ABERCROMBIE & FITCH’S MEMORANDUM IN OPPOSITION TO
LEVIS STRAUSS & CO.’S MOTION TO DISMISS COUNTERCLAIMS
Case No. 03:07-CV-3752-JSW Printed on Recycled Paper
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MICHAEL J. BETTINGER (State Bar No. 122196)
RACHEL R. DAVIDSON (State Bar No. 215517)
KIRKPATRICK & LOCKHART
PRESTON GATES ELLIS LLP
55 Second Street, Suite 1700
San Francisco, CA 94105
Phone: 415-882-8200
Facsimile: 415- 882-8220
J. MICHAEL KEYES(Pro Hac Vice)
KIRKPATRICK & LOCKHART
PRESTON GATES ELLIS LLP
618 West Riverside Avenue, Suite 300
Spokane WA 99201-0602
Phone: 509-624-2100
Facsimile: 509-456-0146
Attorneys for Defendant
ABERCROMBIE & FITCH TRADING CO.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
LEVI STRAUSS & CO.,
Plaintiff,
v.
ABERCROMBIE & FITCH TRADING CO.,
Defendant.
____________________________________
ABERCROMBIE & FITCH TRADING CO.,
Counter-Claimant,
v.
LEVI STRAUSS & CO.,
Counter-Defendant.
No. CV-07-3752 JSW
DEFENDANT ABERCROMBIE &
FITCH’S MEMORANDUM IN
OPPOSITION TO LEVI STRAUSS &
CO.’S MOTION TO DISMISS
COUNTERCLAIMS FOR
CANCELLATION
Date: April 25, 2008
Time: 9:00 a.m.
Courtroom: 2
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ABERCROMBIE & FITCH’S MEMORANDUM IN OPPOSITION TO
LEVIS STRAUSS & CO.’S MOTION TO DISMISS COUNTERCLAIMS
Case No. 03:07-CV-3752-JSW -i- Printed on Recycled Paper
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TABLE OF CONTENTS
Page
I. INTRODUCTION & SUMMARY OF THE ARGUMENT ......................................... 1
II. FACTUAL ALLEGATIONS SET FORTH IN ABERCROMBIE’S
COUNTERCLAIMS FOR RELIEF. ............................................................................. 1
A. LS&Co.’s Fraud on the PTO.............................................................................. 1
1. Abercrombie’s Counterclaims allege the Plaintiff in Lois
Sportswear U.S.A., Inc. v. Levi Strauss & Co. claimed
throughout that litigation that LS&Co. lost its trademark rights
in the arcuate design............................................................................... 1
2. Abercrombie’s Counterclaims also allege that LS&Co.
knowingly filed its first materially false affidavit with the PTO
claiming that there was no proceeding involving LS&Co.’s
rights to the arcuate trademark pending in federal court........................ 3
3. Abercrombie’s Counterclaims further allege that LS&Co.
knowingly filed a second materially false affidavit with the PTO
claiming, once again, that there was no proceeding involving
LS&Co.’s rights to the arcuate trademark pending in federal
court........................................................................................................ 4
B. LS&Co.’s Abandonment of its “arcuate” trademark. ........................................ 5
III. LAW & ARGUMENT................................................................................................... 7
A. The Legal Standards Governing Motions To Dismiss Under F.R.C.P.
12(b)(6). ............................................................................................................. 7
B. LS&Co.’s claim that it “did not misrepresent anything” to the PTO
should be rejected because it is premised on a patently incorrect and
tortured “interpretation” of the Lanham Act. ..................................................... 7
1. LS&Co.’s “counterclaim” argument disregards the plain
meaning of 15 U.S.C. § 1065................................................................. 8
2. LS&Co’s “counterclaim” argument directly conflicts with
federal court interpretations of 15 U.S.C. § 1065—
interpretations that LS&Co. fails to even reference in its motion........ 10
3. LS&Co.’s “counterclaim” argument based upon the text of the
Trademark Manual of Examination Procedures—a reference
manual that does not even purport to be an interpretation of the
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ABERCROMBIE & FITCH’S MEMORANDUM IN OPPOSITION TO
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statute—conflicts with federal interpretations of the Lanham
Act, and is inapplicable by its own terms in any event. ....................... 12
4. LS&Co.’s “counterclaim” argument is not supported by either
one of the two “case law” decisions cited in its motion....................... 15
C. LS&Co.’s false statements were material because the registrant
attesting that there is no proceeding involving the trademark in a court
is a statutory prerequisite to obtaining an “incontestable” registration............ 17
D. LS&Co.’s motion to dismiss Abercrombie’s abandonment
counterclaim should be denied because LS&Co. ignores facts
establishing this claim and relies on case law that is easily
distinguishable on both procedural and substantive grounds........................... 19
1. Abercrombie properly alleged a claim of trademark
abandonment because LS&Co. knowingly consented to other
third-party infringing uses of its “arcuate” trademark. ........................ 20
2. The most that LS&Co.’s legal authority provides is the standard
of proof that Abercrombie will ultimately have to meet on its
abandonment claim—a standard that is wholly inapplicable
when testing the sufficiency of a claim for relief under Rule
12(b)(6). ............................................................................................... 22
IV. CONCLUSION.......................................................................................................... 245
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ABERCROMBIE & FITCH’S MEMORANDUM IN OPPOSITION TO
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TABLE OF AUTHORITIES
Page
Federal Cases
Babbit Electronics, Inc. v. Dynascan Corp., 38 F.3d 1161 (11th Cir. 1994)........................... 24
Board of Regents of Univ. System of Georgia v. Buzas Baseball, Inc., 176 F. Supp. 2d
1338 (N.D. Ga. 2001)........................................................................................................... 24
Citibank, N.A v. City Bank of San Francisco, 206 U.S.P.Q. 997 (N.D. Cal.1980)............ 22, 23
Constellation Brands, Inc. v. Arbor Hill Associates, Inc., ___ F.3d ____ No. 02-CV-
6498 CJS, 2008 WL 515028 (W.D.N.Y. 2008)................................................................... 10
De La Cruz v. Tormey, 582 F.2d 45 (9th Cir. 1978) .................................................................. 7
Electro Source, LLc. v. Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931 (9th Cir.
2006) .................................................................................................................................... 23
Estefan Enterprises, Inc. v. Coco Bongo Grill and Bar, Inc., No. 6:06-cv-742-Orl-
31KRS, 2007 WL 1602341 (M.D. Fla. June 04, 2007) ................................................. 11, 12
Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070 (5th Cir. 1997) .................................... 24
FirstHealth of Carolinas, Inc. v. CareFirst of Maryland, Inc., 479 F.3d 825
(Fed. Cir. 2007) .................................................................................................................... 21
Fort James Corp. v. Kimberly-Clark Tissue Co., 1999 WL 966144 (N.D. Ill. Oct. 8,
1999) .............................................................................................................................. 24, 25
Gilligan v. Jamco Development Corp., 108 F.3d 246 (9th Cir. 1997)....................................... 7
Halo Management, LLC v. Interland, Inc., 308 F. Supp. 2d 1019 (N.D. Cal. 2003)............... 10
In re First Draft, Inc., 76 U.S.P.Q.2d 1183, 2005 WL 2451658 (T.T.A.B. 2005) .................. 14
In re Houbigant Inc., 914 F. Supp. 964 (S.D.N.Y. 1995)........................................................ 25
In re Wine Society of America Inc., 12 U.S.P.Q.2d 1139, 1989 WL 274373 (T.T.A.B.
