Source: https://ipmall.law.unh.edu/content/ttab-trademark-trial-and-appeal-board-1-western-worldwide-enterprises-group-inc-v-qinqdao
Timestamp: 2019-04-26 09:56:52+00:00

Document:
*1 WESTERN WORLDWIDE ENTERPRISES GROUP, INC.
A petition to cancel two registrations now owned by Qinqdao Brewery, by assignment from China National Cereals, Oils and Foodstuffs Import and Export Corporation (hereinafter "China National"), has been filed by Western Worldwide Enterprises Group, Inc. The registrations for which cancellation is sought are Registration No. 1,187,046 [FN1] for the mark "TSINGTAO" for "beer" and Registration No. 1,254,707 [FN2] for the mark "TSINGTAO BEER" and design, also for "beer". Both registrations achieved their fifth anniversary prior to the commencement of this proceeding.
As grounds for the petition for cancellation, petitioner alleges that it is engaged in the business of marketing beer in the United States and that in connection with that business, petitioner uses the term "TSINGTAO" geographically descriptively. With respect to Registration No. 1,187,046, petitioner alleges that the original registrant, China National, was merely an import-export company granted the right to export beer under the TSINGTAO mark by the People's Republic of China and was not the owner of the mark; that China National has abandoned the mark in Registration No. 1,187,046 by discontinuing all use of the mark with the intent not to resume use of the mark; that China National falsely, and with the intent to deceive the U.S. Patent and Trademark Office, declared in the application that matured into Registration No. 1,187,046 that the mark first had been used in commerce in 1960 when, in fact, it was not being used in commerce on that date; that China National falsely, and with the intent to deceive the Office, declared in a declaration filed during the prosecution of the application that the mark had been in use on the goods at the time of the filing of the application and that the mark was, as of the date of the declaration, still in use when, in fact, the People's Republic of China had revoked registrant's right to export beer bearing the mark "TSINGTAO" to the United States; that China National falsely and with the intent to deceive the Office declared in that same declaration that the mark had been substantially exclusively used in commerce for five years when in fact the mark had not been used exclusively and the People's Republic of China had revoked China National's right to export beer to the United States bearing the "TSINGTAO" mark; that China National falsely and with the intent to deceive the Office declared in a Section 8 & 15 affidavit filed on March 17, 1987 that the mark had been in continuous use in United States commerce for five years since the date of registration, when, in fact, the mark was not in use inasmuch as the People's Republic of China had revoked the right of China National to use the mark prior to the date of the declaration, and that the Office reasonably relied upon these material representations in issuing and maintaining China National's registration. With respect to Registration No. 1,254,707, petitioner alleges that at the time China National applied for registration of that mark, China National was not the owner of the mark but rather was only an import-export company with the right to use the mark; that China National abandoned all use of the mark with no intent to resume use of the mark; and that the mark for which registrant obtained registration consists of a term that is primarily geographically descriptive of the goods in connection with which the mark is used.
*2 Respondent, in a timely filed answer [FN3], on November 2, 1989, essentially denied the salient allegations of the petition and alleged as affirmative defenses that petitioner's claims were barred by the fact that respondent's registrations are incontestable and by the doctrine of unclean hands.
As a procedural matter, Fed.R.Civ.P. 12(b)(6) provides that a motion captioned as one to dismiss for failure to state a claim upon which relief can be granted must be filed at or prior to the filing of the answer. In this case, respondent's motion to dismiss was filed well after the filing of respondent's answer to the petition for cancellation. Accordingly, we construe respondent's motion "to dismiss" as one for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(h)(2). [FN5] See e.g., Savina v. Gebhart, 497 F.Supp. 65 (D.md. 1980). With respect to that portion of respondent's motion that is captioned as one to strike, Fed.R.Civ.P. 12(f) provides that a motion to strike also must be filed prior to responding to a pleading. Accordingly, respondent's motion to strike is untimely. Nevertheless, inasmuch as Fed.R.Civ.P. 12(f) provides that the Board may, upon its own initiative, at any time strike from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter, we will consider the arguments raised in respondent's motion to strike on the merits.
