Small Business Network, Inc.v.American Express Company

Trademark Trial and Appeal Board

Dec 13, 2007

No. 92043745 (T.T.A.B. Dec. 13, 2007)

Oral Hearing: Mailed:
July 24, 2007 December 13, 2007

UNITED STATES PATENT AND TRADEMARK OFFICE
_____

Trademark Trial and Appeal Board
______

Small Business Network, Inc.
v.
American Express Company
_____

Cancellation No. 92043745
_____

G. Ehrich Lenz of Incorvaia & Associates for Small Business
Network, Inc.

Mark J. Liss of Leydig, Voit & Mayer Ltd. for American
Express Company.
______

Before Hohein, Kuhlke and Walsh, Administrative Trademark
Judges.

Opinion by Kuhlke, Administrative Trademark Judge:

Small Business Network, Inc. (petitioner) has
petitioned to cancel Registration No. 2838377, issued on May
4, 2004, and owned by American Express Company (respondent).
The registration is for the mark OPEN: THE SMALL BUSINESS
NETWORK (in typed form) for “administration of a discount
program for enabling participants to obtain discounts on
goods and services, arranging of subscription for the
THIS OPINION IS NOT A
PRECEDENT OF THE TTAB
Cancellation No. 92043745
2
publication of others, direct mail consultation services,
providing information about the goods and services of others
via the global computer network, providing online directory
services also featuring hyperlinks to other websites” in
International Class 35.
As grounds for cancellation, petitioner asserts the
claim of priority of use and likelihood of confusion under
Section 2(d) of the Trademark Act, 15 U.S.C. §1052(d). More
specifically, petitioner alleges that it has filed a
trademark application “for the mark SMALL BUSINESS NETWORK
for use in connection with membership club services, namely
providing members with discounts, incentives and special
promotional offers in Class 35” and that the “PTO has
determined by its rejection of Petitioner’s application that
there is a likelihood of confusion between Petitioner’s mark
and Respondent’s.” Petitioner further alleges that it “has
clear priority of use of its mark and has not abandoned it,”
and that “Petitioner’s mark has become distinctive of its
services.”
In addition, petitioner asserts that respondent
committed fraud in obtaining its registration based on the
allegation that respondent “knew it was not entitled to the
mark for which it seeks registration because it was aware of
Petitioners’ mark, but nevertheless alleged ownership of the
Cancellation No. 92043745
3
mark and swore that no one else had the right to use the
same or similar mark in commerce.”
Respondent, in its answer, denies the salient
allegations in the petition for cancellation and asserts
that “Petitioner has no protectable rights in ‘Small
Business Network’” inasmuch as “Petitioner has not made
substantially exclusive and continuous use of this term for
any number of years and the term is a highly descriptive or
a generic public domain term.”
The parties appeared through counsel at an oral hearing
held on July 24, 2007, and have filed briefs.
The evidence of record includes: the pleadings; the
file of the registration sought to be cancelled; trial
testimony, with related exhibits, taken by each party
(Dennis Walker, owner and founder of petitioner (Walker
Test.); Leslie Scharf, director brand marketing strategy for
respondent (Scharf Test.); Barbra Schiff, manager of legal
affairs for respondent (Schiff Test.); and Susan Dalton,
owner of company that provides customer services for
petitioner (Dalton Test.)); respondent’s responses to
interrogatories and requests for admission and petitioner’s
application for the trademark “SMALL BUSINESS NETWORK,”
submitted by petitioner under a notice of reliance; and
third party registrations, respondent’s other registration
for the mark OPEN SMALL BUSINESS NETWORK for credit card and
Cancellation No. 92043745
4
charge card services, and printouts from the Nexis database
of articles referencing third parties using the wording
“Small Business Network,” submitted by respondent under a
notice of reliance.
PRIORITY/LIKELIHOOD OF CONFUSION
Petitioner is relying on its use of the phrase “SMALL
BUSINESS NETWORK” to establish common law rights and
priority of use. “Under the rule of Otto Roth, a party
opposing registration of a trademark due to a likelihood of
confusion with his own unregistered term cannot prevail
unless he shows that his term is distinctive of his goods,
whether inherently or through the acquisition of secondary
meaning or through ‘whatever other type of use may have
