Pleasant Co.v.Barry Epstein

Trademark Trial and Appeal Board

Sep 29, 2000

No. 92027390 (T.T.A.B. Sep. 29, 2000)

Paper No. 28
9/29/00 TEH
UNITED STATES PATENT AND TRADEMARK OFFICE
_____
Trademark Trial and Appeal Board
_____
Pleasant Company
v.
Barry Epstein
_____
Cancellation No. 27,390
Cancellation No. 27,548
_____
Richard Mandel of Cowan, Liebowitz & Latman, P.C. for Pleasant
Company.
Robert L. Epstein of James & Franklin, LLP for Barry Epstein.
_____
Before Simms, Hairston and Holtzman, Administrative Trademark
Judges.
Opinion by Holtzman, Administrative Trademark Judge:
Pleasant Company has filed two petitions1 to cancel the
following two registrations: Registration No. 387,494 for the
mark AMERICAN BOY for "boys' shoes";2 and Registration No.
1,734,910 for AMERICAN BOY for "clothing, namely, shirts,
pants, tops, sweatshirts, and suits."3

1 These petitions were consolidated by the Board on January 8, 1999.
2 Issued May 20, 1941; second renewal; the word AMERICAN has been
disclaimed.
3 Issued November 24, 1992; Section 8 affidavit accepted.
THIS DISPOSITION
IS NOT CITABLE AS PRECEDENT
OF THE T.T.A.B.
Cancellation No. 27,390
2
As the ground for cancellation, petitioner alleges as to
each registration, that respondent "has abandoned its AMERICAN
BOY trademark" and that respondent has "completely
discontinued all use of the mark AMERICAN BOY in its business
without an intent to resume such use."4
Respondent denied the salient allegations of the petitions
to cancel.
The record consists of the files of the involved
registrations; petitioner's notice of reliance on certain of
respondent's discovery responses; trial testimony (with
exhibits) consisting of a deposition of respondent, Barry
Epstein, taken by petitioner during its own testimony period
and a deposition (taken by petitioner pursuant to subpoena) of
B. Alan Olson, a purported licensee of respondent's AMERICAN
BOY mark. Petitioner has also relied on a later declaration
of Mr. Olson and the declaration of Anita Segal, a buyer for
Burlington Coat Factory. Both declarations were made of
record by stipulation of the parties.
Both parties filed trial briefs but an oral hearing was
not requested.

4 Petitioner alleges that on March 2, 1998, petitioner filed an
application to register AMERICAN BOY for children's clothing based on
an allegation of a bona fide intention to use the mark in commerce.
Cancellation No. 27,390
3
As preliminary matters, respondent has objected, in its
brief, to the admissibility of the Segal and Olson
declarations arguing that they are not properly supported by
either an affidavit as required by Trademark Rule 2.123(b), or
a declaration in accordance with Trademark Rule 2.20.
Respondent has also objected, in its brief, to the testimony
of Ms. Segal arguing that because respondent "has no record of
receiving any notice of filing such testimony with the Board,
as required by 37 CFR § 2.125(c)," the declaration "was not
filed with the Board in a timely fashion."
The first objection is without merit. In lieu of either
an affidavit or declaration, a document may be verified under
the provisions of 28 USC § 1746 which provides, in relevant
part, that wherever any matter is required to be supported by
the sworn declaration or affidavit of the person such matter
may, "with like force and effect" be supported by the unsworn
declaration "as true under penalty of perjury." Ms. Segal's
and Mr. Olson's declarations are clearly in compliance with
the requirements of this statute.
In any event, to the extent that there are any
irregularities in the verifications, such deficiencies are
considered waived by respondent. An objection of this nature
should have been raised promptly, or at least at some
reasonable time following respondent's receipt of the
Cancellation No. 27,390
4
declarations so that the deficiencies could have been cured.
See, for example, Trademark Rules 2.123(e)(3) and 2.123(j);
Fed. R. Civ. P. 32(d)(1),(2) and (3)(A) and (B); and TBMP §
718.02 and cases cited therein.
