Dragon Bleu (SARL) v. VENM, LLC, Opp. No. 91212231, 112 U.S.P.Q.2d 1925 (T.T.A.B. 2014)
In this precedential decision, the Trademark Trial and Appeal Board (the “Board”) clarified the standard for pleading a claim to cancel a registration issued under Section 66(a) of the Lanham Act, 15 U.S.C. § 1141f(a), on the ground of abandonment. Section 66(a) governs the registration of marks extended to the U.S. under the Madrid Protocol.
VENM, LLC applied to register the mark VENM for “dance costumes.” Dragon Bleu (SARL) opposed on the ground of likelihood of confusion. Slip Op. at 1. Dragon Bleu pleaded three registrations in its Notice of Opposition, each of which had been registered under Section 66(a). Id. at 1-2, n. 3-5. VENM filed counterclaims seeking to cancel Dargon Bleu’s three pleaded registrations on the grounds of fraud, nonuse, and abandonment. Id. at 1. Dragon Bleu then moved to dismiss VENM’s counterclaims, which the Board granted.
As to the fraud claim, VENM alleged that Dragon Bleu had committed fraud in the application for one of its pleaded registrations when it “represented” that its mark was not likely to cause confusion with a cited registration because the goods in its application were to be limited to clothing used in connection with martial arts. Id. at 5. VENM asserted that this statement was false because Dragon Bleu planned to use the mark offensively against those who sold goods other than martial arts clothing. Id. at 6. The Board held that VENM failed to allege the elements of a fraud claim. First, there was no false statement. Dragon Bleu’s statement merely limited the goods for which it owned a registration; it was not a representation that Dragon Bleu would not use or enforce its mark in connection with other goods. Id. at 7. Second, the supposed false statement was not material because the Examining Attorney’s decision to register Dragon Bleu’s mark was not based on what Dragon Bleu intended to do with it. Id. at 8. Rather, the decision was based on Dragon Bleu’s limitation of goods in its application. Id. Finally, VENM had not alleged any intent to deceive on the part of Dragon Bleu. Id. at 9.
The Board next addressed VENM’s claim of nonuse prior to registration. VENM alleged that because Dragon Bleu’s website did not display or offer for sale any of the goods covered by two of its registrations (one of which was the same registration subject to the fraud claim), Dragon Bleu could not claim that it had used its marks for any of those goods. Id. at 10-11. The Board rejected this claim. It explained that both registrations were issued based on requests for extension of protection of international registrations to the U.S. pursuant to Section 66(a), which does not require use in U.S. commerce prior to registration. Id. at 11-12. Thus, the issue of nonuse prior to registration was irrelevant.
Finally, the Board addressed VENM’s abandonment claim. The Board explained that a mark is abandoned “[w]hen its use has been discontinued with intent not to resume such use” and that three consecutive years of nonuse is prima facie evidence of abandonment under Section 45 of the Lanham Act, 15 U.S.C. § 1127. Slip Op. at 13. Thus, to sufficiently plead a claim of abandonment, a plaintiff has to allege three consecutive years of nonuse or a period of nonuse less than three years coupled with intent not to resume use. Id. at 13-14. Because Dragon Bleu’s marks were registered under Section 66(a), which does not require use at any time prior to registration, the question at issue was: “What is the earliest point in time from which the period of nonuse may be measured for an abandonment claim with respect to a Section 66(a) registration?” Id. at 15. The Board noted that there was no Board or Federal Circuit precedent on this issue. Therefore, it looked to how abandonment was treated with respect to a registration issued under Section 44(e) of the Lanham Act, 15 U.S.C. § 1126(e), which is similar to a Section 66(a) registration in that use of the applied-for mark is not required prior to registration. Slip Op. at 15. The Federal Circuit had previously held that for a registration issued under Section 44(e), the period of nonuse that can be considered prima facie evidence of abandonment starts to run only when the registration issues. Id. The Board held that the same rule should apply to Section 66(a) registrations. Id. at 16.
Here, VENM had filed its counterclaim when Dragon Bleu’s registrations were less than three years old, and VENM had not alleged that Dragon Bleu had intended not to resume use. Id. at 17-18. Therefore, VENM had failed to adequately plead that Dragon Bleu had abandoned its registrations, and the Board dismissed this claim. Id. at 18.
Thus, to sufficiently plead abandonment of a Section 66(a) registration in a cancellation proceeding, a plaintiff must allege three years of nonuse since the date of registration or nonuse with an intent not to resume use. Consequently, if the Section 66(a) registration is less than three years old, there must be well-pleaded allegations that the registrant has discontinued use of its mark and has no intent to resume use.