Opposition Brief — Idaho Potato Commission v. M & M Produce Farm & Sales, Dba M & M Produce

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No. 03-1049 ‘

Supreme Court of the United States

IDAHO POTATO COMMISSION,

Petitioner,

M & M PRODUCE FARM & SALES D/B/A M & M PRODUCE, M & M

PACKAGING, INC., MATTHEW ROGOWSKI AND MARK ROGOWSKI,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION

J. JOSEPH BAINTON*

JOHN GERARD MCCARTHY

BAINTON MCCARTHY LLC

26 Broadway

New York, New York 10004

(212) 480-3500

Counsel for Respondents

March 26, 2004 *Counsel of Record

ae

QUESTIONS PRESENTED FOR REVIEW

Are issues of federal preemption of state law implicated by

a court’s consideration of public policy as expressed in the

Lanham Act when deciding under principles of contract law

whether a provision in a contract of adhesion cannot be

enforced because it is unconscionable or void as against public

policy?

If preemption is implicated, does the Lanham Act preempt

application of the doctrine of licensee estoppel and “no

challenge” contract provisions with respect to certification

marks?

-ii-

PARTIES TO THE PROCEEDINGS

All Parties are listed in the caption.

Respondent M & M Packaging, Inc. is not a publicly held

company and does not have any parent company which is

publicly held. Respondent M & M Produce Farms & Sales is

a general partnership.

“Although not a party to this action, M & M Produce Farms and }

Sales, Inc., a New York corporation formed after this civil action

was commenced, has a financial interest in the outcome of this -

case due to its affiliation with Respondents Matthew Rogowski

and Mark Rogowski. It is not publicly held and does not have any

publicly held parent companies.

-i11-

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW

PARTIES TO THE PROCEEDINGS ................. 11

TABLE OF AUTHORITIES ........................ Vv

OPINIONS BELOW

JURISDICTION

STATUTES OR OTHER PROVISIONS INVOLVED .... 1

Drmeumenm: OF THE CASE ...... 2.6.5... c cece. l

A. Statutory Background ...................... l

B. Factual Background ....................... -

C. Proceedings Below ...................00007 7

REASONS FOR DENYING THE PETITION .......... 8

I. THE SECOND CIRCUIT’S DECISION IS BASED

ON CONTRACT LAW AND THUS DOES NOT

CONFLICT WITH PRECEDENT OF THIS COURT

OR OF ANY COURT OF APPEALS CONCERNING

oo 8

Il. THE DECISION BELOW IS NOT

INCONSISTENT WITH PRECEDENTS OF

OTHER COURTS CONCERNING LEAR AND

LANHAM ACT MARKS ..................... 1]

-1V-

Ill. THE IPC DID NOT PRESERVE THE QUESTION

PRESENTED FOR REVIEW BY THIS COURT ... 11

IV. PRACTICAL CONSIDERATIONS WARRANT

DENIAL OF THE PETITION ........----+-+++: 13

A. The Judgment From Which Review Is Sought

So rere ee er 13

B. The IPC Recently Appealed To the Ninth

Circuit A Final Judgment Which Brings Up

For Review An Order Following The Second

Circuit’s Decision

C.. The Dire Predictions Of The IPC And The Amici

Curiae Are Undercut By The Dearth Of Similar

Cases Since The 1989 Decision Of The Trademark

Trial and Appeal Board Rejecting Licensee

Estoppel For Certification Marks .........--- 16

D. It Is More Appropriate for Congress To Deal

With This Issue ............- 0c cc eeeeccees 17

6), ROC 6 | are eee 19

-V-

TABLE OF AUTHORITIES

CASES

American Angus Ass'n v. Sysco Corp.,

829 F. Supp. 807 (W.D.N.C. 1992)

American Auto. Ass'n v. National Auto. Ass'n.

127 U.S.P.Q. 423 (T.T.A.B. 1960)

Aronson v. Quick Point Pencil Co.,

440 U.S. 257 (1979)

Brotherhood of Locomotive Firemen v. Bangor &

~ Aroostock R. Co., 389 U.S. 327 (1967)

Community of Roquefort v. William Fehndirch. Inc.

