Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-94-05027/USCOURTS-caDC-94-05027-0/pdf.json

Parties Involved:
Checkers Drive-In Restaurants, Inc.
Appellant
Commissioner Of Patents and Trademarks
Appellee

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 17, 1995 Decided April 21, 1995

No. 94-5027

CHECKERS DRIVE-IN RESTAURANTS, INC.,

APPELLANT

v.

COMMISSIONER OF PATENTS AND TRADEMARKS,

APPELLEE

On Appeal from the United States District Court

for the District of Columbia

(No. 93cv01024)

David M. Pitcher argued the cause and filed the briefs for appellant.

Nancy C. Slutter, Associate Solicitor, U.S. Patent and Trademark Office, argued the cause for

appellee. With her on the brief was Albin F. Drost, Deputy Solicitor, U.S. Patent and Trademark

Office. Fred E. McKelvey entered an appearance.

Before: EDWARDS, Chief Judge, HENDERSON and ROGERS, Circuit Judges.

Opinion for the Court filed by Chief Judge EDWARDS.

EDWARDS, Chief Judge: This appeal concerns the scope of the automatic stay provision

under the Bankruptcy Code. This provision, which is found at 11 U.S.C. § 362(a) (1988), generally

operates to block legal actions that could affect the property of a debtor in bankruptcy, and it serves

both to shelter the debtor from harassment and to prevent creditors from engaging in a race to

liquidate the estate's assets.

Appellant, Checkers Drive-In Restaurants, Inc., ("Checkers"), claims the automatic stay

barred it from filing an affidavit as normally required to maintain its federalservice mark registration

pursuant to section 8 of the Lanham Trademark Act, 15 U.S.C. § 1058 (1988) ("Lanham Act").

Under section 8 of the Lanham Act, a service mark registration is canceled at the end of six years

following the date of registration, unless the registrant files an affidavit (between the fifth and sixth

years) setting forth his or her current use of the mark. Id. Checkers's section 8 filing came due while

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1The Lanham Act defines a service mark as "any word, name, symbol, or device, or any

combination thereof ... [used or intended to be used] to identify and distinguish the services of one

person, including a unique service, from the services of others and to indicate the source of the

services, even if that source is unknown." 15 U.S.C. § 1127 (1988).

it was pursuing a petition to cancel a competing service mark registration of a debtor in bankruptcy.

Checkers failed to file the required affidavit during the statutory period, allegedly on the assumption

that the Bankruptcy Code's automatic stay provision barred the required filing. The United States

Patent and Trademark Office then canceled Checkers'sservice mark registration. Checkers appealed

to the Commissioner of Patents and Trademarks ("Commissioner"), arguing that, because the

automatic stay barred it from filing the affidavit, its failure to do so did not warrant the cancellation

of its service mark registration under the Lanham Act. Rejecting this reasoning, the Commissioner

denied Checkers's appeal. When Checkers challenged this decision in the District Court, the trial

judge granted the Commissioner's motion for summary judgment. Checkers now appeals from that

decision.

We affirm the judgment of the District Court. Although the Bankruptcy Code's automatic

stay provision is broad in scope, it does not reach asfar as Checkers would stretch it here. Checkers

asserts that the section 8 filing requirement was stayed by operation of either of two subsections of

the automatic stay provision. The first stays the continuation of any judicial, administrative, or other

action against the debtor if the action was begun before the debtor filed its petition for bankruptcy.

See 11 U.S.C. § 362(a)(1). The second stays any act to take possession of, or exercise control over,

property held by the bankrupt's estate. See id. § 362(a)(3). We find neither to apply. Checkers's

filing of a section 8 affidavit was not part of its claim against the debtor, nor would it have affected

the debtor's property. Rather, it would have merely maintained the status quo with respect to

Checkers's own property. Accordingly, we hold that the Commissioner properly canceled Checkers's

registration.

I. BACKGROUND

This case arises from a dispute between two owners of federally registered service marks,

both of which employed the word "Checkers" in their design.1 Checkers owned, by assignment, a

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By contrast, a trademark is "any word, name, symbol, or device, or any combination

thereof ... [used or intended to be used by a person] to identify and distinguish his or her goods,

including a unique product, from those manufactured or sold by others and to indicate the source

of the goods, even if that source is unknown." Id.