1989) .................................................................................................................................... 13
Iowa Health System v. Trinity Health Corp., 177 F. Supp. 2d 897 (N.D. Iowa 2001) ............ 25
Jonathan Browning, Inc. v. Venetian Casino Resort, LLC, 2007 WL 4532214 (N.D.
Cal. 2007)............................................................................................................................... 7
Kinark Corp. v. Camelot, Inc., 548 F. Supp. 429 (D. N.J. 1982)............................................. 24
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Lois Sportswear v. Levi Strauss & Co., 799 F.2d 867 (2d Cir. 1986) ................................... 5, 6
Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 631 F. Supp. 735 (S.D.N.Y. 1985) ......... 2
National Business Systems, Inc. v. AM International, Inc., 743 F.2d 1227 (7th Cir.
1984) .................................................................................................................................... 18
Parrino v. FHP, Inc., 146 F.3d 699 (9th Cir. 1998) .................................................................. 2
Pizzeria Uno Corp. v. Temple, 747 F.2d 1522 (4th Cir. 1984).................................................. 9
Playboy Enterprises, Inc. v. P.K. Sorren Export Co. Inc. of Fla., 546 F. Supp. 987
(S.D. Fla. 1982).................................................................................................................... 24
Sanders v. Kennedy, 794 F.2d 478 (9th Cir. 1986) .................................................................... 7
Shelby v. Ford Motor Co., 43 U.S.P.Q. 2d 1692, 1693 1997 WL 689456 (C.D. Cal.
Mar. 21 1997)....................................................................................................................... 24
Sizzler Family Steak Houses v. Western Sizzlin Steak House, Inc., 793 F.2d 1529 (11th
Cir. 1986) ............................................................................................................................. 11
STX Inc. v. Bauer USA Inc., 43 U.S.P.Q. 2d 1492 1997 WL 337578 (N.D. Cal.
Jun. 5, 1997)............................................................................................................. 21, 22, 24
Sunrise Jewelry Mfg. Corp. v. Fred S.A., 175 F.3d 1322 (Fed. Cir. 1999)....................... 17, 18
Transgo v. Ajac Transmission Parts Corp., 768 F.2d 1001 (9th Cir. 1985)............................ 24
Visa Intern. Service Ass'n v. Bankcard Holders of America, 211 U.S.P.Q. 28
(N.D. Cal. 1981)....................................................................................................... 22, 23, 24
W. Fla. Seafood, Inc. v. Jet Rests., Inc., 31 F.3d 1122 (Fed. Cir. 1994).................................. 13
Wallpaper Mfrs., Ltd. v. Crown Wallcovering Corp., 680 F.2d 755 (Cust. &
Pat.App. 1982) ............................................................................................................... 21, 24
Federal Statutes
15 U.S.C. § 1058(a)(b) ....................................................................................................... 4, 5, 6
15 U.S.C. § 1064 ........................................................................................................................ 9
15 U.S.C. § 1064(3) ............................................................................................................. 9, 21
15 U.S.C. § 1065 ............................................................................................................... passim
15 U.S.C. § 1065(1) ................................................................................................................... 8
15 U.S.C. § 1065(2) .......................................................................................................... passim
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ABERCROMBIE & FITCH’S MEMORANDUM IN OPPOSITION TO
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15 U.S.C. § 1115 ........................................................................................................................ 9
15 U.S.C. § 1115(a).................................................................................................................... 9
15 U.S.C. § 1115(b)(2)............................................................................................................... 9
15 U.S.C. § 1127 ............................................................................................................ 9, 10, 21
15 U.S.C. §§1058....................................................................................................................... 4
Other Authorities
LS&Co.'s U.S. Trademark Registration Nos. 404,248 .......................................................... 2, 3
3 McCarthy § 19:129 ............................................................................................................... 13
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ABERCROMBIE & FITCH’S MEMORANDUM IN OPPOSITION TO
LEVI STRAUSS & CO.’S MOTION TO DISMISS COUNTERCLAIMS
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION & SUMMARY OF THE ARGUMENT
Abercrombie & Fitch Trading Co. (“Abercrombie”) respectfully submits this
memorandum in opposition to Levi Strauss & Co.’s (“LS&Co.”) motion to dismiss
Abercrombie’s counterclaims for cancellation of LS&Co.’s federally-registered “arcuate”
trademarks based on “fraud on the PTO” and “abandonment.”
As set forth herein, the Court should deny LS&Co.’s motion to dismiss Abercrombie’s
fraud claim because Abercrombie has more than sufficiently alleged facts showing that
LS&Co. submitted materially false statements to the PTO. LS&Co.’s arguments to the
contrary lack any sound legal support and are void of common sense. Likewise, the Court
should deny LS&Co.’s motion to dismiss Abercrombie’s abandonment claim because its
allegations set forth several examples of how LS&Co. knowingly allowed third parties to
infringe on its arcuate trademark and that this has caused the arcuate mark to lose significance
as a mark. LS&Co.’s contrary argument ignores these allegations and is based on legal
authority that is simply not germane to the limited inquiry before this Court.
II. FACTUAL ALLEGATIONS SET FORTH IN ABERCROMBIE’S
COUNTERCLAIMS FOR RELIEF.
A. LS&Co.’s Fraud on the PTO.
Abercrombie has alleged numerous facts detailing that LS&Co. submitted two
materially false affidavits to the PTO.
1. Abercrombie’s Counterclaims allege the Plaintiff in Lois Sportswear
U.S.A., Inc. v. Levi Strauss & Co. claimed throughout that litigation
that LS&Co. lost its trademark rights in the arcuate design.
On December 13, 1982, Lois Sportswear U.S.A., Inc., (“Lois Sportswear”) filed a
declaratory judgment action against Levi Strauss & Co. in the U.S. District Court for the
Southern District of New York. See Lois Sportswear’s Complaint, attached as Exhibit B to
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Abercrombie’s Amended Answer, Affirmative Defenses, Counterclaims (“Abercrombie
Counterclaims”), filed February 6, 2008.1 Among other allegations, the Lois Sportswear
Complaint alleged that Lois Sportswear’s back pocket stitching design used on its denim jeans
did not infringe on LS&Co.’s “stitched pocket design.” See id., ¶ 18. LS&Co. asserted
counterclaims against Lois Sportswear claiming that it infringed on LS&Co.’s U.S.
Trademark Registration Nos. 404,248 (the “'248”) and 1,139,254 (the “'254”), the “arcuate”
registrations. See LS&Co.’s Answer and Counterclaims, attached as Exhibit B to the
Abercrombie Counterclaims.
Incredibly, LS&Co. asserts in its present motion that Lois Sportswear did not “ask for
a declaration that the mark was invalid.” 2 See LS&Co. Motion, p. 3, line 25. Not only did
Lois Sportswear deny all allegations of infringement in that case, but it also asserted in
numerous ways that LS&Co.’s “arcuate” trademark was invalid. For example, in its Answer
to Counterclaims, Lois Sportswear alleged that:
• The arcuate trademark does not serve “as a means of designating
origin with the defendant, and that the public recognizes that design as an
indication that defendant is the source of the garments upon which it
1 Approximately seven months after Lois Sportswear initiated suit against LS&Co., LS&Co. commenced a
separate action in the S.D.N.Y. against Textiles Confecciones Europas, the supplier of Lois jeans to Lois
Sportswear. The two actions were ultimately consolidated.