At least in the Federal Circuit, there exists no dispute that a registration that is over five years old may be cancelled solely on the grounds set forth in Section 14(c), irrespective of whether or not the owner of the registration has filed an affidavit under Section 15. See: Imperial Tobacco Ltd. v. Philip Morris Inc., __ F.2d __, 14 USPQ2d 1390 (Fed.Cir.1990). In this case, Registration No. 1,254,707 achieved its fifth anniversary prior to the commencement of this proceeding and therefore may not be challenged on any grounds not set forth in Section 14(c). Accordingly, respondent's motion to strike the ground that Registration No. 1,254,707 is for a mark that is geographically descriptive is granted and paragraph 19 of the petition for cancellation is hereby stricken. However, with respect to Registration No. 1,187,046, petitioner's arguments are well taken. Petitioner has not attacked that registration on the ground that the mark shown therein is geographically descriptive.
*3 This brings us now to respondent's motion to dismiss the remaining allegations of the petition for cancellation. Although we have construed the motion to dismiss as one for judgment on the pleadings, the motion nevertheless is based on the defense that the petition for cancellation fails to state a claim upon which relief can be granted. Thus, the standard for adjudicating this motion is the same as that set forth in Fed.R.Civ.P. 12(b)(6). [FN8] See e.g., Morgan v. Church's Fried Chicken, 829 F.2d 10, 11 (6th Cir 1987); Ad Hoc Committee of the Baruch Black & Hispanic Alumni Association v. Bernard M. Baruch College, 835 F.2d 980, 982 (2nd Cir.1987), see generally, 5A C. Wright & A. Miller, Federal Practice and Procedure Section 1367, at 515 (1990). That is to say, in order to survive this motion, petitioner need only have alleged such facts as would, if proved, show that petitioner has standing to petition for cancellation of the registered marks and that a statutory ground for cancelling such registrations exists. Scotch Whisky Association v. U.S. Distilled Products Co., 13 USPQ2d 1711 (TTAB 1989). See also, Lipton Industries, Inc. v. Ralston Purina Co., 670 F.2d 1029, 213 USPQ 185 (CCPA 1982).
Respondent, in support of its motion, argues that the sole basis for petitioner's allegation of standing is that petitioner is in the business of marketing beer and that petitioner uses the term "TSINGTAO" geographically descriptively. According to registrant, these allegations are insufficient as a matter of law to show that petitioner has standing to challenge the continued registration of registrant's marks, inasmuch as registrant's registrations are over five years old. Petitioner argues, in response thereto, that although it has not been pleaded, petitioner is the owner of three applications to register composite marks which include the term "TSINGTAO" and that the Office has refused registration to each of these marks because of the existence of registrant's registrations.
Therefore, turning to the allegations respecting standing that have been pleaded, our reviewing court has held that in order to have standing to petition for cancellation of the registration of another, a petitioner must plead facts sufficient only to show that petitioner has a personal interest in the outcome of the case beyond that of the general public. See, Jewelers Vigilance Committee, Inc. v. Ullenberg Corp., 823 F.2d 490; 2 USPQ2d 2021 (Fed.Cir.1987). In this case, petitioner pleads that petitioner uses the term "TSINGTAO" in a geographically descriptive manner in the sale of beer and that the continued registration of respondent's marks will impair petitioner's ability to continue to use that term in a geographically descriptive manner. These facts suffice to show petitioner's standing to maintain the petition for cancellation. Contrary to respondent's arguments, Section 14(c) of the Lanham Act does not limit the grounds upon which a party may base its claim of standing.
*4 With respect to the question of whether a statutory ground exists for cancelling respondent's registrations, the parties argue initially at cross-purposes. Respondent argues, in essence, that the petition for cancellation pleads three grounds for cancellation, that is, abandonment, nonownership and fraud. Petitioner argues, in opposition thereto, that it has pleaded two grounds for cancellation, that is, fraud and abandonment; that the allegations of nonownership are intended only as a preface to the grounds of fraud and abandonment; and that both these grounds have been properly pleaded.
