Armida Winery Inc.v.The Cuban, LLC and Poison Spirits, Inc.

Trademark Trial and Appeal Board

Aug 1, 2018

No. 92065105 (T.T.A.B. Aug. 1, 2018)

Faint Mailed: August 1, 2018 Cancellation No. 92065105 Armida Winery Inc. v. The Cuban, LLC and Poison Spirits, Inc.1 Before Zervas, Mermelstein, and Hightower, Administrative Trademark Judges. By the Board: This case now comes up on Petitioner Armida Winery, Inc.’s (Armida’s) fully- briefed motion, filed November 9, 2017, for summary judgment on the sole pleaded ground of likelihood of confusion and on each of Respondents’ The Cuban, LLC and Poison Spirits, Inc.’s (PSI) affirmative defenses numbers 2-5.2 1 This proceeding was instituted on January 4, 2017. The registration at issue was assigned from The Cuban LLC to Poison Spirits, Inc. on March 1, 2017. By its order of August 14, 2017, the Board joined Poison Spirits LLC as a defendant, retaining The Cuban LLC to facilitate discovery. 6 TTABVUE 2. 2 The Board had previously ruled that PSI’s Joint Objections to the Declaration of Armida’s Vice President Bruce Cousins and other evidence submitted by Petitioner with its motion for summary judgment at 32 TTABVUE, filed under separate cover, would be considered as part of PSI’s single response to the motion for summary judgment. See Board’s order of March 8, 2018 at 34 TTABVUE. UNITED STATES PATENT AND TRADEMARK OFFICE Trademark Trial and Appeal Board P.O. Box 1451 Alexandria, VA 22313-1451 General Contact Number: 571-272-8500 THIS ORDER IS NOT A PRECEDENT OF THE TTAB Cancellation No. 92065105 2 Background Armida seeks to cancel PSI’s registration for the mark POISON in standard character form for, “alcoholic beverages except beers” in Class 33.3 Armida alleges ownership of pending applications and common law rights in the mark POIZIN4 in standard character form and the mark POIZIN, stylized as follows: 5 for red wine and wine, respectively, in Class 33, and claims priority and likelihood of confusion with its marks. Armida also alleges its applications for its marks have been suspended based on likelihood of confusion with PSI’s pending, now registered, mark. By its amended answer,6 PSI denied the salient allegations in the petition to cancel and alleged affirmative defenses of: 1. Failure to “state sufficient facts” which the Board construes as failure to state a claim upon which relief can be granted; 3 Registration No. 5110000, registered December 27, 2016 on the Principal Register, with an application filing date of May 14, 2012, claiming dates of first use anywhere of May 14, 2012 and first use in commerce of October 31, 2016. 4 Application Serial No. 86333906, filed July 10, 2014 for “red wine” in Class 33 pursuant to Trademark Act § 1(a), claiming dates of first use and first use in commerce of April 13, 2001. 5 Application Serial No. 86965419, filed April 5, 2016 for “wine” in Class 33 pursuant to Trademark Act § 1(a), claiming dates of first use anywhere of April 13, 2001 and first use in commerce of July 16, 2001. On February 6, 2018, during the pendency of this proceeding, the application was published for opposition. PSI filed a notice of opposition on April 9, 2018 and the Board issued its institution order for Opposition No. 91240537 on April 10, 2018. 6 Answer was filed by The Cuban LLC on February 22, 2017. An amended answer was filed by PSI on September 25, 2017. 8 TTABVUE. The Board deems the amended answer as the operative pleading of record. Cancellation No. 92065105 3 2. Unlawful use as the term POIZIN may be confused with “POISON” warning labels required under federal and state laws or may create a false and misleading impression that the wine contains or is comparable to a distilled spirit; and a statement that PSI “does not use the ‘POISON’ mark on any label for the sale of any wine;”7 3. To the extent the petition to cancel is predicated on Armida’s “unlawful use,” Armida’s request for cancellation of PSI’s mark is precluded under the “unclean hands” doctrine; 4. Laches and acquiescence based on unrelated third-party applications which have not registered and Armida’s failure to oppose PSI’s application after publication and prior to use; 5. A request pursuant to 15 U.S.C. § 1068 to limit cancellation of PSI’s mark to wine only if Armida’s sales of wine in territorial regions outside Northern California is not “de minimus.” On July 25, 2017, Armida filed a motion to compel discovery responses as defendant had not responded thereto. By its suspension order on the motion to compel, the Board joined PSI as the assignee. No response to the motion to compel having been received, the Board on September 1, 2017 granted the motion to compel as conceded, noting that the motion to compel procedure is not applicable to requests for admission, but that such requests are normally deemed admitted by operation of Fed. R. Civ. P. 36(a) where there has been no response. First Affirmative Defense Stricken A decision on summary judgment necessarily requires a review of the operative pleadings. Affirmative defenses must be supported by sufficient factual background and detail to fairly place the petitioner on notice of the basis for the defenses. See IdeasOne Inc. v. Nationwide Better Health Inc., 89 USPQ2d 1952, 1953 (TTAB 2009). 