NO PRECLUSION WHERE TRADEMARK BOARD LACKED POWER TO HEAR ALL CLAIMS
The U.S. Court of Appeals for the Ninth Circuit found no claim preclusion in a trademark dispute where not all claims before the district court had been heard by the Trademark Trial and Appeal Board (TTAB). V.V.V. & Sons Edible Oils Ltd. v. Meenakshi Overseas, LLC, 946 F.3d 542 (9th Cir. 2019).
V.V.V. & Sons Edible Oils Limited (VVV) is an Indian company that sells Indian food products in several countries, including the United States, and claims to have used the mark IDHAYAM (a Tamil word for “heart”) to market sesame oil since the 1980s. The owner of New Jersey-based Meenakshi Overseas, LLC (Meenakski) filed a trademark application with the U.S. Patent and Trademark Office (USPTO) in 2009 to register IDHAYAM (’654 Mark) for use with sesame oil. VVV opposed that application but abandoned its opposition by failing to respond to a TTAB order to show cause. The TTAB entered judgment against VVV and dismissed its opposition with prejudice.
Meenakshi’s owner received full rights to the ’654 Mark and assigned them to Meenakshi, which then applied to register two additional marks including IDHAYAM (’172 and ’000 Marks). The USPTO registered the marks without opposition from VVV, which itself applied to register IDHAYAM for use with edible oils. The USPTO denied the application due to a likelihood of confusion with Meenakshi’s IDHAYAM mark. Almost two years later VVV filed another application to register IDHAYAM for use with cooking oils, and the USPTO denied that application for the same reason.
VVV then filed with the TTAB a petition to cancel Meenakshi’s three IDHAYAM registrations. At the same time VVV filed a complaint with the U.S. District Court for the Eastern District of California seeking damages and injunctive relief for unfair competition, trademark dilution, and trademark infringement as to Meenakshi’s IDHAYAM marks. Based solely on claim preclusion, the district court dismissed the claims with respect to the ’654 Mark, finding that VVV relied on facts and theories previously raised in its opposition or otherwise available at the time of the TTAB proceedings.
Meenakshi then moved to dismiss the claims as to the remaining two marks. VVV did not oppose the motion “due to the complexity of the area of law and the desire to have the Ninth Circuit Court of Appeals . . . review the case as soon as possible.” The district court granted the motion, and VVV appealed to the U.S. Court of Appeals for the Ninth Circuit.
First, the appellate court considered whether claim preclusion applied. The court said that res judicata, otherwise known as claim preclusion, is applicable whenever there is (1) an identity of claims, (2) a final judgment on the merits, and (3) privity between parties (citing Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 322 F.3d 1064, 1077 (9th Cir. 2003). Although it assumed that the district court had correctly applied the elements of claim preclusion, the appellate court found that an exception applied in this case.
The court said that an exception to claim preclusion applies if “[t]he plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy or form of relief in the first action because of the limitations on the subject matter jurisdiction of the courts” and “the plaintiff desires in the second action to rely on that theory or to seek that remedy or form of relief” (quoting Restatement (Second) of Judgments § 26(1)(c)). The court noted that because the TTAB is concerned only with whether marks should be registered with the USPTO, “the TTAB had no power to decide VVV’s claims of infringement, dilution, and unfair competition or to ‘grant . . . either injunctive [relief] or damages’” (citing Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1158 (9th Cir. 2007)). Thus, the court said, “it would be unfair to preclude VVV from litigating these claims and seeking relief when barriers existed that prevented it from doing so in the first action” (citing Restatement (Second) of Judgments § 26(1)(c); other citation omitted).
Second, the court considered whether claim preclusion barred VVV’s allegation that the ’654 Mark was invalid due to fraud. Without discussing the issue at length, the court held that “[b]ecause claim preclusion does not bar VVV’s claims as to the [’654 Mark], it likewise does not bar VVV’s proposed fraud claim as to [that] mark.”
Accordingly, the appellate court reversed the district court’s dismissal of VVV’s claims with respect to the ’654 Mark. But the appellate court upheld the district court’s dismissal of VVV’s claims with respect to the ’100 Mark and the ’172 Mark. The court noted because VVV had not opposed Meenakshi’s motion to dismiss those claims, VVV had waived the issue (citing Mendoza v. Block, 27 F.3d 1357, 1360 (9th Cir. 1994)) (“[i]n order to preserve an issue for appeal, a party must make known to the court any objection to the court’s action”)).
U.S. COUNSEL NOW REQUIRED IN PROCEEDINGS BEFORE TRADEMARK BOARD
The Trademark Trial and Appeal Board (TTAB) has issued an order underscoring the new requirement that any parties to a TTAB proceeding who have a non-U.S. domicile be represented by a U.S. attorney. Cloudworks Consulting Services Inc. v. Ongoing Operations, LLC, Cancellation No. 92073144 (February 21, 2020) [precedential].
Cloudworks Consulting Services Inc. (Cloudworks), an Ontario corporation based in that Canadian province, filed a petition on December 31, 2019, to cancel Registration No. 3519690 for the mark CLOUDWORKS and Design as used for various computer services, in International Class 42. The petition claimed the registration was invalid because of its owner’s alleged non-use and abandonment of the mark and its alleged fraud on the U.S. Patent and Trademark Office (USPTO).
A Canadian trademark attorney/agent represented Cloudworks in connection with preparing and filing the petition for cancellation. That attorney/agent is listed on the roll of recognized Canadian Trademark Agents maintained by the USPTO’s Office of Enrollment and Discipline and therefore, under the USPTO’s reciprocity arrangement with the Canadian Intellectual Property Office, may represent Canadian clients applying to register marks with the USPTO.
Effective August 3, 2019, however, the USPTO “amended its rules to require applicants, registrants, or parties to a proceeding before the [TTAB] whose domicile is not located within the United States or its territories to be represented by an attorney who is an active member in good standing of the bar of the highest court of a state in the United States, or the District of Columbia, or any Commonwealth or territory of the United States.” Cloudworks Consulting Services Inc. (citing Requirement of U.S. Licensed Attorney for Foreign Trademark Applicants and Registrants, 84 Fed. Reg. 31498 (July 2, 2019); Trademark Rule 2.11, 37 C.F.R. § 2.11; and Patent and Trademark Rules 11.1 and 11.14, 37 C.F.R. §§ 11.1 and 11.14). “This requirement is not satisfied if a party, like [Cloudworks], is represented by a foreign attorney or agent, even if that attorney or agent has been granted reciprocal recognition by the USPTO pursuant to Patent and Trademark Rules 11.14(c) and (f), 37 C.F.R. §§ 11.14(c) and (f).” Id.
Although a U.S. attorney is now required in TTAB proceedings, a reciprocally recognized attorney or agent may still appear as an “additionally appointed practitioner.” Id. In that capacity “the attorney or agent remains authorized to prepare and sign [TTAB] filings and to communicate with Board personnel by telephone or email.” Id.
The TTAB’s order granted Cloudworks 30 days to appoint U.S. counsel, “failing which the [TTAB] may issue an order to show cause why the petition for cancellation should not be dismissed” for failure to comply with Trademark Rule 2.11(a). Id.