Orouba Agrifoods Processing Company v. United Food Import

UNITED STATES PATENT AND TRADEMARK OFFICE

Trademark Trial and Appeal Board

THIS OPINION IS A P.O. Box 1451

Alexandria, VA 22313-1451

PRECEDENT OF THE

T.T.A.B.

MBA Mailed: December 28, 2010

Cancellation No. 92050739

Orouba Agrifoods Processing

Company

v.

United Food Import

Before Bucher, Kuhlke and Taylor, Administrative Trademark

Judges

By the Board:

On July 29, 2009, the Board suspended this proceeding

pending final disposition of a civil action between the

parties. On August 13, 2010, the Board inquired about the

status of the civil action, and allowed the parties time in

which to inform the Board of the status of that action,

failing which, the Board indicated, it would decide the

motion to dismiss pending in this proceeding. Inasmuch as

the parties have not filed a response to the August 13, 2010

order, we now take up for consideration respondent’s “motion

to dismiss” the petition for cancellation on the ground of

claim preclusion or res judicata, filed May 4, 2009.

Because respondent’s motion is based on materials from

outside the pleadings, it is in fact a motion for summary

judgment. TBMP § 528.04 (2d ed. rev. 2004). While the

Cancellation No. 92050739

parties have not yet exchanged initial disclosures, because

the basis for respondent’s motion is res judicata, the

motion is timely under Trademark Rule 2.127(e)(1).

Petitioner contests the motion.

Background

This is the second proceeding between the parties

relating to respondent’s mark shown below

which is registered for frozen fruit and vegetables (the

“Registration”).1 In this proceeding, petitioner seeks to

cancel the Registration alleging: (1) prior use of an

identical mark beginning “in late 1999”; (2) ownership of a

pending application to register the mark shown below for

preserved, dried and cooked fruits and vegetables and other

food products which has been refused registration based on

the Registration

1

Registration No. 3398369, with GREEN MOLOKHIA, 400g and the

photograph of green leafy vegetables disclaimed, issued March 18,

2009 based on dates of first use of January 1, 1998 for “frozen

fruit and vegetables, namely, okra, molokhia, artichokes, green

peas, green beans, mixed vegetables, cauliflower, colcassia, also

known as taro root, green spinach, broad beans vine leaves also

known as grape leaves, falafel, broccoli, strawberries, sweet

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Cancellation No. 92050739

;2

(3) that respondent was petitioner’s authorized importer

from 1998-2005 and the “parties understood that the ‘BASMA’

marks … were owned by Petitioner …”; (4) that use of

respondent’s mark will cause confusion with petitioner’s

marks; (5) the mark in respondent’s Registration “may

falsely suggest a connection with Petitioner”; (6) fraud,

including because respondent had “actual knowledge of …

Petitioner’s prior rights” at the time respondent filed its

application; and (7) misrepresentation of source.

In the first proceeding, Opposition No. 91172895,

petitioner herein filed a notice of opposition against the

application that matured into the Registration. In that

proceeding, petitioner alleged: (1) prior use of BASMA “in

various word and design formats, including as represented by

the Mark” in respondent’s Registration; (2) ownership of the

same application pled in this proceeding; (3) that

corn, carrots, coriander, garlic, potatoes.” The foreign word

BASMA is translated as “smile” in English.

2

Application Serial No. 78870359, filed April 26, 2006, based

on a claimed date of first use in commerce of February 17, 2003

for “Meat, fish, poultry; meat extracts; preserved, dried and

cooked fruits and vegetables; jellies, jams, compotes; eggs, milk

and milk products excluding ice cream, ice milk and frozen

yogurt; edible oils and fats.” The foreign word BASMA is also

translated as “smile” in this application.

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Cancellation No. 92050739

respondent was petitioner’s authorized importer beginning in

1998, and the “parties understood that the ‘BASMA’ marks …

were owned by” petitioner; (4) respondent had “actual

knowledge of … [petitioner’s] prior rights,” and

respondent’s claim of ownership in its application was

“false”; (5) respondent “is not the owner of the Mark

identified in the Application, and … based its Application

on a false verification”; and (6) petitioner “reasonably

believes that [respondent’s] Application will be cited

against [petitioner’s] Application ….” In its answer,

respondent denied the salient allegations in the notice of

opposition.