2Section 8(a) of the Lanham Act states:

Each certificate of registration shall remain in force for ten years: Provided, That the

registration of any mark under the provisions of this chapter shall be canceled by the

Commissioner at the end of six years following its date, unless within one year next preceding the

expiration of such six years the registrant shall file in the Patent and Trademark Office an affidavit

setting forth those goods or services recited in the registration on or in connection with which the

mark is in use in commerce and attaching to the affidavit a specimen or facsimile showing current

use of the mark, or showing that any nonuse is due to special circumstances which excuse such

nonuse and is not due to any intention to abandon the mark. Special notice of the requirement for

such affidavit shall be attached to each certificate of registration.

15 U.S.C. § 1058(a). 

service mark for use in connection with its marketing of restaurant services. Checkers's mark was

registered pursuant to the Lanham Act on October 23, 1984. By virtue of this registration, Checkers

gained a number of benefits, for federalregistration of a trademark orservicemark constitutes "prima

facie evidence of the validity of the registered mark and of the registration of the mark, of the

registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark

in commerce on or in connection with the goods orservicesspecified in the [registration] certificate."

15 U.S.C. § 1057(b) (1988). Moreover, the Lanham Act provides registrants with the opportunity

to recover treble damages for violations of their rights, see 15 U.S.C. § 1117(a) (1988), and, after

five years of continuous use, permits registrants to make their rights "incontestible"i.e., to

transformtheir registration into conclusive evidence oftheirrightsbyfiling an affidavitsetting forth

certain information, see id. §§ 1065, 1115(b) (1988).

However,section 8 ofthe LanhamAct providesthat, to maintain these benefits, allregistrants

must file, between the fifth and sixth years after initial registration, an affidavit setting forth the

continued use of the registered mark in commerce "on or in connection with" the goods or services

listed in the registration statement for the mark, or providing an adequate explanation for nonuse of

the mark. 15 U.S.C. § 1058(a). If a registrant fails to file the required affidavit, the Commissioner

by law must cancel its registration at the end of the sixth year.2Id. Thus, Checkers was required to

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file its section 8 affidavit no later than October 23, 1990, to maintain the registration of its service

mark.

On March 16, 1988, another service mark registrant, Checkers Restaurant Group, Inc.,

("CRG"), petitioned the Trademark Trial and Appeal Board ("TTAB") to cancel Checkers's

registration pursuant to 15 U.S.C. § 1064 (1988), which providesfor the filing ofsuch a cancellation

petition "by any person who believes that he is or will be damaged by the registration of a mark on

the principalregister." In support of its petition, CRG argued, inter alia, that Checkers'sregistration

interfered with CRG's federally guaranteed right to use its service mark "in other than its existing

geographic area." Appendix for Appellant ("App.") 18. Checkers answered this cancellation petition

and counterclaimed, seeking to cancel CRG's own service mark on essentially the same grounds.

In August 1989, before these competing cancellation claims could be resolved, CRG filed a

petition for relief under Chapter 11 of the federal Bankruptcy Code, 11 U.S.C. § 1101 et seq. (1988

& Supp. V 1993), in the United States Bankruptcy Court for the Eastern District of New York. In

so doing, CRG triggered the application of the automatic stay provision, 11 U.S.C. § 362(a), which

providesthat the filing of a bankruptcy petition "operates as a stay, applicable to all entities," of eight

different categories of conduct encompassing a wide swath of legal actions, including litigation, lien

enforcement, and administrative proceedings, that could affect or interfere with the property of the

bankrupt's estate. Accordingly, on January 8, 1990, CRG petitioned the TTAB to stay all

proceedings relating to the cross-cancellation petitions filed by itself and Checkers. The TTAB

responded on February16, 1990, with an orderstaying the cancellation proceeding "since petitioner's

registration isthe subject of a counterclaim." Checkers Restaurant Group, Inc. v. Checkers of North

America, Inc., Cancellation No. 17,053, slip op. at 1-2 (Feb. 16, 1990), reprinted in App. 31-32.