303 F.2d 494 (2d Cir. 1962)

Delaware and Hudson Canal Co. v. Clark.

80 U.S. (Wall.) 311 (1871)

In re Florida Citrus Comm’n.

160 U.S.P.Q. 495 (T.T.A.B. 1968)

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co..

240 U.S. 251 (1916)

Illinois High School Ass'n v. GTE Vantage, Inc.,

99 F.3d 244 (7th Cir. 1996)

Intel Corp. v. Terabyte Int’l, Inc.,

6 F.3d 614 (9th Cir. 1993)

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Klos v. Polskie Lini Lotnicze,

133 F.3d 168 (2d Cir. 1997)... -- +++ sees errr res: Y

Lake v. Equitable Sav. & Loan Ass'n,

674 P.2d 419 (Idaho 1983) ..------ rrr 9,10

Lear v. Adkins, 395 U.S. 653 (1969) ..--- eee e ere? 11

Mazurek v. Armstrong, 520 U.S. 968 (1997)... +--+ +5 14

Midwest Plastic Fabricators, Inc. v. Underwriters Labs.,

Inc., 12 U.S.P.Q. 2d 1267 (T.T.A.B. 1989),

aff'd, 906 F.2d 1568 (Fed. Cir. a ae 16, 17

National Bd. for Certification in Occupational Therapy, Inc.

v. American Occupational Therapy Ass'n,

24 F. Supp. 2d 494 (D. Md. 1998) ...----- eect 16

New England Mutual Life Ins. Co. v. Caruso,

§35 N.E.2d 270 (N.Y. 1989) ...--eeeeecrecrree® 10

Northwestern Nat'l Ins. Co. v. Donovan, )

916 F.2d 372 (7th Cir. |. a ee ee a 8 :

Park ’N Fly, Inc. v. Dollar Park and Fly, Inc.,

469 U.S. 189 (1985) ..--- eee ere errr 3,4, 10

Potato Sales Co. v. Department of Agriculture,

| 92 F.3d 800 (9th Cir. 1996) ...-----e reer errr 6

Worlds Carpets, Inc. v. Dick Littrel’s New World Carpets,

438 F.2d 482 (Sth Cir. 1971) ..----e reer reece 3

-Vil-

STATUTES AND REGULATIONS

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28 U.S.C. § 1254

-Vili-

LEGISLATIVE HISTORY

Pub. L. 105-330, § 301, 112 Stat. 3070 (Oct. 30, 1998) .. 18

Hearing on H.R. 3119, A Bill “To Amend the Trademark Act

of 1946 with respect to the Dilution of Famous Mark”, and

an Oversight Hearing in a Federal Right of Publicity; State

Marketing-Order Commissions and Product Certifications;

International Expropriation of Registered Marks; and Patent

Extension Review Before the House Subcomm. on Courts

and Intellectual Property, 105" Cong. (May 21, 1998) .- . 18

REGISTERED MARKS

Raw, Mo. SUZ AID «25 ic ecw en ere ver ccsennerence 4n

Reg. No. 2,161,268 ......----eeeeee eee ree restr 2

Res, NO: 2,568,675 «<0 2s - seer erersesneenerneeeees 2

SCHOLARLY AUTHORITY

J. Thomas McCarthy, McCarthy on Ti rademarks and

Unfair Competition (4th ed. 2003) .....------ passim

OTHER AUTHORITY

Restatement (Second) of Contracts § 208 i ) ee 9

W0 hie CIAL R AS eile es Viars hs

RESPONDENTS’ BRIEF IN OPPOSITION

Respondents M & M Produce Farms & Sales (“M & M”’),

M & M Packaging, Inc., Matthew and Mark Rogowski

respectfully urge this Court to deny the petition for a writ of

certiorari to the United States Court of Appeals for the Second

Circuit filed by the Idaho Potato Commission (ine “TFC.

