Yufan Hu v. TJ Food Service, LLC

UNITED STATES PATENT AND TRADEMARK OFFICE

THIS ORDER IS A Trademark Trial and Appeal Board

PRECEDENT OF THE P.O. Box 1451

TTAB Alexandria, VA 22313-1451

General Contact Number: 571-272-8500

wbc

Mailed: August 8, 2017

Opposition No. 91230600

Yufan Hu

v.

TJ Food Service, LLC

Wendy Boldt Cohen, Interlocutory Attorney:

TJ Food Service, LLC (“Applicant”) previously filed a motion to dismiss Yufan

Hu’s (“Opposer”) notice of opposition for failure to state claims of non-ownership and

likelihood of confusion, and for lack of Board jurisdiction and/or venue based on the

parties’ prior contractual agreement and arbitration clause.1 After denying the

motion to dismiss in part as to failure to state a claim, the Board allowed the parties

time to brief the motion to dismiss for lack of Board jurisdiction and/or venue as a

motion for summary judgment.2 This case now comes before the Board on that

motion.3 The motion is fully briefed.4

1 6 TTABVUE, Applicant’s Motion to Dismiss.

2 13 TTABVUE 4, Board’s Order.

3 14 TTABVUE, Applicant’s Motion for Summary Judgment.

4 Opposer’s motion to substitute counsel is noted and made of record. 17 TTABVUE, Opposer’s

Appearance of Attorney; 18 TTABVUE, Opposer’s Motion to Substitute Counsel.

Opposition No. 91230600

Background

An operating agreement between Applicant, Opposer, and a third party,5 as

members of WNH Food Service LLC, was executed on February 18, 2015. Pertinent

to the dispute at hand is Section 8.16 of that agreement, which reads:

Any dispute, claim or controversy among the Members or between a

Member and the Company arising out of or related to this agreement

shall be settled by arbitration in Tippecanoe County, Indiana. Such

arbitration shall be conducted by a single arbitrator in accordance with

the rules of The American Arbitration Association, and judgment may

be entered upon the award rendered and enforced by appropriate

judicial action. Unless otherwise allocated by the arbitrator, the losing

party shall bear any fees and expenses of the arbitrator, other

arbitration fees and expenses, reasonable attorney's fees of both parties,

any costs of producing witnesses and any other reasonable costs or

expenses incurred by him or the prevailing party. BY EXECUTING

THIS AGREEMENT YOU ARE AGREEING TO HAVE CERTAIN

DISPUTES DECIDED BY NEUTRAL ARBITRATION AND YOU ARE

GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE SUCH

DISPUTES LITIGATED IN A COURT OR JURY TRIAL. BY

EXECUTING THIS AGREEMENT YOU ARE GIVING UP YOUR

JUDICIAL RIGHTS TO DISCOVERY AND APPEAL. IF YOU REFUSE

TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS

PROVISION, YOU MAY BE COMPELLED TO ARBITRATE. YOUR

AGREEMENT TO THIS ARBITRATION PROVISION IS

VOLUNTARY.

The principal question is the effect of this arbitration clause on the Board’s power to

hear this trademark registration dispute concerning the LATEA mark.

5 Yimei Wan, an individual.

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Analysis

The Board is an administrative tribunal with jurisdiction over the question of

registrability of U.S. trademarks.6 See Trademark Act § 17, 15 U.S.C. § 1067. The

Board is empowered to determine only the right to register. Trademark Act §§ 17-18,

20, 24; Trademark Act § 18, 15 U.S.C. §§ 1067-68, 1070, 1092; see also, e.g., Conolty

v. Conolty O’Connor NYC LLC, 111 USPQ2d 1302, 1309 (TTAB 2014). However, the

Board may consider the terms of a contract if, and to the extent that, construction of

the contract is necessary to a decision on matters within the Board’s jurisdiction. See

Selva & Sons, Inc. v. Nina Footwear, Inc., 705 F.2d 1316, 217 USPQ 641, 647 (Fed.

