ETS Express, Inc.v.Can’t Live Without It, LLC dba S’Well Bottle

Trademark Trial and Appeal Board

Jan 4, 2019

CANC (T.T.A.B. Jan. 4, 2019)

Baxley January 4, 2019 Cancellation No. 92066213 ETS Express, Inc. v. Can’t Live Without It, LLC dba S’Well Bottle Before Zervas, Shaw and Kuczma, Administrative Trademark Judges. By the Board: On July 23, 2018, 12 TTABVUE, the Board ordered ETS Express, Inc. (“Petitioner”) to show cause why judgment in this proceeding should not be entered in favor of Can’t Live Without It, LLC dba S’Well Bottle (“Respondent”) in view of the termination of the civil action between the parties (Can’t Live Without It LLC dba S’Well Bottle v. ETS Express, Inc., Case No. 1:17-cv-03506 (SDNY 2018)). This case now comes up on (1) Petitioner’s response to the Board’s show cause order, 14 TTABVUE; (2) Respondent’s motion (filed September 6, 2018) “for leave to file a supplemental pleading in support of request for judgment in Respondent’s favor,” 15 TTABVUE, and (3) Petitioner’s motion (filed September 12, 2018) for leave to file a reply brief in support of its response to the order to show cause, 16 TTABVUE. UNITED STATES PATENT AND TRADEMARK OFFICE Trademark Trial and Appeal Board P.O. Box 1451 Alexandria, VA 22313-1451 General Contact Number: 571-272-8500 General Email: TTABInfo@uspto.gov This decision is not a precedent of the TTAB. Cancellation No. 92066213 2 I. Full briefing of order to show cause granted We turn first to Respondent’s motion for leave to file a “supplemental pleading” in support of its request for entry of judgment and Petitioner’s motion for leave to file a reply brief. By its motion, Respondent seeks to file a brief in opposition Petitioner’s response to the order to show cause. A brief in opposition is not a pleading (compare Federal Rule Civil Procedure 8 with Trademark Rule 2.127(a)). Nonetheless, we hereby grant Respondent’s motion to the extent that we will consider Respondent’s “supplemental pleading” as a brief in opposition to Petitioner’s response to the order to show cause. As a matter of fairness, we also grant Petitioner’s motion for leave to file a reply brief in connection with the order to show cause. See Trademark Rule 2.127(a). II. Background Respondent owns two registrations for the following mark for “Bottles, sold empty” in International Class 21.1 Petitioner seeks to cancel Respondent’s registrations on the grounds that (1) the mark is generic; (2) the mark is functional; (3) the mark has not become distinctive (Registration No. 5118514 only); and (4) fraud, 1 TTABVUE. In lieu of an answer, Respondent, on July 13, 2017, filed a motion 1 Registration No. 4366242 on the Supplemental Register, issued July 9, 2013, and Registration No. 5118514 on the Principal Register, issued January 10, 2017. Registration No. 5118514 includes a claim of acquired distinctiveness under Trademark Act Section 2(f), 15 U.S.C. § 1052(f). Both registrations include statements that “The mark consists of three- dimensional configuration of a bottle and bottle cap. The broken lines depicting indentations on the bottle cap indicate placement of the mark on the goods and are not part of the mark.” Cancellation No. 92066213 3 to suspend this proceeding pending final determination of the civil action, 4 TTABVUE. Respondent, as plaintiff in the civil action, alleges, among other things, (1) trade dress infringement under Trademark Act Section 32, 15 U.S.C. § 1114, and (2) false designation of origin and unfair competition under Trademark Act Section 43(a), 15 U.S.C. § 1125(a), 4 TTABVUE 27-31. In its answer in the civil action, Petitioner, as defendant, denied the salient allegations of the complaint, asserted affirmative defenses -- including a defense that Respondent’s claims were barred because Respondent committed fraud in obtaining Registration No. 5118514 by averring in a declaration in support of the application for that registration that its use of the involved mark over the previous five years had been “substantially exclusive -- and set forth a counterclaim through which it sought, among other things, cancellation of Respondent’s involved registrations under Trademark Act Section 37, 15 U.S.C. § 1119, on grounds of lack of acquired distinctiveness, genericness, functionality, and “inequitable conduct,” 14 TTABVUE 134-49. The Board suspended the present cancellation proceeding on August 5, 2017, 5 TTABVUE. On May 4, 2018, Petitioner moved to resume the cancellation proceeding, indicating that on April 17, 2018, the district court entered judgment in Petitioner’s favor in the civil action, dismissing the case with prejudice, because the “jury rendered a verdict finding [Petitioner] not liable on all claims.” 8 TTABVUE 4. The district court amended its order on April 24, 2018, stating that Petitioner’s counterclaim for a declaratory judgment of noninfringement was denied as moot and that all other counterclaims were denied with prejudice “for reasons stated from the Cancellation No. 92066213 4 bench.” 