7 8 TTABVUE 6. Cancellation No. 92065105 4 In the petition for cancellation, Armida has sufficiently alleged priority and likelihood of confusion based on the alleged prior use of its pleaded marks for wine. PSI’s first affirmative defense, that Armida has failed to state a claim upon which relief can be granted, is not a true affirmative defense because it relates to an assertion of the insufficiency of the pleading rather than a statement of a defense to a properly pleaded claim. See Hornblower & Weeks Inc. v. Hornblower & Weeks Inc., 60 USPQ2d 1733, 1738 n.7 (TTAB 2001). Moreover, PSI has not filed a motion to dismiss or otherwise indicated any basis for its allegation that Armida’s complaint fails to state a claim upon which relief may be granted, and we see none. In any event, we have reviewed the sufficiency of Armida’s pleading and find that Armida has sufficiently pleaded a Section 2(d) claim. We therefore strike PSI’s first affirmative defense. Further, the fact that PSI has not responded on summary judgment to any of Armida’s arguments regarding the affirmative defenses is sufficient to deem PSI to have waived them. See Diversey Lever, Inc. v. Ecolab, Inc., 191 F.3d 1350, 52 USPQ2d 1062, 1064 (Fed. Cir. 1999) (affirmative defense not raised in response to summary judgment motion is waived) (citations omitted). Motion for Summary Judgment On November 9, 2017, Armida filed its motion for summary judgment on the claim of likelihood of confusion and on each of PSI’s affirmative defenses 2-5. Armida attached evidence to its motion with additional evidence filed under separate cover Cancellation No. 92065105 5 on the same date, and filed on November 16, 2017 a CD8 with additional documentary evidence designated as confidential. The Board issued its suspension order on November 22, 2017, noting that pursuant to Trademark Rule 2.126, submissions to the Board consisting of external storage media are not permitted, and allowing Armida 20 days to electronically submit its evidence. The Board deemed the filing date of the motion for summary judgment to be November 16, 2017 and allowed PSI time in which to file its response in opposition to the motion. On December 12, 2017, Armida filed confidential and redacted versions of its evidence previously submitted on CD, and on December 27, 2017, Armida’s motion for summary judgment was granted as conceded. On January 11, 2018, counsel for The Cuban LLC entered an appearance and filed a motion for reconsideration of the Board’s December 27, 2017 order, and on January 12, 2018, PSI filed a separate motion for reconsideration. By its order of January 24, 2018, the Board vacated its order granting the motion for summary judgment. The Board also required defendants to appoint a single lead counsel or authorized representative to receive and distribute Board correspondence, and to file a single response to the motion for summary judgment. On February 13, 2018, defendants appointed counsel for The Cuban LLC as lead counsel, on February 28, 2018, filed objections to evidence, and on March 1, 2018, filed a combined response in opposition to the motion for summary judgment and a request to “take judicial notice” of testimony from another Board proceeding. On March 8, 2018, the Board issued an order treating defendants’ filings as a single 8 14 TTABVUE. Cancellation No. 92065105 6 response in opposition to the motion for summary judgment and allowed Armida 20 days from March 1, 2018 to file its reply brief.9 By its reply brief, Armida argues that PSI has not disputed that Armida is the prior user and that there is a likelihood of confusion between the parties’ marks.10 Real Party in Interest Although counsel for The Cuban LLC has entered an appearance, and has been appointed lead counsel for this proceeding, the real party in interest in this proceeding is PSI as the current owner by assignment of the registration at issue. See Fed. R. Civ. P. 17(a)(3). See also 6A Wright, Miller & Kane, FEDERAL PRACTICE AND PROCEDURE § 1547 (3d ed, Westlaw 2018)(assignee is always real party in interest in action involving patent). After a trademark has been assigned with its entire interest, the assignor, in this case The Cuban LLC, has divested itself of its trademark rights. Replogle v. Air-Way Co., 287 F. 765, 766 (App. D.C. 1923) (assignor cannot deprive assignee of right to use assigned mark or set up adverse use). See also, 3 J. Thomas McCarthy, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 18:15 (5th ed. Westlaw 2018). Likewise, the assignee, PSI, steps into the shoes of the assignor together with any legal burdens or limitations that were imposed. See Waterman v. Mackenzie, 138 U.S. 252, 255 (1891)(patentee or his assigns may, inter alia, assign whole patent comprising exclusive right to use). See also Rainbow Ranch Corp. v. 9 34 TTABVUE. 10 Armida also seeks leave to file a motion for sanctions against PSI under Fed. R. Civ. P. 11 because of PSI’s “frivolous opposition.” The motion is denied. It was incumbent on PSI as the registrant to defend on the motion for summary judgment. Even if a motion for sanctions were appropriate, the procedure to be followed is set out in Fed. R. Civ. P. 11(c)(2). Cancellation No. 92065105 7 Rainbow Shops, Inc., 89 Misc. 2d 808, 392 N.Y.S.2d 796, 198 USPQ 107, 109 (N.Y. Sup. Ct. 1977) (finding it is “elementary proposition of law” that assignee stands in no better position than assignor); Lanham Act § 1060, 15 U.S,C. § 1060 (providing generally that trademarks shall be assignable with good will of business in which underlying mark is used); Patent and Trademark Rule 3.71(d) (“The assignee of a trademark application or registration may prosecute a trademark application, submit documents to maintain a trademark registration, or file papers against a third party in reliance on the assignee’s trademark application or registration, to the exclusion of the original applicant or previous assignee.”); Fed. R. Civ. P. 25(c) (court may “order[ ] the transferee to be substituted in the action or joined with the original party”). While we have followed our long-standing practice of retaining the assignor as a party to facilitate discovery, The Cuban LLC has no interests in this proceeding beyond that of an assignor. It should file no further motions, responses, or other papers separately from PSI without leave of