Checkers and CRG then negotiated a settlement agreement by which CRG transferred all

rights to its service mark to Checkers in exchange for $42,500, and Checkers granted CRG a license

to use itsservice mark at CRG'stwo existing restaurantsin New York City. On November 30, 1990,

the Bankruptcy Court approved this settlement. Accordingly, on December 19, 1990, Checkers

moved the TTAB to lift the stay it had imposed on the cancellation proceedings, dismiss those

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3Section 108(c) provides, in relevant part:

[I]f applicable nonbankruptcy law, an order entered in a nonbankruptcy

proceeding, or an agreement fixes a period for commencing or continuing a civil

action in a court other than a bankruptcy court on a claim against the debtor, ...

and such period has not expired before the date of the filing of the petition, then

such period does not expire until the later of

(1) the end of such period, including any suspension of such period

occurring on or after the commencement of the case; or

(2) 30 days after notice of the termination or expiration of the stay

under section 362 ... of this title ... with respect to such claim.

11 U.S.C. § 108(c). 

proceedings as moot, and accept a section 8 affidavit filed concurrently. In response, the TTAB

dismissed the parties' cancellation petitions with prejudice, and forwarded Checkers's section 8

affidavit to the Post-Registration Section of the Patent and Trademark Office for consideration.

However, because Checkers filed the affidavit after October 23, 1990, that Office's

Affidavit/RenewalExaminerrejected it as untimely and canceled Checkers's service mark registration.

Checkerssought relieffromtheCommissioner, arguing that the automatic stay imposed by 11 U.S.C.

§ 362(a) prevented it from filing a section 8 affidavit during the pendency of the cancellation

proceedings, and that, after the stay was lifted, its section 8 affidavit was timely filed pursuant to 11

U.S.C. § 108(c) (1988), which extends periods fixed by nonbankruptcy law "for commencing or

continuing a civil action in a court other than a bankruptcy court on a claim against the debtor" until

30 days after a stay is terminated, if the period fixed by nonbankruptcy law already has run.3 The

Commissioner rejected Checkers's argument, reasoning that

this petitioner was not the party in bankruptcy and the filing of a Section 8 affidavit

in relation to its [service mark registration] would not have been an exercise of

control over a debtor in bankruptcy nor would it have furthered any claim against the

debtor. The Section 8 filing would have spoken only to the petitioner's own

continued use of its own registration.

In re Trademark Registration of Checkers of North America, Inc., No. 91-272(R),slip op. at 3 (Feb.

11, 1993) (footnote omitted), reprinted in App. 129. Checkers sought judicial review of the

Commissioner's decision by filing suit in the District Court. On January 7, 1994, the District Court

granted summary judgment for the Commissioner, holding that the Bankruptcy Code did not stay

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4Meanwhile, Checkers obtained a new service mark from the Commissioner that is only

slightly different from its previous mark. 

Checkers's obligation to file a timely section 8 affidavit. See Checkers Drive-In Restaurants, Inc. v.

Commissioner of Patents and Trademarks, Civ. Action No. 93-1024-TFH,slip op. at 12-21 (D.D.C.

Jan. 7, 1994), reprinted in App. 219-28.4

II. ANALYSIS

On appeal, Checkers claims the District Court erred in rejecting its argument that the

automatic stay provision blocked the filing of a section 8 affidavit while Checkers was pursuing its

cancellation petition against a debtor in bankruptcy. Specifically, Checkers claims that either of two

subsections of the automatic stay provision operated to bar the required filing. The first stays "the

commencement or continuation, including the issuance or employment of process, of a judicial,

administrative, or other action or proceeding against the debtor that was or could have been

commenced before the commencement ofthe" bankruptcy. 11 U.S.C. § 362(a)(1). The second stays

"any act to obtain possession of property of the estate or of property from the estate or to exercise

control over property of the estate." Id. § 362(a)(3). We review de novo the District Court's grant

of summary judgment on this issue. See Harbor Ins. Co. v. Stokes, 45 F.3d 499, 501 (D.C. Cir.

1995).

In the words of the Congress that enacted it, the automatic stay imposed by 11 U.S.C. §

362(a) "is one of the fundamental debtor protections provided by the bankruptcy laws." S. REP. NO.

989, 95th Cong., 2d Sess. 54 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5840; H.R. REP. NO.

595, 95th Cong., 2d Sess. 340 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6296.

It gives the debtor a breathing spell from his creditors. It stops all collection efforts,

all harassment, and all foreclosure actions. It permits the debtor to attempt a

repayment or reorganization plan, or simply to be relieved of the financial pressures

that drove him into bankruptcy.