On December 29, 2007, after petitioner failed to timely

file its brief on the case in the prior opposition, or more

importantly to take testimony or submit any evidence in

support of its claims, the Board issued an order to show

cause pursuant to Trademark Rule 2.128(a)(3) why

petitioner’s failure to file a brief should not be treated

as a concession of the case. The show cause order warned

that if petitioner failed to respond, judgment could be

entered against it. On February 12, 2008, after petitioner

failed to respond to the show cause order, the Board entered

judgment against petitioner and dismissed the prior

opposition with prejudice. Respondent’s involved

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Cancellation No. 92050739

application then issued as the Registration involved in this

proceeding.

The Parties’ Contentions

In its motion for summary judgment, respondent argues

that although the petition for cancellation “is slightly

more detailed than [petitioner’s] prior Opposition, the

claims and factual allegations are essentially identical.”

In fact, according to respondent, petitioner’s claims of

priority and likelihood of confusion, false suggestion of a

connection and misrepresentation of source in this

proceeding “all relate” to petitioner’s allegation here, as

in the opposition, that respondent “is not the owner of the

subject mark.” Therefore, respondent argues that petitioner

“is asserting the same set of transactional facts as were

asserted in its prior Opposition proceeding,” and “there is

nothing in the pending Cancellation petition that could not

have been raised in the earlier Opposition.”

Petitioner argues in response that the Board “may have

rendered a final decision on the Opposition proceeding, but

it did so without reaching the substantive merits of the

case.” Petitioner further argues that this proceeding is

based on a different set of transactional facts than the

opposition, because the petition for cancellation “includes

allegations that the petitioner is the senior user, that

[respondent’s] use creates consumer confusion and that the

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Cancellation No. 92050739

[respondent] failed to take steps to prevent consumer

confusion.” In addition, petitioner claims that its

petition for cancellation includes allegations which “were

discovered subsequently or only developed subsequently,”

including

the nature of use of the marks in

commerce, the characteristics of the end

users, and the goods sold by each party.

The facts exacerbating the false

suggestion between the [respondent] and

the petitioner, including the

development of the [respondent’s]

website, were not alleged in the

Opposition. The scope of the

Petitioner’s brand recognition is also a

new factual allegation in the earlier

Opposition.

Finally, petitioner claims that “[g]iven the grave

allegations of this case, i.e., the misappropriation of a

mark by a distributor, the merits of the case should be

considered.”

Decision

Summary judgment is only appropriate where there are no

genuine issues of material fact in dispute, thus allowing

the case to be resolved as a matter of law. Fed. R. Civ. P.

56(c). The party seeking summary judgment bears the burden

of demonstrating the absence of any genuine issue of

material fact, and that it is entitled to a judgment under

the applicable law. See Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986); Sweats Fashions, Inc. v. Pannill Knitting

Co. Inc., 833 F.2d 1560, 4 USPQ2d 1793, 1796 (Fed. Cir.

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Cancellation No. 92050739

1987). A factual dispute is genuine if, on the evidence of

record, a reasonable fact finder could resolve the matter in

favor of the non-moving party. See Opryland USA Inc. v.

Great American Music Show Inc., 970 F.2d 847, 23 USPQ2d

1471, 1472 (Fed. Cir. 1992); Olde Tyme Foods, Inc. v.

Roundy’s, Inc., 961 F.2d 200, 22 USPQ2d 1542, 1544 (Fed.

Cir. 1992).

The evidence on summary judgment must be viewed in a

light most favorable to the non-movant, and all justifiable

inferences are to be drawn in the non-movant’s favor.

Lloyd’s Food Products, Inc. v. Eli’s, Inc., 987 F.2d 766, 25

USPQ2d 2027, 2029 (Fed. Cir. 1993); Opryland USA, 23 USPQ2d

at 1472. The Board may not resolve issues of material fact;

it may only ascertain whether issues of material fact exist.

See Lloyd’s Food Products, 25 USPQ2d at 2029; Olde Tyme

Foods, 22 USPQ2d at 1542.