2 LS&Co. also leads this Court to believe that Lois Sportswear “conceded” before the District Court that
LS&Co.’s arcuate trademark was incontestable. See LS&Co.’s motion pg. 4 (citing Lois Sportswear, U.S.A.,
Inc. v. Levi Strauss & Co., 631 F. Supp. 735, 740 (S.D.N.Y. 1985). LS&Co. is wrong. Lois Sportswear moved
for summary judgment on non-infringement. As Lois Sportswear’s brief made abundantly clear, for purposes of
its motion only, Lois Sportswear was not challenging the validity of LS&Co.’s “arcuate” trademark. See Lois
Sportswear’s Memorandum of Law in Support of Motion Summary Judgment attached, p. 5 (“[f]or purposes of
this motion for summary judgment only, Lois and Textiles do not dispute the validity of Levi’s registered
trademark(s) covering the Levi back pocket stitching design.”), attached as Exhibit A to the Declaration of J.
Michael Keyes. Because Abercrombie’s Counterclaims reference the fact that Lois Sportswear moved for
summary judgment, see Abercrombie’s Counterclaims, ¶ 10, Exhibit E pg. 1, Exhibit F pg. 1, this Court can
consider Lois Sportswear’s summary judgment brief on a motion to dismiss. Parrino v. FHP, Inc., 146 F.3d 699,
705-706 (9th Cir. 1998) ("A district court ruling on a motion to dismiss may consider documents "whose contents
are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the
plaintiff’s pleading”).
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appears;” See Lois Sportswear’s Answer to Counterclaims, ¶ 4, attached as
Exhibit B to Abercrombie’s Counterclaims.
• The arcuate trademark “never functioned as a designation of source or
origin and was and is, therefore, not susceptible of appropriation or
protection as a trademark.” Id. at ¶ 15.
• The arcuate trademark “has become so diluted by reason of widespread
use by others, on jeans and similar garments, of the same or a similar
design that it has lost whatever distinctiveness it otherwise possessed and
no longer functions as a designation of source or origin with the
defendant.” Id. at ¶ 16.
• LS&Co.’s conduct “has resulted in a loss by defendant of any
trademark rights it otherwise possessed in that mark.” Id. at ¶ 17.
2. Abercrombie’s Counterclaims also allege that LS&Co. knowingly filed
its first materially false affidavit with the PTO claiming that there was
no proceeding involving LS&Co.’s rights to the arcuate trademark
pending in federal court.
On May 14, 1985—during the pendency of Lois Sportswear in federal district court—
LS&Co.’s Vice President and Corporate Secretary, Ms. Katherine Durgin, attempted to file a
“Section 8 & 15” affidavit with the PTO in order for the '254 Registration to become
“incontestable.” See Combined Affidavit under Section 8 & 15 of Katherine Durgin, attached
as Exhibit C to Abercrombie’s Counterclaims. In her affidavit, Ms. Durgin testifies that “there
is no proceeding involving said rights pending and not disposed of either in the Patent and
Trademark Office or in the courts.” Id. The statement was made to the PTO notwithstanding
the fact that Lois Sportswear v. Levi Strauss & Co. was pending in federal court and that Lois
had continuously alleged in that proceeding that LS&Co. lost “any trademark rights it
otherwise possessed” in the in arcuate mark. See Lois Sportswear’s Answer to
Counterclaims, ¶ 17. Abercrombie specifically alleges that Ms. Durgin “knew or—by virtue
of her position within LS&Co. and her voluntary execution of a sworn statement—should
have known that her statement was false.” Abercrombie Counterclaims, ¶ 8. Abercrombie
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also specifically alleges that this affidavit was “materially” false. See Abercrombie’s
Counterclaim, ¶ 7.
The PTO received LS&Co.’s affidavit but notified it that Ms. Durgin’s affidavit was
filed too early. See Exhibit D to Abercrombie Counterclaims. Under the Lanham Act, an “8
& 15” affidavit can be filed only between the fifth and sixth year after the date of issuance of
the registration. See Abercrombie’s Counterclaims, ¶ 6; see also 15 U.S.C. § 1058(a)(b).3
Since LS&Co.’s '254 Registration did not issue until September 2, 1980, the earliest possible
date upon which LS&Co. could have filed its “8 & 15” affidavit was September 2, 1985.
Thus, as set forth in Abercrombie’s Counterclaims, LS&Co.’s early submission was not just a
few days or weeks premature—it was submitted nearly four months too soon. See
Abercrombie’s Counterclaim, ¶ 10.
3. Abercrombie’s Counterclaims further allege that LS&Co. knowingly
filed a second materially false affidavit with the PTO claiming, once
again, that there was no proceeding involving LS&Co.’s rights to the
arcuate trademark pending in federal court.
After the first “8 & 15” affidavit was submitted to the PTO, LS&Co.’s Assistant
Corporate Secretary, Ms. Jean Fowler, submitted a second “8 & 15” affidavit to the PTO on
January 2, 1986. See Combined Affidavit under Section 8 & 15 of Jean Fowler, attached as
Exhibit G to Abercrombie’s Counterclaims. Like the first affidavit, this one too claimed that
“there is no proceeding involving said rights pending and not disposed of either in the Patent
and Trademark Office or in the courts.” Id. LS&Co. submitted this affidavit even though at
the time Lois Sportswear v. Levi Strauss & Co. was, in fact, pending in the U.S. Court of
Appeals for the Second Circuit as Lois Sportswear had appealed the denial of its motion for
3 This affidavit is referred to as the “8 and 15” affidavit because the requirements for the contents of this
affidavit are set forth in Sections 8 and 15 of the Lanham Act, or 15 U.S.C. §§1058, 1065 respectively. See
Abercrombie Counterclaims, ¶ 6.
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summary judgment and the granting of LS&Co.’s motion for summary judgment. See Lois
Sportswear’s Notice of Appeal, filed December 3, 1985, attached as Exhibit F to
Abercrombie’s Counterclaims. Abercrombie specifically alleges that Ms. Fowler “knew or—
by virtue of her position within LS&Co. and her voluntary execution of a sworn statement—
should have known that her statement was false.” See Abercrombie Counterclaims, ¶ 12.
Abercrombie also specifically alleges that this affidavit was “materially” false. See id. at ¶ 7.
It would be more than 8 months after LS&Co. submitted its second false affidavit to
the PTO that a divided panel of the U.S. Court of Appeals for the Second Circuit affirmed the
trial court’s decision over a vocal dissent by Judge Miner. Abercrombie’s Counterclaims,
¶ 12; see also Lois Sportswear v. Levi Strauss & Co., 799 F.2d 867, 877 (2d Cir. 1986)
(Miner, J. dissenting) (dissenting because the “district judge improperly undertook to decide
disputed factual matters and that summary judgment in favor of Levi therefore was
unwarranted.”).
B. LS&Co.’s Abandonment of its “arcuate” trademark.
Abercrombie’s Counterclaims have alleged several instances of how LS&Co.
knowingly failed to adequately police its “arcuate” trademark against third party use, and how
LS&Co.’s failure resulted in the “arcuate” losing its significance as a trademark.
First, Abercrombie alleges that in 2003, LS&Co. sued a company claiming that it
infringed on LS&Co.’s “arcuate” trademark. See Abercrombie’s Counterclaims, ¶ 22. Yet,
that same year in a separate lawsuit LS&Co. sued a company by the name of Federal Jeans.
Id. at ¶ 23. Although Federal Jeans was also using a stitching design that was very similar to
the design used by the other company sued by LS&Co. in 2003, LS&Co. “knowing allowed”
Federal Jeans to continue to using the infringing design. Id..