S. REP. NO. 989 at 54-55, reprinted in 1978 U.S.C.C.A.N. 5840-41; H.R. REP. NO. 595 at 340,

reprinted in 1978 U.S.C.C.A.N. 6296-97. The automatic stay also offers important protection for

creditors.

Without it, certain creditors would be able to pursue their own remedies against the

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debtor's property. Those who acted first would obtain payment of the claims in

preference to and to the detriment of other creditors. Bankruptcy is designed to

provide an orderlyliquidation procedure under which all creditors are treated equally.

A race of diligence by creditors for the debtor's assets prevents that.

S. REP. NO. 989 at 49, reprinted in 1978 U.S.C.C.A.N. 5835; H.R. REP. NO. 595 at 340, reprinted

in 1978 U.S.C.C.A.N. 6297; see also United States v. Inslaw, Inc., 932 F.2d 1467, 1473 (D.C. Cir.

1991) ("The object of the automatic stay provision is ... to make sure that creditors do not destroy

the bankrupt estate in their scramble for relief."), cert. denied, 502 U.S. 1048 (1992); MartinTrigona v. Champion Fed. Sav. & Loan Ass'n, 892 F.2d 575, 577 (7th Cir. 1989) (stating that

automatic stay seeks "to protect the bankrupt's estate from being eaten away by creditors' lawsuits

and seizures of property before the trustee has had a chance to marshal the estate's assets and

distribute them equitably among the creditors").

To effectuate these congressional purposes, section 362(a) generally must be construed

broadly. See 2 COLLIER ON BANKRUPTCY ¶ 362.04 (Lawrence P. King ed., 15th ed. 1994) ("The stay

of section 362 is extremely broad in scope and ... should apply to almost any type of formal or

informal action against the debtor or the property of the estate."); see also Midlantic Nat'l Bank v.

New Jersey Dep't of Envtl. Protection, 474 U.S. 494, 504 (1986) (recognizing that, "in enacting §

362 in 1978, Congress significantly broadened the scope of the automatic stay"). Its breadth is not

unlimited, however. As the Ninth Circuit has stated, "while seemingly broad in scope, the automatic

stay provisions should be construed no more expansively than is necessary to effectuate legislative

purpose." In re Chugach Forest Prods., Inc., 23 F.3d 241, 245 (9th Cir. 1994) (quoting In re

Continental Air Lines, Inc., 61 B.R. 758, 779 (S.D. Tex. 1986)). Thus, we have held that, although

the automatic stay blocks many legal actions against the debtor, it does not similarly bar claims

brought by the debtor against other parties. See Carley Capital Group v. Fireman's Fund Ins. Co.,

889 F.2d 1126, 1127 (D.C. Cir. 1989) (per curiam ). More recently, in Inslaw, we held that the

automatic stay did not bar the Department ofJustice from using computer software provided by, and

claimed by, a debtor in bankruptcy. 932 F.2d at 1472-74. In so doing, we rejected the debtor's

argument that the Department's use of the software without the debtor's consent amounted to an

"exercise of control" over property of the estate within the meaning of subsection 362(a)(3),

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commenting that such a construction of the statute "would take it well beyond Congress's purpose."

Id. at 1472-73.

Like the debtor in Inslaw, Checkers here asserts a construction ofsection 362(a) that would

extend that provision "well beyond Congress's purpose." The policies underlying the automatic

staythose of sheltering the debtor from the demands of creditors and preserving the bankrupt's

estate pending orderlydistribution bya trusteeare not implicated byan act,such asCheckers'sfiling

of a section 8 affidavit, that has no effect upon a claim against the debtor or the property ofthe estate,

but rather maintainsthe status quo with respect to the property of an entity engaged in litigation with

the debtor. We therefore reject Checkers's contention that the filing required by section 8 of the

Lanham Act in this case would have constituted either the "continuation" of an "action or proceeding

against the debtor" within the meaning of subsection 362(a)(1), or an act "to exercise control over

property of the estate" within the meaning of subsection 362(a)(3).

