Court Opinion

ID: 4455307
Source: CourtListenerOpinion
Date Created: 2019-11-13 17:00:37.562285+00
Date Added: 2024-06-11T14:45:01.005546
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                 ______________________

                   GALPERTI, INC.,
                      Appellant

                            v.

                   GALPERTI S.R.L.,
                        Appellee
                 ______________________

                       2019-1150
                 ______________________

    Appeal from the United States Patent and Trademark
Office, Trademark Trial and Appeal Board in No.
92/057,016.
                 ______________________

              Decided: November 13, 2019
                ______________________

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

   PAOLO STRINO, Gibbons P.C., New York, NY, argued for
appellee. Also represented by JONATHON BRUGH LOWER,
Newark, NJ.
                ______________________
2                             GALPERTI, INC. v. GALPERTI S.R.L.

    Before PROST, Chief Judge, CLEVENGER and MOORE,
                     Circuit Judges.
PROST, Chief Judge.
     Galperti, Inc. (“Appellant”) appeals from the decision of
the Trademark Trial and Appeal Board dismissing its pe-
tition to cancel Galperti S.r.l.’s (“Appellee”) Registration
No. 3411812 for the mark GALPERTI. Galperti, Inc. v.
Galperti S.r.l., Cancellation No. 92057016, 2018 WL
4237616 (T.T.A.B. Aug. 31, 2018) (“Board Op.”). We affirm
the Board’s conclusions that Appellant failed to demon-
strate priority in the GALPERTI mark and that it did not
try the issue of trade name usage by implied consent. How-
ever, we vacate the portion of the Board’s decision conclud-
ing that Appellee did not obtain its registration through
fraud and thus remand for a proper legal analysis of that
issue.
                              I
    Appellant, a Texas corporation, and Appellee, an Ital-
ian limited liability company, are unrelated companies
that both manufacture and sell metal flanges and related
products. On April 15, 2008, Appellee obtained a trade-
mark registration for the mark GALPERTI “in standard
characters for ironmongery in the form of metal hardware,
namely, flanges, ring-shaped fittings of metal, and forg-
ings.” Board Op. at *1 (internal quotation marks omitted).
The registration claims a priority date of September 26,
2006, based on Italian registration application
No. MI2006C009605.
     The mark is registered on the Principal Register under
Section 2(f) of the Lanham Act. Section 2(f) requires an
applicant to demonstrate that a mark “has become distinc-
tive of the applicant’s goods in commerce.” 15 U.S.C.
§ 1052(f). “The Director may accept as prima facie evidence
that the mark has become distinctive . . . proof of substan-
tially exclusive and continuous use thereof as a mark by
GALPERTI, INC. v. GALPERTI S.R.L.                          3

the applicant in commerce for the five years before the date
on which the claim of distinctiveness is made.” Id. As part
of its registration, Appellee made this showing by averring
that it had made “substantially exclusive and continuous
use” of the mark “for at least the five years immediately
before” September 26, 2007. Board Op. at *1.
     Appellant petitioned to cancel the registration on two
grounds. First, it argued that its use of the GALPERTI
mark predated Appellee’s rights in the mark, and therefore
Appellee was not entitled to registration under Section 2(d)
of the Lanham Act due to a likelihood of confusion. Id. Sec-
ond, it argued that Appellee’s registration was obtained by
fraud. According to Appellant, Appellee knew that both
parties used the GALPERTI mark for the manufacture and
sale of flanges, so its claim that it made “substantially ex-
clusive” use of the mark was a fraudulent misrepresenta-
tion. Id. at *2.
    The Board rejected Appellant’s Section 2(d) argument,
finding that Appellant had “failed to demonstrate . . . by a
preponderance of the evidence” that it had any rights in the
mark prior to September 26, 2006—Appellee’s priority date
based on its foreign registration. Id. at *27. The Board
also rejected Appellant’s attempt to argue priority in
GALPERTI as a trade name, rather than a trademark. The
Board noted that Appellant had not included this separate
argument in its petition, and concluded that it had also not
tried the issue by implied consent. Id. at *14. Finally, the
Board rejected Appellant’s fraud argument, concluding
that even if Appellee was aware of Appellant’s presence in
the U.S. marketplace, that did not make its claim of sub-
stantially exclusive use “per se false.” Id. at *31.
   Appellant timely appealed. We have jurisdiction under
28 U.S.C. § 1295(a)(4)(B).
4                            GALPERTI, INC. v. GALPERTI S.R.L.