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Second, Abercrombie alleged that in 2003 LS&Co. sued a company by the name of
“For What It’s Worth” claiming that its back pocket stitching design was an infringement of
the “arcuate” trademark. Id. at ¶ 24. As Abercrombie further alleges, for a very significant
amount of time at least one other company had been using a stitching design that was very
similar to the “infringing” design used by For What It’s Worth. Yet, “LS& Co. has
knowingly allowed this other party to use a design that LS&Co. knows is infringing on
LS&Co.’s arcuate trademark.” Id..
Third, Abercrombie alleges that in 2004, LS&Co. sued a company by the name of
RP55 for its alleged “willful infringement” of the arcuate trademark. Abercrombie’s
Counterclaims, ¶ 25. LS&Co. even produced an expert report in that case claiming that
“RP55’s back pocket stitching design was likely to cause confusion in the marketplace” with
the arcuate trademark. Id.. Yet, despite LS&Co.’s claims of “willful infringement” against
RP55 and its use of an expert report supporting that allegation, LS&Co. “dismissed its case
‘with prejudice’” against RP55. As Abercrombie specifically alleges, LS&Co.’s release of
RP55 is “another example of how LS&Co. is allowing other supposedly infringing designs to
be used with LS&Co.’s express permission.” Id..
As set forth in Abercrombie’s Counterclaims, all of these examples of LS&Co.
knowingly permitting infringing uses constitute “abandonment.” Id. at ¶ 29.
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III. LAW & ARGUMENT
A. The Legal Standards Governing Motions To Dismiss Under F.R.C.P. 12(b)(6).
A motion to dismiss is proper under Fed. R. Civ. P. 12(b)(6) only where the pleadings
“fail to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). Such a
motion should be denied “unless it appears beyond a doubt that a plaintiff can show no set of
facts supporting his or her claim.” Jonathan Browning, Inc. v. Venetian Casino Resort, LLC,
2007 WL 4532214, * 7 (N.D.Cal. 2007) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78
S.Ct. 99, 2 L.Ed.2d 80 (1957)); see also De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir.
1978). In assessing a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the complaint is
construed in the light most favorable to the non-moving party and all material allegations in
the complaint are taken to be true. Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1986).
The issue on a motion to dismiss for failure to state a claim is “not whether the
claimant will ultimately prevail but whether the claimant is entitled to offer evidence to
support the claims asserted.” Gilligan v. Jamco Development Corp., 108 F.3d 246, 249 (9th
Cir. 1997) (demand that claimants establish each element necessary to survive a motion for
summary judgment asked far more of them than federal rules require at pleading stage). The
Ninth Circuit has repeatedly cautioned that the pleading standard set forth in Rule 8
establishes "a powerful presumption against rejecting pleadings for failure to state a claim."
Id. (citations omitted).
B. LS&Co.’s claim that it “did not misrepresent anything” to the PTO should be
rejected because it is premised on a patently incorrect and tortured
“interpretation” of the Lanham Act.
LS&Co. incorrectly argues that “disclosure of the pending Lois Sportswear lawsuit
was not required because Lois Sportswear did not file a counterclaim” for cancellation of
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LS&Co.’s trademark registration in that proceeding. See LS&Co.’s Motion, p. 7. For
numerous reasons, LS&Co.’s assertion is flatly wrong.
1. LS&Co.’s “counterclaim” argument disregards the plain meaning of 15
U.S.C. § 1065.
LS&Co.’s argument that it did not need to disclose the Lois Sportswear litigation is
contrary to the plain meaning of the applicable statute. 15 U.S.C. § 1065 provides that in
order to obtain an “incontestable” trademark registration, the registrant must file an affidavit
with the PTO attesting that:
(1) there has been no final decision adverse to registrant’s
claim of ownership of such mark for such goods or services, or
to registrant’s right to register the same or to keep the same on
the register; and
(2) there is no proceeding involving said rights pending in
the Patent and Trademark Office or in a court and not finally
disposed of;
15 U.S.C. § 1065 (emphasis supplied).
The statute does not state (or even imply) that a “proceeding” only means a “proceeding
involving counterclaims for cancellation” as LS&Co. suggests. Rather, subparagraph (2) of
the statute unambiguously states that it applies to any “proceeding” involving the registrant’s
“said rights” to the trademark. This “said rights” language means the “registrant’s right to
register the same or to keep the same on the register.” See 15 U.S.C. § 1065(1).
LS&Co.’s argument ignores the legal reality that the Lanham Act expressly provides
that the “said rights” referred to in 15 U.S.C. § 1065(2) can be challenged either by way of
“defense” or by way of “counterclaim.” For example, 15 U.S.C. § 1115(a) provides that a
trademark registration constitutes “prima facie evidence of validity” but that it “shall not
preclude another person from providing any legal or equitable defense or defect including
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those set forth in subsection (b) of this section.” Id. (emphasis supplied). One of the
enumerated defenses listed in subsection (b) is that “the mark has been abandoned by the
registrant.” 15 U.S.C. § 1115(b)(2). Additionally, the Lanham Act provides that a trademark
registration may be attacked by filing a “petition to cancel” the registration. See 15 U.S.C.
§ 1064. One of the enumerated grounds for filing a petition to cancel is if the registered mark
has been “abandoned.” See 15 U.S.C. § 1064(3).
As these statutory provisions make clear, a claim that a registered trademark has been
“abandoned” can be asserted either as a defense under 15 U.S.C. § 1115, or as a counterclaim
under 15 U.S.C. § 1064. Either way, such a claim would be a challenge to the “said rights” of
the trademark owner to enforce the trademark. Pizzeria Uno Corp. v. Temple, 747 F.2d 1522,
1529 (4th Cir. 1984) (observing that “the presumption which registration thus gives the mark,
though, does not preclude one charged with infringement from collaterally attack[ing] in an
infringement action, either by way of an affirmative defense or by way of a counterclaim
seeking cancellation of the registration”).
In applying the plain meaning of 15 U.S.C. § 1065 to the facts as alleged by
Abercrombie in its Counterclaims, it is undisputed that Lois Sportswear challenged LS&Co.’s
right to enforce its trademark. A trademark is deemed abandoned when it has “los[t] its
significance as a mark”, see 15 U.S.C. § 1127, which is a loss of trademark rights as “against
the world.” Halo Management, LLC v. Interland, Inc., 308 F. Supp. 2d 1019, 1029 (N.D. Cal.
2003). As Abercrombie’s Counterclaim explicitly alleges, the Lois Sportswear case involved
claims that LS&Co. had “abandoned” its arcuate trademark. See Abercrombie Counterclaims,
Exhibit B (Lois claiming (i) LS&Co. lost “any trademark rights it otherwise possessed.” Id. at
¶ 17; (ii) the arcuate trademark did not serve “as a means of designating origin with the
defendant, and that the public recognizes that design as an indication that defendant is the
source of the garments upon which it appears.” Id. at ¶ 4; (iii) the arcuate trademark “never
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functioned as a designation of source or origin and was and is, therefore, not susceptible of
appropriation or protection as a trademark.” Id. at ¶ 15; (iv) the arcuate trademark “has
become so diluted by reason of widespread use by others, on jeans and similar garments, of
the same or a similar design that it has lost whatever distinctive it other possessed and no
longer functions as a designation of source or origin with the defendant.” Id. at ¶ 16;
(v) LS&Co.’s conduct “has resulted in a loss by defendant of any trademark rights it
otherwise possessed in that mark.” Id. at ¶ 17). These factual allegations make it crystal clear
that Lois Sportswear was attacking the validity of the arcuate trademark and, therefore, that
lawsuit was undeniably a “proceeding” involving LS&CO.’s “said rights” in the arcuate.