A. Subsection 362(a)(1)

Checkersfirst claimsthat itsfiling of a section 8 affidavit wasstayed by subsection 362(a)(1),

which bars legal actions that continue a pre-petition claim against the debtor. Checkers rests its

argument on that portion of its cancellation petition alleging that CRG's registration interfered with

Checkers's right to use its service mark outside of its existing geographic area. See 15 U.S.C. §

1057(b) (stating that federalregistration is "prima facie evidence ... of the registrant's exclusive right

to use the registered mark in commerce"); see also 3 J. THOMAS MCCARTHY, MCCARTHY ON

TRADEMARKS AND UNFAIR COMPETITION § 26.13[1] (3d ed. 1994) ("[T]he owner of a Principal

Register registration has superior rights throughout the United States."). Checkers contends that,

because this claim alleged interference with a right guaranteed to Checkers by virtue of the federal

registration of its service mark, its maintenance of federal registration was necessary to its ability to

bring the claim. Thus, Checkers argues, any act to maintain its federal registrationsuch as the filing

of a section 8 affidavitconstituted the "continuation" of its claim against the debtor within the

meaning of subsection 362(a)(1). This is a specious claim.

Subsection 362(a)(1) stays the continuation of "a judicial, administrative, or other action or

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5Checkers also cites two cases holding that the inception of bankruptcy proceedings exempts a

creditor from state laws requiring the filing of a continuation statement to renew a financing

statement reflecting a security interest in the assets of the debtor. See In re Chaseley's Foods,

proceeding against the debtor." 11 U.S.C. § 362(a)(1) (emphasis added). Checkers's interpretation

of this provision would extend the automatic stay to encompass not only actions against the debtor,

but also acts that maintain the status quo within which such actions exist. In this case, the action

against the debtor was Checkers's cancellation claim against CRG. Checkers's filing of a section 8

affidavit constituted no part of that claim. Rather, the filing served merely to maintain the status quo

with respect to Checkers's own pre-existing service mark registration. We discern nothing in the

automatic stay provision nor in its underlying policy to suggest that Congress intended it to block

actions that maintain the status quo between a debtor and its legal adversary. To the contrary, our

review of the legislative history reveals precisely the opposite intentfor, as already mentioned,

Congressincluded section 362(a) in the BankruptcyCode to ensure the preservation ofthe status quo

between a debtor and its creditors. See In re Chugach Forest Prods., 23 F.3d at 243 ("[The

automatic stay] is designed to effect an immediate freeze of the status quo by precluding and

nullifying post-petition actions, judicial or nonjudicial, in nonbankruptcy fora against the debtor or

affecting the property ofthe estate.") (internal quotations omitted); In re Morton, 866 F.2d 561, 564

(2d Cir. 1989) (holding that operation of state law requiring lien holder to renew lien in state court

was not stayed by section 362 because "extension ... simply allows the holder of a valid lien to

maintain the status quoa policy not adverse to bankruptcy law, but rather in complete harmony

with it").

The cases cited by Checkers are not to the contrary. Checkers relies on cases from the

bankruptcy courts holding that the automatic stay barred filings required to revive a pre-petition

judgment lien, see In re Thomasson, 66 B.R. 503, 505 (Bankr. W.D. Mo. 1986), to reinscribe a

notice of assignment of the debtor's accounts receivable, see In re Pernie Bailey Drilling Co., Inc.,

131 B.R. 53, 59 (Bankr. W.D. La. 1991), aff'd, 157 B.R. 100 (W.D. La. 1992), aff'd, 993 F.2d 67

(5th Cir. 1993), and to extend an attachment of the debtor's property, see In re Paul, 67 B.R. 342,

346-47 (Bankr. D. Mass. 1986).5 While we express no view as to the merits of these decisions, we

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Inc., 30 B.R. 452, 455-58 (N.D. Ind. 1983), aff'd as modified, 726 F.2d 303 (7th Cir. 1983); In

re Funding System Asset Management Corp., 38 B.R. 351, 352 (Bankr. W.D. Pa. 1984). 

However, as Checkers itself acknowledges, see Brief for Appellant at 23, the courts in these cases

did not rest their holdings on section 362(a) of the Bankruptcy Code, but rather relied on the

relationship between the policies underlying the state law requirements and the effects of a

bankruptcy filing. 