Cir. 1983); M-5 Steel Mfg. Inc. v. O’Hagin’s Inc., 61 USPQ2d 1086, 1094-95 (TTAB

2001). In that context, the Board may, in the exercise of its statutory jurisdiction,

consider an agreement, its construction, or its validity, “although other courts would

be the proper tribunals in which to litigate a cause of action for enforcement or breach

of [that] contract.” Selva & Sons, Inc., 217 USPQ at 647.

Applicant argues in its motion for summary judgment that the Board proceeding

should be dismissed because the parties are subject to an arbitration clause; that the

arbitration clause requires arbitration for “[a]ny dispute, claim or controversy among

the Members”; that the ownership and likelihood of confusion claims before the Board

6 While the Board has jurisdiction to determine the registrability of trademarks, it does not

have exclusive jurisdiction in all circumstances. See, e.g., 15 U.S.C. § 1119 (“In any action

involving a registered mark the court may determine the right to registration, order the

cancelation of registrations, in whole or in part, restore canceled registrations, and otherwise

rectify the register with respect to the registrations of any party to the action.”).

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Opposition No. 91230600

involve a dispute among the Members; and that therefore the Board does not have

jurisdiction to consider the dispute.7

Opposer argues that “the immediate dispute is regarding ownership of intellectual

property … which is never contemplated in the WNH Operating Agreement”; that

use of the trademark at issue is contemplated in a separate agreement; and that the

Board has the exclusive jurisdiction to determine registrability.8 Opposer concludes,

“[t]hus a dispute between the WNH Members regarding the registration of the Mark

must necessarily be brought before the TTAB and could not be determined by an

arbitrator.”9

Section 2 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 2, provides:

A written provision in any …contract evidencing a transaction

involving commerce to settle by arbitration a controversy thereafter

arising out of such contract or transaction, or the refusal to perform

the whole or any part thereof, or an agreement in writing to submit

to arbitration an existing controversy arising out of such a contract,

transaction, or refusal, shall be valid, irrevocable, and enforceable,

save upon such grounds as exist at law or in equity for the revocation

of any contract.

The Supreme Court has observed that “‘the preeminent concern of Congress in

passing the [FAA] was to enforce private agreements into which parties had entered,’

7 14 TTABVUE 7-9, Applicant’s Motion for Summary Judgment. We note that the arbitration

clause cannot itself divest a court or administrative tribunal of its authority (or “jurisdiction”)

over a dispute. But it can require such a forum to stay a proceeding in light of an agreement

to arbitrate issues that otherwise are before the forum. See, e.g., LaPrade v. Kidder Peabody

& Co., 146 F.3d 899, 903 (D.C. Cir. 1998) (FAA contemplates that court action will be stayed

pending arbitration and that such stay “does not oust the court’s jurisdiction of the action,

though the parties have agreed to arbitrate”) (citing, inter alia, The Anaconda v. American

Sugar Refining Co., 322 U.S. 42, 44 (1944)). We therefore interpret Applicant’s motion as

requesting a stay pending arbitration, rather than dismissal.

8 15 TTABVUE 8-9, Opposer’s Response to the Motion for Summary Judgment.

9 15 TTABVUE 9, Opposer’s Response to the Motion for Summary Judgment.

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a concern which ‘requires that we rigorously enforce agreements to arbitrate.’”

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 625-26 (1985)

(quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221 (1985)). At bottom is

the policy “guaranteeing the enforcement of private contractual arrangements: the

Act simply ‘creates a body of federal substantive law establishing and regulating the

duty to honor an agreement to arbitrate.’” Mitsubishi Motors Corp., 473 U.S. at 625

(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23 (1983)).

Thus, when considering if a dispute should be arbitrated, the Board must first

consider whether the parties agreed to arbitrate the dispute. See Mitsubishi Motors

Corp., 473 U.S. at 626. In so doing, the Board will follow the principle that “any doubts

concerning the scope of arbitrable issues should be resolved in favor of arbitration.”

Moses H. Cone Mem’l Hosp., 460 U.S. at 24-25. After finding an agreement to

arbitrate, the Board must then turn to “whether legal constraints external to the

parties’ agreement foreclosed the arbitration of those claims.” Id. at 628.