the Board. Motion for Rule 56(d) Discovery PSI has embedded a request for discovery pursuant to Fed. R. Civ. P. 56(d) in its response brief and asks the Board for Rule 56(d) discovery “in the alternative” to denial of the motion for summary judgment.11 PSI also states that it had sought to depose Armida’s principals, Bruce and Steve Cousins, “among others,” prior to Armida’s filing of the motion for summary judgment, but the deposition was deferred 11 33 TTABVUE 9. Cancellation No. 92065105 8 and a 30-day extension of time was entered based on Armida’s request to reschedule while Armida’s offices were shut down due to wildfires in California. PSI argues that “due to Armida’s fraudulent misrepresentation”12 in seeking the extension and then filing the motion for summary judgment, PSI was unfairly prejudiced and denied the opportunity to take depositions at all.13 Armida argues PSI failed to properly request discovery under Rule 56(d) and merely embedded the motion in its substantive response to the motion for summary judgment. A motion for Fed. R. Civ. P. 56(d) discovery must be supported by an affidavit or declaration showing that the non-moving party cannot, for the reasons stated, present facts essential to justify its opposition to the motion. See Fed. R. Civ. P. 56(d). PSI submitted two declarations14 in support of its combined response and motion to take judicial notice, but neither declaration includes any specified reason as to why PSI needs discovery to respond to Armida’s motion for summary judgment. See Sweats Fashions Inc. v. Pannill Knitting Co., 833 F.2d 1560, 4 USPQ2d 1793, 1799 12 “[P]arties to proceedings before the Trademark Trial and Appeal Board and their attorneys . . . are required to conduct their business with decorum and courtesy.” Trademark Rule 2.192. Unwarranted or unproven charges of fraud or misrepresentation by opposing counsel do not meet this standard. See also Trademark Rule 2.193(f), Patent and Trademark Rule 11.18(b)-(c). 13 33 TTABVUE 3. 14 Declaration of Kevin Harr, PSI’s Secretary and Vice President at 33 TTABVUE 170; and declaration of Christopher Clark, sole managing member of The Cuban LLC. Id. at 247. Mr. Harr also states that he was General Counsel for The Cuban LLC. The Board notes that Mr. Clark signed the assignment document as President and CEO of PSI. Id. at 216. Mr. Harr states in his declaration that he appeared on behalf of both The Cuban LLC and PSI for the parties’ discovery conference. Id. at 175. Cancellation No. 92065105 9 (Fed. Cir. 1987) (finding mere assertion in brief of need for discovery insufficient). Moreover, PSI has responded to the merits of Armida’s motion. See Ron Cauldwell Jewelry, Inc. v. Clothestime Clothes, Inc., 63 USPQ2d 2009, 2012 n.8 (TTAB 2002) (denying motion for Rule 56(f) (now Rule 56(d)) discovery where responsive brief on merits to summary judgment filed); see also TBMP § 528.06 (2018) (“A request for Fed. R. Civ. P. 56(d) discovery should be clearly made, and certainly not buried somewhere in a responsive brief or other paper, and should not be filed as a ‘throw away’ alternative accompanying a response to the motion for summary judgment on the merits.”). If PSI believed it needed further discovery prior to responding to the motion for summary judgment, it should have filed a proper motion seeking that discovery prior to filing its response in opposition to the motion for summary judgment. Fed. R. Civ. P. 56(d). The Board is not inclined to consider the request when a party responds to a motion for summary judgment and includes a request for Fed. R. Civ. P. 56(d) discovery within its response. Accordingly, the motion in the alternative for Rule 56(d) discovery is denied. Objections to Evidence PSI objects 1) to the declaration of Armida’s Vice President, Bruce Cousins, and attachments, arguing the declaration is not made on “personal knowledge” as required by Fed. R. Civ. P. 56(c)(4); 2) that the invoices and accounting summaries of sales data provided under seal are a “recreation” of data and are inadmissible as hearsay without an applicable exception under Fed. R. Evid. 803(6); and 3) that any Cancellation No. 92065105 10 other evidence submitted by Armida in support of its motion for summary judgment is not admissible. Affidavits or declarations may be submitted in support of, or in opposition to, a motion for summary judgment provided that they are “made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” Fed. R. Civ. P. 56(c)(4). Pursuant to the Rule, an affiant or declarant may testify based on his or her personal knowledge from a review of the contents of files and records. Ava Ruha Corp. v. Mother’s Nutritional Ctr., Inc., 113 USPQ2d 1575, 1578 (TTAB 2015) (Fed. R. Civ. P. 56(c)(4) allows testimony from personal knowledge based on review of files and records or position with company). In addition, an affidavit or declaration can adequately support a motion for summary judgment when the affiant or declarant’s position with the employer renders him or her competent to provide the testimony on the particular issues which the affidavit concerns. Id. To the extent some portions of the declaration may not be based on personal knowledge, the proper remedy is to simply disregard those portions. Id. In this case, Mr. Cousins’ declaration states he is Petitioner’s Vice President, is testifying based on his personal knowledge, and that attached to the declaration are true and accurate summaries of annual sales and merchandise sales, and true and accurate copies of sales invoices.15 Because Mr. Cousins is competent to testify based 15 The wine sales and merchandise sales summaries and invoices have been designated confidential and were submitted under seal. 16 TTABVUE. Cancellation No. 92065105 11 on his status as Petitioner’s Vice President