2. LS&Co’s “counterclaim” argument directly conflicts with federal court
interpretations of 15 U.S.C. § 1065—interpretations that LS&Co. fails
to even reference in its motion.
No fewer than three federal courts have interpreted “proceeding involving said rights”
in 15 U.S.C. § 1065 to include a proceeding where the trademark owner’s right to enforce the
trademark was challenged, even when there was no counterclaim for cancellation of the
trademark registration. See e.g., Constellation Brands, Inc. v. Arbor Hill Associates, Inc., ___
F.3d ____, No. 02-CV-6498 CJS, 2008 WL 515028, at *11 (W.D.N.Y. 2008) (defendant
asserting counterclaims against trademark registrant for “trademark infringement, unfair
competition, and false advertising” is a “proceeding involving said rights” under 15 U.S.C.
§ 1065(2)); see also Estefan Enterprises, Inc. v. Coco Bongo Grill and Bar, Inc., No. 6:06-cv-
742-Orl-31KRS, 2007 WL 1602341, *3 (M.D. Fla. June 04, 2007); Sizzler Family Steak
Houses v. Western Sizzlin Steak House, Inc., 793 F.2d 1529, 1541 (11th Cir. 1986) (plaintiff’s
federal complaint for trademark and servicemark infringement against defendant for its use of
its federal trademark registration “Sizzlin’” constituted a “proceeding” involving defendant’s
“said rights” to its trademark). Not surprisingly, LS&Co. fails to cite to any of these cases in
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its motion to dismiss. Even a cursory review of just one of them showcases how LS&Co.’s
“counterclaim” argument is deeply flawed.
For example, in Estefan Enterprises, Inc., the trademark registrant, EEI, brought suit
against an alleged trademark infringer. The defendant denied the allegations of infringement
and asserted four affirmative defenses including both estoppel and laches. See Coco Bongo
Grill and Bar’s Answer to Complaint, p. 4, Affirmative Defense III, filed July 17, 2006 in the
U.S. District Court for the Middle District of Florida (alleging “t[o] the extent that Plaintiff
has any rights to enforce Plaintiff is barred and estopped from enforcing those rights by the
failure to actively pursue infringement claims and the doctrine of laches.”) (available through
PACER). The defendant in Estefan did not assert a counterclaim for cancellation of
Plaintiff’s registration.
During the pendancy of the suit, EEI timely filed its “incontestability” affidavit with
the PTO and then moved for summary judgment on infringement and claimed that its
registration was “incontestable.” The Court disagreed that the mark was incontestable and
noted that:
EEI’s “incontestable” argument fails. Section 1065 requires
that, for a mark to be classified as incontestable, EEI must file
an affidavit within a year after five years of continuous use of
the mark and that there must be ‘no proceeding involving said
rights pending ... in a court not finally disposed of.’ EEI’s mark
was registered with the USPTO on September 18, 2001. EEI
timely filed an affidavit of incontestability in January of 2007.
However, EEI filed the complaint for the instant case, which is
still pending, on May 31, 2006. Therefore, when EEI filed for
incontestability, there was a “proceeding involving said rights
pending ... in a court and not finally disposed of,” and § 1065(2)
prevents EEI’s mark from being classified as incontestable.
Estefan Enterprises, Inc., 2007 WL 1602341, at *3 (internal citations omitted).
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Estefan Enterprises’ interpretation of the statute confirms that any lawsuit involving a
challenge to a trademark owner’s purported right to enforce its trademark against another
party constitutes a “proceeding involving said rights” under 15 U.S.C. § 1065. Its
interpretation is wholly consistent with the plain meaning of the statute and this Court should
embrace it, and reject LS&Co.’s argument that ignores the plain meaning of the statute and
the judicial interpretations thereof.
3. LS&Co.’s “counterclaim” argument based upon the text of the
Trademark Manual of Examination Procedures—a reference manual
that does not even purport to be an interpretation of the statute—
conflicts with federal interpretations of the Lanham Act, and is
inapplicable by its own terms in any event.
LS&Co. asserts that as a matter of law the Trademark Manual of Examination
Procedures (the “TMEP”) is somehow a definitive “interpretation” of 15 U.S.C. § 1065 and
that it precludes Abercrombie’s fraud claim. See LS&Co. Motion, pp. 7-8. Based upon this
“definitive” source, LS&Co. claims that it had no obligation to disclose Lois Sportswear
because the TMEP only requires disclosures of cases involving a “counterclaim for
cancellation” of a registration. This argument is demonstrably flawed for numerous reasons.
First, the TMEP by its own terms is not an interpretation of the statute4, and is not
binding on the Trademark Trial and Appeal Board (the “TTAB”), much less a federal court.
See W. Fla. Seafood, Inc. v. Jet Rests., Inc., 31 F.3d 1122, 1127 n.8 (Fed. Cir. 1994)
(observing that TMEP “does not have the force and effect of law, it sets forth the guidelines
and procedures followed by the examining attorneys at the PTO”). At best, the TMEP can be
considered “good evidence” of what the examination procedures are at the PTO. See 3
McCarthy § 19:129 (“While the TMEP is good evidence of the practices followed by the
4 See Foreword to TMEP, September 2007. The Foreword provides, in pertinent part, that “[t]he Manual
contains guidelines for Examining Attorneys and materials in the nature of information and interpretation, and
outlines the procedures which Examining Attorneys are required or authorized to follow in the examination of
trademark applications.” See id. (emphasis supplied).
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Patent and Trademark Office, it is not binding on the Trademark Board or a court as to the
meaning of the statute or federal regulations.”). The “examination procedures” followed at
the PTO are, quite simply, irrelevant to Abercrombie’s counterclaim for fraud. Abercrombie
has alleged that LS&Co. violated the provisions of a statute passed by Congress, not a
procedural manual drafted by some unidentified individual at a federal agency.
Second, even if the TMEP could be considered an interpretation of the statute (which
it is decidedly not), the TTAB has noted that when the TMEP conflicts with judicial
interpretations of the Lanham Act, the TMEP obviously needs to give way. See In re Wine
Society of America Inc., 12 U.S.P.Q.2d 1139, 1989 WL 274373, at *1 (T.T.A.B. 1989)
(holding that “to the extent that the language of Section 807.14(a) of the Trademark Manual
of Examining Procedure (to which applicant has directed our attention) describes a standard
of ‘material alteration’ different from that described in the cases to which we have referred,
that section of the manual should be revised”); see also In re First Draft, Inc., 76 U.S.P.Q.2d
1183, 2005 WL 2451658, at *6 (T.T.A.B. 2005) (affirming refusal of registration under the
Lanham Act and applicable case law, despite TMEP section cited by applicant). As noted
above, none of the federal courts interpreting 15 U.S.C. § 1065(2) have held that a
“counterclaim for cancellation” must first be asserted before federal litigation is considered a
“proceeding involving said rights” in the trademark. For this reason as well, this Court should
reject LS&Co.’s argument that the TMEP precludes Abercrombie’s fraud claim.
Third, even if the text of the TMEP could somehow be considered a “persuasive”
interpretation of 15 U.S.C. § 1065(2) (which, again, it is not), it simply does not apply here.
The TMEP provision provides that:
The USPTO does not consider a proceeding involving the mark
in which the owner is the plaintiff, where there is no
counterclaim involving the owner’s rights in the mark, to be a
“proceeding involving these rights” that would preclude the
filing or acknowledgment of a § 15 affidavit.