Inasmuch as petitioner has made clear that the allegations of non-ownership are intended as a preface to the grounds of abandonment and fraud and not as separate grounds for cancellation, and since there can be no serious dispute that abandonment has been properly pleaded, we turn solely to the question of whether the allegations set forth in the petition for cancellation state a claim of fraud. [FN10] In this regard, respondent argues that the sole basis for the claim of fraud is that the Chinese government revoked registrant's right to export beer bearing the "TSINGTAO" mark to the United States; that, in point of fact, this is not true; and that, in any event, there is no nexus between an alleged revocation of a right to export beer by a foreign government and the issue of whether a mark has been used lawfully in United States commerce.
When the sale or transportation of any product for which registration of a trademark is sought is regulated under an Act of Congress, the Patent and Trademark Office may make appropriate inquiry as to compliance with such Act for the sole purpose of determining the lawfulness of the commerce recited in the application.
(Emphasis added). Consequently, "unlawful" must be held to imply only such commerce as is unlawful under the Acts of Congress. In this case, petitioner has failed to plead that the use by respondent or its predecessor in interest of "TSINGTAO" beer was unlawful under any statute of the United States. Without such a pleading, such use cannot be considered to violate the "in commerce" requirements of Sections 1, 2(f), 8 or 15. Therefore, the facts pleaded do not state a claim upon which relief can be granted.
*5 Petitioner may however have a claim based upon fraud by reason of the original respondent's allegedly intentional misrepresentation as to its ownership of the marks at the time that the applications which matured into the involved registrations were filed, as in the case of a distributor who intentionally misrepresents that it, rather than the foreign manufacturer, is the proprietor of the mark. Cf. Hank Thorp, Inc. v. Minilite, Inc. 474 F.Supp 228, 205 USPQ 598 (D.Del 1979); Global Maschinen Gmbh v. Global Banking Systems, Inc., 227 USPQ 862 (TTAB 1985). If petitioner does, indeed, intend to assert such a claim, the petition should be amended to plead the claim clearly.
With respect to the remaining allegations of the petition for cancellation, that is to say, those set forth in paragraph 11 of the petition for cancellation, respondent's motion is clearly well taken. The Board repeatedly has held that the fact that a party has set forth an erroneous date of first use does not constitute fraud unless, inter alia, there was no valid use of the mark until after the filing of the application. See, e.g. Hecon Corp. v. Magnetic Video Corp., 199 USPQ 502 (TTAB 1978).
With respect to the allegation that the affidavit of distinctiveness was fraudulent because, as alleged by petitioner, the mark was not used "exclusively", this also does not form the basis for a claim of fraud. The Lanham Act imposes an obligation upon an applicant to submit evidence sufficient to show only that use of the mark has been "substantially exclusive". Thus the fact that there may have been others who have used the involved mark, but whose use was not sufficient to negate the applicant's assertion of substantially exclusive use in commerce, does not make the claim of distinctiveness fraudulent. Compare, Marshall Fields v. Mrs. Field's Cookies, 11 USPQ2d 1355 (TTAB 1989).
In view thereof, respondent's motion for judgment on the pleadings on the ground that the petition fails to state a claim is granted in part and denied in part and paragraphs 11, 12, 13, 15, and 19 are hereby dismissed. Petitioner is allowed thirty days from the mailing date of this order to file an amended pleading, if it so desires.
Except to the extent indicated above, proceedings herein are otherwise suspended.
FN1. Registration No. 1,187,046, issued January 19, 1982 under Section 2(f), Section 8 & 15 affidavit filed April 21, 1987.
FN2. Registration No. 1,254,707, issued October 18, 1983 under Section 2(f) as to "TSINGTAO", the word "beer" being disclaimed, Section 8 & 15 affidavit filed March 2, 1989.