and his personal knowledge, PSI’s objections based on lack of personal knowledge are overruled. We also overrule Respondent’s hearsay objections. Respondent has objected that none of the evidence submitted meets the “threshold requirements for admissibility,” nor would it be admissible under business record exceptions to the hearsay rule.16 See Fed. R. Evid. 803(6). Federal Rule of Civil Procedure 56(c)(4) does not require the submission of admissible evidence. An objection is only proper when “the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.” (emphasis added). Here Armida has submitted wine sales and merchandise sales summaries and the underlying sales invoices and label approval applications. Summaries of business records may be admissible if the underlying documents are available, and in this case the underlying documents are the sales invoices. See Fed. R. Evid. 1006. Whatever the form of the materials submitted with the Cousins declaration, it does not appear that they could not “be presented in a form that would be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). Further, if PSI did not think the documents were available to it, or the affiant was not credible, the procedure was to submit a proper motion for discovery under Fed. R. Civ. P. 56(d). In view of the above, we have considered the Cousins declaration in connection with Armida’s motion for summary judgment. We overrule the objections but have 16 32 TTABVUE 7. Cancellation No. 92065105 12 considered whether Mr. Cousins’ statements are sufficiently probative to support judgment in Armida’s favor. PSI also seeks to have the Board take “judicial notice” of the testimony of Mr. Cousins in an unrelated Board proceeding involving a third party that is not a part of this proceeding and involving a different mark owned by Armida. The Board does not take “judicial notice” of testimony. See Fed. R. Evid. 201(b). Trademark Rule 2.122(f) provides that upon motion granted by the Board, testimony taken in another proceeding between the same parties or their privies, may be used in connection with a summary judgment motion in a pending Board proceeding. See also TBMP § 528.05(f). As the testimony PSI seeks to have considered is not from a proceeding between the same parties, nor is there any argument made that the unrelated third party is in privity with PSI, the motion is denied. Summary Judgment Standard Summary judgment is only appropriate where there are no genuine disputes as to any material fact, and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the burden of demonstrating the absence of any genuine dispute of material fact, and that it is entitled to judgment under the applicable law. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party moving for summary judgment has the initial burden of demonstrating that a particular fact cannot be disputed by citing to particular parts of materials in the record, including affidavits or declarations, admissions or interrogatory answers; Cancellation No. 92065105 13 or showing that the cited materials do not establish the absence or presence of a genuine dispute, or that the adverse party cannot produce admissible evidence to support the fact. Fed. R. Civ. P. 56(c)(1). See generally Celotex, 477 U.S. at 323; Sweats Fashions, 4 USPQ2d at 1795-96. When the movant has supported its motion with evidence sufficient, if unopposed, to indicate that there is no genuine dispute of material fact, the non-movant must present sufficient evidence to show an evidentiary conflict as to one or more material facts at issue. See Opryland USA, Inc. v. Great Am. Music Show, Inc., 970 F.2d 847, 23 USPQ2d 1471, 1472-73 (Fed. Cir. 1992); Enbridge, Inc. v. Excelerate Energy LP, 92 USPQ2d 1537, 1540 (TTAB 2009). For Armida to prevail on summary judgment with respect to its Section 2(d) claim, it must demonstrate that there is no genuine dispute of material fact that 1) it has standing to bring this proceeding; 2) it has registered or previously used a mark sufficient to establish proprietary rights; and 3) contemporaneous use of the parties’ respective marks on or in connection with their respective goods would be likely to cause confusion, mistake or to deceive consumers. Cunningham v. Laser Golf Corp., 222 F.3d 943, 55 USPQ2d 1842, 1844 (Fed. Cir. 2000); Life Zone, Inc. v. Middleman Grp., Inc., 87 USPQ2d 1953, 1959 (TTAB 2008); Hornblower, 60 USPQ2d at 1735. Armida’s motion is based in part on PSI’s failure to timely respond to Armida’s requests for admissions, served April 26, 2017. Armida argues that pursuant to Fed. R. Civ. P. 36(a), its requests for admissions are deemed admitted and thus priority and likelihood of confusion have been conclusively established in its favor. Cancellation No. 92065105 14 PSI argues that the deemed admissions may not be used against it as a “co- party.”17 In his attached declaration, PSI’s Secretary and Vice President Kevin Harr declares that he appeared at the discovery conference and, upon receiving the Board’s order regarding joinder, promptly filed and served PSI’s amended answer, initial disclosures and all documents responsive to Armida’s requests for production.18 Neither PSI, nor its predecessor, The Cuban LLC, has filed a motion to withdraw or amend the admissions or shown that its failure to respond to the requests for admissions was the result of excusable neglect. See Fed. R. Civ. P. 36(b). Because Respondents never responded to Armida’s requests for admissions, the requests are deemed admitted. See Fed. R. Civ. P. 6(b) and 36(a). See also Giersch v. Scripps Networks, Inc., 85 USPQ2d 1306 (TTAB 2007); and Hobie Designs, Inc. v. Fred Hayman Beverly Hills, Inc., 14 USPQ2d 2064 (TTAB 1990) (if party upon whom requests for admission have been served fails to timely respond, such requests will stand admitted absent showing that its failure to timely respond was result of excusable neglect; or unless motion to withdraw or amend admissions is filed pursuant to Fed. R. Civ. P. 36(b), and granted by Board). Accordingly the admissions stand and are operative for purposes of Armida’s motion. The facts deemed admitted by PSI include the following: 17 To the extent PSI objects to the form of the requests for admission, the objection is overruled. PSI’s chance to object was during its time to respond to the admissions or to withdraw and amend its deemed admissions, which it did not do. Even if the Board considered the objection as to typographical errors in the heading of the requests, it would not change the outcome herein. 