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LS&Co. casually glosses over the reality that this text applies only when the
trademark owner is the plaintiff in the proceeding and there is no counterclaim for
cancellation. In Lois Sportswear, LS&Co. was the defendant, not the plaintiff. See
Abercrombie Counterclaims, ¶ B. Thus, this TMEP provision by its own terms cannot be
read to exempt the Lois Sportswear proceeding from the disclosure obligation embodied in 15
U.S.C. § 1065(2). The Court should jettison LS&Co.’s wayward argument to the contrary.
Fourth, LS&Co.’s motion also conveniently ignores the fact that at the time it filed its
first false affidavit with the PTO, the text of the TMEP did not contain this “counterclaim”
language relied upon by LS&Co. in support of its motion to dismiss. Instead, the pertinent
text of § 1604.03 of the TMEP provided that the “8 & 15” affidavit:
must also state that there is no proceeding involving said rights
pending in the Patent and Trademark Office or in a court and
not finally disposed of, and “proceeding” has been interpreted
to mean registrant being in position either of plaintiff or
defendant.
See TMEP § 1604.03 (1st Edition, Rev. 6, 1983) (emphasis supplied).5 Thus, even if the
current text of the TMEP cited by LS&Co. could be considered a correct, binding, or an
otherwise persuasive interpretation of the federal statute, the text could only be applicable to
the second false affidavit and not the first affidavit filed by LS&Co.6
For all of these reasons, the Court should reject LS&Co.’s erroneous assertion that the
TMEP somehow insulates LS&Co. from liability for filing two false affidavits with the PTO.
5 The next revision of the TMEP did not take effect until January 1, 1986.
6 At the time LS&Co. filed its second false affidavit with the PTO, the pertinent text of TMEP provided that a
“proceeding involving the mark in which the registrant is the plaintiff, and there is no counterclaim involving
registrant’s rights in the mark, does not preclude acceptance of a Section 15 affidavit.” TMEP § 1604.03 (1st
Edition, Rev. 7, 1986).
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4. LS&Co.’s “counterclaim” argument is not supported by either one of
the two “case law” decisions cited in its motion.
LS&Co. cites “case law” (actually one “opinion” from the Patent Commissioner and
one Federal Circuit case) that does not support LS&Co.’s arguments on any level. See
LS&Co.’s Motion, pp. 7-8.
Contrary to LS&Co.’s characterization, In re Trademark Registration of McDonald’s
Corp. (“In re McDonald’s”) did not hold that a counterclaim must first be asserted before a
proceeding constitutes a “proceeding involving said rights” in a trademark. In that case,
McDonald’s obtained a federal registration for “McChicken.” In re McDonald’s, 1984
Commr. Pat. LEXIS 10 (Comm’er of Patents and Trademarks Apr. 10, 1984). Five years
thereafter, McDonald’s filed its Sections “8 & 15” affidavit, but the Section 15 portion was
not accepted because the trademark examiner observed that the McChicken mark was
“involved in a civil proceeding.” Id. at *2. McDonald’s petitioned the Commissioner to
accept McDonald’s Section 15 affidavit for filing because “the civil action involving this
registration does not raise any question with respect to its rights as contemplated by Section
15.” Id. at *1-2.
In assessing McDonald’s position, the Commissioner simply noted that no
counterclaim had been filed by the opposer. Id. at *2. The Commissioner further noted that it
had been “office practice” to withhold stamping of Section 15 affidavits “if the registration is
involved in any civil proceeding, without looking to the nature of the proceeding to determine
if it involves the rights contemplated by Section 15.” Id. The Commissioner observed that
this “practice” was “stricter than the requirements set forth in Section 15.” Id. Accordingly,
the Commissioner ordered that:
The current office practice on Section 15 affidavits is hereby
ordered changed. The Search Library copies of a
registration may be stamped with an appropriate Section 15
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notation if the registration is not involved in a proceeding
which challenges the rights indicated in Section 15.”
In re McDonald’s at *2-3 (emphasis supplied).
As this expert indicates (an excerpt that LS&Co. conveniently omits from its block
quotation on pg. 8 of its motion), the Commissioner did not state that a counterclaim for
cancellation must first be asserted before a proceeding constitutes a “proceeding involving
said rights” in a trademark. Quite the contrary, the relevant inquiry is whether the registration
“is involved in a proceeding which challenges the rights indicated in Section 15.” As noted
above, such a “challenge” can be asserted as either a “defense” or a “counterclaim.” See
supra at p. 9. Thus, LS&Co. is incorrect that In re McDonald’s somehow precludes
Abercrombie’s claim for fraud. If anything, the Commissioner’s directive is actually
consistent with the plain meaning of the statute and the judicial interpretations thereof.
Finally, LS&Co. cites to Sunrise Jewelry Mfg. Corp. v. Fred S.A., 175 F.3d 1322,
1327 (Fed. Cir. 1999), but fails to offer any explanation as to how it supports LS&Co.’s
“interpretation” of the statute. In fact, Sunrise Jewelry does not support LS&Co.’s position.
In that case, the trademark registrant, Fred, was involved in federal litigation and a
cancellation proceeding before the PTO involving its trademark. Id. at 1323. The litigation
and the PTO proceeding were resolved through settlement and, thereafter, Fred timely filed its
“incontestability” affidavit. Id. The affidavit actually mentioned the settlement and noted that
“a withdrawal of the cancellation proceeding had been filed.” Id. After the incontestability
affidavit was filed with the PTO, a counterclaim for cancellation of Fred’s registration was
asserted in an unrelated federal court action. Id. at 1324.
Thereafter, the Plaintiff in Sunrise Jewelry alleged that Fred committed fraud on the
PTO by filing its incontestability affidavit. Sunrise Jewelry Mfg. Corp., 175 F.3d at 1324.
This claim was rejected because “at the time Fred filed the affidavit it would have been
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reasonable to believe that no proceeding was pending in view of the previously filed
withdrawal of the cancellation proceeding.” Id. at 1327. The court also noted that at the time
the counterclaim for cancellation was filed, Fred had already filed his affidavit, and “the
Lanham Act imposes no continuing duty to update a § 15 affidavit.” Id.
The facts set forth in Abercrombie’s counterclaim are completely different from the
facts in Sunrise Jewelry. In Sunrise Jewelry, at the time the affidavit was filed, the
proceedings had been settled and a notice of withdrawal had been filed. By contrast, at the
time LS&Co. filed both affidavits, Lois Sportswear was still very much alive and Lois
Sportswear was unquestionably challenging LS&Co.'s rights to the arcuate trademark.
Moreover, in Sunrise Jewelry, the affidavit submitted to the PTO actually referenced the
litigation and disclosed that it had been resolved through settlement. Neither one of
LS&Co.’s affidavits made any mention whatsoever of the Lois Sportswear matter. Finally, in
Sunrise Jewelry, the counterclaim that sought cancellation of Fred’s trademark was filed after
Fred submitted the Section 15 affidavit. See Sunrise Jewelry Mfg. Corp., 175 F.3d at 1324.
Not so in Lois Sportswear v. LS&Co. Lois Sportswear alleged from the outset of the litigation
that LS&Co did not have an enforceable trademark. Sunrise Jewelry is inapposite.
C. LS&Co.’s false statements were material because the registrant attesting that
there is no proceeding involving the trademark in a court is a statutory
prerequisite to obtaining an “incontestable” registration.
LS&Co.'s argument on materiality is equally unsound. LS&Co. claims that because it
ultimately prevailed in the Lois Sportswear litigation, the false statements it made to the PTO
many months prior to the Second Circuit decision could not be “material.” This argument
should be rejected on its face for both legal and policy reasons.
