Court Opinion

ID: 5132229
Source: CourtListenerOpinion
Date Created: 2021-12-07 00:01:58.730012+00
Date Added: 2024-06-11T08:23:28.980785
License: Public Domain

Case: 21-1011    Document: 37     Page: 1   Filed: 11/12/2021

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                    GALPERTI, INC.,
                       Appellant

                             v.

                    GALPERTI S.R.L.,
                         Appellee
                  ______________________

                        2021-1011
                  ______________________

     Appeal from the United States Patent and Trademark
 Office, Trademark Trial and Appeal Board in No.
 92057016.
                  ______________________

                Decided: November 12, 2021
                  ______________________

     THEODORE H. DAVIS, JR., Kilpatrick, Townsend &
 Stockton LLP, Atlanta, GA, argued for appellant. Also rep-
 resented by BETHANY R. NELSON; MELISSA DAVIS, JENNIFER
 S. SICKLER, Thompson & Knight LLP, Houston, TX.

    PAOLO STRINO, Gibbons P.C., New York, NY, argued for
 appellee. Also represented by JONATHON BRUGH LOWER,
 Newark, NJ.
                 ______________________

  Before MOORE, Chief Judge, PROST and TARANTO, Circuit
                        Judges.
Case: 21-1011    Document: 37      Page: 2      Filed: 11/12/2021

 2                            GALPERTI, INC.   v. GALPERTI S.R.L.

 TARANTO, Circuit Judge.
     In September 2007, Galperti S.r.l. (Galperti-Italy), to
 support its application to the Patent and Trademark Office
 (PTO) for registration of the mark GALPERTI, told the
 PTO that, in the five preceding years, its use of the mark
 was “substantially exclusive.” In 2008, the PTO granted
 the application and issued Registration No. 3411812. In
 2013, Galperti, Inc. (Galperti-USA) petitioned the PTO to
 cancel the registration, arguing, among other things, that
 the registration was obtained by fraud because Galperti-
 Italy’s 2007 statement of substantially exclusive use was
 false and, indeed, intentionally so. When the PTO’s Trade-
 mark Trial and Appeal Board dismissed the cancellation
 petition, we affirmed as to the non-fraud issues but vacated
 the Board’s rejection of the fraud charge and remanded for
 further consideration of that charge. Galperti, Inc. v.
 Galperti S.r.l., 791 F. App’x 905 (Fed. Cir. 2019) (2019
 CAFC Op.). On remand, the Board again dismissed the
 fraud claim, again finding no proven falsity of the state-
 ment at issue (and again not reaching the intent aspect of
 fraud). Galperti, Inc. v. Galperti S.r.l., Cancellation No.
 92057016 (TTAB Aug. 4, 2020) (2020 Board Op.). Now, on
 Galperti-USA’s second appeal, we hold that, in finding no
 falsity of Galperti-Italy’s assertion of substantially exclu-
 sive use from 2002 to 2007, the Board committed two legal
 errors: requiring Galperti-USA to establish its own propri-
 etary rights to the mark and disregarding use of the mark
 by others during the period at issue. We vacate the Board’s
 decision and remand for further consideration.
                               I
     Galperti-USA, a Texas corporation, and Galperti-Italy,
 an Italian limited liability company, are legally unrelated
 companies, both of which manufacture and sell metal
 flanges and related products. On April 15, 2008, Galperti-
 Italy obtained a trademark registration for the mark
 GALPERTI for “[i]ronmongery in the form of metal
Case: 21-1011       Document: 37       Page: 3   Filed: 11/12/2021