developed a trade identity.’” Towers v. Advent Software
Inc., 913 F.2d 942, 16 USPQ2d 1039, 1041 (Fed. Cir. 1990),
citing, Otto Roth & Co. v. Universal Food Corp., 640 F.2d
1317, 209 USPQ 40, 43 (CCPA 1981). “The Otto Roth rule is
applicable to trademark registration cancellation
proceedings as well.” Id. at 1041.
It is undisputed that the phrase SMALL BUSINESS NETWORK
is descriptive of petitioner’s services. Petitioner amended
its pleaded application for the mark SMALL BUSINESS NETWORK
to seek registration based on acquired distinctiveness under
Section 2(f) with NETWORK disclaimed and respondent
disclaimed the phrase SMALL BUSINESS NETWORK in its
Cancellation No. 92043745
5
registration. Petitioner argues, however, that this phrase
has acquired distinctiveness when used in connection with
its services. Based on the record, we find that
petitioner’s use of the phrase SMALL BUSINESS NETWORK did
not cause this term to acquire distinctiveness prior to
either respondent’s January 17, 2002 date of first use
(respondent’s response to Request for Admission No. 4) or
March 11, 2002, the filing date of respondent’s underlying
application for its involved registration.
It is petitioner’s burden to establish acquired
distinctiveness. See Yamaha Int’l Corp. v. Hoshino Gakki
Co. Ltd., 840 F.2d 1572, 6 USPQ2d 1001, 1006 (Fed. Cir.
1988). “[L]ogically that standard becomes more difficult as
the mark’s descriptiveness increases.” Id. at 1008. Thus,
a claim that petitioner has been using the subject matter
for a long period of substantially exclusive use may not be
sufficient to demonstrate that the mark has acquired
distinctiveness. See In re Gibson Guitar Corp., 61 USPQ2d
1948, 1952 (TTAB 2001) (66 years of use); In re Kalmbach
Publishing Co., 14 USPQ2d 1490 (TTAB 1989); and In re Gray
Inc., 3 USPQ2d 1558, 1559 (TTAB 1987).
The amount and character of evidence required to
establish acquired distinctiveness depends on the facts of
each case, Roux Laboratories, Inc. v. Clairol Inc., 427 F.2d
823, 166 USPQ 34 (CCPA 1970), and more evidence is required
Cancellation No. 92043745
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where a mark is so highly descriptive that purchasers seeing
the matter in relation to the goods or services would be
less likely to believe that it indicates source in any one
party. See In re Bongrain International Corp., 894 F.2d
1316, 13 USPQ2d 1727 (Fed. Cir. 1990). Evidence of acquired
distinctiveness can include the length and manner of use of
the mark, the nature and extent of advertising and
promotion, sales, and surveys. See British Seagull Ltd. v.
Brunswick Corp., 28 USPQ2d 1197 (TTAB 1993). See also Coach
House Restaurant, Inc. v. Coach and Six Restaurant, Inc.,
934 F.2d 1551, 19 USPQ2d 1401, 1406 (1991). However, a
successful advertising campaign is not in itself necessarily
enough to prove acquired distinctiveness. In re Boston Beer
Co. L.P., 198 F.3d 1370, 53 USPQ2d 1056 (Fed. Cir. 1999)
(claim based on annual sales under the mark of approximately
eighty-five million dollars, and annual advertising
expenditures in excess of ten million dollars, not
sufficient to establish acquired distinctiveness in view of
highly descriptive nature of mark).
The phrase “SMALL BUSINESS NETWORK” is highly
descriptive of petitioner’s services. The first part,
“SMALL BUSINESS,” names the target consumer, small
businesses. “NETWORK” is defined as “an extended group of
people with similar interests or concerns who interact and
remain in informal contact for mutual assistance or
Cancellation No. 92043745
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support.” The American Heritage Dictionary of the English
Language (4th ed. 2006).1 Thus, the final portion of the
mark, “NETWORK,” describes a significant feature of the
services, namely the provision of a network through which
small businesses may obtain discounts. We agree with
petitioner that respondent’s examples of third-party use of
the phrase “small business network” to describe other small
business networks are of limited probative value insofar as
determining the descriptiveness of the phrase in connection
with petitioner’s specific services.2 However, given the
common meaning of the individual terms “small business” and

1 The Board may take judicial notice of dictionary definitions.
University of Notre Dame du Lac v. J.C. Gourmet Food Imports Co.,
213 USPQ 594, 596 (TTAB 1982), aff’d, 703 F.2d 1372, 217 USPQ 505
(Fed. Cir. 1983).