                             II
    We review the Board’s legal conclusions de novo, and
its findings of fact for substantial evidence.         In re
I.AM.Symbolic, 866 F.3d 1315, 1322 (Fed. Cir. 2017). A
finding is supported by substantial evidence if a reasonable
mind might accept the evidence as adequate to support the
finding. Consol. Edison Co. v. NLRB, 305 U.S. 197, 229
(1938). We review the Board’s decision regarding whether
an issue was tried by implied consent for abuse of discre-
tion. See Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d
1359, 1373 (Fed. Cir. 2008).
                             A
    Appellant raises a legal challenge to the Board’s deter-
mination that it did not demonstrate priority in the
GALPERTI mark. The Board reviewed corporate records,
licensing agreements, deposition testimony, invoices, test
reports, catalogs, sales figures, and website printouts pro-
vided by Appellant, but concluded that “the totality of the
testimony and all of the aforementioned evidence” did not
prove that Appellant had common law rights in the
GALPERTI mark prior to Appellee’s priority date of Sep-
tember 28, 2006. 1 Board Op. at *16; see id. at *18–27.
    Appellant argues, however, that it was legal error for
the Board to consider whether its evidence demonstrated
use prior to 2006. According to Appellant, our decision in
Converse, Inc. v. International Trade Commission, 909 F.3d
1110 (Fed. Cir. 2018), which issued after the Board’s opin-
ion, mandates that Appellee’s priority date is irrelevant,
and the proper question was whether Appellant

    1   To the extent Appellant also challenges the Board’s
factual findings, or the Board’s weighing of the evidence,
we conclude that the Board’s findings were supported by
substantial evidence for the reasons laid out in its own
lengthy analysis. See Board Op. at *18–27.
GALPERTI, INC. v. GALPERTI S.R.L.                           5

demonstrated use prior to April 15, 2008—Appellee’s U.S.
registration date. Therefore, Appellant argues, it is enti-
tled to remand for the Board to consider its evidence rela-
tive to April 15, 2008.
    We do not agree that Converse controls this case. Con-
verse presented an infringement action, not a cancellation
petition. And Converse did not reckon with priority
claims—it only considered whether infringement occurred
before or after registration. More particularly, the ques-
tion in Converse was whether a mark owner asserting in-
fringement “is entitled to rely on the presumption of
validity afforded to registered marks” when the “infringe-
ment . . . began before registration.” 909 F.3d at 1117. The
court answered that question in the negative. Id. at 1118.
As a result, “with respect to infringement by those respond-
ents whose first uses came before registration . . . [a mark
owner] must establish without the benefit of the presump-
tion that its mark had acquired secondary meaning before
the first infringing use by each respondent.” Id.
     The facts of this case bear little resemblance to that
scenario. Appellant asks us to extend Converse far beyond
its facts, and to hold that any claim of priority, or indeed
any reference to a date other than the U.S. registration
date absent a separate showing of secondary meaning,
should be wholly disregarded in a cancellation petition. We
decline to do so. Such a holding would be contrary to a sig-
nificant body of law that was not disturbed by Converse, as
well as to the language of Section 7(c) of the Lanham Act,
which provides that “[c]ontingent on the registration of a
mark on the principal register provided by this Act, the fil-
ing of the application to register such mark shall constitute
constructive use of the mark.” 15 U.S.C. § 1057(c) (empha-
ses added). It would also be contrary to 15 U.S.C. § 1141f,
which explains that where, as here, a U.S. registration is
based on an international registration under the Madrid
Protocol, the foreign registration “shall constitute construc-
tive use of the mark, conferring the same rights as those
6                              GALPERTI, INC. v. GALPERTI S.R.L.

specified in 7(c)” of the Lanham Act. Those rights become
effective as of “[t]he international registration date,” “[t]he
date of recordal of the request for [U.S. protection], or “[t]he
date of priority,” whichever is earlier. 15 U.S.C. § 1141f.
    Accordingly, we reject Appellant’s interpretation of
Converse and affirm the Board’s conclusion that Appellant
did not prove priority in the GALPERTI mark.
                               B
     Appellant also argues that the Board erred by failing
to consider its arguments for cancellation based on trade
name usage. A registration can be cancelled if a petitioner
previously used the mark as either its own trademark, or
its own trade name. See 15 U.S.C. § 1502(d). Here, Appel-
lant concedes that its petition only argued for cancellation
based on its use of GALPERTI as a mark. Appellant’s
Br. 27. However, in its briefing before the Board, Appel-
lant also attempted to argue for cancellation based on its
use of GALPERTI as a trade name. The Board rejected
that argument, finding that the issue was neither included
in the petition nor tried by implied consent, and was there-
fore not properly raised. Board Op. at *13–14.
    We conclude that the Board did not abuse its discretion
in reaching this conclusion. The Board conducted a rea-
soned analysis in which it concluded, based on an evalua-
tion of Appellant’s evidence and Appellee’s responses, that
Appellee “was not put on notice” that Appellant was at-
tempting to try the trade name use issue. Board Op. at
*14. As the Board correctly noted, Appellant’s evidence did
not clearly establish trade name usage as an argument dis-
tinct from trade mark usage, and its witness “failed to iden-
tify which specific trade name or names [if any] it was
relying upon to prove priority.” Id. As a result, Appellee
“was not fairly apprised that [Appellant] would be seeking
to establish its Section 2(d) claim based on trade name
use.” Id.
GALPERTI, INC. v. GALPERTI S.R.L.                          7

