Mark R. Newmanv.Unlimited Concepts, Inc.

Trademark Trial and Appeal Board

Jan 30, 2001

No. 92024265 (T.T.A.B. Jan. 30, 2001)

Hearing: Paper No. 78
July 12, 2000 PTH
1/30/01
UNITED STATES PATENT AND TRADEMARK OFFICE
_____
Trademark Trial and Appeal Board
_____
Mark R. Newman, d/b/a
MRN Enterprises
v.
Unlimited Concepts, Inc. d/b/a
Tri-Corp Marketing
_____
Cancellation No. 24,265
_____
George R. Brown of Whitehall Linden Grynkewich & Halladay
for Mark R. Newman, d/b/a MRN Enterprises.
Howard B. Rockman of Sonnenschein Nath & Rosenthal for
Unlimited Concepts, Inc., d/b/a Tri-Corp Marketing.
_____
Before Seeherman, Hairston and Chapman, Administrative
Trademark Judges.1
Opinion by Hairston, Administrative Trademark Judge:
Mark R. Newman, d/b/a MRN Enterprises has petitioned to
cancel the registrations owned by Unlimited Concepts, Inc.,
d/b/a Tri-Corp Marketing for the marks shown below,
1 Judge Seeherman has been substituted for Judge McLeod who is no
longer with the U.S. Patent and Trademark Office.
THIS DISPOSITION
IS NOT CITABLE AS PRECEDENT
OF THE T.T.A.B.
Cancellation No. 24,265
2
Registration No. 1,809,488
and
Registration No. 1,811,017
both for “smoking pipes.”2
2 Registration No. 1,809,488 issued December 7, 1993 and
Registration No. 1,811,017 issued December 14, 1993;
respectively. A Section 8 affidavit was filed in connection with
the latter registration. Each registration contains the
statement that “The lining is a feature of the mark and is not
intended to indicate color.”
Cancellation No. 24,265
3
As grounds for cancellation of both registrations,
petitioner alleges that he has used the marks shown in the
registrations sought to be cancelled in connection with
tobacco water pipes and T-shirts since prior to the dates of
first use alleged in the registrations; that he is the owner
of applications to register these marks (Serial Nos.
74/431,706 and 74/431,707); that registration of his
applications has been refused under Section 2(d) of the
Trademark Act in view of the involved registrations; that
Registration Nos. 1,811,017 and 1,809,488 were fraudulently
obtained because respondent’s president, Jeffrey Richards,
knew of petitioner’s “property interest” in the marks in
both registrations; and that this property interest was
material information which respondent failed to disclose to
the Patent and Trademark Office at the time respondent filed
its trademark applications.3
Respondent, in its answer, has denied the salient
allegations of the petition to cancel.4
The record consists of the pleadings; the files of the
involved registrations; and the trial testimony, with
3 We should point out that notwithstanding petitioner’s
allegations of prior use, he has not asserted a likelihood of
confusion claim.
4 Respondent also asserted the affirmative defenses of
acquiescence, laches, estoppel, and unclean hands. In addition,
respondent asserted that the Board does not have jurisdiction
over this matter because an agreement between the parties
provides that all disputes will be decided by arbitration.
Inasmuch as respondent did not pursue any of these defenses, we
have given them no consideration.
Cancellation No. 24,265
4
related exhibits, taken by each party. Both parties filed
briefs on the case and an oral hearing was held before the
Board.
The Parties
Petitioner, Mark R. Newman, operates two retail smoke
shops known as Head East and Head West in the Tucson,
Arizona area. Petitioner opened his Head East shop in
November 1977 and his Head West shop in 1983. Petitioner
sells smoking accessories, cigarettes, tobacco, t-shirts and
incense.
Respondent, Unlimited Concepts Inc., is in the business
of selling contemporary tobacco products, such as tobacco
water pipes. Jeffrey Richards is president and CEO of
respondent.
