No. 91213564 (T.T.A.B. Aug. 3, 2018)

Shenzhen Bao Ye Heng Industrial Development Co., LTDv.Paul Audio, Inc.

Trademark Trial and Appeal BoardAug 3, 2018

No. 91213564 (T.T.A.B. Aug. 3, 2018)

THIS ORDER IS NOT A PRECEDENT OF THE TTAB Mailed: August 3, 2018 UNITED STATES PATENT AND TRADEMARK OFFICE _____ Trademark Trial and Appeal Board _____ Shenzhen Bao Ye Heng Industrial Development Co., LTD v. Paul Audio, Inc. _____ Opposition Nos. 91206084 91213564 _____ Notice of Correction _____ By the Board: On July 30, 2018, the Board issued a decision which addressed the July 20, 2017 order of the Court of Appeals for the Federal Circuit to vacate and remand. The decision reversed the Board’s December 23, 2016 decision, and reversed the oppositions. On July 30, 2018, the Board inadvertently mailed the December 23, 2016 decision. Attached is the decision which should have been mailed. The mailing date above and on the decision is the date of this final decision. THIS OPINION IS NOT A PRECEDENT OF THE TTAB Mailed: August 3, 2018 UNITED STATES PATENT AND TRADEMARK OFFICE _____ Trademark Trial and Appeal Board _____ Shenzhen Bao Ye Heng Industrial Development Co., LTD1 v. Paul Audio, Inc. _____ Opposition Nos. 91206084 91213564 _____ ON REMAND FROM THE U.S. COURT OF APPEALS FOR THE FEDERAL CIRCUIT _____ Hubert H. Kuo and David Yu of Ardent Law Group, P.C., for Shenzhen Bao Ye Heng Industrial Development Co., LTD. A. Justin Lum of David and Raymond IP Law Firm, for Paul Audio, Inc. _____ Before Bergsman, Kuczma, and Gorowitz, Administrative Trademark Judges. Opinion by Gorowitz, Administrative Trademark Judge: 1 The prior Board decision inadvertently omitted the word “Development” from Opposer’s name. Opposition Nos. 91206084 and 91213564 2 On December 23, 2016, the Board issued a decision sustaining Shenzhen Bao Ye Heng Industrial Development Co., LTD’s (“Bao Ye Heng”) oppositions to Paul Audio, Inc.’s (“Paul Audio”) applications to register the mark C-MARK (stylized) shown below: • Application Serial No. 77312117 for “Audio apparatus, namely, speakers, loud speakers, loud speaker boxes, speaker boxes, loud speaker enclosures, speaker enclosures, amplifiers, mixers, equalizers, horns and driver, audio related accessories, namely, adaptor cables, subwoofer/bass speakers, stage speaker 2-way full range speaker, 3- way full range speakers, 4-way full range speakers, tweeters, and head set receivers,” in International Class 9;2 and • Application Serial No. 85697706 for “Wholesale distributorships featuring audio apparatus; retail store and on-line retail store services all featuring audio apparatus,” in International Class 353 on the ground of likelihood of confusion under Section 2(d) of the Trademark Act, 15 U.S.C. § 1052(d).4 The oppositions were sustained based on our finding of issue 2 Filed on July 13, 2012, based on allegations of use in commerce as of December 1, 1993. 3 Filed on August 7, 2012, based on allegations of use in commerce as of December 1, 1993. 4 Bao Ye Heng also pleaded dilution and fraud. Bao Ye Heng neither submitted evidence in support of its claim of dilution nor argued such claim. With respect to the claim of fraud, other than asserting that Paul Audio’s applications should be declared void ab initio because “[a]ny purported use [by Paul Audio] of the mark C-MARK in China would then be an unlawful use,” (Bao Ye Heng Brief, 54 TTABVUE 9), Bao Ye Heng submitted no argument supporting its claim of fraud. Opposition Nos. 91206084 and 91213564 3 preclusion with respect to the claim of abandonment, which was fully litigated in a prior cancellation action brought by Paul Audio against Zhou Baoning, Chairman of Bao Ye Heng. Paul Audio appealed to the U.S. Court of Appeals for the Federal Circuit and moved the Court to remand the case to the Board for further proceedings. When Bao Ye Heng did not respond, the Court issued an intervention order asking the United States Patent & Trademark Office (“USPTO”) whether it wished to participate in the appeal. The USPTO agreed that the case should be remanded so that the Board may vacate its December 23, 2016 decision and reopen the opposition proceedings for the Board to address the issues on the merits In a non-precedential order dated July 20, 2017, the Court granted the motion and remanded the case to the Board for further proceedings consistent with the order. Accordingly, other than the ruling dismissing the dilution and fraud claims, we vacate our December 23, 2016 decision and reopen proceedings to address the issues on the merits. In the December 23, 2016 decision, we decided the issue of likelihood of confusion on the merits.5 Our decision was based on the marks being identical and the goods Accordingly, we dismissed both the dilution claim under Section 43(c) and the fraud claim in the December 23, 2016 decision and they are no longer at issue. 