FN3. Respondent's contested motion, filed October 10, 1989, for an extension of time to file an answer to the petition for cancellation is granted. Accordingly, respondent's answer is accepted as timely filed.
FN4. Together with, but not in support of, its motion to dismiss, respondent filed a copy of an instrument of assignment which shows that China National, subsequent to the commencement of this proceeding, assigned all of its rights in the marks and the involved registrations to Qinqdao Brewery and that respondent has submitted a copy of the instrument of assignment to the Assignment Branch of this office for recordation. In view thereof, and in accordance with the Board's usual practice, Qinqdao Brewery is hereby joined as party defendant.
FN5. We note also that respondent attached an exhibit to its motion consisting of an affidavit of an official of the People's Republic of China to the effect that the city known as "Tsingtao" changed its name in 1979 to "Qinqdao" and that under the laws of the People's Republic of China, the only beer that may be sold or exported bearing the mark "TSINGTAO" is brewed by Qinqdao brewery. Inasmuch as the clear thrust of respondent's motion is that petitioner has failed to plead a claim upon which relief can be granted and since, in any event, respondent's motion appears to have been filed prior to adequate opportunity for discovery, the Board does not construe respondent's motion as one for summary judgment. Accordingly, the exhibit noted above and the exhibits submitted by the parties in support of, and in opposition to, the "motion to dismiss" have been given no consideration in determining the sufficiency of the allegations set forth in the petition for cancellation.
FN6. The Board, on March 7, 1990, granted a consented motion to extend filed by the parties on February 5, 1990 by which, among other things, petitioner's brief in opposition to the motion to dismiss or to strike would have become due on February 20, 1990. On March 5, 1990, together with a certificate of mailing dated February 27, 1990, petitioner filed its brief in opposition to respondent's motion. Petitioner's brief in opposition to respondent's motion is therefore untimely. Nevertheless, inasmuch as respondent has not objected to petitioner's memorandum on this basis, we construe respondent to have waived its right to object to petitioner's memorandum on the ground that it is untimely and petitioner's brief is accepted. Moreover, in view of the potentially dispositive nature of respondent's motion, the Board would not in the circumstances of this case have deemed registrant's motion conceded. See, Coach House Restaurant v. Coach and Six Restaurants, 223 USPQ 176, 177 n. 3 (TTAB 1984).
FN7. Although we do not rely on this fact in determining the sufficiency of the pleading, in point of fact the registration file shows that the affidavit under Sections 8 and 15 was filed on March 2, 1989, that is to say, prior to the commencement of this proceeding.
FN8. While the Board has entertained respondent's motion for judgment on the pleadings on the ground that the petition fails to state a claim upon which relief can be granted, the filing of a motion to dismiss, prior to answering the petition for cancellation, clearly is the better practice.
FN9. However, if pleaded, the refusal to register petitioner's applications would have been a sufficient basis upon which to base a finding that petitioner had alleged facts which, if proved, would demonstrate petitioner's standing to be heard. See e.g., Lipton Industries, Inc. v. Ralston Purina Co., 670 F.2d 1029, 213 USPQ 185 (CCPA 1982).
FN10. We note that petitioner argues that it has set forth a claim of fraud with respect to both Registration No. 1,187,046 and Registration No. 1,254,707. However, the pleadings reveal an attempt to plead fraud solely with respect to Registration No. 1,187,046. Fraud in the procurement and maintenance of Registration No. 1,254,707 may be made the subject of an amended pleading, if appropriate.
FN11. The paragraphs in question are somewhat vague and it is not at all clear to the Board that the pleadings in question are intended to plead fraud by reason of "unlawful use" as opposed to fraud by reason of nonuse. Nevertheless, inasmuch as petitioner, in its brief in opposition to the motion, has not taken issue with respondent's characterization of this portion of petitioner's pleading, we presume therefrom that the parties are in agreement that petitioner is attempting to plead fraud by reason of "unlawful use". To the extent, however, that petitioner is attempting to plead fraud by reason of nonuse, it may file an amended pleading that clearly states that claim.

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