Although not a party to this proceeding, Aztec
Technology International (Aztec) was a partnership which was
formed on May 11, 1988 and its members were Mark R. Newman,
the petitioner herein; Jeffrey Richards, president and CEO
of respondent; and Ray Clark. The purpose of Aztec,
according to the partnership agreement, was “to legally
obtain and distribute any and all items the partners may
wish to obtain and distribute.” During its existence, Aztec
had no employees, offices, or telephone number.
Cancellation No. 24,265
5
Abandonment
Petitioner, for the first time in his brief on the
case, has raised the issue of abandonment with respect to
the mark in Registration No. 1,809,488. Petitioner’s claim
of abandonment is based on the testimony of Jeffrey
Richards. When asked during a testimony deposition whether
respondent had abandoned the mark, Mr. Richards responded
“Yes.” (Richards Deposition, p. 41.) Respondent, in its
brief on the case, does not dispute that it has abandoned
the mark. Also, respondent indicated that it did not intend
to file a Section 8 affidavit in connection with the
registration. Indeed, Office records indicate that no
affidavit was filed. In view of the foregoing, we deem the
petition to cancel to be amended under Fed. R. Civ. 15(b) to
include a claim of abandonment with respect to Registration
No. 1,809,488. Moreover, in view of Mr. Richard’s testimony
that the mark therein has been abandoned, the petition to
cancel Registration No. 1,809,488 on the ground of
abandonment is granted.
Having granted the petition to cancel Registration No.
1,809,488 on the ground of abandonment, we need not reach
the issues of ownership and fraud with respect to this
registration. We turn then to the issues of ownership and
fraud with respect to Registration No. 1,811,017. The
parties refer to the mark therein as the JESTER mark.
Cancellation No. 24,265
6
Petitioner testified that in 1989 he came up with the idea
and actually developed the prototype for a new style of
tobacco water pipe known as GRAFFIX. According to
petitioner, he wanted to put his personal signature on the
product and with the assistance of a graphic artist, Richard
Reavis, he came up with the JESTER mark. Petitioner
testified that he paid Mr. Reavis $700.00 cash for the art
work. According to petitioner, he thereafter granted an
implied license to Aztec to distribute the GRAFFIX style
tobacco water pipes bearing the JESTER mark. Petitioner
testified that in late 1989 he contacted SMF manufacturing
in Tucson to handle large scale production of the tobacco
water pipes. Aztec, as evidenced by the cancelled checks of
record, paid SMF Manufacturing the costs of production of
the pipes. In addition, in January 1990 Aztec paid Graphyx
Artwear the costs of printing 10,000 labels bearing the
Jester mark. These labels were applied to tobacco water
pipes which were distributed by Aztec. Petitioner testified
that he took the “overruns” when the labels were printed and
applied these to water pipes which he sold at his two smoke
shops. Petitioner testified that he has used the JESTER
mark on tobacco water pipes continuously since January 1990.
According to petitioner, he was acting on his own when he
developed the GRAFFIX style tobacco water pipe and the
JESTER mark, that Aztec was a mere distributor of GRAFFIX
Cancellation No. 24,265
7
tobacco water pipes bearing the JESTER mark, and that he did
not assign any rights in the JESTER mark to Aztec.
Respondent’s president and CEO Jeffrey Richards
testified that petitioner was acting on Aztec’s behalf when
petitioner developed the GRAFFIX style tobacco water pipe
and the JESTER mark, and that as indicated above, Aztec paid
for the manufacturing of the water pipes and the labels
which were affixed to the water pipes. Richards testified
that when Aztec ceased doing business in March 1991, he
liquidated the assets of Aztec through a company named
Reminiscence and paid petitioner his share of the proceeds.
According to Richards, neither petitioner nor the other
partner in Aztec, Ray Clark, had any desire to continue
doing business together. Richards testified that he
continued to distribute the GRAFFIX style tobacco water
pipes with the JESTER mark through respondent Unlimited
Concepts, Inc. and continues to do so. Thus, respondent
maintains that rights in the JESTER mark passed to it from
Aztec.