 GALPERTI, INC.   v. GALPERTI S.R.L.                           3

 hardware, namely, flanges, ring-shaped fittings of metal,
 and forgings.” 2020 Board Op. at *1–2. The registration
 claims a priority date of September 28, 2006, based on Ital-
 ian registration application No. MI2006C009605.
      It is common ground here that GALPERTI is “primar-
 ily merely a surname” and, so, without more, could not be
 registered. Lanham Act § 2(e)(4), 15 U.S.C. § 1052(e)(4).
 Here, Galperti-Italy obtained a registration of GALPERTI
 on the Principal Register under Section 2(f) of the Lanham
 Act, which, even for a mark that is “primarily merely a sur-
 name,” allows registration if the mark “has become distinc-
 tive of the applicant’s goods in commerce” and allows the
 PTO to “accept as prima facie evidence” of such acquired
 distinctiveness “proof of substantially exclusive and contin-
 uous use thereof as a mark by the applicant in commerce
 for the five years before the date on which the claim of dis-
 tinctiveness is made.” 15 U.S.C. § 1052(f). The PTO ini-
 tially rejected Galperti-Italy’s application on the ground
 that the mark GALPERTI was not registrable because it
 was primarily just a surname. J.A. 51; see Lanham Act
 § 2(e)(4), 15 U.S.C. § 1052(e)(4). On September 26, 2007,
 Galperti-Italy responded by asserting, in reliance on the
 Section 2(f) proof standard for acquired distinctiveness:
 “The mark has become distinctive of the goods listed in the
 application through the Applicant’s substantially exclusive
 and continuous use in commerce for at least the five years
 immediately before the date of this statement.” J.A. 68.
 The registration subsequently issued.
     On April 4, 2013, within five years of the April 15, 2008
 registration, Galperti-USA petitioned to cancel the regis-
 tration under Section 14 of the Lanham Act, 15 U.S.C.
 § 1064. Its amended petition in 2014 presented three
 grounds. First, Galperti-USA argued that its use of the
 GALPERTI mark predated Galperti-Italy’s relevant use of
 the mark and Galperti-Italy’s use was likely to cause con-
 fusion. See Lanham Act § 2(d), 15 U.S.C. § 1052(d). Sec-
 ond, Galperti-USA argued that Galperti-Italy obtained the
Case: 21-1011    Document: 37      Page: 4      Filed: 11/12/2021

 4                            GALPERTI, INC.   v. GALPERTI S.R.L.

 registration by fraud, namely, by intentionally making a
 false assertion of substantially exclusive use from 2002 to
 2007. See Lanham Act § 14(3), 15 U.S.C. § 1064(3) (cancel-
 lation available for registration “obtained fraudulently”);
 In re Bose Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009) (hold-
 ing that an applicant commits fraud when it knowingly
 makes false, material representations of fact with an intent
 to deceive the PTO). Third, Galperti-USA alleged that
 Galperti-Italy made a false claim of ownership, again in-
 voking fraud.
     After a trial, the Board deemed the ownership ground
 forfeited and rejected the other two grounds on the merits.
 Galperti-USA appealed the two merits rulings. We af-
 firmed the Board’s determination that Galperti-USA failed
 to demonstrate its prior use of the mark. 2019 CAFC Op.,
 791 F. App’x at 907–08. 1 But we vacated the Board’s de-
 termination that Galperti-USA failed to prove the falsity,
 and hence failed to prove the fraudulent character, of
 Galperti-Italy’s 2007 assertion to the PTO that its use of
 the mark had been substantially exclusive in the preceding
 five years. Id. at 909–10. We explained that “when evalu-
 ating whether an applicant has had ‘substantially exclu-
 sive’ use of a mark, we look to whether any use by a third
 party was ‘significant,’ or whether it was merely ‘inconse-
 quential or infringing.’” Id. at 910 (quoting L.D. Kichler
 Co. v. Davoil, Inc., 192 F.3d 1349, 1352 (Fed. Cir. 1999)).
 While approving the Board’s conclusion that Galperti-It-
 aly’s mere “‘knowledge of other players in the market-
 place’” was insufficient to make its statement to the PTO
 “‘per se false,’” id., we held that the Board had erred in
 stopping at that point, because the absence of “per se”

     1   We also rejected Galperti-USA’s argument about
 prior trade-name use, affirming the Board’s determination
 that Galperti-USA had not properly preserved such a con-
 tention. 2019 CAFC Op., 791 F. App’x at 908–09.
Case: 21-1011       Document: 37       Page: 5   Filed: 11/12/2021