OPINIONS BELOW

Another opinion of the United States District Court for the

Southern District of New York in this case. its Apmnil 26, 2000

Memorandum and Order, is reported at 95 F. Supp. 2d 150

(S.D.N.Y. 2000). That memorandum and order did not address

licensee estoppel. An unreported memorandum and order of

the District Court dated June 11, 2002 is reproduced in the

appendix hereto. Resp. App. la-6a.

JURISDICTION

This Court has jurisdiction pursuant to 28 U.S.C. § 1254(1).

STATUTES OR OTHER PROVISIONS INVOLVED

Additional relevant portions of the Lanham Act, 15 U.S.C.

§§ 1051-1128, are reproduced at Resp. App. 7a-13a.

STATEMENT OF THE CASE

A. Statutory Background

The rights of a certification mark registrant differ

significantly from those of a trademark registrant. While a

trademark gives a specific producer of a product exclusive

nghts, a certification mark “must be made available without

discrimination to certify the goods .. . of any person who

2

maintains the standards or conditions which such marks

certifies.” Community of Roquefort v. William Fehndirch, Inc.

303 F.2d 494, 497 (2d Cir. 1962) (citation omitted). A

certification mark is intended to be used by a person other than

its owner while a “trademark” is used to identify and

distinguish a registrant’s own goods from those manufactured

or sold by others. 15 U.S.C. § 1127. Courts and commentators

uniformly note that a certification mark is “a special creature

created for a purpose uniquely different from that of an ordinary

service mark or trademark.” Jn re Florida Citrus Comm’n, 160

U.S.P.Q. 495, 499 (T.T.A.B. 1968); see also Midwest Plastic

Fabricators, Inc. v. Underwriters Labs., Inc., 12 U.S.P.Q. 2d

1267, 1270 n.6 (T.T.A.B. 1989) (noting differences between

certification mark and trademarks), aff’d, 906 F.2d 1568 (Fed.

Cir. 1990); 3 J. Thomas McCarthy, McCarthy on Trademarks

and Unfair Competition § 19:91, at 19-201 (4th ed. 2003).

When applying for registration on the Principal Register of

the United States Patent and Trademark Office (the “PTO”’), a

certification mark owner must designate what the mark

certifies. 3 McCarthy, supra § 19:92, at 19-205 (“applicant for

registration of a certification mark must specify . . . the

conditions under which the certification mark is used”); id. §

19:97, at 19-215 (reproduction of PTO Form 4.9 “Certification

Mark Application’’); Pet. at 26 (noting services that AAA Four

Diamond Award certifies and citing to Reg. No. 2,563,673);

Reg. No. 2,161,268 (noting that mark “certifies that the sailboat

and its sails strictly conform .. . to the official plans and

specifications of the [mark owner] for a ‘STAR CLASS’

yacht’). Once the mark is registered, its owner cannot refuse to

allow someone to use the marks other than failure of the goods

or services to meet the grounds for certification that was

designated in the application. 3 McCarthy, supra § 19:97, at

19-213 (“certifier cannot refuse to license the mark to anyone

on any ground other than the standard it has set’’).

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The Lanham Act prohibits registration of marks which are

primarily geographically descriptive. 15 U.S.C. § 1052(e)(2).

“Congress has expressly left accessible to all potential users

those names of subdivisions of the earth -- regions, nations,

counties, towns, rivers, lakes. and other natural and artificial

geographical units -- which could be employed to draw public

attention to the origin of a product or the situs of a business.”

Worlds Carpets, Inc. v. Dick Littrel’s New World Carpets, 438

F.2d 482. 485 (Sth Cir. 197] ); see also Delaware and Hudson

Canal Co. v. Clark. 80 U.S. (Wall.) 311, 324 (1871) (“it is

obvious that the same reasons which forbid the exclusive [use]

of generic names of those merely descriptive of the article

manufactured and which can be employed with truth by other

manufacturers, apply with equal force the appropriation of

geographical names, designated districts of country’’).

Congress carved out one exception to the prohibition against

registration of geographically descriptive terms — marks

certifying origin. AS U.S.C. § 1052(e)(2).