5 The only factual issues not decided on the merits were priority and the related issue of Paul Audio’s abandonment. We found that issue preclusion applied to these factual issues which were litigated in a prior action to cancel Registration No. 3252760 (Cancellation No. 92049924 - Paul Audio v. Zhou Boaning), in which Zhou Boaning (Registrant) pleaded abandonment as an affirmative defense. While the Board found that Paul Audio had Opposition Nos. 91206084 and 91213564 4 and services being either identical or closely related. The same facts on which our decision was based still exist and therefore, we find that there is likelihood of confusion. As stated above, we did not decide the issue of priority and the related issue of Paul Audio’s abandonment of its rights. As such, the only issue remaining is priority, which requires a determination of whether Paul Audio abandoned its rights in the C- MARK mark in the United States. The Record. The record includes the pleadings, and by operation of Trademark Rule 2.122(b), 37 C.F.R. § 2.122(b), the files of the opposed applications. In addition, the parties introduced the following evidence: Bao Ye Heng’s evidence: 1. A copy of cancelled Registration No. 1906390 – Exhibit A to Bao Ye Heng’s Notice of Reliance, 45 TTABVUE 8- 9; 2. Copies of Chinese Records regarding ownership of the mark C-MARK and transfer of ownership of the same - Exhibits B to H to Bao Ye Heng’s Notice of Reliance, 45 TTABVUE 11-30; 3. Testimony deposition of Zhou Baoning, in Cancellation No. 92049924 and exhibits thereto (Zhou Canc. Test.) – abandoned its mark in 2004, Paul Audio prevailed because the Board found that the respondent’s application was filed in the name of Zhou Boaning, rather than the proper owner, Bao Ye Heng. The underlying application was declared void ab initio and Registration. No. 3252760 was cancelled. Because Paul Audio essentially prevailed, it had no incentive to appeal the finding of abandonment and, therefore, it would not be fair to now bind Paul Audio through issue preclusion. Opposition Nos. 91206084 and 91213564 5 Exhibit I to Bao Ye Heng’s Notice of Reliance, 45 TTABVUE 33-429; 6 4. Testimony deposition of Zhou Baoning, Volume 1 (Zhou Test. 1) 49 TTABVUE; and 5. Testimony deposition of Zhou Baoning, Volume 2 (Zhou Test. 2) 50 TTABVUE. Paul Audio’s evidence, which includes all of the evidence of use introduced by Paul Audio in the prior cancellation action: 1. Cancelled Registration No. 1906390 and assignment history thereof – Exhibits A and B to Paul Audio’s Notice of Reliance, 51 TTABVUE 8-10; 2. California Secretary of State corporate status records for Paul Audio, Inc. and C-Mark Light & Sound, Inc. Exhibits C and D to Paul Audio’s Notice of Reliance, 51 TTABVUE 12-14; 3. Testimony deposition of Zhou Baoning in Cancellation No. 92049924 and exhibits thereto (Zhou Canc. Test.) – Exhibit H to Paul Audio’s Notice of Reliance, 51 TTABVUE 69-455; 4. Testimony deposition of Gong Li (Paul Gong) in Cancellation No. 92049924 and exhibits thereto (Gong Canc. Test.) Exhibit I to Paul Audio’s Notice of Reliance, 51 TTABVUE 457-689; 5. Redacted Confidential Testimony deposition of Gong Li (Paul Gong) in Cancellation No. 92049924 and exhibits thereto (Gong Canc. Test. Redacted) Exhibit J to Paul Audio’s Notice of Reliance, 51 TTABVUE 691-766; 6. Confidential Testimony deposition of Gong Li (Paul Gong) in Cancellation No. 92049924 (Gong Canc. Test.- Confid.) Exhibit K to Paul Audio’s Notice of Reliance, 52 TTABVUE; 6 On December 5, 2013, Paul Audio moved for leave to use testimony from Cancellation No. 92049924. 