2 Printouts of articles from the Nexis database referencing third
parties using the phrase “small business network” include: “The
organization is promoting north Omaha through ... a series of
activities this summer, working with ... Omaha Small Business
Network.” Omaha World-Herald (June 20, 2005); “Meetings and
Events ... Small Business Network, monthly meeting ...”
Anchorage Daily News (May 25, 2005); “The Western Pennsylvania
Small Business Network’s 29th annual Small Business Awards
Luncheon was held ...” Pittsburgh Post-Gazette (May 23, 2005);
“The Week Ahead ... SOHO Groups, a small business network, will
hold its monthly meeting at ...” Salt Lake Tribune (August 2,
2004). While two examples highlighted by respondent appear to
involve services similar to petitioners, this is not sufficient
to support a finding that the phrase is widely used in connection
with petitioner’s services. See Schiff Test. pp. 26-27 Exh. No.
13 (“Welcome to the Rhode Island Small Business Network ...
[f]ind great deals and discounts on everything from retailers to
restaurants ... [t]he Small Business Network is your online
connection to everything Rhode Island ... [i]ncentives,
discounts, coupons and, you’ll only find it at UPN28.com”) and
pp. 33-35 Exh. No. 21 (“New York Small Business Network is an
association designed to help small businesses and individuals
obtain discounts on products and services that will help their
businesses grow ... New York Small Business Network has
Cancellation No. 92043745
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“network,” and the unambiguous meaning of the phrase used in
connection with petitioner’s services, that alone is
sufficient to find the phrase highly descriptive. Thus,
while the statute provides that acquired distinctiveness may
be presumed based on substantially exclusive use for five
years, given the highly descriptive nature of the phrase
“small business network,” petitioner may not rely on this
statutory presumption alone.
In support of its assertion of acquired
distinctiveness, petitioner testified that between 1995 and
1996 petitioner worked with a long distance company to sell
their long distance services and received “dues” from the
long distance company for every customer petitioner obtained
for the long distance company. Walker Test. pp. 11-14.
Petitioner conducted this business purely by telemarketing
and “the presentation went something like, ‘This is Denny
Walker calling from Small Business Network to introduce you
to our new buying plan...” Id. p. 11. By 1998, the long
distance companies no longer used petitioner’s services.
Thereafter, in 1998, petitioner began offering other
discount benefits and began enrolling members into
petitioner itself and petitioner collected dues directly
from its members. Id. p. 13. Other than a direct mailing
campaign conducted in 2003, petitioner has primarily used

agreements with various vendors to offer the products and
Cancellation No. 92043745
9
the phrase in its telemarketing campaigns. Although
petitioner has used the phrase on its website created in
1996, Mr. Walker testified that the website was not used as
a marketing tool until 2003. Id. p. 43. In addition, at
least as early as 1999, petitioner sent membership kits to
new members along with a quarterly newsletter that included
the phrase “SMALL BUSINESS NETWORK.” The website and
membership kits display the phrase “SMALL BUSINESS NETWORK”
next to a prominent SBN logo. The newsletter is titled
NETWORK NEWS and includes in smaller print the following
wording on the cover: A Magazine Exclusively for the
Members of Small Business Network. Mr. Walker further
testified that “None of the stuff before 1998 really counts
because I mean – there were build ups and then disasters.”
Id. p. 22. Finally, petitioner’s membership had grown to
approximately 78,000 dues paying members by 2002.3 Id. p.
15.
After a careful review of the record, we find that
petitioner has not shown that SMALL BUSINESS NETWORK had
acquired distinctiveness prior to respondent’s filing date
of March 11, 2002. In making this determination we have
considered petitioner’s argument that the evidence of actual