Once a mark is registered upon the Principal Register, its

Owner receives many new rights under the Lanham Act. See

Park 'N Fly, Inc. v. Dollar Park and F. ly, Inc., 469 U.S. 189,

i 193-94 (1985) (discussing nghts conferred by Lanham Act on

federally registered marks). The certificate of registration is

“prima facie evidence of the validity of the mark and of the

registration of the mark, of the registrant’s ownership of the

: mark, and of the registrant’s exclusive ri ght to use the registered

mark.” 15 U.S.C. § 1057(b). Congress provided that under

; certain conditions the right to use a mark can become

“incontestable.” 15 U.S.C. § 1065. Once a mark becomes

incontestable, the registration is conclusive proof of the mark’s

validity and the registrant’s right to use it. 15 U.S.C. § 11] 15(b);

Park ‘N Fly, 469 U.S. at 194. Congress snccifically provided

that a certification mark registration can be cancelled at any

time for four enumerated reasons. 15 U.S.C. § 1064(5).

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4

Congress also provided for cancellation at any time of the

registration of any mark if it becomes the generic name for the

goods or services. 15 U.S.C. § 1064(3); Park 'N Fly, 469 U.S.

at 194: see Illinois High School Ass'n v. GTE Vantage, Inc., 99

F.3d 244, 247 (7th Cir. 1996) (Posner, J.) (discussing generic

marks including “thermos” and “aspirin”); 2 McCarthy, supra

§ 12.1, at 12-6 to 12-7.

B. Factual Background

In 1937. Idaho growers and produce shippers established the

IPC to advertise fruits and vegetables grown in Idaho. The

Idaho legislature granted their association the statutory nght to

tax growers. Eventually, the IPC became a self-governing

agency of the State and focused solely on potatoes. It spends

more than half its $10 million annual budget advertising Idaho

potatoes. (Pet. App. 86a: id.24a.)

In 1956, the IPC obtained its first registration for a

certification mark on the PTO’s Principal Register for a

circular seal within which is an outline map of Idaho and

“Grown in Idaho.” (See Pet. App. 45a.) This mark certifies the

“regional origin of produce. ’ In January 1966, the IPC obtained

a registration from the PTO for the word mark “IDAHO” in

connection with potatoes and onions certifying that “goods so

marked are grown in the State of Idaho.” (Pet. App. 45a.) The

IPC has since obtained three additional federal registrations for

| The lower courts erroneously reported that this registration was

for “the word ‘IDAHO’ in its distinctive font.” (Pet. App. 22a; id.

3a.) The Petition contains the same error (Pet. at 6), but in the

District Court the IPC contended that this mark was the word in any

form and the Certificate of Registration does not refer to a distinctive

font. See Reg. No. 802,418 (Jan. 18, 1966).

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5

stylized certification marks to be used to certify regional origin

of potatoes grown in Idaho. (Pet. App. 45a-46a.)

Potatoes come in several different varieties. Russet is the

most famous variety of Idaho potato. Russet potatoes are

grown in a number of states. The IPC contends that consumers

perceive Russets from Idaho as being the “Cadillac” of baking

potatoes. (Pet. App. 23a.)

The IPC’s uses its certification marks to control ti ghtly the

Idaho potato industry throughout the United States.

Under the IPC’s regulations, every Idaho potato

grower must be licensed, and must place the Idaho

mark upon containers and shipping documents for

its harvest; no Idaho potato may leave the State of

Idaho without the certification mark; every packer

and shipper of Idaho potatoes must be licensed;

every out-of-state purchaser of Idaho potatoes must

be licensed to use the [certification] marks and

every repacker and reseller who purchases Idaho

potatoes in bulk from a licensed out-of-state vendor

must also be licensed.

(Pet. App. 24a-25a:) The IPC checks a potential licensee’s

credit and background. The IPC also imposes other

requirements that do not have anything to do with certifying the

regional origin of potatoes. The IPC’s license agreements are

pre-printed forms, which are not subject to negotiation but

instead are offered on a “take it or leave it” basis.

