it is plain that there is a likelihood of
source confusion from contemporaneous use of the marks "FLEXAIR"
and "AIRFLEX." Moreover, the record reflects that instead of an
absence of any incidents of actual confusion, which would be
expected if, during the past ten years of contemporaneous use,
confusion were unlikely to occur, the record contains two
examples of customers who confused petitioner's "FLEXAIR" air
diffusers with the "AIRFLEX" air diffusers marketed by
respondent. Such incidents are not insignificant, given the time
and expense involved in the typical sale of such products.
Respondent further argues, however, that any finding of
a likelihood of confusion is barred by equitable principles of
laches, acquiescence and estoppel. Specifically, and provided
that confusion is likely rather than inevitable, see, e.g.,
Ultra-White Co., Inc. v. Johnson Chemical Industries, Inc., 465
F.2d 891, 175 USPQ 166, 167 (CCPA 1972) [holding that equitable
defenses such as laches, acquiescence and estoppel are not
applicable where a likelihood of confusion is inevitable],11

11 To be thorough, it is also pointed out that such defenses are not
applicable to a claim of fraud inasmuch as it is in the public
interest to prohibit registrations procured or maintained by fraud.
See, e.g., Treadwell's Drifters Inc. v. Marshak, 18 USPQ2d 1318, 1320
(TTAB 1990), recon. denied, 18 USPQ2d 1322 (TTAB 1990); and Bausch &
Lomb Inc. v. Leupold & Stevens Inc., 1 USPQ2d 1497, 1499 (TTAB 1986).

Canc. No. 92045054
25
respondent contends that because petitioner has acquiesced in
respondent's use of the "AIRFLEX" mark both internationally and
domestically, petitioner is guilty of laches and is therefore
estopped from complaining about a likelihood of confusion.
Basically, such defenses require a showing of undue delay in
asserting rights against a party and prejudice to that party
resulting therefrom. The defenses begin to run in an inter
partes proceeding such as this, which petitioner commenced on
September 27, 2005, from the time action could be taken by
petitioner against the acquisition by respondent of rights to
which objection is being made by petitioner, which in this case
is the December 9, 2003 date on which the mark which is the
subject of respondent's underlying application for registration
was published for opposition. See National Cable Television
Association Inc. v. American Cinema Editors Inc., 19 USPQ2d 1424,
1431-32 (Fed. Cir. 1991).
In particular, respondent contends that equitable
defenses bar relief on the ground of priority of use and
likelihood of confusion, asserting that:
First, EDI has admitted that SSI used
AIRFLEX in connection with diffusers outside
the United States since 1998, and EDI must
have know [sic] SSI was using AIRFLEX in the
United States by reason of EDI's purchases of
the plastic holder for disc diffusers and
tube stubs on which AIRFLEX was impressed.
While EDI requested that the plastic holders
either be blank or bear FlexAir, it never
requested removal of AIRFLEX from the tube
stubs.

In his June 30, 2005 letter in which
Tharp for the first time complained of SSI's
use of AIRFLEX, he stated: ["]When we
started in the operations, clearly SSI and
Canc. No. 92045054
26
EDI cooperated because we had mutual needs,
and it was clear that your primary area of
emphasis was a different marketing territory
than EDI."

This statement does not say that SSI was
not marketing products in the United States.
Rather, it says that SSI's primary marketing
area as [sic] international and implies that
EDI's primary marketing area was domestic.
Such a statement was and is entirely
consistent with the facts at least insofar as
SSI is concerned. As Mr. Frankel testified,
some 75% to 80% of SSI's sales were and have
continued to be international ... and thus
SSI's primary marketing area was and is
international. As the Tharp statement
implicitly recognized, SSI's secondary
marketing area was and is domestic.

....

There seems no question that the
artificial distinction which EDI attempts to
make between the domestic and international
markets is contrived. While EDI has not even
given an estimate of the break down [sic]
between its US and international sales, there
can be not [sic] question that its
international sales were significant, even if
not 75% to 80% of sales as is the case with
SSI. Moreover, having failed to give a
breakdown between US and international sales,
EDI should not be permitted to contend
otherwise.

Tharp admittedly acquiesced in SSI's use
of AIRFLEX in the international market
starting in 1998. If there were any
likelihood of confusion between the marks, it
would more likely occur in the international
market than in the US market.

....