    Accordingly, the Board did not abuse its discretion in
concluding that Appellant did not try the issue of trade
name use by implied consent.
                               C
     Finally, Appellant argues that the Board’s analysis of
its fraud claim was legally erroneous. We agree.
     A petitioner may seek to cancel a registration of a mark
if the registration “was obtained fraudulently.” 15 U.S.C.
§ 1064(3). A trademark applicant commits fraud when it
knowingly makes false, material representations of fact
with an intent to deceive the Patent and Trademark Office.
In re Bose Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009).
    According to Appellant, Appellee committed fraud as
part of its trademark application when it averred that it
had made “substantially exclusive” use of the GALPERTI
mark for the five years prior to September 26, 2007. 2 Board
Op. at *29–30. From 2005 through late 2006, Appellant
and Appellee were involved in a trademark dispute in
Texas, which specifically related to both parties’ usage of
the GALPERTI mark. Id. at *11. Ms. Dina Galperti, Man-
aging Director of Appellee, was deposed in connection with
that litigation and gave testimony that confirmed her
awareness of Appellant and its use of the mark. J.A. 3895.
Less than a year later, Ms. Galperti submitted a declara-
tion to the Patent and Trademark Office in support of

    2    Appellant also argues that Appellee’s showing of
secondary meaning under Section 2(f) was fatally defective
on its face because the averment was an unsworn portion
of the response signed (without independent verification)
by Appellee’s counsel. Appellant’s Br. 53–55. We conclude
that Appellant waived this argument on appeal because it
raises new issues that could have been raised and were not
considered below. See Hylete LLC v. Hybrid Athletics, LLC,
931 F.3d 1170, 1175 (Fed. Cir. 2019).
8                             GALPERTI, INC. v. GALPERTI S.R.L.

Appellee’s argument that it had made “substantially exclu-
sive and continuous” use of the GALPERTI mark.
     As the Board correctly concluded, Ms. Galperti and Ap-
pellee were “well aware of” Appellant, its use of the
GALPERTI mark, and its “presence in the U.S. market-
place.” Board Op. at *31. “Indeed, Ms. Galperti testified
that because the parties operate in a specialized, niche
market, ‘all operators know each other, all operators in the
world know each other.’” Id. (quoting Ms. Galperti’s depo-
sition testimony). Nonetheless, the Board concluded that
Appellee’s claim of “substantially exclusive” use of the
mark was not false. In reaching that conclusion, the Board
misapplied our existing precedent regarding when a claim
of “substantially exclusive” usage is false.
    The Board looked to our decision in L.D. Kichler Co. v.
Davoil, Inc., 192 F.3d 1349 (Fed. Cir. 1999), for guidance
on the bounds of the phrase “substantially exclusive.”
Board Op. at *30. As Kichler explains, an applicant’s claim
is not defeated by merely any other usage of the mark. 192
F.3d at 1352. Such a strict interpretation would deprive
the word “substantially” of any meaning. Id. Rather, when
evaluating whether an applicant has had “substantially ex-
clusive” use of a mark, we look to whether any use by a
third party was “significant,” or whether it was merely “in-
consequential or infringing.” Id.
    The Board concluded based on Kichler that, at least in
some instances, a party can truthfully claim “substantially
exclusive” use even while having knowledge of another
party’s use of the mark. It therefore correctly stated that
Appellee’s “knowledge of other players in the marketplace
does not make the September 26, 2007 averment of ‘sub-
stantially exclusive’ use of the GALPERTI mark per se
false.” Board Op. at *31. The Board committed legal error,
however, by stopping its analysis at that point and conclud-
ing that because Appellee’s statement was not “per se”
false, it was not false. The Board failed to conduct the next,
GALPERTI, INC. v. GALPERTI S.R.L.                         9

necessary, step: analyzing whether Appellant’s use of the
mark was “significant” enough to make Appellee’s claim
false, or whether it was “inconsequential” such that Appel-
lee’s claim of “substantially exclusive” use was not false.
     Accordingly, we vacate the portion of the Board’s deci-
sion concerning fraud, and remand for further considera-
tion consistent with this opinion. On the issue of falsity,
the Board should consider the significance of Appellant’s
use of the GALPERTI mark to determine whether Appel-
lee’s claim of “substantially exclusive” use was false.
                              III
     For the foregoing reasons, we affirm the Board’s con-
clusions with respect to Appellant’s lack of priority in the
GALPERTI mark and Appellant’s failure to try the issue of
trade name usage by implied consent. We vacate, however,
the portion of the Board’s decision relating to fraud, and
remand for a proper analysis of whether Appellee obtained
its registration through fraud.
  AFFIRMED-IN-PART, VACATED-IN-PART, AND
                REMANDED
                            COSTS
    The parties shall bear their own costs.