Respondent's second objection is not well taken either.
The certificate of service accompanying the transmittal of Ms.
Segal's declaration to the Board states that a service copy of
the declaration was mailed to respondent on September 14,
1999. Moreover, although respondent's counsel claims that he
received no notice of the "filing" of the declaration, counsel
makes no claim that he never received any service copy of the
declaration. Indeed, respondent's counsel had stipulated to
the submission as well as the admissibility of this very
evidence and an earlier copy of the declaration was apparently
sent to respondent on September 9, 1999 along with the
stipulation for respondent's counsel's signature.
Moreover, there is no claimed or actual prejudice from
petitioner's asserted failure to "file" the declaration with
the Board. We note that respondent has not objected to the
substance of the declaration or indicated that petitioner's
reliance on the declaration in any way prevented respondent
from addressing any issues raised therein during its own
testimony period.
Cancellation No. 27,390
5
We turn then to the facts of the case. In 1934,
respondent's grandfather started a company under the name of
American Boy Clothing Incorporated with two of respondent's
uncles. The company manufactured and sold children's
outerwear, clothing, pants, and tops under the AMERICAN BOY
label through the wholesale trade. The company continued to
operate until 1974. Respondent entered the business in 1965
"in sales." By 1969, he had acquired 62 percent of the
company. In 1974, respondent and his uncle (the sole
shareholders at that point) decided to liquidate the
corporation in view of his uncle's retirement. Respondent,
through an informal agreement with his uncle, assumed full
ownership rights in the AMERICAN BOY trademark.
In September 1974, respondent formed a company called
Rifle Industries ("Rifle"). This business consisted of a
showroom with sales and administrative offices in Manhattan,
and was engaged in the sale of knit shirts and fleece to
approximately 5,000 customers. Garments were produced by this
company under three primary labels. RIFLE products
constituted 75% of total sales over the 19-year existence of
the company and AMERICAN BOY clothing constituted about 15% of
total sales. Total sales for the business reached $7 million
per year in the 1980's and peaked at $12 million per year in
the early nineties, dropping to a total of $10 million in
Cancellation No. 27,390
6
1992. The clothing was manufactured by an outside contractor,
Alperin Incorporated ("Alperin"), over which respondent
exercised quality control. Respondent was initially the sole
shareholder of Rifle but was later joined by two other
individuals who each acquired a 1/3 interest in the company.
On January 3, 1990, respondent entered into a license
agreement with Rifle giving that company the right to use the
AMERICAN BOY mark because, according to respondent, that was
the only label that respondent owned that was not created as
part of the Rifle company, and because of the increasing
requests and popularity of the AMERICAN BOY trademark. Rifle
was liquidated in 1993 and the inventory ($900,000), less than
10% of which comprised AMERICAN BOY products, was sold to the
manufacturer, Alperin. Respondent assigned rights to Alperin
in the other labels but Alperin was not interested in
acquiring the AMERICAN BOY label.
In the meantime, in December 1978, respondent along with
Leonard and Alan Olson, formed a new company called Barrel
Sportswear Limited ("Barrel") to sell sweaters and sportswear,
types of clothing not produced by Rifle. Approximately 15% of
Barrel's sales were attributable to the AMERICAN BOY label,
with the remainder attributed to the "Barrel" label or
licensed labels such as "NFL" and "NBA." The business was
operated out of the same, but expanded, offices as Rifle and
Cancellation No. 27,390
7
there was an overlap in customers, including Wears and J. C.
Penney. On January 3, 1990, respondent entered into a license
agreement with Barrel company (as he had with Rifle) giving
Barrel the right to use the AMERICAN BOY mark. Sales for
Barrel company reached approximately $10 million in 1991. As
a result of a weakening market, and because the dissolution of
Rifle in 1993 affected the profitability of Barrel, in 1995,
Barrel was liquidated and dissolved. The shareholders
assigned the Barrel label to Alan Olson who went to work for a
company called Marvin Knitwear Incorporated and he later re-
formed his own company, Barrel Sportswear Limited, bringing
the BARREL label with him. The AMERICAN BOY label was not
transferred as part of the liquidation of Barrel.