Under the doctrine of res judicata or claim preclusion,

“a judgment on the merits in a prior suit bars a second suit

involving the same parties or their privies based on the

same cause of action.” Jet, Inc. v. Sewage Aeration

Systems, 223 F.3d 1360, 55 USPQ2d 1854, 1856 (Fed. Cir.

2000) (quoting Parklane Hosiery Co. v. Shore, 439 U.S. 322,

326 n. 5 (1979)). “For claim preclusion based on a judgment

in which the claim was not litigated, there must be (1) an

identity of the parties or their privies, (2) a final

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Cancellation No. 92050739

judgment on the merits of the prior claim, and (3) the

second claim must be based on the same transactional facts

as the first and should have been litigated in the prior

case.” Sharp Kabushiki Kaisha v. Thinksharp, Inc., 448 F.3d

1368, 79 USPQ2d 1376, 1378 (Fed. Cir. 2006).

Here, the pleadings reveal that the parties in the two

proceedings are identical. Petitioner does not contend

otherwise.

While petitioner claims that the Board did not reach

“the substantive merits” of the prior opposition proceeding,

the Board’s February 12, 2008 order dismissed petitioner’s

notice of opposition with prejudice, and entered judgment

against petitioner. For claim preclusion purposes, the

Board’s order is a final judgment on the merits.

International Nutrition Co. v. Horphag Research, Ltd., 220

F.2d 1325, 55 USPQ2d 1492, 1494 (Fed. Cir. 2000) (“default

judgments can give rise to res judicata … INC therefore

cannot avoid the bar of res judicata on the ground that [its

predecessor-in-interest’s previous] opposition was abandoned

and dismissed for failure to prosecute”).

Petitioner argues, however, that the purpose of the

show cause order issued in the prior opposition pursuant to

Trademark Rule 2.128(a)(3) was “to save the Board the burden

of determining a case on the merits,” citing TBMP § 536.

However, as noted above, even default judgments for failure

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Cancellation No. 92050739

to answer, or dismissals for failure to prosecute, where

there has been no decision “on the merits,” can act as a bar

under the doctrine of claim preclusion. Horphag Research,

220 F.3d at 1325, 55 USPQ2d at 1492. The language in

Section 536 of the TBMP upon which petitioner relies merely

relates to the Board’s preference to dispose of cases which

have settled, or in which the plaintiff has lost interest,

without “the burden of determining a case on the merits.”

While the Board’s dismissal of the prior opposition would

not be sufficient for issue preclusion purposes, it is a

final judgment on the merits for purposes of claim

preclusion. Young Engineers, Inc. v. U.S. International

Trade Commission, 721 F.2d 1305, 219 USPQ 1142, 1151 (Fed.

Cir. 1983) (“issue preclusion operates only as to issues

actually litigated, whereas claim preclusion may operate

between the parties simply by virtue of the final

judgment”).

Finally, there is no genuine issue that petitioner’s

claims in this proceeding are based on the same

transactional facts as, and could have been litigated in,

the prior opposition. Indeed, the prior opposition, like

this proceeding, is based on petitioner’s allegations of

ownership and use of BASMA, and variations thereof,

including the mark in the Registration. The prior

opposition, like this proceeding, is based on petitioner’s

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Cancellation No. 92050739

allegations that respondent was merely petitioner’s

authorized importer, that petitioner retained ownership of

the BASMA marks and that respondent had “actual knowledge”

of petitioner’s superior rights at the time it filed its

application. And the prior opposition, like this

proceeding, was based on the feared or actual rejection of

petitioner’s pending application based on respondent’s

Registration. Petitioner’s argument that the petition

includes allegations which “were discovered subsequently,”

is not credible given that they concern its own use of the

mark and, in any event, these “new allegations” are simply

the same transactional facts with more detail. Moreover,

the argument that other allegations were “developed

subsequently” is simply another way of saying they are

positing a new legal theory on the same transactional facts.

