L-Nutra, Inc.v.Marshall Nutraceuticals Pty Ltd.Download PDFTrademark Trial and Appeal BoardSep 11, 2018No. 92067874 (T.T.A.B. Sep. 11, 2018) Copy Citation MW September 11, 2018 Cancellation No. 92067874 L-Nutra, Inc. v. Marshall Nutraceuticals Pty Ltd. Before Bergsman, Wellington, and Hightower, Administrative Trademark Judges. By the Board: This proceeding now comes before the Board for consideration of Respondent’s motion (filed April 26, 2018) to vacate default judgment. Petitioner has filed a brief in opposition to the motion. I. Background On February 5, 2018, L-Nutra, Inc. (“Petitioner”) filed a petition to cancel the registered mark M NUTRA and design for various foods and beverages in International Classes 29, 30, and 32.1 On February 8, 2018, the Board issued the notice of institution allowing Respondent until March 20, 2018 to file an answer to the petition. On March 22, 2018, Respondent filed a motion to dismiss the petition for 1 Registration No. 5253357 issued on August 1, 2017 based on a request for extension of protection under Trademark Act Section 66(a), 15 U.S.C. § 1141f(a). Respondent claims a priority date of July 22, 2016 based on the filing of an application for registration in Australia. 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 General Email: TTABInfo@uspto.gov THIS ORDER IS NOT A PRECEDENT OF THE TTAB Cancellation No. 92067874 2 failure to state a claim. The same day, Petitioner filed a motion for default judgment for Respondent’s failure to file an answer to the petition by the answer deadline. On March 28, 2018, the Board issued an order suspending the proceeding pending disposition of Petitioner’s motion. The Board advised the parties that because Respondent failed to timely answer the petition, Respondent was in default and the motion to dismiss would not be considered. In addition, the Board noted that Respondent must respond to Petitioner’s motion with a showing of good cause within 20 days of the filing of the motion. 8 TTABVUE 2. On April 25, 2018, the Board entered judgment by default against Respondent because Respondent failed to respond to the motion for default judgment by the response deadline. The following day, Respondent filed its motion to vacate the default judgment. II. Arguments Respondent states that its failure to file a response to the motion for default judgment was just “a simple mistake,” 11 TTABVUE 6, and that, although it never filed a response, Respondent drafted a response and served it on Petitioner on April 12, 2018.2 Respondent argues that Petitioner will not be prejudiced by vacating the default judgment because its motion to vacate was filed within a reasonable time after entry of default; thus, the proceeding has not been affected. Respondent further argues that it has a meritorious defense to the claims in the proceeding because Petitioner’s marks create a different commercial impression than the subject mark 2 Pursuant to Trademark Rule 2.127(a), 37 C.F.R. § 2.127(a), Respondent’s brief in response to the motion was due on April 11, 2018. Thus, Respondent’s service of the response on Petitioner was late. Cancellation No. 92067874 3 and because the identified goods in the pleaded registrations are different than those in the involved registration. Finally, Respondent contends that the filing of its motion to dismiss and service of the response on Petitioner is evidence that the default was not willful and that it has an interest in litigating the case on its merits. In response to the motion to vacate, Petitioner argues that Respondent has missed two deadlines in this proceeding and has not explained why its failure to timely respond in either instance was excusable. According to Petitioner, compliance with the deadlines was within Petitioner’s direct control and its carelessness “must be construed as inexcusable neglect.” 12 TTABVUE 7. III. Applicable Law Once default judgment has been entered against a defendant pursuant to Fed. R. Civ. P. 55(b), the judgment may be set aside for the reasons set forth in Fed. R. Civ. P. 60(b). The factors to be considered in determining a motion to vacate default judgment for failure to file an answer include: (1) whether the plaintiff will be prejudiced by the Board’s decision to vacate judgment; (2) whether the default was willful; and (3) whether the defendant has a meritorious defense to the action. See Djeredjian v. Kashi Co., 21 USPQ2d 1613, 1615 (TTAB 1991). The determination of whether a motion under Fed. R. Civ. P. 60(b) should be granted is a matter that lies within the sound discretion of the Board. Id. However, because default judgments for failure to timely answer the complaint are not favored by the law, a motion for relief from such a judgment under Fed. R. Civ. P. 55(c) and 60(b) is generally treated with more liberality by the Board than are motions for relief Cancellation No. 92067874 4 from other types of judgments. See Information Sys. & Networks Corp. v. U. S., 994 F.2d 792, 795 (Fed. Cir. 1993) (“Rule 60(b) is applied most liberally to judgments in default.”) (quoting Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 