The Unites States Department of Agriculture (the “USDA”)

comprehensively regulates the produce industry pursuant to the

Perishable Agricultural Commodities Act (“PACA”). 7 U.S.C.

§§ 499a-499t. The USDA requires produce packers to have a

6

PACA license. 7 C.F.R. § 46.3 (2003). The loss of a PACA

license spells the demise of a produce packer. The USDA may

revoke a PACA license if a packer has materially and

knowingly engaged in misbranding, i.e., incorrectly identified

the origin or variety of produce. 7 U.S.C. § 499b(5); 7 C.F.R.

§ 46.45 (2003); see Potato Sales Co. v. Department of

Agriculture, 92 F.3d 800 (9th Cir. 1996) (USDA properly

sanctioned seller of New Zealand apples packaged as

Washington apples). The USDA, not the IPC, inspects and

certifies potatoes leaving Idaho for sale elsewhere in the United

States. :

A packer may lawfully pack and sell Russet potatoes grown

in different states in consumer size bags that describe the

contents as “russet potatoes.” Jd. The prices packers pay for

Idaho potatoes are occasionally cheaper than the prices they pay

for the same variety from other states. The IPC’s regulations,

however, prohibit packers from obtaining Idaho potatoes to

fulfill generic orders for potatoes.

M & M, including M & M Packaging, is a small family

business devoted mainly to growing labor intensive root crops,

but not potatoes, on a small farm in upstate New York. These

crops are seasonal, so M & M also repacks potatoes to stay in i

business throughout the year. M & M has a PACA license. 4

In order to repack potatoes from Idaho, M & M entered into

a licensing agreement with the IPC. No negotiation took place

between M & M and the IPC concerning the terms of the

license. While M & M was an IPC licensee, it would purchase

potatoes in bulk from licensed Idaho potato vendors and would |

repackage those potatoes into five-pound bags bearing one or

more of the IPC’s certification marks. M & M’s largest

customer for its packing business was G&T Terminal

Packaging Inc. (“G&T”), a reseller of produce and an IPC

5

licensee. G&T’s primary customer base is supermarket chains,

which are sophisticated and experienced customers for produce.

G&T in essence used “M & M as an agent or independent

contractor to repack G&T’s potatoes in five pound bags with

G&T’s name on them as seller and then deliver the potatoes to

various customers of G&T, returning the delivery tickets to

G&T.” (Pet. App. 29a.)

In February 1995, the IPC revoked M & M’s license when

M & M was unable to produce certain of its records which had

been destroyed in a fire 18 months earlier. (Pet. App. 30a: see

also Resp. App. 4a-5a.) Since the IPC revoked M & M’s

license to use the certification marks, it has continuously denied

M & M’s requests to use them.

On two occasions during the pendency of this action,

M & M’s orders for rail cars of Idaho potatoes were cancelled.

The sellers told M & M that the IPC had ordered them not to

sell Idaho potatoes to M & M. In one case, the rail cars had

already reached New York State and M & M had already paid

the freight charges. As a result of M & M’s inability to obtain

bulk quantities of Idaho potatoes to fulfill orders, G&T began

having its five-pound bags packed in Idaho.

C. Proceedings Below

1. The District Court upheld the IPC’s licensee estoppel

position early during the pre-trial proceedings and dismissed

M & M’s counterclaims for cancellation of the various

certification marks. The parties did not conduct discovery

concerning those claims.

Throughout the district court proceedings, the IPC primarily

contended that M & M had sold misbranded or counterfeit

potatoes. (See Pet. App. 77a, n.6.) The jury concluded that the

8

IPC did not prove that M & M had sold as Idaho potatoes.

potatoes not grown in Idaho, a conclusion that the District

Court described as “inescapable.” (Pet. App. 32a; id. 34a-35a;

Resp. App. 2a & 4a.) The IPC nonetheless continued to deny

M & M and M & M Packaging a license to use the ‘ idaho”

certification mark, and the District Court denied Respondents’

post-trial application for a mandatory injunction compelling the

IPC to grant a license to them. (Resp. App. 5a-6a.)