29 TTABVUE. By Order dated June 30, 2014, the motion was granted, as conceded. Board Order, 37 TTABVUE 4 fn.9. Opposition Nos. 91206084 and 91213564 6 7. Rebuttal Testimony deposition of Gong Li (Paul Gong) in Cancellation No. 92049924 and exhibits thereto (Gong Canc. Test. - Rebuttal) Exhibit L to Paul Audio’s Notice of Reliance, 51 TTABVUE 768-892; 8. Decision of Asian Domain Name Dispute Resolution Centre regarding domain name c-mark.com - Exhibit M to Paul’s Notice of Reliance, 51 TTABVUE 894-906; 9. Testimony deposition of Gong Li (Paul Gong), Volume 1 (Confid. Gong Test. 1), 57 TTABVUE; 10. Redacted Confidential Testimony deposition of Gong Li (Paul Gong), Volume 1 (Gong Redacted Test. 1), 59 TTABVUE; 11. Testimony deposition of Gong Li (Paul Gong), Volume 2 (Confid. Gong Test. 2), 60 TTABVUE; and 12. Redacted Confidential Testimony of Gong Li (Paul Gong), Volume 2 (Gong Redacted Test. 2), 62 TTABVUE. Evidentiary Objections. Paul Audio filed numerous evidentiary objections. As we stated in our December 23, 2016 decision, the Board is capable of weighing the relevance and strength or weakness of the objected-to testimony and evidence in cases litigated before us, including any inherent limitations in such testimony or evidence, and this meant there was no the need to strike the testimony and evidence objected to in these consolidated cases. Given the circumstances, we chose not to make specific rulings on each and every objection. As necessary and appropriate, we will point out in this decision any limitations applied to the evidence or otherwise note evidence upon which we cannot rely. Ultimately, while we have considered all the evidence and arguments of the parties, we do not rely on evidence not discussed herein. Opposition Nos. 91206084 and 91213564 7 Standing. The Board acknowledged in the December 23, 2016 decision that Bao Ye Heng had established standing since Bao Ye Heng’s use of the mark C-MARK in commerce (discussed infra) establishes that it has a real interest in the outcome of this proceeding, as well as a reasonable basis for its belief of damage. Discussion. Both parties claim ownership of the mark C-MARK for stereo equipment, which they claim to have acquired from the Chinese company, “Shenzhen World Music” aka “World Music” and “World Music Limited.” Paul Audio’s Use of the C-MARK mark. Paul Gong, Applicant’s president, was the general manager of Shenzhen World Music from 1991 – 1999, and was the general manager when Shenzhen World Music closed. Gong Canc. Test., 51 TTABVUE 475. Shenzhen World Music was the main distributor and sole agent in China for C-Mark Light and Sound, a California corporation, which manufactured speakers and sold C-Mark Light and Sound speakers under the C-MARK mark commencing in 1993. Id., at 473-474, 469. C-Mark Light and Sound sold approximately 100 different models of speakers and also sold speaker accessories worldwide, all of which were sold under the C-MARK mark. Id. Paul Gong was the president of C-Mark Light and Sound, which he started in 1993. Id., at 468. Opposition Nos. 91206084 and 91213564 8 Paul Audio, C-Mark Light and Sound’s successor, was established in 1996 to manufacture speakers. Id., 467, 469-70. Paul Audio continued using the C-MARK mark on and in connection with its speakers. Up until 2000, 100 percent of Paul Audio’s speakers were sold under the C-MARK mark; after 2000, only 10 percent of Paul Audio’s speakers were sold under the C- MARK brand. Gong Canc. Test. Redacted, 51 TTABVUE 697. In or about 1999, Shenzen World Music’s Chinese registration for the C-MARK mark was acquired by Bao Ye Heng, after which Paul Audio put the following notice on its website in both English and Chinese: Public Notice of C-Mark (USA) Company Around 1999, the trademark of C-Mark (China) was misappropriated by unlawful businessmen, C-Mark (USA) therefore changed the original C-Mark to CSP’s that same year. All of the American C-Mark products sold in Chinese market today are counterfeits with poor quality. American C-Mark products are protected by the Federal Trademark Law of the United States (Trademark No.:1906390). This notice is hereby issued by C-Mark (USA) Company.7 When asked whether “Paul Audio ever stopped selling the C-MARK trademark in the United States,” Mr. Gong answered “no.” Gong Canc. Test. Redacted, 51 TTABVUE 697. 