Petitioner’s principal argument in this case is that
respondent is not the owner of the JESTER mark because
Aztec, as a mere distributor, had no ownership rights in the
mark which it could transfer to respondent. Alternatively,
petitioner argues that even if Aztec had rights in the
JESTER mark, respondent did not acquire such rights because
Cancellation No. 24,265
8
Aztec did not transfer them to respondent by way of a formal
assignment. Finally, petitioner argues that respondent
committed fraud because respondent claimed in its
application that it first used the JESTER mark in March 1990
when respondent knew that it did not use the mark on this
date.
With respect to applicant’s first argument, we note
that the Aztec partnership was a loosely organized venture,
to say the least. The entire Aztec partnership agreement is
less than one page and there are no provisions concerning
ownership of products or marks which were developed. Also,
the parties have offered conflicting testimony as to whether
Aztec was the owner of the JESTER mark or a mere
distributor. In the absence of a written agreement covering
ownership of the JESTER mark, and in view of the conflicting
testimony on this matter, we cannot say that petitioner has
proven that respondent is not the owner of the JESTER mark
because Aztec was a mere distributor and had no ownership
rights to transfer to respondent. Rather, the fact that the
documentary evidence shows that Aztec paid for the
manufacture of the water pipes as well as the costs of
printing the labels bearing the JESTER mark would tend to
support respondent’s position that Aztec was not a mere
distributor.
Cancellation No. 24,265
9
Also, it is well settled that rights in a trademark are
gained only through actual usage of the mark. No rights
accrue to one who invents or comes up with the idea for a
trademark. 2 J. Thomas McCarthy, McCarthy on Trademarks and
Unfair Competition, Section 16.11 (4th ed. 1996). Thus,
even though it is undisputed that the JESTER mark was
petitioner’s idea, this is not enough to establish
petitioner’s ownership of the mark. We recognize that
petitioner, for the most part, created the prototype of the
GRAFFIX style tobacco water pipe.5 Although in the case of
a manufacturer and distributor there is a presumption that
the manufacturer owns the mark, the present situation is
somewhat different because another entity actually
manufactured the water pipes and it was Aztec which paid the
costs of the manufacturing.
With respect to actual usage of the mark, petitioner
testified that he took “overruns” from the first printing of
labels bearing the JESTER mark and applied them to water
pipes which were sold at his two smoke shops in January
1990. Petitioner maintains that this was the first use of
the JESTER mark. Respondent, on the other hand, introduced
as an exhibit an Aztec invoice dated February 2, 1990 for
the sale of JESTER water pipes to T-Shirt Headquarters in
5 We say for the most part because there is testimony that he
received some assistance from Ray Clark, another partner in
Aztec.
Cancellation No. 24,265
10
St. Louis, Missouri. Moreover, it is respondent’s position
that petitioner’s January 1990 sales of JESTER water pipes
were on behalf of the Aztec partnership.6 This seems
reasonable to us inasmuch as previously indicated, Aztec
paid for the water pipes and the labels. Further, based on
the testimony, both petitioner and Richards continued to use
the JESTER mark on water pipes after Aztec ceased doing
business in March 1991. Petitioner testified that he became
aware that Richards was still using the mark and told
Richards to stop. Although Richards did not stop,
petitioner took no action. Rather, the testimony of both
petitioner and Richards indicates that the two entered into
yet another venture to sell a second type of tobacco water
pipe. There is nothing in writing concerning this venture.
This continuing relationship between petitioner and Richards
militates against a finding that petitioner was the owner of
the JESTER mark, that is, if petitioner believed that
Richards was not entitled to use the JESTER mark, it seems
unlikely that petitioner would have entered into yet another
venture with Richards in the absence of a written agreement
with specific terms concerning ownership of products and
marks (including JESTER) which were developed.
6 We note that respondent, in its application, alleged a first
use date of March 1990, although respondent’s president, Jeff
Richards, testified that Aztec first sold water pipes bearing the
JESTER mark around January 1990.