2. Respondents urged the Second Circuit not to enforce the

no challenge provision based on legal principles applicable to

contracts of adhesion, containing terms that are unconscionable

or against public policy.

REASONS FOR DENYING THE PETITION

I. THE SECOND CIRCUIT’S DECISION IS BASED

ON CONTRACT LAW AND THUS DOES NOT

CONFLICT WITH PRECEDENT OF THIS

COURT OR OF ANY COURT OF APPEALS

CONCERNING PREEMPTION

Although not explicitly stated in its opinion, the Second

Circuit based its decision that the no challenge provision of the

license agreement is unenforceable on general principles of

contract law because it is a term in a contract of adhesion that

violates public policy and is unconscionable. A contract of

adhesion is one “that is offered by the authoring party on a take

it or leave it basis, rather than being negotiated between the

parties.” Northwestern Nat’! Ins. Co. v. Donovan, 916 F.2d

372, 377 (7th Cir. 1990). The IPC’s license agreement was

(and is) offered to potential licensees on such a “take it or leave

it” basis. Agreeing to the terms of that contract is the exclusive

means by which a merchant can use the IPC’s certification

marks indicating truthfully the Idaho ongin of its potatoes. The

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9

IPC has also established a system to prevent out-of-state

packers from obtaining fresh potatoes from Idaho in bulk

quantities unless they agree to the terms of that contract. The

terms of the license agreement are and were non-negotiable. In

order to use the marks a potato packer has no choice but to

agree to sign the IPC license and purportedly by doing so to

surrender the night to ever challenge the validity of them. ‘The

concept of adhesion contracts . . . is a notion evolved from

public policy that refused to enforce a contract provision when

it offends basic notions of civility and fair play.” Klos v.

Polskie Lini Lotnicze, 133 F.3d 164, 168-69 (2d Cir. 1997): see

also Lake v. Equitable Sav. & Loan Ass'n. 674 P.2d 419. 423

(Idaho 1983) (noting that under Idaho law contract provisions

may be unenforceable as against public policy) .

A court may refuse to enforce the contract. or may enforce

it without the unconscionable term, or may limit the application

of any unconscionable term to avoid an unconscionable result

where a contract or term is unconscionable at the time the

contract is made. Restatement (Second) of Contracts § 208

(1981). A determination of unconscionability is made in light

of the contract’s setting, purpose and effect, considering

whether there is gross disparity in the exchange and gross

inequality of bargaining power with terms unreasonably

favoring the stronger party. /d. cmts. a,c & d. In determining

whether a contract of adhesion is unconscionable, one factor to

consider is whether the ‘‘coerced” party had any alternatives.

Klos, 133 F.3d at 169 (citing Carnival Cruise Lines. Inc. v.

Shute, 499 U.S. 585, 594-95 (1991)). In this case, M & M was

a “coerced” party because it did not _have any alternative other

than signing the IPC’s license agreement if it wanted to

purchase in bulk potatoes grown in Idaho and apply the IPC’s

certification marks (including the word “Idaho”) to packages

containing Idaho-grown potatoes. The one-sided license

agreement essentially provided that the IPC, and only the ir,

10

could terminate the agreement and/or pursue other remedies for

an alleged breach. It further included the estoppel provision.

The Second Circuit, in determining whether the estoppel

provision subverts the public policies underlying the Lanham

Act. properly balanced the policy at issue and the degree to

which that policy is undermined by enforcement of the contract

against the public interest in seeing private agreements

enforced. See New England Mutual Life Ins. Co. v. Caruso,

535 N.E.2d 270 (N.Y. 1989); Lake, 674 P.2d at 423. The

policies underlying the Lanham Act, encouraging competition,

are completely undermined by the estoppel provision of the

IPC’s license agreement. Park ‘N Fly, 469 U.S. at 193

(‘Because trademarks desirably promote competition, and the

maintenance of product quality, Congress determined that ‘a

sound public policy requires that trademarks receive nationally

the greatest protection that can be given them.’”); Intel Corp.

v. Terabyte Int'l, Inc., 6 F.3d 614, 618 (9th Cir. 1993)

(explaining policy concerns sought to be furthered by Lanham

Act).