First, whether a statement is “material” is assessed at the time the statement was made
to the PTO. See, e.g., Orient Express Trading Co., 842 F.2d at 653 (“knowing misstatement
must have been with respect to a material fact -- one that would have affected the PTO’s
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action on the applications.”) (citations omitted); Crown Wallcovering Corp., 188 U.S.P.Q. at
143 (material information or facts are those “which, if transmitted and disclosed to the
examiner, would have resulted in the disallowance of the registration sought.”); National
Business Systems, Inc. v. AM International, Inc., 743 F.2d 1227, 1239 (7th Cir. 1984)
(“To support a finding of fraud, the court ‘must determine not only that the undisclosed art or
information was material, but that the one charged with non-disclosure knew or should have
known of its materiality at the time.’” (citations omitted)); Duffy-Mott Co., Inc., 424 F.2d at
1099 (noting that court needs to consider “the purpose for which the false affidavit was filed
in order to determine the importance of the untrue allegations”).
The purpose for which LS&Co. submitted the “8 and 15” affidavit was to obtain
“incontestability,” a “new right” that is not granted with the original registration. Crown
Wallcovering Corp., 188 U.S.P.Q. at 144. The only way for a trademark registrant to obtain
this “new right” is to submit an incontestability affidavit to the PTO satisfying the
requirements set forth in 15 U.S.C. § 1065 at the time the registrant files the affidavit. One of
those statutory requirements is that the registrant must attest that there “is no proceeding
involving said rights pending in the Patent and Trademark Office or in a court and not finally
disposed.” 15 U.S.C. § 1065(2). Without providing that statement, a trademark registrant
would be ineligible to obtain an “incontestable” trademark. Thus, as a matter of law,
LS&Co.’s affidavits that testified to the supposed “non-existence” of a court proceeding
involving its rights to the trademark are unquestionably “material” under 15 U.S.C. § 1065(2)
because those statements go to the heart of whether LS&Co. would have been entitled to an
incontestable trademark at the time it filed its affidavits. See Orient Express Trading Co., 842
F.2d at 653 (statement of continuous use required for Section 8 and 15 affidavit, which
registrant made falsely, constituted material misstatement of fact).
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Second, as a matter of policy, interpreting “materiality” the way LS&Co. suggests
would create a safe haven for those that submit false affidavits to the PTO. Under LS&Co.’s
theory of “materiality”, a trademark owner could file a false statement (or in LS&Co.’s case,
two false statements) with the PTO regarding pending litigation involving the trademark.
Under LS&Co.’s definition of “materiality”, so long as that registrant ultimately prevailed in
the litigation that was secreted from the PTO, it would not matter how outrageous or deceitful
the statement was because it was “immaterial.” Such an absurd result is not supported by the
text of the statute, the Lanham Act, judicial interpretations, or common sense. Moreover, this
argument tacitly (if not overtly) seeks this Court’s imprimatur on false filings before a federal
agency and it should be rejected on that basis as well.
For all of the aforementioned reasons, the Court should deny LS&Co.’s motion to
dismiss Abercrombie’s counterclaim for fraud on the PTO.7
D. LS&Co.’s motion to dismiss Abercrombie’s abandonment counterclaim should
be denied because LS&Co. ignores facts establishing this claim and relies on
case law that is easily distinguishable on both procedural and substantive
grounds.
This Court should also reject LS&Co.’s argument that Abercrombie has failed to
allege sufficient facts to state a claim for “abandonment.” The reasons are twofold. First,
Abercrombie has specifically alleged—and this Court must accept as true—that LS&Co.
knowingly consented to third party infringements of LS&Co.’s “arcuate” trademark. Such
knowing consent can constitute an abandonment of a trademark, as LS&Co.’s own legal
authority indicates. See LS&Co. Motion, pp. 10-11. For this reason alone, LS&Co.’s motion
fails. Second, LS&Co. relies on legal authority that is simply inapplicable at this stage of the
7 In fact, it is Abercrombie’s position that LS&Co.’s submission of two materially false affidavits is undisputed
as a matter of law. Abercrombie filed a motion for summary adjudication on this exact issue on March 21, 2008,
but took this motion off-calendar so that it could be combined with Abercrombie’s motion for summary
judgment of non-infringement, which will be filed with the Court at a future date.
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proceeding. The only issue before this Court is whether Abercrombie has alleged sufficient
facts to establish a claim of abandonment. None of LS&Co.’s authority discusses the relevant
pleading standard; rather, all of these cases involved either preliminary injunctions, summary
judgment motions, or a trial where the abandonment claims were analyzed against the
evidence produced. Thus, other than articulating the legal standard that Abercrombie will
ultimately have to meet to support its claim of abandonment, LS&Co.’s cited legal authority
fails to support its argument and certainly cannot be read to suggest that Abercrombie has
failed to allege sufficient facts to support its abandonment claim.
1. Abercrombie properly alleged a claim of trademark abandonment
because LS&Co. knowingly consented to other third-party infringing
uses of its “arcuate” trademark.
The Lanham Act provides that a trademark registration may be cancelled when the
trademark has been “abandoned.” 15 U.S.C. § 1064(3). “Abandonment” is defined to include
any act or omission by the registrant which causes the trademark “to lose its significance as a
mark.” 15 U.S.C. § 1127. Whether a trademark has lost is significance as an indication of
origin is a question of fact. FirstHealth of Carolinas, Inc. v. CareFirst of Maryland, Inc.,
479 F.3d 825, 830 (C.A.Fed. 2007).
A trademark can lose its significance as a mark when the trademark owner allows
third parties to use its trademark. As one Court has observed:
Without question, distinctiveness can be lost by failing to take
action against infringers. If there are numerous products in the
marketplace bearing the alleged mark, purchasers may learn to
ignore the “mark” as a source identification. When that occurs,
the conduct of the former owner, by failing to police its mark,
can be said to have caused the mark to lose its significance as a
mark. Wallpaper Mfrs., Ltd. v. Crown Wallcovering Corp.,
680 F.2d 755, 766 (Cust. & Pat.App. 1982).
Even LS&Co.’s own legal authority acknowledges that abandonment can occur when the
trademark owner consents to third party infringing uses of its trademark. See LS&Co.
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Motion, p. 10 (citing STX, Inc. v. Bauer USA, Inc., 43 U.S.P.Q.2d 1492,
1502 (N.D.Cal.1997)). For example, in STX the court noted that “[t]he existence of third
party infringers does not constitute an abandonment of a mark where the trademark owner
does not consent to the use of the mark by these others but rather, vigorously pursues these
third party infringers." Id.; see also Citibank, N.A v. City Bank of San Francisco, 206
U.S.P.Q. 997, 1011 (N.D.Cal.1980) (same); Visa Intern. Service Ass'n v. Bankcard Holders of
America, 211 U.S.P.Q. 28, 41 (N.D.Cal.1981) (same). STX went on to observe that that the
defendant failed to establish its abandonment claim because it “has not presented evidence to
the effect that plaintiff consents to any of the allegedly infringing third party use but merely
that plaintiff is aware of such use.” STX, Inc., 43 U.S.P.Q.2d at 1502.
In sharp contrast to the facts in STX, Abercrombie has alleged numerous facts (and
already presented evidence in the attachments to the Counterclaims) showing that LS&Co.
has knowingly consented to allegedly infringing third party uses of its “arcuate” trademark.
For example, Abercrombie alleges that in 2003, LS&Co. sued a company claiming
that it infringed on LS&Co.’s “arcuate” trademark. Abercrombie’s Counterclaims, ¶ 22. Yet,
that same year in a separate lawsuit LS&Co. sued a company by the name of Federal Jeans.