8 TTABVUE 5. On May 9, 2018, Respondent filed a “counter-notice” regarding disposition of the civil action wherein it asserted that resumption was premature because time to appeal the entry of judgment had not lapsed, 9 TTABVUE. The Board denied Petitioner’s motion for resumption as premature in a June 20, 2018 order and continued the suspension of this proceeding. Respondent timely filed post-trial motions (1) under Fed. R. Civ. P. 50(b) for judgment as a matter of law on its claim of unfair competition under New York common law, and (2) under Fed. R. Civ. P. 59(a)(1) for a new trial on its trade dress infringement claims. However, the district court denied those motions in a June 11, 2018 memorandum order. 15 TTABVUE 59-76. On July 12, 2018, Respondent filed a motion for resumption of proceedings and entry of judgment. Therein, Respondent asserts that the district court denied its post- trial motions in the June 11, 2018 order and that, because there have been no further filings in the civil action, the civil action has been finally determined, and the cancellation may now resume. Because Petitioner’s claims herein were raised as counterclaims in the civil action and were dismissed with prejudice, Respondent contends that Petitioner is estopped from reasserting those claims in this case and that Respondent is entitled to denial of the petition to cancel with prejudice. The above-referenced July 23, 2018 order to show cause followed. In response to the order to show cause, Petitioner asserts that the claims set forth in the petition to cancel were not actually decided in the civil action, and that, events have taken place since the November 10, 2017 close of discovery in the civil action Cancellation No. 92066213 5 that provide the basis for cancellation of Respondent’s registration and render application of claim preclusion or issue preclusion inappropriate. 14 TTABVUE. In particular, Petitioner contends the following. • Consumer statements of purchasers of similar third-party bottles on Amazon.com made after the close of discovery in the civil action indicate that Respondent’s involved mark is not distinctive and that Respondent is not the exclusive user of that mark, 14 TTABVUE 13-50. • Respondent failed to police its involved mark because, in a complaint filed in an entirely different proceeding on May 30, 2018,2 it based its counterfeiting and infringement claim against CSS, Inc. on its word mark S’WELL instead of the involved bottle mark, 14 TTABVUE 59-98, and, on July 30, 2018, stipulated to dismiss a civil action with Coheso, Inc. in which it alleged infringement of its involved mark in a counterclaim.3 14 TTABVUE 100-32. • The issues of genericness, functionality, lack of distinctiveness and fraud were not actually decided in the civil action because the district court did not allow those issues to be presented to the jury. Respondent contends that 2 The complaint was filed in Can’t Live Without It, LLC d/b/a S’Well Bottle v. CSS, Inc., 1:18- cv-04789, filed in the United State District Court for the Southern District of New York. 3 That civil action is styled Coheso, Inc. d/b/a Mira Brands v. Can’t Live Without It, LLC d/b/a S’Well Bottle, Case No. 5:17-cv-03381, filed June 12, 2017 in the United States District Court for the Northern District of California. Cancellation No. 92066213 6 • Both claim preclusion and issue preclusion are applicable in this case because the claims presented in this case were also presented in the counterclaim in the civil action and were denied with prejudice by the trial judge “for the reasons stated from the bench.” 8 TTABVUE 5. In addition, the district court judge struck the fraud affirmative defense from the bench. 15 TTABVUE 8-9 and 55-56. • The Amazon.com customer reviews that Petitioner seeks to bring before the Board through declaration of its attorneys’ legal assistant Lloyd Tajos are the same type of Amazon.com customer reviews that Petitioner sought to introduce through testimony of Mr. Tajos in the civil action. The district court ruled that Mr. Tajos’s testimony was inadmissible as expert testimony and as hearsay. 15 TTABVUE 26-28. • To show that it did not fail to police its mark, Respondent provided testimony in the civil action from its president Jeffrey Peck concerning its program for enforcing its trade dress rights. 15 TTABVUE 31-35. • There has been insufficient intervening factual change in the brief time since the close of discovery in the civil action to warrant relitigation of the issues herein. In reply, Petitioner contends that new Amazon.com customer reviews reflect the changed status of consumer association in the market; that bottles sold under Respondent’s involved mark are in fourth place for sales among similar bottles; and Cancellation No. 92066213 7 that Respondent’s failure to enforce its trade dress rights points to genericness. 16 TTABVUE. Although the USPTO has expertise in determining trademark registrability, such determinations are not within the USPTO's exclusive jurisdiction. See Trademark Act Section 37, 15 U.S.C. § 1119; Am. Bakeries Co. v. Pan-O-Gold Baking Co., 2 USPQ2d 1208 (D. Minn. 1986). To the extent that a civil action in a Federal district court involves issues in common with those in a proceeding before the Board, the decision of the Federal district court is binding upon the Board.4 See, e.g., Goya Foods Inc. v. Tropicana Prods. Inc., 846 F.2d 848, 6 USPQ2d 1950 (2d Cir. 1988). We turn first to whether the present case is barred by claim preclusion. Under the doctrine of claim preclusion (also known as res judicata), the entry of a final judgment “on the merits” of a claim (i.e., cause of action) in a proceeding precludes