Fortunately, proof of EDI's acquiescence
does not require a determination of the
veracity of Tharp's claim that he was not
aware of SSI's use of AIRFLEX in the United
States until mid-2005. Tharp has admitted
that ... "[w]e knew that they were marketing
the product as AIRFLEX early in 1998." ...
Assuming that he actually believed that such
use was only international, EDI does an
Canc. No. 92045054
27
unspecified but substantial part of its
FlexAir business internationally ..., and if
AIRFLEX would cause confusion in the United
States, it would likely cause even more
confusion in foreign markets. The
distinction which Tharp attempted to draw
between domestic and international confusion
is obviously an attempt to justify EDI's
acquiescence in SSI's use of AIRFLEX outside
the United States, an acquiescence which is
incontrovertible.

....

Of course, if EDI had complained of
SSI's use of AIRFLEX back in 1998, before SSI
had built up any good will therein, SSI could
have changed its mark without serious
consequences. Because EDI waited for some
seven years to make any complaint, it would
be inequitable to deprive SSI of its right to
register, let alone use, AIRFLEX.

We concur with petitioner, however, that respondent has
not met its burden of proof to establish its equitable
defense(s). As is apparent from the argument recounted above,
respondent's argument not infrequently is speculative rather than
factually based. In addition, as petitioner persuasively points
out in its reply brief, even if confusion herein is regarded as
likely rather than inevitable:
SSI does not cite a single case in
support of its acquiescence or laches
argument. Nor does it distinguish the
Federal Circuit decision holding that in a
cancellation proceeding, the time runs from
knowledge of application for registration.
It does not run from the alleged knowledge of
use. National Cable Television Assoc. v.
American Cinema Editors Inc., 19 USPQ2d 1424,
1431 (Fed. Cir. 1991).

There is no dispute that the earliest
point in time at which EDI could know that
SSI had filed to register the AIRFLEX mark
was when the mark was published for
opposition on December 9, 2003. SSI does not
dispute that EDI complained of the use of the
Canc. No. 92045054
28
mark about a year and a half later and filed
for cancellation in less than two years form
the date of publication. Last, SSI does not
dispute that a year and a half to two years
is not sufficient for a laches defense.

Even if less than [approximately] two
years was an unreasonable delay, laches would
still not apply because SSI did not provide
evidence of material prejudice. Mere delay
alone does not constitute laches. Turner v.
Hops Grill & Bar Inc., 52 USPQ2d 1310, 1312-
13 (TTAB 1999). SSI cannot simply say it has
been prejudiced. SSI has the burden of
proving laches and material prejudice cannot
be based upon a presumption. Id. at 1312.

Without any support, SSI wants to
discuss when EDI allegedly had actual
knowledge of SSI's use of the mark in the
United States. Yet, EDI did not have actual
knowledge before the incident in Louisiana in
June 2005 when SSI won the St. John the
Baptist Parish bid despite the fact that
EDI's equipment was specified. ....

....

The undisputed testimony is that after
learning in June 2005 that SSI was competing
against it, EDI complained to SSI in a letter
dated June 30, 2005 and filed the Petition
for Cancellation on September 27, 2005. ....
It is not disputed that EDI complained within
a month from the time of the Louisiana
incident and filed the cancellation less than
three months from the time it sent the
letter.

Regardless, the proper analysis is when
EDI knew of the registration, not when EDI
allegedly knew of SSI's use of the mark in
the United States. SSI does not dispute that
under this analysis, laches does not apply.