services that small businesses use everyday at reduced rates”).
3 The information provided regarding advertising expenses in 2003
is not relevant to the question of acquired distinctiveness prior
to 2002.
Cancellation No. 92043745
10
confusion supports a finding that petitioner had attained
trademark rights in the phrase “SMALL BUSINESS NETWORK.”
We first address the evidentiary problem presented by
this evidence. The bulk of the evidence of alleged actual
confusion is in the testimony of Susan Dalton presented on
rebuttal. Respondent has objected to this testimony and the
exhibits introduced thereunder as improper rebuttal and
hearsay. We agree that it is improper rebuttal. “Evidence
which should constitute part of [petitioner’s] case in
chief, but which is made of record during the rebuttal
period, is not considered when [respondent] objects.”
United States Playing Card Co. v. Harbro LLC, 81 USPQ2d
1537, 1539-40 (TTAB 2007). We are not persuaded by
petitioner’s argument that Ms. Dalton’s testimony served to
rebut Ms. Schiff’s testimony regarding the issue of actual
confusion. Rather, the rebuttal testimony and evidence is
merely cumulative evidence relating to actual confusion
briefly testified to by Mr. Walker. Respondent’s additional
objections to Ms. Dalton’s testimony and exhibits submitted
thereunder as inadmissible hearsay are also sustained except
as to Ms. Dalton’s testimony relating to her personal
experience speaking to customers.
However, even if we were to consider the testimony, the
instances asserted to be examples of confusion occurred
after respondent launched a broad advertising campaign of
Cancellation No. 92043745
11
its mark OPEN: SMALL BUSINESS NETWORK. While this may lead
to the conclusion that respondent had established trademark
rights in the phrase SMALL BUSNIESS NETWORK as a result of
its advertising blitz and, therefore, trumped any rights
petitioner may have been attempting to build, it does not
show that petitioner had acquired trademark rights in the
mark. Finally, even if we were to consider it evidence of
petitioner’s acquired distinctiveness of its mark, it occurs
after respondent’s first use of its mark and application
filing date. The record simply does not support a finding
of acquired distinctiveness or secondary meaning in the
highly descriptive phrase SMALL BUSINESS NETWORK
attributable to petitioner, prior to respondent’s first use
date of its mark or application filing date.
Inasmuch as the record reflects that petitioner had not
acquired service mark rights in its alleged mark SMALL
BUSINESS NETWORK as of the time respondent first used the
mark OPEN: SMALL BUSINESS NETWORK in connection with its
services or the filing date of the application underlying
respondent’s registration, we hold that petitioner has not
established priority of use so as to support a valid cause
of action to cancel the registration for the mark OPEN:
SMALL BUSINESS NETWORK pursuant to Section 2(d) of the
Lanham Act.
Cancellation No. 92043745
12
In order to prevail pursuant to Section 2(d), the
petitioner must establish, among other things, prior service
mark rights in its own purported mark. Because petitioner
herein has failed to do this, the petition for cancellation
must be dismissed as to this claim.
FRAUD
In regard to the claim of fraud, petitioner argues that
respondent “could not reasonably assert that it had
substantially exclusive use of the SMALL BUSINESS NETWORK
mark” and that “it appears that [respondent] deliberately
attempted to avoid discovering [petitioner’s] prior use of
the name ‘Small Business Network.’” Br. p. 22.
In order to prevail on a claim of fraud for
misstatements in an application, a plaintiff must plead and
prove that the applicant knowingly made “false, material
representations of fact in connection with [its]
application.” Torres v. Cantine Torresella S.r.L., 808 F.2d
46, 1 USPQ2d 1483, 1484 (Fed. Cir. 1986). To constitute
fraud on the U.S. Patent and Trademark Office, a statement
must be (1) false, (2) made knowingly, and (3) a material
representation. The charge of fraud upon the Office must be
established by clear and convincing evidence. Giant Food,
Inc. v. Standard Terry Mills, Inc., 229 USPQ 955 (TTAB
1986).
Cancellation No. 92043745
13
With regard to the type of fact alleged to have been
misrepresented in this case, Professor McCarthy has stated
the following:
It should be noted that in the application “oath”
declarant states that to the best of his or her
“knowledge and belief” no other firm “has the
right to use” the mark or a confusingly similar
mark “in commerce.” ... The application oath is
essentially an averment of the affiant or
declarant’s belief that no other firm has the
legal right to use the mark or a confusingly
similar mark in interstate or foreign commerce.
There is nothing in the oath or the statute which
requires applicant to disclose anyone who in fact
may be using the mark, but does not, in the
applicant’s belief, possess the legal right to
use. The oath is not a guarantee that no other
firm has a legal right to use the mark. Simply
because after litigation, another may succeed in
proving in the PTO or in court that it does have a
legal right to use, does not mean that the signer
of the oath committed fraud and was a liar. The
signer of an application oath should not be put in
the position of a fortune teller as to what the
courts will hold in future as to the trademark
rights of others.

McCarthy on Trademarks and Unfair Competition § 31.76
(4th ed. updated 2007) citations omitted.
The Board has found that there is no fraud in signing
the application oath if an applicant knew of third-party
uses, but reasonably believed that its rights were superior
to those third-party uses. See, Space Base, Inc. v. Stadis
Corp., 17 USPQ2d 1216 (TTAB 1990); and Heaton Enterprises of
Nevada, Inc. v. Lang, 7 USPQ2d 1842 (TTAB 1988).
We begin by noting that respondent’s mark is OPEN:
SMALL BUSINESS NETWORK and the phrase SMALL BUSINESS NETWORK
Cancellation No. 92043745
14
is disclaimed. To the extent respondent was aware of or
should have been aware of use by others, including
petitioner, of the descriptive phrase SMALL BUSINESS
NETWORK, does not account for respondent’s belief as to its
rights in the mark as a whole. More importantly, in view of
our finding regarding petitioner’s failure to establish
service mark rights in the descriptive phrase SMALL BUSINESS
NETWORK, the statement in respondent’s declaration is not
false. Thus, the claim of fraud must fail.
Decision: The petition for cancellation is dismissed.