In January 1995, respondent formed another new company
called B.R. Milford Inc. ("Milford") after being approached by
Gary Worth, an acquaintance who was a designer in the ladies
wear business. Respondent initially owned the entire interest
of Milford and at the end of 1996, Mr. Worth became a full
partner in the company. The business operated an inventory
showroom, a design room and a sample room, in Manhattan, using
subcontractors for the manufacture of the clothing, including
a marker grader, cutting room, and a sewing facility. The
company produced ladies sportswear as a result of Mr. Worth's
reputation as a designer of such clothing and used two labels
Cancellation No. 27,390
8
on the clothing, B.R. MILFORD and AMERICAN BOY. The B.R.
MILFORD products were sold through independent sales
representatives in Atlanta, Dallas, Chicago and New York,
selling either through trade shows or "on the road." The
AMERICAN BOY label was sold through two major accounts who
were interested in labels that consumers would not see in
department stores. These customers "showed at hotels,"
considered "very popular" in the ladies wear business. They
operated out of a suite of rooms for about two weeks at a
time, with business obtained from a mailing list of a couple
thousand names. At least one of these customers had
specifically requested the AMERICAN BOY label. Less than 10%
of the total sales of Milford were attributed to the AMERICAN
BOY label. The Milford business never really took off, with
sales totaling $3 million over the three-year period. Sales
of the AMERICAN BOY label during that time amounted to
approximately $100,000 for the entire period. Milford ceased
manufacture of AMERICAN BOY product in October or November of
1997. Because Milford was unprofitable, the decision was made
between March and April 1998 to wind down the business by
selling off inventory. Respondent testified that as of April
of that year, Milford may have had 100 garments left in stock.
Invoices for that period (March 2, 1998 through July 9, 1998)
reflect sales of 77 garments under the AMERICAN BOY label.
Cancellation No. 27,390
9
Invoices show that as of April, only 19 garments were sold.
Respondent testified that he no longer had the invoices for
the remaining garments, stating that Mr. Worth, his ex-
partner, could have taken the invoices with him. Respondent
testified that the other 80 garments were sold to discount
outlets for probably about $15 per garment. Milford vacated
its business premises sometime in either April or early May
1998, and respondent sold the remaining inventory out of his
home. The invoices show that four garments under the AMERICAN
BOY label were sold on June 4, 1998 and that the last two
AMERICAN BOY garments were sold on July 9, 1998.
On June 12, 1998, respondent began working on a full time
basis managing a Laundromat business (American Boys Laundry
Incorporated) owned by his wife. Approximately in April 1999,
respondent became a loan officer for Saxon National Mortgage
Company. Respondent testified that he had conducted "very
preliminary" discussions about a possible licensing
arrangement for the AMERICAN BOY mark in July or August 1998,
but he admitted that he was not actively soliciting potential
licensees.
Either in late 1998 or early 1999, Alan Olson had re-
formed a company called Barrel Sportswear Limited. Respondent
testified that sometime in January or February of 1999, Olson
approached respondent as to the availability of a license for
Cancellation No. 27,390
10
the AMERICAN BOY mark. In May 1999, Olson purportedly
notified respondent that Olson had an order for AMERICAN BOY
sweaters with Burlington Coat Factory ("Burlington"). Olson
had initially testified that a sale of approximately $2,000 to
$3,000 worth of AMERICAN BOY sweaters had been sold to
Burlington sometime during April or May 1999. Olson claimed
that he had had a discussion with Anita Segal of Burlington
and told her that some of the clothing would have the AMERICAN
BOY label. Ms. Segal purportedly indicated to Olson that she
did not care what label goes into the garment. Olson
testified that the first shipment of AMERICAN BOY sweaters
would be made in September or October 1999. On June 7, 1999,
respondent and Alan Olson, on behalf of Olson's reformed
Barrel company, entered into a license agreement for use of
the AMERICAN BOY mark on clothing.