Furthermore, while petitioner plainly knew of
respondent's use of its "AIRFLEX" mark internationally since
about the time the parties commenced doing business in 1998 and
1999, such time frame obviously is not only prior to the
publication of respondent's mark for opposition, but in the
Canc. No. 92045054
29
absence of evidence of the extent of petitioner's international
sales, there simply is no proof of respondent's contention that
the dichotomy between international and domestic sales is an
"artificial distinction" or one which is "contrived" by
petitioner to avoid a finding of acquiescence. Accordingly, we
find that there is a likelihood of confusion which has not been
shown to be barred by laches, acquiescence or estoppel as
asserted by respondent.
Turning next to the remaining ground of fraud, we agree
with respondent that the involved registration has not been shown
to have been obtained by fraud. As respondent accurately notes
in its brief, petitioner's claim of fraud in essence "is based
upon nothing more [than] ... the fact that SSI knew of EDI's use
of FlexAir when it applied to register AIRFLEX." While
petitioner insists that because there is a likelihood of
confusion, respondent's knowing failure to inform the USPTO of
petitioner's prior use and superior rights constitutes fraud, the
Board, as stated in Kelly Services Inc. v. Greene's Temporaries
Inc., 25 USPQ2d 1460, 1462-63 (TTAB 1992), takes the position
that the issue of fraud depends upon whether the respondent had a
good faith belief in the absence of a likelihood of confusion
when it executed its application for registration:
We view the statutorily prescribed
ownership statement as comprising the
following averments: (1) the declarant
believes the applicant to be the exclusive
owner of the applied for mark and (2) the
declarant believes no other party has an
equal or superior right to use, on any goods
or services, the same mark or a mark so
similar to applicant's that, when used on
such goods or services, there would be a
Canc. No. 92045054
30
likelihood of confusion as to the source of
the goods or services. See, e.g. An Evening
at the Trotters, Inc. v. A Nite at the Races,
Inc., 214 USPQ 737 (TTAB 1982).

In the Trotters case, it was held that
an applicant that believes its right to
register a mark is superior to that of
another user of the same or similar mark will
not be held to have committed fraud by
signing an application with the statutorily
prescribed ownership statement. An Evening
at the Trotters, 214 USPQ at 741 n.9. The
converse of this, of course, is that fraud
may be found where the application is signed
in the absence of such a good faith belief.
....

Thus, [a] petitioner cannot prevail upon
its claim of fraud unless it pleads and
proves that respondent, when it signed the
application with the ownership oath, was
aware of petitioner's superior right to use
the same or a similar mark, as a technical
trademark, or in a manner analogous to
trademark use, so as to create a likelihood
of confusion among consumers if the two
parties used their marks contemporaneously.

Respondent concedes that while the failure of its
involved registration for the mark "AIRFLEX" to bar the issuance
of petitioner's registration for the mark "FLEXAIR" "may not be
evidence that [the] ... marks are not confusingly similar,"
respondent maintains that such failure "should go a long way
towards demonstrating that there could have been no fraud."
Respondent, in this regard, cites First International Services
Corp. v. Chuckles Inc., 5 USPQ2d 1628, 1635 (TTAB 1988), in which
the Board stated that:
Opposer has also alleged fraud due to
applicant's failure to inform the Examining
Attorney of opposer's mark, about which
applicant is claimed to have had prior
knowledge. While we have determined in this
opinion that, in the totality of
circumstances, confusion is likely, we
Canc. No. 92045054
31
recognize that there is an arguable
difference between applicant's and opposer's
marks. Accordingly, we do not think it was
unreasonable for applicant to believe ... the
contemporaneous use of the marks by the
parties was not likely to cause confusion,
[and] that therefore no fraudulent intent can
be inferred from applicant's averment to this
effect in the application. See, SCOA
Industries Inc. v. Kennedy & Cohen Inc., 188
USPQ 411 (TTAB 1975).

We concur with respondent that, inasmuch as the marks at issue
herein are not identical, and thus there are arguable differences
therein, respondent could reasonably believe, notwithstanding our
finding that the respective marks are confusingly similar when
used in connection with air diffusers, that the contemporaneous
use thereof by the parties is not likely to cause confusion.
Likewise, because there is no evidence of record, such as an
injunction or finding of infringement in a judicial proceeding,
that respondent knew that petitioner possessed a superior right
to use its "FLEXAIR" mark vis-à-vis respondent's use of its
"AIRFLEX" mark, respondent could maintain a good faith belief in
its entitlement to the registration which it sought. There
consequently being an absence of circumstances from which a
fraudulent intent could be inferred, the claim of fraud must
fail.
We accordingly conclude, in light of the above, that
while no fraud has been shown in respondent's obtaining of its
involved registration, it is nonetheless the case that
contemporaneous use by respondent of its "AIRFLEX" mark in
connection with "water cleaning equipment, namely diffusing units
for aerating sewage and industrial wastewater," is likely to
Canc. No. 92045054
32
cause confusion with the prior use by petitioner of its "FLEXAIR"
mark for the legally identical goods of "air diffusers for
aerating water and wastewater."
Decision: The petition to cancel is denied with
respect to the ground of fraud but is granted as to the ground of
priority of use and likelihood of confusion. In view thereof,
Reg. No. 2,819,700 will be cancelled in due course.