18 33 TTABVUE 170, 176. Cancellation No. 92065105 15 Request for Admission 1: Admit that there is a likelihood of confusion between the mark POISON for the goods as described in USPTO Reg. No. 5110000 and the mark POIZIN for wine. Request for Admission 5: Admit that you had not used the designation POISON in commerce for the goods as described in USPTO Reg. No. 5110000 on or before November 9, 2016. The Cuban LLC’s argument that the deemed admissions in this case cannot be used against PSI as a “co-party” are unavailing19 as PSI stands in the shoes of the assignor. The order compelling discovery added PSI as the assignee, allowed PSI time for complying with its discovery obligations, and alerted PSI that the admissions were deemed admitted by operation of Rule. If PSI wished to withdraw its deemed admissions, it could have submitted a motion to do so. It did not and the deemed admissions stand admitted as part of the record on the motion for summary judgment. By Admission 5, PSI is deemed to have admitted that its earliest date of use is not on or before November 9, 2016. As to the first admission, however, likelihood of confusion is a legal conclusion and must still be proven by Armida. See Interstate Brands Corp. v. Celestial Seasonings, Inc., 576 F.2d 926, 198 USPQ 151, 153-54 (CCPA 1978) (finding likelihood of confusion is legal conclusion and cannot be an admission because only facts may be admitted). The Board still bears responsibility for the ultimate legal conclusion on the question of likelihood of confusion, including 19 The Cuban LLC cites to Becerra v. Asher, 105 F.3d 1042, 1048 (5th Cir. 1997), which is a civil rights case; and Riberglass v. Techni-Glass Indus., Inc., 811 F.2d 565, 566-67 (11th Cir. 1987), which clearly states in the quotation provided by The Cuban LLC that the deemed admissions are not binding where the co-defendant “actually responded.” Here neither The Cuban LLC, nor PSI, served responses to requests for admission, nor sought to withdraw and replace the deemed admissions. Cancellation No. 92065105 16 the similarities of the marks, and must make its own evaluation of what the average consumer will perceive the marks to be. See Freedom Fed. S&L Ass’n v. Heritage Fed. S&L Ass’n, 210 USPQ 227, 230 n.1 (TTAB 1981) (noting Board must independently evaluate evidence and arrive at its own conclusions). Therefore, we turn to a review of the evidence on summary judgment. Standing Standing is a threshold issue that must be proven by a plaintiff in every inter partes case. Empresa Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270, 111 USPQ2d 1058, 1062 (Fed. Cir. 2014); Ritchie v. Simpson, 170 F.3d 1092, 50 USPQ2d 1023 (Fed. Cir. 1999); Lipton Indus., Inc. v. Ralston Purina Co., 670 F.2d 1024, 213 USPQ 185 (CCPA 1982). Our primary reviewing court has enunciated a liberal threshold for determining standing, namely that a plaintiff must demonstrate that it possesses a “real interest” in a proceeding beyond that of a mere intermeddler, and “a reasonable basis for his belief of damage.” Empresa, 111 USPQ2d at 1062. A “real interest” is a “direct and personal stake” in the outcome of the proceeding. Ritchie, 50 USPQ2d at 1025-26. In the petition to cancel, Armida claims prior use of the POIZIN marks for red wine and wine, and ownership of two pending applications that have been refused registration under Trademark Act § 2(d) based on PSI’s registration. In its brief for summary judgment, Armida maintains it is undisputed that it began using its mark POIZIN for wine starting in 2001. Cancellation No. 92065105 17 While Armida did not introduce copies of its pending applications, see Trademark Rule 2.122(e), PSI’s Mr. Harr states in his declaration that Armida’s application Serial No. 86333906 was refused registration based on likelihood of confusion with PSI’s registration, and also provided copies of Armida’s petition for interference and the denial of that petition by the Deputy Commissioner for Trademark Examination Policy as Exhibits B and C, which state Armida’s pending application Serial No. 86333906 was suspended pending disposition of PSI’s pending application Serial No. 85624872.20 PSI admits in its answer that when PSI filed its application to register its mark, Armida sold red wine labeled “POIZIN,” and that Armida owns two suspended pending trademark applications Serial Nos. 86333906 and 86965419.21 This is sufficient to establish Armida’s standing in this proceeding. WeaponX Performance Prods. Ltd. v. Weapon X Motorsports, Inc., 126 USPQ2d 1034, 1040 (TTAB 2018) (defendant’s admission in answer together with other evidence may establish plaintiff’s standing). Accordingly, we find that there is no genuine dispute of material fact that Armida has standing to bring this cancellation proceeding. Priority In a cancellation proceeding involving a likelihood of confusion claim brought under Trademark Act Section 2(d), the petitioner must prove its priority as an element of its claim. Generally, for purposes of priority, either party may (contingent 20 33 TTABVUE 171-73 and 186-91. 