Because of the inconsistencies and the "suspicious"
circumstances surrounding the license agreement, petitioner
subpoenaed Anita Segal. Ms. Segal stated in her declaration
that she had never heard of the AMERICAN BOY brand. In
addition, she denied ever having discussed the AMERICAN BOY
label with Olson or that she ever ordered AMERICAN BOY
clothing from Olson. She further stated that Burlington would
have no motivation to purchase a brand name unknown to her,
and that if there had been any sale, it was unauthorized by
Cancellation No. 27,390
11
either her or Burlington. Following petitioner's submission
of the Segal declaration, and before Olson had signed the
transcript of his deposition, a new attorney for Olson
contacted petitioner's counsel indicating that Olson wished to
make substantial corrections to his testimony. By stipulation
of the parties, Olson submitted this testimony by declaration
wherein he recanted the essential portions of his previous
testimony. By his declaration, Olson stated that the reason
the license agreement was signed was that respondent had
approached Olson and asked him to sign the agreement as a
"favor" to respondent concerning a "potential dispute" over
the AMERICAN BOY label. Olson further stated that he was not
motivated to sign the agreement by any interest in selling
AMERICAN BOY clothing, that he had no intent to sell AMERICAN
BOY clothing at the time he entered into the agreement, that
he made no sales of clothing with AMERICAN BOY labels, and
that he had no discussions with respondent or Burlington about
selling AMERICAN BOY clothing.
We note first, that respondent has essentially admitted
that the mark in Registration No. 387,494 has been abandoned
with no intent to resume use. Respondent admits that that
there has been no use of AMERICAN BOY for footwear for at
least the past three years and that he was unaware of any
Cancellation No. 27,390
12
sales or offer for sale of AMERICAN BOY shoes "in this
century." (Epstein test. p.129-130)
We turn then to Registration No. 1,734,910 for clothing.
The petition to cancel this registration, which was filed on
March 3, 1998, does not specify any particular period of
nonuse of this AMERICAN BOY mark. In its brief on the case,
petitioner claims that respondent has abandoned the mark "by
ceasing manufacture during 1997, liquidating his remaining
inventory in 1998 and then leaving the clothing business."
Respondent concedes nonuse of the mark as of July 1998, when
the remaining inventory was sold. However, respondent
contends that he had an intent to resume use of the mark.
A prima facie case of abandonment may be established by
petitioner with proof of nonuse in the United States for three
consecutive years. See Section 45 of the Trademark Act; and
Imperial Tobacco Ltd. v. Philip Morris Inc., 899 F.2d 1575, 14
USPQ2d 1390 (Fed. Cir. 1990). The prima facie case
"eliminates the challenger's burden to establish the intent
element of abandonment as an initial part of [his] case," and
creates a rebuttable presumption that the registrant
abandoned the mark without intent to resume or commence use
under the statute. See Imperial Tobacco, supra at 1579, 14
USPQ2d at 1393. This presumption shifts the burden to the
registrant to produce evidence that he either used the mark
Cancellation No. 27,390
13
during the statutory period or intended to resume or commence
use. See Cerveceria Centroamericana S.A. v. Cerveceria India,
Inc., 892 F.2d 1021, 1026, 13 USPQ2d 1307, 1312 (Fed. Cir.
1989).
If the burden were on respondent in this case,
respondent's unsupported claims of some vague intention to
license the use of its AMERICAN BOY mark would not be
sufficient to establish an intent to resume use. See Rivard
v. Linville, 133 F.3d 1446, 45 USPQ2d 1374 (Fed. Cir. 1998).
Moreover, Olson recanted essentially all of his material
testimony thereby destroying his credibility and discrediting
his initial claims regarding the license agreement. Under the
circumstances, we could not accord any weight to either
Olson's testimony or the effect of the license agreement on
any asserted intent by respondent to resume use of the mark.