 GALPERTI, INC.   v. GALPERTI S.R.L.                           5

 falsity does not imply the absence of falsity, id. What was
 needed was an inquiry, on remand, into whether the uses
 to which Galperti-USA pointed as showing the falsity of
 Galperti-Italy’s representation to the PTO were significant
 or, instead, inconsequential. Id. In stating the remand in-
 struction, we referred to “Appellant’s use” (Galperti-USA
 being “Appellant”), id. (emphasis added), but given our
 statement of the legal standard in terms of “any use by a
 third party” and “other players in the marketplace,” id., the
 remand mandate could not be reasonably understood as
 limited to evidence of Galperti-USA’s own use, but required
 proper consideration of all the evidence presented of signif-
 icant (rather than inconsequential) use.
      On remand, the Board did not take an improper view
 of this court’s mandate. But it again found that Galperti-
 USA had failed to prove the significant, not inconsequen-
 tial, use that would make Galperti-Italy’s representation
 false. And in so finding, the Board stated two conclusions
 that are now at issue before us.
      First, the Board concluded that Galperti-USA “had to
 show it had obtained proprietary rights in ‘Galperti’ by ev-
 idence of secondary meaning,” 2020 Board Op. at *15, and
 that Galperti-USA’s “failure to show a proprietary interest
 in the surname ‘Galperti’ as a trademark during the rele-
 vant time period renders [Galperti-USA’s] purported use
 ‘inconsequential,’” id. at *17. Second, the Board concluded
 that Galperti-USA could not benefit from third-party use
 of GALPERTI because there was no proven privity (though
 there was affiliation) between Galperti-USA and the third-
 party users. Id. at *17 (stating that because two Galperti-
 USA “affiliates” “were neither predecessors nor successors
 in interest” of Galperti-USA, “any common law use” by the
 affiliates “did not inure to [Galperti-USA’s] benefit”). The
 Board also addressed aspects of the evidence it found not
 to help Galperti-USA for reasons not expressly dependent
 on those two conclusions. Id. at *12–15. For the reasons it
 set forth, the Board found that Galperti-USA had
Case: 21-1011     Document: 37      Page: 6     Filed: 11/12/2021

 6                            GALPERTI, INC.   v. GALPERTI S.R.L.

 demonstrated only insignificant use and hence had not
 shown falsity or, therefore, fraud on Galperti-Italy’s part.
 Id. at *17.
    Galperti-USA timely appealed. We have jurisdiction
 under 28 U.S.C. § 1295(a)(4)(B).
                               II
      Galperti-USA contends that the Board’s analysis of fal-
 sity includes two legally incorrect premises. One is that
 Galperti-USA had to have trademark-protected rights in
 its use of the mark at issue (in 2002–2007)—specifically,
 secondary meaning (i.e., acquired distinctiveness)—in or-
 der for that use to count as significant in assessing the fal-
 sity of Galperti-Italy’s assertion of “substantially exclusive
 use.” The other is that uses by third parties do not count
 in the substantially-exclusive-use assessment unless the
 third parties were in privity with Galperti-USA. We agree
 that both premises are found in the Board’s analysis and
 that both premises are incorrect as a matter of law—a mat-
 ter we decide de novo. In re i.am.symbolic, 866 F.3d. 1315,
 1322 (Fed. Cir. 2017). Because we cannot be confident that
 the Board’s bottom-line finding of no significant non-
 Galperti-Italy use was unaffected by the two legal errors,
 we vacate and remand. We do not reach the intent aspect
 of fraud.
                               A
      Galperti-Italy made its assertion of “substantially ex-
 clusive use” of GALPERTI (in the specified 2002–2007 pe-
 riod) specifically in order to invoke Lanham Act Section
 2(f)’s authorization to rely on “substantially exclusive and
 continuous use . . . as a mark” for the five preceding years
 to make out a prima facie case of acquired distinctiveness.
 15 U.S.C. § 1052(f). The Board thus treated the meaning
 of Galperti-Italy’s representation to the PTO in 2007, as in-
 tended by Galperti-Italy and understood by the PTO, as
 mirroring the statutory provision being invoked.
Case: 21-1011       Document: 37       Page: 7   Filed: 11/12/2021

 GALPERTI, INC.   v. GALPERTI S.R.L.                           7

     Because GALPERTI is primarily just a surname, it is
 not disputed here that any proprietary rights depend on
 secondary meaning, as is true of descriptive terms. 2 J.
 McCarthy on Trademarks and Unfair Competition § 13:2
 (5th ed. 2021). Accordingly, in requiring that Galperti-
 USA have proprietary rights in GALPERTI for its use of
 the term to count in showing Galperti-Italy’s assertion of
 substantially exclusive use as a mark to be false, the Board
 required that Galperti-USA show “secondary meaning,”
 2020 Board Op. at *15, i.e., acquired distinctiveness. See
 Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769
 (1992) (“This acquired distinctiveness is generally called
 ‘secondary meaning.’”); Real Foods Pty. Ltd. v. Frito-Lay
 North America, Inc., 906 F.3d 965, 972 (Fed. Cir. 2018). In
 other words, the Board ruled that GALPERTI had to have
 acquired distinctiveness as a source identifier for Galperti-
 USA in order for Galperti-USA’s own use to undermine
 Galperti-Italy’s claim of substantially exclusive use.
     That requirement is counter to our precedent on what
 uses count as undermining a claim of acquired distinctive-
 ness of a term based on substantially exclusive use of the
 term as a mark for the statutory five-year period. Our prec-
 edents hold that even marketplace uses of a term lacking
 secondary meaning for the users are among the uses that
 legitimately play that role. After all, a significant amount
 of marketplace use of a term not as a source identifier for
 those users does tend to undermine an applicant’s asser-
 tion that its own use has been substantially exclusive so as
 to create a prima facie case that the term has come to ac-
 quire distinctiveness as a source identifier for the appli-
 cant. An applicant’s assertion that it has attained the
 status of recognition as the source of goods carrying a given
 mark is not undermined only by uses made by another per-
 son that has attained that status for itself. We and our
 relevant predecessor court have so held, in particular, as to
 merely descriptive uses of such a term.
Case: 21-1011    Document: 37      Page: 8      Filed: 11/12/2021