6To have standing to pursue a cancellation petition, a litigant must demonstrate a "likelihood of

damage from the continuing registration of the mark" in dispute. 2 MCCARTHY, supra, §

20.13[1]; see also Golden Gate Salami Co. v. Gulf States Paper Corp., 332 F.2d 184, 188

(C.C.P.A. 1964) (noting that damage from conflicting trademark and service mark registrations is

"not often subject to precise proof") (internal quotations omitted). 

find each distinguishable from the present case for the simple reason that each involved a filing

necessary to renew a legal actionbe it a lien, an assignment of assets, or an attachment of

propertyoperating directly against the debtor. Here, by contrast, Checkers's section 8 filing would

have operated not to renew or sustain its cancellation petition against CRGthe action against the

debtorbut, as we have said, merely to maintain the status of its own property.

We recognize that Checkers's filing of a section 8 affidavit could, in some attenuated sense,

be deemed necessary to the maintenance of part of Checkers's cancellation petition against CRG.

Without a valid federal registration, Checkers might not have had standing to pursue that portion of

its cancellation petition claiming injury from CRG's alleged interference with rights guaranteed to

Checkers by federal law.6 However, to acknowledge that the section 8 filing was tangentially related

to Checkers's ability to litigate a portion of its claim against CRG is not to bring that filing within the

scope ofsection 362(a). Any construction of section 362(a) that would reach the filing at issue here

would extend the power of the bankruptcy courts into a whole host of activities far removed from

the concerns addressed by the Bankruptcy Code. For example, under Checkers's construction of the

provision, a homeowner involved in an action to quiet title against a debtor in bankruptcy could claim

that section 362(a) stayed his payment of property taxes imposed by state law. Such payment

certainly is in some sense necessary to the maintenance of good title in the property, and, therefore,

could be described as the "continuation" of a claim against the debtor. However, not only does such

a sweeping construction ofsection 362(a) have the potential to raise serious constitutional questions

regarding the scope ofthe jurisdictionthat maypermissiblybe exercised bynon-Article III bankruptcy

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7The provision states in full:

After the commencement of a cancellation proceeding, if it comes to the attention of the

Trademark Trial and Appeal Board that the respondent has permitted his involved registration to

be canceled under section 8 of the Act of 1946 or has failed to renew his involved registration

under section 9 of the Act of 1946, an order may be issued allowing respondent until a set time,

not less than fifteen days, in which to show cause why such cancellation or failure to renew should

not be deemed to be the equivalent of a cancellation by request of respondent without the consent

of the adverse party and should not result in entry of judgment against respondent as provided by

paragraph (a) of this section. In the absence of a showing of good and sufficient cause, judgment

may be entered against respondent as provided by paragraph (a) of this section.

37 C.F.R. § 2.134(b). 

courts, see Inslaw, 932 F.2d at 1472-73, but it is not even remotely necessary to the achievement of

the provision'stwin goalsnamely, creating a "breathing spell" for the debtor and preventing a "race

of diligence" by creditors. For these reasons, we reject it.

Checkers also seeks to invoke subsection 362(a)(1) in this case by arguing that its filing of

a section 8 affidavit continued a claim against the debtor because it prevented CRG from prevailing

in its own cancellation claim against Checkers. Checkers points out that the Commissioner's Rules

of Practice in Trademark Cases provide for entry of judgment against a respondent in a cancellation

proceeding where the respondent allows his or her registration to be canceled pursuant to section 8

while the proceeding is pending. See 37 C.F.R. § 2.134(b) (1994).7 Because Checkers's filing of a

section 8 affidavit would have prevented CRG from prevailing under this rule, the filing was stayed,

Checkers argues.

This contention also lacks merit. Checkers's position amounts to an argument that section

362(a) disabled it from taking any action to fend off CRG's attempts to cancel Checkers's service

mark registration. However, it is well settled in this circuit and others that the section 362(a)

automatic stay does not require persons involved in litigation with a debtor to capitulate to the

debtor's every demand. See Inslaw, 932 F.2d at 1473 ("Fulfillment ofth[e] purpose [ofthe automatic

stay] cannot require that every party who acts in resistance to the debtor's view of its rights violates

§ 362(a) if found in error by the bankruptcy court."); see also In re Merrick, 175 B.R. 333, 338

(Bankr. 9th Cir. 1994) ("The automatic stay should not tie the hands of a defendant while the plaintiff

debtor is given free rein to litigate."); Martin-Trigona, 892 F.2d at 577 ("There is ... no policy of

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preventing persons whom the bankrupt has sued from protecting their legal rights."). Thus, the fact

that Checkers's filing of a section 8 affidavit might have prevented CRG from winning total victory

presents no basis for the application of subsection 362(a)(1).