The Parties’ Arbitration Provision is Broad and Encompasses the Issue of

Ownership.

Here, the parties admit that they have signed an agreement to arbitrate but

disagree as to whether the claims before the Board are a “dispute” as contemplated

by the arbitration clause. The dispute as articulated by the parties centers on the

issue of ownership and we address arbitrability solely with regard to that issue. The

arbitration clause in the WNH Food Service, LLC operating agreement broadly reads

that “[a]ny dispute, claim or controversy among the Members or between a Member

and the Company arising out of or related to this agreement shall be settled by

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Opposition No. 91230600

arbitration.” Opposer asserts that “Applicant contributed the LaTea intellectual

property to WNH in exchange for a minority equity interest in WNH. This intellectual

property included recipes and co-ownership in the LaTea brand.”10 In response to a

similar allegation in the Notice of Opposition, Applicant maintains that it granted “a

nonexclusive license to WNH to use the LaTea Trademark and proprietary

information in exchange for a controlling interest in WNH.”11 The issue then is not

whether Applicant contributed an interest of some kind in the mark at issue to

become a member of the company but whether its contribution amounted to an

ownership interest in the mark.

Because the operating agreement authorizes a member’s contribution of “any

combination of cash, property, labor, or services” to obtain an equity position in the

company,12 and because Applicant’s contribution to WNH was made pursuant to the

operating agreement, the issue of the nature of Applicant’s contribution, which gives

rise to Opposer’s claim that Applicant does not own the mark, arguably falls within

the purview of the arbitration clause in the operating agreement, which governs

“[a]ny dispute, claim or controversy among the Members or between a Member and

the Company arising out of or related to this agreement … .”13 Moreover, with respect

10 15 TTABVUE 13, Declaration of Yufan Hu at ¶ 7. Yufan Hu is identified as an equity

member of Applicant and General Manager and equity member of WNH Food Service, LLC.

11 7 TTABVUE 4, Applicant’s Answer to Notice of Opposition.

12 14 TTABVUE 17, Exh. A to Applicant’s Motion for Summary Judgment.

13 The issue of the arbitrability of the dispute may itself be considered and determined by the

arbitrator. See American Arbitration Assoc. Rules for Commercial Arbitration (“AAA Rules”),

Rule 7(a) (Oct. 2013) (“The arbitrator shall have the power to rule on his or her own

jurisdiction, including any objections with respect to the existence, scope, or validity of the

arbitration agreement or to the arbitrability of any claim or counterclaim.”). Here, the parties’

arbitration clause incorporates the AAA Rules as follows: “Such arbitration shall be

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Opposition No. 91230600

to claims regarding ownership rights, the parties’ agreement does not specifically

exclude Lanham Act claims, or any statutory claims for that matter, from the scope

of agreement to arbitrate. To the contrary, the parties’ agreement appears to be

expansive, covering “[a]ny dispute, claim or controversy … arising out of or related

to” it. Accordingly, the Board is not persuaded that the parties’ ownership dispute is

excepted from the arbitration clause.

Ownership of a Trademark Can Be Arbitrated

As to whether “Congress itself has evinced an intention to preclude a waiver of

judicial remedies for the statutory rights at issue,” Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. 20, 26 (1991), we at the outset note that administrative proceedings

are not necessarily exempt from application of the FAA. The U.S. Supreme Court has

enforced arbitration provisions even where there is, as here, a statute enabling a

federal administrative agency to resolve the dispute. See Gilmer, 500 U.S. 20 (the

requirement that an age discrimination claim be filed with the Equal Employment

Opportunity Commission as a precursor to private litigation does not override

compulsory arbitration when the dispute is subject to the FAA); see also Preston v.

conducted by a single arbitrator in accordance with the rules of The American Arbitration

Association.” Accordingly, the parties have shown their clear and unmistakable intent to

delegate the arbitrability question to an arbitrator. See AT & T Techs., Inc. v. Commc’ns