relitigation of the same claim in a subsequent proceeding between the parties or their privies, even in those cases where the prior judgment was the result of a default or consent. See Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322 (1955); Chromalloy Am. Corp. v. Kenneth Gordon, Ltd., 736 F.2d 694, 222 USPQ 187 (Fed. Cir. 1984); Flowers Indus., Inc. v. Interstate Brands Corp., 5 USPQ2d 1580 (TTAB 1987). A dismissal with prejudice is a judgment on the merits for purposes of claim preclusion. See Pactiv Corp. v. Dow Chem. Co., 449 F,3d 1227, 78 USPQ2d 1939, 1941 (Fed. Cir. 2006). A second suit is barred by the doctrine of res judicata (also known 4 Likewise, a Board decision, in certain circumstances, may provide a basis for application of issue preclusion. See B&B Hardware, Inc. v. Hargis Industries, Inc., 113 USPQ2d 2045 (2015). Cancellation No. 92066213 8 as claim preclusion) where (1) the parties (or their privies) are identical; (2) there has been an earlier final judgment on the merits of a claim; and (3) the second claim is based on the same set of transactional facts as the first.5 Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 55 USPQ2d 1854, 1856 (Fed. Cir. 2000). Claim preclusion generally bars relitigation of claims that were, or could have been, raised in a prior action between the parties which has been adjudicated on the merits. See Pactiv Corp., 78 USPQ2d at 1941. The parties in the present case and the civil action are identical. Further, notwithstanding that the counterclaim in the civil action did not reach the jury, the denial with prejudice of the counterclaim by the trial judge in the civil action constitutes a judgment on the merits for purposes of claim preclusion. See Pactiv Corp., 78 USPQ2d at 1941. Regarding the remaining factor identified in Jet, supra, we find that the allegations of genericness, functionality, lack of distinctiveness (with regard to Registration No. 5118514 only) and fraud as pleaded in the respective proceedings are based on the same factual allegations, notwithstanding that the petition to cancel sets forth those allegations in greater detail than they are set forth in the counterclaim in the civil action. Compare 1 TTABVUE 6-10 with 14 TTABVUE 145- 147. Indeed, because the counterclaim was filed in the civil action on June 2, 2017, 5 Likewise, the doctrine of issue preclusion (also known as collateral estoppel) bars “the revisiting of ‘issues’ that have been already fully litigated” Jet, Inc., 55 USPQ2d at 1858-59, and requires four preconditions for a second suit to be barred thereby: (1) identity of the issues in a prior proceeding; (2) the issues were actually litigated; (3) the determination of the issues was necessary to the resulting judgment; and (4) the party defending against preclusion had a full and fair opportunity to litigate the issues. Id. at 1859. Cancellation No. 92066213 9 two days after the commencement of the present cancellation proceeding, the allegations set forth in the counterclaim could also have been raised in the cancellation proceeding. Petitioner’s argument against the application of claim preclusion is that the jury did not make a determination on the claims, which, we have found above, is not critical to the application of claim preclusion. Claim preclusion does not bar a party from asserting claims based on activity occurring after the judgment in the earlier suit. See SimpleAir, Inc. v. Google LLC, 126 USPQ2d 1026, 1033 (Fed. Cir. 2018). However, the scant few months that passed between the entry of judgment in the civil action and briefing of the order to show cause is hardly enough to create an intervening factual change sufficient to allow relitigation of the issues herein. Indeed, the cases upon which Petitioner relied in responding to the order to show cause involved second actions that were brought more than a decade after the first case was decided. See CSL Silicones v. Midsun Group Inc., 170 F.Supp.3d 304, 319 (D. Conn 2016) (because suit involves the litigation of facts that occurred after the dismissal of petition to cancel fourteen years previous, that suit is not based on the same set of transactional facts as the earlier cancellation proceeding); Haymaker Sports, Inc. v. Turian, 197 USPQ 32, 39 (TTAB 1977) (prior civil action in which the court determined that both parties were entitled to use their respective marks did not preclude plaintiff from petitioning to cancel defendant’s registration seventeen years later on the ground of abandonment); Johnson & Johnson v. Rexall Drug Co., 186 USPQ 167, 170 (TTAB 1975) (plaintiff permitted to assert genericness claim thirteen years after parties stipulated to dismissal with Cancellation No. 92066213 10 prejudice of the same claim in an earlier suit, provided that new claim was limited to evidence arising subsequent to the prior challenge). To conclude otherwise would render the concept of claim preclusion meaningless and potentially subject Respondent to endless litigation of the claims herein. Based on the foregoing, we find that the petition to cancel is barred by the doctrine of claim preclusion. Because such finding is sufficient to decide this case, we need not reach the issue of issue preclusion. See Trademark Board Manual of Procedure (TBMP) § 102.01 (June 2018). The petition to cancel is dismissed with prejudice.