403 (5th Cir. 1981)). Initially, we note that Respondent’s motion to vacate lacks details regarding the reason for its “mistake” in failing to timely respond to Petitioner’s motion. In addition, Respondent fails to provide any information regarding its initial failure to timely file an answer. Respondent has clearly been negligent in complying with the Board’s deadlines. However, the record does not show that Respondent’s inaction was in willful disregard for the Board’s rules and deadlines. See, e.g., Information Sys. & Networks Corp. v. U. S., 994 F.2d at 796 (failure to file answer and failure to move to vacate entry of default prior to entry of judgment insufficient to show willful disregard for rules). Petitioner does not contend that Respondent willfully disregarded the Board’s deadlines. Instead, Petitioner argues that Respondent’s inattention and carelessness is inexcusable.3 However, carelessness is not evidence of a willful intent. With respect to the remaining factors in the analysis, Petitioner does not argue that it will be prejudiced if the Board vacates the default. Thus, we find no evidence that the short delay in the proceeding will prejudice Petitioner’s ability to prosecute 3 Petitioner relies on the excusable neglect standard set forth in Pioneer Inv. Serv. Co. v. Brunswick Assoc. L.P., 507 U.S. 380, 395 (1993), and adopted by the Board in Pumpkin Ltd. v. Seed Corps, 43 USPQ2d 1582, 1586 (TTAB 1997), not the more liberal standard for determining motions for relief from judgments for failure to answer followed by the Court of Appeals for the Federal Circuit in Information Sys. & Networks Corp. In addition, most of the cases Petitioner relies on in its response are inapposite since they do not relate to entry of default judgment for failure to file an answer. Cancellation No. 92067874 5 its case. See, e.g., Pumpkin Ltd. v. Seed Corps, 43 USPQ2d 1582, 1587 (TTAB 1997) (prejudice typically results if witnesses or evidence become unavailable as a result of the delay). Further, we find that Respondent, in its motion to vacate, has asserted a meritorious defense to the allegations in the petition. See DeLorme Publ’g Co v. Eartha’s Inc., 60 USPQ2d 1222, 1224 (TTAB 2000) (all that is necessary to establish a meritorious defense are plausible responses to the allegations in the petition). In view of the foregoing, and bearing in mind that it is the policy of the law to decide cases on their merits, Respondent’s motion to vacate the default judgment is granted.4 IV. The Pleading For purposes of judicial economy, the Board has sua sponte reviewed the petition for cancellation to determine whether Petitioner has pleaded a legally sufficient claim upon which relief may be granted. The ESTTA cover sheet for the petition identifies likelihood of confusion under Trademark Act Section 2(d), 15 U.S.C. § 1052(d), as the sole ground for cancellation. Upon review of the text of the petition, the Board finds that Petitioner has pleaded sufficient factual allegations that, if proved, would establish Petitioner’s standing and its claim of likelihood of confusion based on ownership of two existing registrations for the standard character mark L-NUTRA.5 4 Respondent is advised, however, that the Board expects the parties to comply with the schedule in the proceeding. While the law favors judgment on the merits, the Board is justified in enforcing its procedural deadlines. See Hewlett-Packard Co. v. Olympus Corp., 931 F.2d 1551, 18 USPQ2d 1710, 1713 (Fed. Cir. 1991). 5 We note that while Petitioner has included copies of its pleaded registrations with its complaint, the copies do not show the current status and current title to the registrations. Thus, the pleaded registrations have not been properly made of record. See Trademark Rule 2.122(d)(1), 37 C.F.R. § 2.122(d)(1); TBMP § 704.03(b)(1)(A). Cancellation No. 92067874 6 Accordingly, Respondent is allowed until October 2, 2018 to file an answer to the petition for cancellation. Conferencing, disclosure, discovery and trial dates are reset as follows: Time to Answer 10/2/2018 Deadline for Discovery Conference 11/1/2018 Discovery Opens 11/1/2018 Initial Disclosures Due 12/1/2018 Expert Disclosures Due 3/31/2019 Discovery Closes 4/30/2019 Plaintiff's Pretrial Disclosures Due 6/14/2019 Plaintiff's 30-day Trial Period Ends 7/29/2019 Defendant's Pretrial Disclosures Due 8/13/2019 Defendant's 30-day Trial Period Ends 9/27/2019 Plaintiff's Rebuttal Disclosures Due 10/12/2019 Plaintiff's 15-day Rebuttal Period Ends 11/11/2019 Plaintiff's Opening Brief Due 1/10/2020 Defendant's Brief Due 2/9/2020 Plaintiff's Reply Brief Due 2/24/2020 Request for Oral Hearing (optional) Due 3/5/2020 In each instance, a copy of the transcript of testimony, together with copies of documentary exhibits, must be served on the adverse party within thirty days after completion of the taking of testimony. Trademark Rule 2.125. Briefs shall be filed in accordance with Trademark Rules 2.128(a) and (b). An oral hearing will be set only upon request filed as provided by Trademark Rule 2.129. Copy with citationCopy as parenthetical citation