Cancellation No. 24,265
11
With respect to petitioner’s second argument, we cannot
say, based on this record, that upon the dissolution of
Aztec, rights in the JESTER mark were not transferred to
respondent. While we recognize that there was no formal
assignment of rights in the JESTER mark from Aztec to
respondent, there is no dispute that upon the dissolution of
Aztec, Jeff Richards, through respondent, continued to use
the JESTER mark. Moreover, Richards paid petitioner certain
sums of money which may be reasonably characterized as
petitioner’s share of the Aztec partnership’s assets. Also,
it does not appear that the third partner, Ray Clark, had
any interest in continuing to use the mark.
We turn then to petitioner’s final argument. As noted
by the Board in Kemin Industries, Inc. v. Watkins Products,
Inc., 192 USPQ 327 (TTAB 1976) at 329, fraud upon the U.S.
Patent and Trademark Office:
. . . signifies a willful withholding from the
Office by an applicant or registrant of material
information which, if transmitted and disclosed
to the Examiner, would have resulted in the
disallowance of the registration sought. To
state it another way, a person seeking
registration is under a duty not to make any
knowingly misleading or incorrect statement
in affidavits forming a part of the application
for registration. There is, however, a
material legal distinction between a “false”
representation and a “fraudulent” one, the
latter involving an intent to deceive, whereas
the former may be occasioned by a
misunderstanding, an inadvertence, a mere
negligent omission, or the like.
(citations omitted)
Cancellation No. 24,265
12
Moreover, as the Board stated in Smith International,
Inc. v. Olin Corporation, 209 USPQ 1033 (TTAB 1981) at 1044:
. . . the very nature of the charge of fraud
requires that it be proven “to the hilt”
with clear and convincing evidence; there is
no room for speculation, inference, or surmise
and any doubt must be resolved against the
charging party.
Keeping the above in mind, we cannot say that
petitioner has established by clear and convincing evidence
that respondent committed fraud on the U.S. Patent and
Trademark Office because it alleged that it first used the
JESTER mark in March 1990. While the better practice would
have been for respondent to have disclosed in the
application that it was relying on first use of the JESTER
mark by Aztec, the fact that respondent failed to
specifically indicate this was not fraudulent. Moreover,
the fact that respondent alleged a first use date of March
1990 rather than January 1990 as set forth in the testimony
of Jeff Richards is not fatal inasmuch as the March 1990
date was prior to the filing date of the application, i.e.,
April 8, 1993. It is well settled that a misstatement of a
date of first use in commerce is not fraudulent provided
that there has been use of the mark in commerce prior to the
filing date of the registrant’s application. See Girard
Polly-Pig, Inc. v. Polli-Pig by Knapp, Inc., 217 USPQ 1338
(TTAB 1983).
Cancellation No. 24,265
13
Finally, we recognize that Richards filed another
application for a different mark, SEALS, for a paper used to
wrap tobacco wherein he listed himself and petitioner as
co-owners of the mark sought to be registered. Aztec
distributed wrapping papers bearing the SEALS mark.
Petitioner claims that this is “evidence” that Richards has
taken inconsistent positions with respect to ownership of
marks which were used by Aztec. Although respondent did not
specifically address this contention in its brief, we do not
find that the listing of petitioner and Richards as co-
owners of the SEALS mark is necessarily inconsistent in view
of the very loose nature of the Aztec partnership.
As noted above, a claim of fraud must be proven “to the
hilt.” Not only does petitioner’s evidence fall short in
this regard, but quite frankly, the evidence in general in
this case is contradictory and unclear. As the plaintiff in
this proceeding, petitioner had the burden of establishing
that respondent is not the owner of the JESTER mark and that
respondent committed fraud in obtaining its registration for
this mark. Petitioner has failed to meet his burden in both
instances.
Decision: The petition to cancel Registration No.
1,809,488 on the ground of abandonment is granted; the
petition to cancel Registration No. 1,811,017 on the grounds
Cancellation No. 24,265
14
of lack of ownership of the JESTER mark and fraud in
obtaining the registration is denied.