 8                            GALPERTI, INC.   v. GALPERTI S.R.L.

      Thus, in De Walt, Inc. v. Magna Power Tool Corp., one
 of this court’s predecessors (whose decisions are preceden-
 tial for us) rejected a claim of substantially exclusive use
 where the opposer had “a long established right to use
 ‘power sh[o]p’ descriptively and prominently in connection
 with the sale of woodworking saws and it would be incon-
 sistent to register ‘Power Shop’ to [the applicant] for those
 wares.” 289 F.2d 656, 661 (CCPA 1961). In Otto Roth &
 Co. v. Universal Foods Corp., the same court elaborated:
     Any use by opposer, whether begun prior or subse-
     quent to applicant’s, and whether in a descriptive
     context or in the manner of a mark, may be suffi-
     cient to defeat the applicant’s claim that the term
     is distinctive of its goods or has become distinctive
     thereof with the meaning of section 2(f) of the Lan-
     ham Act.
 640 F.2d 1317, 1320 (CCPA 1981). And in In re Boston Beer
 Co., we affirmed a refusal to register “The Best Beer in
 America,” explaining that “[t]he examples of use of the
 phrase by others in its descriptive form support the board’s
 conclusion that the mark had not acquired distinctiveness.”
 198 F.3d 1370, 1373 (Fed. Cir. 1999). In our earlier opinion
 in this case, moreover, we instructed the Board to consider
 “whether any use by a third party was ‘significant,’” with-
 out suggesting that the only uses that would count would
 be those for which acquired distinctiveness for the user was
 present. 2019 CAFC Op., 791 F. App’x at 910.
      Under those precedents, the Board committed a legal
 error here. If evidence of uses lacking secondary meaning
 is pertinent under Section 2(f), the evidence is pertinent to
 showing the falsity of the assertion made by Galperti-Italy
 using the statutory language in order to meet the Section
 2(f) standard. Contrary to the Board’s ruling, therefore, we
 conclude that Galperti-USA does not need to establish sec-
 ondary meaning of its own uses of GALPERTI in order for
Case: 21-1011       Document: 37       Page: 9   Filed: 11/12/2021

 GALPERTI, INC.   v. GALPERTI S.R.L.                           9

 those uses to be counted in determining the falsity of
 Galperti-Italy’s claim of substantially exclusive use.
                                  B
      The Board also erred in its related requirement that
 Galperti-USA had to demonstrate privity with other users
 of the mark during the 2002–2007 period at issue to rely on
 those uses to show falsity of Galperti-Italy’s claim of sub-
 stantially exclusive use. See 2020 Board Op. at *17. This
 requirement is inconsistent with our precedent. In Otto
 Roth, the court explained that “any” use may frustrate a
 claim for substantially exclusive use, without limiting that
 use to the party challenging registration. 640 F.2d at 1320.
 A few years ago, we confirmed the common-sense point
 that the “most relevant evidence” in a Section 2(f) inquiry
 “will be the trademark owner’s and third parties’ use in the
 recent period before first use or infringement.” Converse,
 Inc. v. Int’l Trade Comm’n, 909 F.3d 1110, 1122 (Fed. Cir.
 2018) (advising that “both Converse’s use and the use by
 its competitors” must be considered). Use by anyone, re-
 gardless of relation to the challenger, may undercut a claim
 of substantially exclusive use. This straightforward point
 is reflected in our prior opinion in the present matter,
 where we said that “any use by a third party” could be sig-
 nificant. 2019 CAFC Op., 791 F. App’x at 910.
                                 III
     For the foregoing reasons, we reject two aspects of the
 Board’s decision on what constitutes “use” for purposes of
 defeating a claim of substantially exclusive use. We vacate
 the Board’s decision and remand. Further analysis of the
 falsity issue must proceed in the absence of the legal errors
 we have identified. We do not address the intent aspect of
 the charge of fraud, which the Board has not addressed.
     The parties shall bear their own costs.
                VACATED AND REMANDED