Congress determined that public policy requires that

certification marks can be cancelled at any time “on the ground

that the registrant . . . discriminately refuses . . . to continue to

certify the goods or services of any person who maintains the

standards or conditions which such mark certifies.” 15 U.S.C.

§ 1064(5)(D). The estoppel provision precludes the entire class

of persons who would be likely to challenge the IPC’s

certification marks on this ground from doing so, thereby

frustrating the policies embodied in the Lanham Act. In fact,

the T.T.A.B. has suggested that only persons who have been

refused certification after meeting the prescribed standards have

standing to seek cancellation of a certification mark. See

American Auto. Ass'n v. National Auto. Ass'n, 127 U.S.P.Q.

423, 427-28 (T.T.A.B. 1960); 3 McCarthy, supra § 20:61, at

)

1]

20-116. The practical result of the IPC’s form contract is the

removal of the IPC from the purview of the Lanham Act.

providing the IPC with free reign to act in whatever manner it

chooses without fear of reprisal for its illegal conduct. When

weighed against the public interest in seeing contracts enforced.

the balance tips decidedly in favor of holding the estoppel

provision unenforceable as a matter of contract law.

I]. THE DECISION BELOW IS NOT INCONSISTENT

WITH PRECEDENTS OF OTHER COURTS

CONCERNING LEAR AND LANHAM ACT MARKS

The Second Circuit correctly noted that the question

resolved by its decision had “not yet been squarely decided by

any federal circuit court.” (Pet. App. 8a.) First, no other Court

of Appeals has analyzed the applicability of the law governing

contracts of adhesion to certification marks. Second. no other

Court of Appeals has addressed the applicability of the licensee

estoppel doctrine to certification marks. As discussed earlier,

the Lanham Act differentiates certification marks from

trademarks in many key aspects. It is the very nature of the

certification mark, the requirement of “compulsory licensing,”

which prevents the doctrine of licensee estoppel from being

applicable to certification marks.

Ill. © THEIPC DID NOT PRESERVE THE QUESTION

PRESENTED FOR REVIEW BY THIS COURT

Before the Second Circuit, the IPC contended that the Lear,

Inc. v. Adkins, 395 U.S. 653 (1969), decision did not apply

solely because in this case there was an express contractual

provision while Lear involved an implied contractual term.

(See Pet. App. 12a (“IPC maintains that the Lear balancing test

is inapplicable because unlike the contract in Lear, which was

silent concerning the rights of the licensee to challenge the

12

patent. the contract signed by M & M specifically precluded M

& M from challenging the IPC’s marks.”).) The IPC’s brief did

not even cite to this Court’s opinion in Aronson v. Quick Point

Pencil Co., 440 U.S. 257 (1979). The IPC also did not ask the

Second Circuit to consider the issue as one of federal

preemption of state contract law, but chose instead to permit the

Second Circuit to address the issue as one involving M & M’s

claim that the IPC license agreement was a contract of adhesion

and unenforceable as a matter of state law.

After the Second Circuit issued its opinion, the IPC

petitioned for en banc rehearing. Once again, the IPC did not

mention Aronson or preemption. In its rehearing petition, the

IPC described the prior case law as holding “that there is a basis

for refusing to enforce a provision in a trademark-related

contract, but, only if the provision violates the public policy

behind trademark law of preventing confusion to the public.”

(Idaho Potato Commission’s Petition for En Banc Rehearing 9,

Idaho Potato Comm’nv.M & M Produce Farms & Sales, Nos.

02-7792 (L) & 02-7818 (XAP) (July 25, 2003).) Referring to

what it then perceived to be the test annunciated by the pnor

case law, the IPC told the Second Circuit that it had

no objection to this test being applied to the instant

case. Indeed, it is the only test that should be

applied.

(Jd. (emphasis added).) The IPC complained only about the

panel’s view that the appropriate policy expressed in the

Lanham Act is “free and open competition among producers

and distributors of the certified product” rather than prevention

of consumer confusion. (/d. at 13.) Having told the Second

Circuit that one test applied, the IPC should not now be heard

that a different one applies.