21 8 TTABVUE 3 at ¶3. Cancellation No. 92065105 18 on registration) rely on an application filing date as a constructive date of use,22 although either party may introduce evidence of its earlier actual use, i.e., that it owns “a mark or trade name previously used in the United States.” Trademark Act § 2(d), 15 U.S.C. § 1052(d); Brewski Beer Co. v. Brewski Bros. Inc., 47 USPQ2d 1281, 1284 (TTAB 1998). Prior use of a mark must be demonstrated by a preponderance of the evidence showing use of the designation on or in connection with a product or service in commerce as a trademark or in a manner analogous to trademark use, such as advertising, use as a tradename, or any other manner of public use. See Standard Knitting Ltd. v. Toyota Jidosha K.K., 77 USPQ2d 1917, 1929 (TTAB 2006). Armida claims a date of first use of 2001 based on sales of wine with the POIZIN label since that date.23 Mr. Cousins’ declaration states that he had wine labels created in 2001 and submitted them for approval starting in 2001 to the Bureau of Alcohol, Tobacco and Firearms (ATF) and that they were approved. The Certificate of Label Approvals (COLAs) attached to the declaration show Armida’s claimed POIZIN mark in both standard character and stylized form for the years 2001, 2006, 2013 and 2015. Also submitted with the declaration was a “true and accurate” summary of annual sales of wine “containing the mark POIZIN as shown in the label approvals from 2001-2016;” “true and accurate” copies of sales invoices for wine from 2003-2014 22 “If the applicant would only prevail based on an unperfected constructive use date, the Board will issue a decision contingent on registration and allow the application in question to go forward. If and when a registration is issued, judgment in the new registrant’s favor will be entered.” Cent. Garden & Pet Co. v. Doskocil Mfg. Co., 108 USPQ2d 1134, 1139 n.13 (TTAB 2013). 23 1 TTABVUE 5 and 13 TTABVUE 8. Cancellation No. 92065105 19 “containing the POIZIN mark as shown in the label approvals;” and advertising information in the form of advertisements for POIZIN wine placed in the magazine Wine Country from 2002-2016. Armida’s applications for label approval and the COLAs which were granted are evidence only that the label at issue was approved for use by the Alcohol and Tobacco Tax and Trade Bureau. They do not show that the label was actually in use in commerce. Cf. AMF, Inc. v. Am. Leisure Prods., Inc., 474 F.2d 1403, 177 USPQ 268, 269 (CCPA 1973) (finding existence of third-party registrations is not evidence of what happens in marketplace or customer familiarity with marks). On the other hand, the summaries of annual wine sales and invoices attached to Mr. Cousins’ declaration are sufficient to show Armida’s sale of wine under the POIZIN mark beginning in 2001. PSI’s underlying filing date for its application is May 14, 2012.24 Upon federal registration, the registered mark has a constructive first use date of its application filing date. Kohler Co. v. Baldwin Hardware Corp., 82 USPQ2d 1100, 1106 (TTAB 2007) (respondent may rely on filing date of application underlying its registration in 24 PSI’s reliance on the “market penetration” test, articulated in Natural Footwear Ltd. v. Hart, Schaffner & Marx, 760 F.2d 1383, 1398-99 (3d Cir. 1985) is misplaced. A finding of priority before the Board does not require use in commerce or any particular degree of market penetration in order to establish priority. See, e.g., Nat’l Cable TV Ass’n v. Am. Cinema Eds., Inc., 937 F.2d 1572, 19 USPQ2d 1424, 1429 n.4 (Fed. Cir. 1991) (“Section 14 [through Section 2(d)] requires only prior use; ‘in commerce’ is noticeably absent.”); First Niagara Ins. Brokers, Inc. v. First Niagara Fin. Grp., Inc., 476 F.3d 867, 81 USPQ2d 1375, 1378 (Fed. Cir. 2007) (finding “plain language of the statute” merely requires prior mark to have been used in United States by another); E.I. du Pont de Nemours & Co. v. Big Bear Stores, Inc., 161 USPQ 50, 51 (TTAB 1969) (bona fide test marketing and experimental sales in small volumes are sufficient to show use of mark). Cancellation No. 92065105 20 establishing priority, in absence of allegation or proof of earlier use). See also 15 U.S.C. § 1057(c). Armida also argues PSI is deemed to have admitted that its first use date is not before November 9, 2016.25 No matter which date is used, however, none of these dates is earlier than Armida’s use beginning in 2001. PSI also admitted in its answer that Armida used the POIZIN mark for red wine prior to May 14, 2012: 1. PSI denies the allegation(s) stated in paragraph 1 of the Petition, except PSI admits that, prior to May 14, 2012, when Registrant filed its USPTO application to register the Mark, Petitioner sporadically sold red wine labeled “POIZIN” (“POIZIN Labeled Wine”) in the territorial region of Northern California, and Petitioner and/or one or more wine wholesalers or retailers made de minimis sales of POIZIN-Labeled Wine in Southern California and in States other than California.26 Although PSI’s answer characterizes Armida’s pre-2012 sales as “sporadic[ ],” PSI did not assert as a defense that Armida had abandoned any right established by such use. See W. Fla. Seafood, Inc. v. Jet Rests., Inc., 31 F.3d 1122, 31 USPQ2d 1660, 1666 (Fed. Cir. 1994). Absent a defense - and proof - of abandonment, sporadic prior use is still prior use. Accordingly, there is no genuine dispute of material fact that Armida has shown priority of use for its mark POIZIN for wine as against PSI’s mark POISON for “alcoholic beverages except beers.” 25 This date is from Request for Admission 5, but it is not clear what this date signifies. In its brief, Armida argues that PSI was “put on notice” of Armida’s prior use on November 10, 2014, the date Armida’s attorney requested through The Cuban LLC’s attorney that the POISON application be abandoned. See 12 TTABVUE 15 and 33 TTABVUE 172. 