Workers of Am., 475 U.S. 643, 649 (1986) (Courts should not find that parties agreed to

arbitrate the question of arbitrability “[u]nless the parties clearly and unmistakably provide

otherwise.”); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1374, 80 USPQ2d 1669, 1675

(Fed. Cir. 2006) (“parties clearly and unmistakably intended to delegate arbitrability

questions to an arbitrator as evidenced by their incorporation of the AAA Rules”); Terminix

Int’l Co. v. Palmer Ranch LP, 432 F.3d 1327, 1332 (11th Cir.2005); Contec Corp. v. Remote

Solution Co., 398 F.3d 205, 208 (2d Cir.2005); Commonwealth Edison Co. v. Gulf Oil Corp.,

541 F2d 1263, 1272 (7th Cir. 1976); Gilman v. Walters, 61 F.Supp.3d 794, 800 (S.D. Ind.

2014).

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Ferrer, 552 U.S. 346 (2008) (an agreement to arbitrate a contract dispute governed

by the FAA supersedes state law that lodges primary jurisdiction of the dispute with

the California Labor Commissioner).

In such cases, the Supreme Court has explained, the focus is on the intention of

Congress:

Although all statutory claims may not be appropriate for arbitration,

having made the bargain to arbitrate, the party should be held to it

unless Congress itself has evinced an intention to preclude a waiver

of judicial remedies for the statutory rights at issue. In this regard,

we note that the burden is on [the party resisting arbitration] to show

that Congress intended to preclude a waiver of a judicial forum for

[such] claims. If such an intention exists, it will be discoverable in

the text of the [statute at issue], its legislative history, or an

“inherent conflict” between arbitration and the [statute]’s underlying

purposes. Throughout such an inquiry, it should be kept in mind that

questions of arbitrability must be addressed with a healthy regard

for the federal policy favoring arbitration.

Gilmer, 500 U.S. at 26 (citations and internal quotation marks omitted; bracketed

material added).

Turning next to Congress’s intent as expressed by the text of the Lanham Act, we

note that the Board has statutory authority to determine the right to register marks

but that the Lanham Act does not contain language expressly exempting any

registrability determinations from being decided in arbitration. See Trademark Act

§§ 13, 14, 17 and 18.

The question presented in this case is whether Applicant transferred any

ownership rights in the subject mark to WNH when it relied on the value of the mark

as part of its capital contribution. Because one cannot register a mark that it does not

own, the ownership issue is central to deciding the registrability of the mark in

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dispute. See, e.g., Holiday Inn v. Holiday Inns, Inc., 534 F.2d 312, 189 USPQ 630, 635

n.6 (CCPA 1976); Meem-Haskins Coal Corp. v. Cent. Fuel Corp., 137 F.2d 242, 58

USPQ 605, 609 (CCPA 1943); Wonderbread 5 v. Gilles, 115 USPQ2d 1296 (TTAB

2015); Great Seats, Ltd. v. Great Seats, Inc., 84 USPQ2d 1235, 1239 (TTAB 2007).

Accordingly, the issue of whether the WNH Operating Agreement is determinative of

ownership rights in the mark is arbitrable.

Conclusion

Accordingly, we deem it appropriate to honor the parties’ agreement to arbitrate

disputes among its members arising under the operating agreement as to who owns

the mark (a question turning on the parties’ intent). Thus, we will maintain the

current suspension to afford either party the opportunity to commence arbitration on

the issue of whether the parties’ ownership dispute falls under the purview of the

arbitration clause in the operating agreement and, if so, to reach a decision on the

issue of ownership of the mark in question under that agreement.

* * *

The parties are allowed 60 DAYS from the mailing date of this order to notify

the Board that an arbitration proceeding on the non-ownership claim has been

commenced, failing which the Board will resume these proceedings.14

In the event arbitration occurs, the parties are ordered to report promptly to the

Board the decision of the arbitrator on the arbitrability and ownership issues so that

the Board may determine how the opposition may proceed thereafter.

14The Board does not have the authority to order the parties to initiate an arbitration

proceeding.

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Proceedings otherwise remain suspended.

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