However, the burden is not on respondent to show an intent
to resume use. Petitioner has alleged that there has been no
use of the AMERICAN BOY mark, at the earliest, as of October
or November 1997. The time period since then is obviously
insufficient to support a prima facie case of abandonment.
Thus, the burden of establishing an intent to abandon the mark
falls on petitioner. Since abandonment is in the nature of a
complete forfeiture, it carries a strict burden of proof.
P.A.B. Produits et Appareils de Beaute v. Satinine Societa,
Cancellation No. 27,390
14
670 F.2d 1031, 196 USPQ 801 (CCPA 1978) and Woodstock's
Enterprises Inc. (California) v. Woodstock's Enterprises Inc.
(Oregon), 43 USPQ2d 1440 (TTAB 1997). Petitioner has not met
this burden.
First, we disagree that nonuse of the mark occurred as of
the last date of manufacture of the AMERICAN BOY clothing.
Respondent testified that its clothing would not normally have
even been manufactured until January or February of 1998 for
sale in the spring season of that year. In any event, merely
because respondent ceased manufacture of the AMERICAN BOY
product (whether that date is October 1997 or February 1998)
or even dissolved the Milford business and discontinued sales
under the AMERICAN BOY mark does not, particularly under the
circumstances of this case, demonstrate an intent to abandon
the mark. Simply put, nonuse of the AMERICAN BOY mark is not,
in itself, tantamount to an abandonment of the mark. Our
primary reviewing court (or, more accurately, its predecessor,
the U.S. Court of Customs and Patent Appeals) has considered
the existence of goodwill as evidence to negate an intent to
abandon. Sterling Brewers, Inc. v. Schenley Industries, Inc.,
441 F.2d 675, 169 USPQ 590 (CCPA 1971). If the goodwill built
up by a mark has so declined that the mark no longer has any
source-indicating significance to the public, the mark is
abandoned. See Wallpaper Mfrs., Ltd. v. Crown Wallcovering
Cancellation No. 27,390
15
Corp., 680 F.2d 755, 214 USPQ 327 (CCPA 1982). However,
goodwill does not ordinarily disappear or completely lose its
value overnight. A mere temporary cessation of business does
not automatically lead to the conclusion that the business and
goodwill have come to an end. See Person's Co. v.
Christman, 900 F.2d 1565, 14 USPQ2d 1477 (Fed. Cir. 1990) and
Defiance Button Machine Co. v. C & C Metal Products Corp., 759
F.2d 1053, 225 USPQ 797 (2d Cir. 1985).
The record demonstrates that the AMERICAN BOY trademark
has been in continuing use in connection with clothing for
almost seventy years. It is clear from the evidence that
respondent has acquired goodwill in the AMERICAN BOY mark,
that the goodwill has continued to exist in the mark, and that
the goodwill has remained exclusively associated with
respondent during that time. Petitioner has not shown, or
even claimed otherwise. The record further demonstrates that
over the years, respondent has been able to, at least for the
most part, successfully reconstitute or reinvent his business
ventures so as to maximize potential growth and sales of his
clothing. This pattern of activity further casts doubt on any
claim by petitioner that the cessation of respondent's
business in its latest incarnation, Milford company, resulted
in an abandonment of the mark.
Cancellation No. 27,390
16
Thus, we find that petitioner essentially "jumped the gun"
in seeking to cancel this registration for abandonment.5
Decision: The petition to cancel Registration No.
1,734,910 is dismissed. The petition to cancel Registration
No. 387,494 is granted, and that registration will be
cancelled in due course.
R. L. Simms
P. T. Hairston
T. E. Holtzman
Administrative Trademark
Judges, Trademark Trial
and Appeal Board

5 Petitioner, in a footnote in its brief, alleges that respondent had
no basis on which to file a Section 8 affidavit on June 22, 1998.
Petitioner states, in passing, that the "fraudulent filing of the
declaration constitutes an additional basis on which to cancel the
mark." The petition has not been amended to plead a claim of fraud,
nor do we find that this issue has been tried by the parties. Thus,
the issue of fraud has been given no consideration.