26 8 TTABVUE 1. Cancellation No. 92065105 21 Likelihood of Confusion Consideration of the issue of likelihood of confusion in the context of summary judgment motions involves an analysis of all of the probative facts in evidence that are relevant to the thirteen factors set forth in In re E.I. du Pont de Nemours & Co., 476 F.2d 1357, 177 USPQ 563, 567 (CCPA 1973), although not every factor is relevant in each case. See also M2 Software, Inc. v. M2 Commc’ns, Inc., 450 F.3d 1378, 78 USPQ2d 1944, 1946 (Fed. Cir. 2006); Palm Bay Imps., Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d 1369, 73 USPQ2d 1689, 1691 (Fed. Cir. 2005); In re Majestic Distilling Co., 315 F.3d 1311, 65 USPQ2d 1201, 1203 (Fed. Cir. 2003). We look to whether there are genuine disputes with respect to any of these factors which would be material to a decision on the merits. Two key factors are the degree of similarity of the parties’ marks and the degree to which their respective goods are related. See Federated Foods, Inc. v. Fort Howard Paper Co., 544 F.2d 1098, 192 USPQ 24 (CCPA 1976) (noting “fundamental inquiry” mandated by § 2(d) goes to cumulative effect of differences in essential characteristics of goods and differences in marks at issue). Similarity of the Marks The du Pont factor regarding the similarity, or dissimilarity, of the marks requires us to consider them in their entireties as to appearance, sound, connotation and commercial impression. Palm Bay Imps., 73 USPQ2d at 1691 (citing du Pont, 476 F.2d at 1361). The test under this du Pont factor is whether the marks are sufficiently Cancellation No. 92065105 22 similar that confusion as to the source of the goods offered under the respective marks is the likely result. Armida argues the marks POIZIN and POISON are “almost identical” in that they differ by only two letters in the second syllable, that it would be hard for consumers to distinguish the two marks and that their sound or pronunciation and commercial impression are almost identical. PSI does not directly argue the similarity of the marks, although it does discuss them in its answer. Our review of the marks shows that (i) the “POISON” mark and the “POIZIN” mark differ in appearance by two of six letters; and (ii) when used after the identical initial syllable “poi” (pȯi), the sounds of the syllables “son” (zᵊn) and “zin” (zin) are nearly phonetically indistinguishable. Essentially, only one letter between the marks, the “I” in second syllable of POIZIN versus the “O” in POISON, could be subject to a possible slight difference in pronunciation, but we do not think the average consumer would necessarily distinguish that difference when calling for the goods. It has long been held that there is no correct pronunciation of a trademark. See, e.g., In re Belgrade Shoe Co., 411 F.2d 1352, 162 USPQ 227, 227 (CCPA 1969) (“The appellant acknowledges that ‘there is no correct pronunciation of a trademark.’ We think that one is very likely to pronounce ‘Collegienne’ as if it were spelled ‘Colleejen’ or ‘Colleejun.’ Thus, in sound, the appellant's mark differs from the registered mark primarily in that the former is the plural form of the latter, which we feel does not amount to a material difference Cancellation No. 92065105 23 in a trademark sense”). In this instance the sound and commercial impression of the marks are highly similar. Both parties argue, and we agree, that the connotation of the marks is very similar as a substance capable of causing illness or harm.27 Further, the marks must be considered highly similar in appearance. PSI’s POISON mark is registered in standard-character form. As such, it covers use of that mark in any stylization, including that actually used by Armida for its POIZIN marks. See Citigroup Inc. v. Capital City Bank Group Inc., 637 F.3d 1344, 98 USPQ2d 1253, 1258-59 (Fed. Cir. 2011); SquirtCo v. Tomy Corp., 697 F.2d 1038, 216 USPQ 937, 939 (Fed. Cir. 1983). When these marks are considered in their entireties, they appear highly similar in sound, appearance, connotation and commercial impression. PSI has failed in its arguments or declarations to identify a genuine dispute of material fact as to the similarity of the marks. Similarity of the Goods Armida argues that the goods of the parties are closely related as PSI’s goods are “alcoholic beverages except beer” which encompass Armida’s “red wine” and “wine.” PSI admits as much in its answer,28 and we agree. Thus there is no genuine dispute of material fact as to the relatedness of the goods, which are identical in part. Armida argues that the case law is clear that the parties’ goods are sold in the same channels of trade and PSI does not dispute this. Where, as here, “there is no 27 12 TTABVUE 8 and 8 TTABVUE 5 at ¶ 10. 28 Id. at ¶ 11 (“PSI admits that the Mark has been registered for use in USPTO Class 33, “alcoholic beverages including beer,” which includes wine.”). Cancellation No. 92065105 24 limitation on the channels of trade” in the identification in the involved registration of a respondent, it is presumed that the respondent's goods move in all normal channels of trade for those goods. Genesco Inc. v. Martz, 66 USPQ2d 1260, 1268 (TTAB 2003) (“Given the in-part identical and in-part related nature of the parties' goods, and the lack of any restrictions in the identifications as to trade channels and purchasers,” the parties’ goods “could be offered and sold to the same classes of purchasers through the same channels of trade.”); see also Octocom Sys., Inc. v. Houston Computers Servs., Inc., 918 F.2d 937, 16 USPQ2d 1783, 1788 (Fed. Cir. 1990) (where application has no restriction on trade channels, it cannot be narrowed by