Id. at ¶ 23. Although Federal Jeans was also using a stitching design that was very similar to
the design used by the other company sued by LS&Co. in 2003, LS&Co. “knowing allowed”
Federal Jeans to continue to using the infringing design. Id..
In another example of LS&Co. knowingly consenting to infringing use of its “arcuate
trademark”, Abercrombie alleged that in 2003, LS&Co. sued a company by the name of “For
What It’s Worth” claiming that its back pocket stitching design was an infringement of the
“arcuate” trademark. Id. at ¶ 24. As Abercrombie further alleges, for a very significant
amount of time at least one other company had been using a stitching design that was very
similar to the “infringing” design used by For What It’s Worth. Yet, “LS& Co. has
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knowingly allowed this other party to use a design that LS&Co. knows is infringing on
LS&Co.’s arcuate trademark.” Id..
Additionally, Abercrombie alleges that in 2004, LS&Co. sued a company by the name
of RP55 for its alleged “willful infringement” of the arcuate trademark. Id. at ¶ 25. LS&Co.
even produced an expert report in that case claiming that “RP55’s back pocket stitching
design was likely to cause confusion in the marketplace” with the arcuate trademark. Id. at ¶
25. Yet, despite LS&Co.’s claims of “willful infringement” against RP55 and its use of an
expert report supporting that allegation, LS&Co. “dismissed its case with prejudice” against
RP55. As Abercrombie specifically alleges in its Counterclaim, LS&Co.’s release of RP55 is
“another example of how LS&Co. is allowing other supposedly infringing designs to be used
with LS&Co.’s express permission.” Id..
As Abercrombie alleges, all of these examples of LS&Co. knowingly permitting
infringing uses constitutes “abandonment.” Id. at ¶ 29. These facts are sufficient to state a
claim for abandonment and, therefore, LS&Co.’s motion to dismiss should be denied on this
basis alone.
2. The most that LS&Co.’s legal authority provides is the standard of
proof that Abercrombie will ultimately have to meet on its
abandonment claim—a standard that is wholly inapplicable when
testing the sufficiency of a claim for relief under Rule 12(b)(6).
LS&Co.’s legal authority does not support its motion to dismiss. Notably, not one of
LS&Co.’s cited cases involved a motion to dismiss a claim of trademark abandonment.
Instead, all of these cases involved preliminary injunctions, summary judgment motions, and
trial—proceedings that require a court to determine whether sufficient evidence exists to
support a claim. See Electro Source, LLc. v. Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931,
941 (9th Cir. 2006) (failure of proof to support summary judgment); Citibank, N.A. v. The
City Bank of San Francisco, 206 U.S.P.Q. 997, 1011, 1980 WL 30239 (N.D. Cal. Mar. 23,
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1980) (preliminary injunction granted due to failure to meet “strict burden of proof” of
abandonment); Visa Int’l Service Assn. v. Bankcard Holders of America, 211 U.S.P.Q. 28,
1981 WL 40539 at *43 (N.D. Cal. Feb. 26, 1981) (preliminary injunction granted after
evaluation of evidence); STX Inc. v. Bauer USA Inc., 43 U.S.P.Q. 1492, 1500, 1997 WL
337578 (N.D. Cal. Jun. 5, 1997) (failure to meet “high burden of proof” on summary
judgment); Transgo v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1009 (9th Cir. 1985)
(appeal from jury verdict and judgment); Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d
1070, 1081 (5th Cir. 1997) (summary judgment on naked license defense); Babbit
Electronics, Inc. v. Dynascan Corp., 38 F.3d 1161, 1165 (11th Cir. 1994) (appeal from
plaintiff’s hearing on notice of foreign law); Sweetheart Plastics, Inc., 743 F.2d at 1041
(appeal from judgment entered on jury verdict); Wallpaper Mfrs., Ltd. v. Crown Wallcovering
Corp., 680 F.2d 755, 757 (appeal from T.T.A.B. decision granting petition to cancel
trademark registration); Board of Regents of Univ. System of Georgia v. Buzas Baseball, Inc.,
176 F. Supp. 2d 1338, 1344 (N.D. Ga. 2001) (motions for summary judgment); Shelby v.
Ford Motor Co., 43 U.S.P.Q. 2d 1692, 1693 1997 WL 689456 (C.D. Cal. Mar. 21 1997)
(declaratory judgment action based on stipulated findings of fact and conclusions of law);
Kinark Corp. v. Camelot, Inc., 548 F. Supp. 429, 431-32 (D. N.J. 1982) (opinion after bench
trial); Playboy Enterprises, Inc. v. P.K. Sorren Export Co. Inc. of Fla., 546 F. Supp. 987, 989
(S.D. Fla. 1982) (opinion after bench trial). As such, they do not stand for the proposition that
Abercrombie has failed to sufficiently plead a claim of abandonment.
A case that is much more procedurally on point than any of the cases cited by LS&Co.
is Fort James Corp. v. Kimberly-Clark Tissue Co., 1999 WL 966144 (N.D. Ill. 1999). There,
the defendant was sued for trademark infringement and alleged several affirmative defenses,
including that the plaintiff had “abandoned” its trademark, as well as a counterclaim for
cancellation based on abandonment. The defendant’s abandonment allegation provided that
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the “widespread third-party use of similar designs, unpoliced by Fort James, has undermined
consumer perception that a single source exists for the goods that bear the trademarked
design.” Id. at *4. The plaintiff moved to dismiss this affirmative defense and the
counterclaim based on abandonment. The court denied the motion observing that this
pleading provided a “plausible scenario of abandonment” and the court emphasized that
“ultimate success of the defense is not our concern at this stage of the case” Id. at *5. Other
cases have similarly rejected motions to dismiss counterclaims based on abandonment
theories. Iowa Health System v. Trinity Health Corp., 177 F. Supp. 2d 897, 923 (N.D. Iowa
2001) (noting that “for purposes of the present motion to dismiss, the Trinity Iowa Plaintiffs
‘improper tacking’ claim does state a claim upon which relief can be granted, because there is
a set of facts that could be proved consistent with the allegations of improper tacking” that
would constitute “abandonment.”); In re Houbigant Inc., 914 F. Supp. 964, 994 (S.D.N.Y.
1995) (claim of abandonment not dismissed on Rule 12 motion).
If the limited factual allegations in Fort James were sufficient to survive a motion to
dismiss, then certainly the pleading in this case—a pleading that details several instances
where LS&Co. knowingly allowed third parties to engage in infringement of the “arcuate”
mark thereby causing it to lose its significance as a mark—is more than sufficient to state a
claim for abandonment.
IV. CONCLUSION
For the reasons set forth herein, LS&Co.’s motion to dismiss should be denied.8
8 Should the Court grant the motion, though, Abercrombie respectfully requests it be granted leave to amend it
Counterclaims to clarify its allegations. See Daw Indus. v. Proteor Holdings, S.A., 2008 U.S. Dist. LEXIS 6736,
*9-10 (S.D. Cal. Jan. 29, 2008)( “A court may dismiss a complaint without granting leave to amend only if it
appears with certainty that the plaintiff cannot state a claim and any amendment would be futile”).
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Dated: March 28, 2008 Respectfully submitted,
KIRKPATRICK & LOCKHART
PRESTON GATES ELLIS LLP
By: /s/
Michael J. Bettinger
Rachel R. Davidson
J. Michael Keyes
Attorneys for Defendant
ABERCROMBIE & FITCH TRADING CO.
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