B. Subsection 362(a)(3)

Checkers next arguesthat itsfiling of a section 8 affidavit wasstayed by subsection 362(a)(3),

which bars acts to exercise control over property of the bankrupt's estate. As Checkers sees it, by

filing an affidavit necessary to maintain its own service mark registration, Checkers would have taken

an act to exercise control over the right to use the "Checkers" service mark, in derogation of CRG's

own claim to that right. Central to Checkers's theory is the notion that, by virtue of their

cross-cancellation claims, Checkers and CRG each were vying for the single and exclusive federal

right to use a service mark employing the word "Checkers" in interstate commerce. Thus, in

Checkers's view, any act that served to maintain its own claim to that right was an act to "exercise

control over" property of the bankrupt's estate within the meaning of subsection 362(a)(3).

Checkers misunderstands the nature of the right created by federal registration under the

Lanham Act. We recognize that federal registration constitutes prima facie evidence of the

registrant's "exclusive right to use the registered mark in commerce." 15 U.S.C. §§ 1057(b), 1115(a)

(emphasis added). However, we also note that each federal registration constitutes such evidence.

In this case, therefore, the federal registrations of both Checkers and CRG constituted prima facie

evidence that each enjoyed the exclusive right to utilize its respective service mark in commerce.

While the cross-cancellation proceeding might ultimatelyhave established that protectionofthe rights

of one registrant required cancellation of the service mark of the other, each held an independent

property right in its own service mark until that decision was made, if ever. Thus, contrary to

Checkers'stheory, itsfiling of a section 8 affidavit would have affected only its own property, not the

property of CRG. Accordingly, the required filing was not stayed by subsection 362(a)(3).

C. Cancellation of a Registration Under Section 8 of the Lanham Act

Because we find that neithersubsection 362(a)(1) norsubsection 362(a)(3)stayedCheckers's

filing of a section 8 affidavit in this case, we hold that the Commissioner properly canceled Checkers's

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service mark. In so holding, we recognize that the circumstances of this case do not present the

paradigmatic situation that prompted Congress to enact section 8 of the Lanham Act. Congress

intended that section "to remove from the register automatically marks which are no longer in use.

Failure of registrantsto file affidavits resultsin removal ofsuch deadwood." Morehouse Mfg. Corp.

v. J. Strickland & Co., 407 F.2d 881, 887 (C.C.P.A. 1969) (emphasis omitted). Nevertheless, in

establishing cancellation as the penalty for failure to file the required affidavit, Congress made no

exception for the innocent or the negligent. Thus, the Commissioner had no discretion to do other

than cancel Checkers's service mark registration in this case. See In re Mother Tucker's Food

Experience (Canada), Inc., 925 F.2d 1402, 1405 (Fed. Cir. 1991) ("It was not within the

Commissioner's discretionary authority to waive [the section 8] requirement.").

Moreover, while the application of the section 8 filing requirement may appear harsh in this

case, Checkers failed to avail itself of a simple means of avoiding this result. Checkers neglected to

take the prudential step of seeking clarification from the bankruptcy court, or even from the

Commissioner, as to whether its section 8 filing obligation was stayed. Checkers had ample time to

make such an inquiry; CRG filed its petition for bankruptcy approximately two months before the

first day of the year-long "window" during which Checkers wasrequired to file itssection 8 affidavit.

By failing to inquire, Checkers assumed the risk that the required filing was not stayed. See In re

Clark, 49 B.R. 704, 707 (Bankr. D. Guam 1985) ("Where there is uncertainty about ... applicability

of the automatic stay, a creditor should petition the court for clarification. If the creditor does not,

he takes a calculated risk of being held in contempt [for violating the stay]."); In re Pody, 42 B.R.

570, 573-74 (Bankr. N.D. Ala. 1984) (same). That gamble did not pay off, and accordingly,

Checkers's service mark was canceled at the conclusion of the filing period.

III. CONCLUSION

For the foregoing reasons, the judgment of the District Court is affirmed.

So ordered.

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