Petitioner cannot avoid the application of claim

preclusion by merely bringing additional claims in this

proceeding based on the same transactional facts as the

prior opposition. Vitaline Corp. v. General Mills Inc., 891

F.2d 273, 13 USPQ2d 1172, 1173 (Fed. Cir. 1989). In

Vitaline, General Mills petitioned to cancel Vitaline’s

registration, and Vitaline counterclaimed to cancel one of

General Mills’s registrations based on fraud, relying on

General Mills’s “Sections 8 and 15 affidavit and related

specimens” to support its fraud counterclaim. The Board

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Cancellation No. 92050739

entered summary judgment in favor of General Mills on the

fraud counterclaim. Vitaline then filed a subsequent

petition to cancel the same registration based on

abandonment, and our primary reviewing court affirmed the

Board’s summary judgment in General Mills’s favor on the

ground of claim preclusion. It held that “Vitaline’s

theories of abandonment and fraud are not only based upon

the same transactional facts – use of the mark on product

containers in connection with certain wording, but rely on

the very same proof – the affidavit and specimens.” Id., 13

USPQ2d at 1174. Here, while the grounds for the prior

opposition did not include priority and likelihood of

confusion, false suggestion of a connection or

misrepresentation of source, all of these claims are based

on the same facts alleged in the opposition, perhaps with

slightly more detail.

In fact, given the factual allegations in the prior

opposition, specifically, petitioner’s alleged prior use and

ownership of the BASMA marks, that respondent was

petitioner’s distributor and aware of petitioner’s allegedly

superior rights, and that respondent alleged use of the mark

in the Registration for goods similar or related to those

offered by petitioner, petitioner could (and should) have

asserted each of these claims in the earlier case. Id.

(“The abandonment theory clearly could have been brought in

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Cancellation No. 92050739

the original proceeding because Vitaline had access to the

affidavit and related specimens” when it filed its fraud

counterclaim); see also, Nasalok Coating Corp. v. Nylok

Corp., 522 F.2d 1320, 86 USPQ2d 1369, 1371 (Fed. Cir. 2008)

(“Claim preclusion refers to ‘the effect of foreclosing any

litigation of matters that never have been litigated,

because of a determination that they should have been

advanced in an earlier suit.’”) (citations omitted);

Horphag, 220 F.3d 1325, 55 USPQ2d at 1494-95 (“To the extent

that the cancellation petition expands on the false

declaration allegations made in the opposition, the

differences between the two pleadings are not sufficient to

differentiate the claims for res judicata purposes,

particularly since there was nothing in the cancellation

petition that could not have been alleged in the

opposition.”).3

Petitioner’s assertion that the merits of this

proceeding should be considered because of “the grave

allegations of this case,” does not persuade us of a

different result. We recognize that “[c]aution is warranted

in the application of preclusion by the PTO, for the

3

Here, to the extent petitioner alleges that respondent’s

development of its Web site, after the earlier case terminated,

constitutes “changed circumstances,” we disagree. After

prevailing in the first proceeding, respondent was entitled to

move forward with use and development of its mark, without fear

that petitioner could obtain a second bite at the apple based on

immaterially changed transactional facts.

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Cancellation No. 92050739

purposes of trademark procedures include protecting both the

consuming public and the purveyors. … [thus], the

circumstances for preclusion ‘must be certain to every

intent’.” Mayer/Berkshire Corp. v. Berkshire Fashions Inc.,

424 F.3d 1229, 76 USPQ2d 1310, 1314 (Fed. Cir. 2005)

(quoting Russell v. Place, 94 US (4 Otto) 606, 610 (1878))

(involving a federal court infringement action followed by a

Board proceeding, and the presentation of “sufficient

evidence” of “materially changed marketing practices” after

conclusion of the federal case). However, in this case,

there is no genuine issue of material fact regarding the

identity of the parties, the finality of the judgment on the

merits of the prior claim, and/or that the second claim is

based on the same transactional facts. While the

circumstances may in fact be that petitioner is the producer

and respondent is the importer, petitioner had an

opportunity to be heard on the merits in the opposition and

simply allowed judgment to be entered against it by failing

to go forward with its case. Moreover, petitioner has also

had an opportunity to be heard in a civil action and was

given an opportunity to inform the Board of the outcome of

that civil action, which it has not done.

Conclusion

For all of these reasons, we find that there is no

genuine issue of material fact and that petitioner’s claims

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Cancellation No. 92050739

in this proceeding are barred by res judicata. Accordingly,

respondent’s motion for summary judgment is hereby GRANTED,

and the petition for cancellation is hereby DISMISSED, WITH

PREJUDICE.

***

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