7 Gong Test. 2, web.archive.org/web/2003041913011/http://www.c-mark.com. 60 TTABVUE 178. Opposition Nos. 91206084 and 91213564 9 In the prior cancellation action, the Board determined that Paul Audio abandoned its rights in the mark C-MARK in the United States because Paul Audio produced no credible evidence of use after the NAAM Show in 2004. See Board Decision in Cancellation Action No 92049924, p. 17. As mandated by the Court, we are now addressing the issue of abandonment on the merits by evaluating the evidence submitted by Paul Audio in this action to establish priority and Paul Audio’s continued use. Paul Audio submitted copies of fifteen different invoices, and packing and shipping documents all bearing the C-MARK name, and in many instances the C- MARK mark.8 Confid. Gong Test. 1, Exhibits 4-8 and 10-23, 58 TTABVUE 94-98, 102- 151.9 The “ship time” indicated on Exhibit 4 is August 31, 2003. Id. at 94. Paul Audio submitted between one to four invoices for each year thereafter through 2012. Mr. Gong testified that all of Paul Audio’s “products are C-MARK”10 (Id. at 61); and that Paul Audio uses the C-MARK mark on its website, located at C-MARK.com, which it has operated continuously since 1996. Gong Test. 1, 57 TTABVUE 23. A mark shall be deemed to be "abandoned" …: (1) When its use has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of abandonment. "Use" of a mark means the 8 Some of the documents were duplicates. They have only been counted once. 9 These documents are confidential. They will only be discussed in very broad terms, avoiding all identifying confidential information. 10 This testimony was in the confidential portion of the deposition. However, it is critical to our determination of abandonment, thus we refer to the testimony without the specific details. Opposition Nos. 91206084 and 91213564 10 bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark. Section 45 of the Trademark Act, 15 U.S.C. §1127. Paul Gong’s testimony and exhibits thereto establishes use of the C-MARK mark in commerce by Paul Audio’s predecessor, C-Mark Light and Sound, as early as 1993 and by Paul Audio, itself, since its inception in 1996. The invoices submitted establish use from 2003 – 2012. While Paul Audio’s evidence of use is not substantial, it does constitute bona fide use of such mark made in the ordinary course of trade, which was not made merely to reserve a right in a mark. As such, it is sufficient to establish that Paul Audio did not abandon its use of the C-MARK mark. Bao Ye Heng’s Use. Zhou Baoning is the Chairman of the Board of Bao Ye Heng, a position he has held since the company was established in 1998. 49 TTABVUE 16. Mr. Zhou testified that Bao Ye Heng’s first use of the C-MARK mark in U.S. commerce commenced with the sale of “digital and power amplifiers” to Bose Corporation in Framingham, MA on June 6, 2005. Id., at 52-57 and exhibit 3.11 Mr. Zhou introduced an invoice evidencing 11 Paul Audio objected to this testimony on the grounds that it constitutes hearsay and that the document (identified as a pro forma invoice) has not been authenticated. Mr. Zhou, testified that in his role of general manager he oversees the purchase orders and the sales of products; and that the sales executives report to him. Zhou Test. Vol. 1, 49 TTABVUE 16, 20. He testified that he signs, by affixing a stamp, every pro forma invoice issued by his company. Id., at 22-23. As such, this invoice and the others introduced were authenticated by Mr. Zhou, who testified about the sales process, including generation of invoices. We overrule this objection and all of the other objections made on the assumption that Mr. Zhou could not authenticate the invoices because he was not involved in day-to-day operations of Bao Ye Heng. Opposition Nos. 91206084 and 91213564 11 this sale and provided invoices of sales to other US companies from 2006-2012.12 Id. at 154, 61-84, and Confidential Exhibits 4-22. Conclusion. After reviewing all evidence, whether discussed herein or not, we find that Paul Audio did not abandon its use of the C-MARK mark in commerce; that Paul Audio’s rights predate any rights established by Bao Ye Heng and therefore, that Paul Audio has priority. Decision: The oppositions are dismissed. The applications will be processed for registration in due course. 12 All of the sales documentation introduced was designated confidential. Accordingly, we have not discussed any information contained on such invoices.