testimony regarding applicant’s use in fact); Venture Out Props. LLC v. Wynn Resorts Holdings LLC, 81 USPQ2d 1887, 1893 (TTAB 2007) (where application trade channels are unrestricted and applicant presents no evidence to contradict opposer’s evidence, there is no basis to find material fact exists as to trade channels). Based on the foregoing, and viewing the arguments and evidence in a light most favorable to PSI, we find there is no genuine dispute of material fact as to a likelihood of confusion between the marks. Second and Third Affirmative Defenses of Unlawful Use and Unclean Hands Armida argues that there can be no unlawful use based on its wine labels because its labels have all been approved and certified by the ATF (now the Alcohol and Tobacco Tax and Trade Bureau), which has the authority to implement Title 27 of the Code of Federal Regulations cited by PSI in its affirmative defense. Armida introduced copies of the label approvals through the Cousins declaration. Armida also Cancellation No. 92065105 25 argues that because the unclean hands defense is predicated on the unlawful use defense, and there is no unlawful use, the unclean hands defense must also fail. PSI did not respond to these arguments. It is well-settled that trademark rights cannot be acquired through “unlawful use,” a defense which has its origins in the common law doctrine of “unclean hands.” See Erva Pharm., Inc. v. Am. Cyanamid Co., 755 F. Supp. 36, 39 n.1 (D.P.R. 1991). Unlawful use will be found where (1) a finding of non-compliance has previously been made by a court or government agency having competent jurisdiction under the statute involved, or (2) where there has been a per se violation of a statute regulating the sale of a party’s goods. Satinine Societa v. P.A.B. Produits, 209 USPQ 958, 964 (TTAB 1981). The party alleging unlawful use must prove non-compliance by clear and convincing evidence. See Gen. Mills, Inc. v. Health Valley Foods, 24 USPQ2d 1270, 1274 (TTAB 1992). Under these facts, where Armida has presented its label approvals and PSI has not responded, we find there is no genuine dispute of material fact that PSI’s unlawful use and unclean hands defenses must fail as the agency charged with enforcing labelling requirements has approved the labels that are in use. There is no evidence that there has been a finding of non-compliance by a court or agency, nor is it apparent that there has been a per se violation of any statute. Fourth Affirmative Defense of Laches and Acquiescence PSI’s fourth affirmative defense alleges that because Armida failed to timely assert an opposition to registration of PSI’s mark, and made no attempt to oppose or Cancellation No. 92065105 26 contest PSI’s application until the April 24, 2015 filing of an unsuccessful petition for interference against PSI’s application, the petition to cancel is barred under the doctrines of laches and acquiescence. Armida argues there can be no genuine dispute that at most there was a delay of one year between the time of publication of PSI’s application and the filing of Armida’s petition for interference and that there is no evidence of any detriment to PSI. Armida contends that the earliest date it could bring an action against PSI’s intent to use application was upon registration.29 As we noted above, PSI is considered to have waived any affirmative defense as it has not responded to or presented evidence on these issues raised by Armida. Fifth Affirmative Defense for Section 18 Restriction PSI’s fifth affirmative defense is an assertion under Section 18 of the Lanham Act to restrict its registration by excluding wine. Section 18 of the Lanham Act gives the Board the equitable power to restrict goods or services or to otherwise restrict or rectify the registration of a registered mark. 15 U.S.C. § 1068. The party seeking the restriction must plead that (i) the proposed restriction will avoid a finding of likelihood of confusion, and (ii) the registrant is not using the mark on the goods or services deleted or “effectively excluded” from the registration. Eurostar Inc. v. “Euro- Star” Reitmoden GmbH & Co. KG, 34 USPQ2d 1266, 1271 (TTAB 1994). See also 29 PSI did not respond to Armida’s laches and acquiescence arguments in its summary judgment brief and PSI did not distinguish between laches and acquiescence in its pleading. The only apparent reference to laches is at ¶ 3 of the Harr declaration, noting that publication of PSI’s application on September 4, 2013 was notice to “any person,” and that Armida did not file a timely notice of opposition. 33 TTABVUE 171. Cancellation No. 92065105 27 Embarcadero Techs., Inc. v. RStudio Inc., 105 USPQ2d 1825, 1828 (TTAB 2013) (defendant may assert affirmative defense by moving to restrict its own goods or services in order to avoid any likelihood of confusion alleged by plaintiff). As we have found no genuine dispute of material fact that there is a likelihood of confusion between the marks, and PSI has pled at Paragraph 11 of the answer that its goods include wine, PSI is not eligible for the restriction it proposes, and did not argue that it was eligible, because it is clearly using its mark on wine, the good that it seeks to exclude from its registration. See DAK Indus., Inc. v. Daiichi Kosho Co., 35 USPQ2d 1434, 1437 (TTAB 1995) (noting Board will only exercise its authority under Section 18 to permit partial cancellation by restriction or modification of goods listed in application or registration where such claim will avoid likelihood of confusion). Accordingly, PSI’s fifth affirmative defense must fail. Summary In view of the foregoing, Armida’s motion for summary judgment is granted and judgment is entered against PSI. The petition to cancel is granted and Registration No. 5110000 will be cancelled in due course. ***