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13

IV. PRACTICAL CONSIDERATIONS WARRANT

DENIAL OF THE PETITION

A. The Judgment From Which Review Is Sought Is Not

Final

The District Court’s August 26, 1998 decision that M & M

could not challenge the validity of the IPC’s certification marks

was rendered before Respondents had an Opportunity to conduct

discovery on the issues relevant to their counterclaims.

In August 1998, Majestic Produce Corp. was a party in one

of the consolidated actions and was clearly not bound by license

estoppel from pursuing cancellation of the IPC’s marks. (Pet.

App. 71a.) In considering the grounds for cancellation --

including a challenge of the right of a certification mark owner

to require a license agreement before its mark can be used -- the

District Court identified areas that would need further

development of the facts before trial. (Pet. App. 82a - 83a; id.

88a; id. 92a; id. 95a.) After that decision, the parties and the

court spent a significant amount of time addressing the IPC’s

assertion of Eleventh Amendment immunity and applicability

of the State Action Doctrine. See Jdaho Potato Comm'n v. M

& M Produce Farms & Sales, 95 F. Supp. 2d 150, 151-54

(S.D.N.Y. 2000), aff'd sub nom., Hapco Farms, Inc. v. Idaho

Potato Comm'n, 238 F.3d 468 (2d Cir. 2001 ). By then,

Majestic Produce had filed for bankruptcy and no discovery

took place on the issues raised by the claims seeking

cancellation of the marks. Obviously, the trial in this action did

not involve any issue concerning the validity of the IPC’s marks

or whether they should be cancelled. Accordingly, the parties

have not had an opportunity to develop a complete record in the

case for the Court to review. The IPC essentially asks this

Court to become involved in the pleading stage of this issue.

14

This Court has repeatedly expressed its reluctance to.

exercise its certiorari jurisdiction to review interlocutory

judgments of the courts of appeals. See, e.g.. Brotherhood of

Locomotive Firemen v. Bangor & Aroostock R. Co., 389 U.S.

327. 328 (1967) (“because the Court of Appeals remanded the

case. it is not yet ripe for review by this Court”): Hamilton-

Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 258 (1916)

(“except in extraordinary cases. the wnit is not issued until final

decree”); see also Mazurek v. Armstrong, 520 U.S. 968, 975

(1997) (noting exception to general rule because Court of

Appeals’ judgment was both “clearly erroneous” and produced

“immediate consequences” in form of injunction against State

of Montana).

The Second Circuit’s decision is not clearly erroneous and

it has no immediate consequences. The Court should decline

the IPC’s request to forgo its usual practice of awaiting a final

judgment before exercising certiorari jurisdiction.

B. The IPC Recently Appealed To the Ninth Circuit A

Final Judgment Which Brings Up For Review An

Order Following The Second Circuit’s Decision

The IPC commenced a civil action against M & M’s largest

customer, G&T, in the United States District Court for the

District of Idaho concerning G&T’s use of M & M to repack its

Idaho potatoes.” That lawsuit involved some of the very same

potatoes which were the subject of this action, so G&T

intervened in this actiom—Like M & M, G&T asked the New

2 The docket sheet for that case, State of Idaho Potato Comm'n v.

G&T Terminal Packaging, Inc., Case No. CIV 98-0088-S-DOC, is

available through the Idaho federal courts’ website,

—. _ http://www.id.uscourts.gov, which also contains links to imaged

| copies of the documents in the court’s file.

15

York court to cancel the IPC’s certification marks. Eventually.

the distnct court dismissed G&T’s intervention complaint.

On June 27, 2002. the Idaho district court granted summary

judgment to the IPC for breach of contract damages arising

from G&T’s efforts to cancel the IPC’s certification marks.

G&T filed a motion for reconsideration based on the Second

Circuit’s decision below. The Idaho district court held:

In sum. G&T has met its burden of showing a

change of law of a strongly convincing nature to

persuade the Court to reverse its prior decision. The

June 27 Order was entirely premised upon a New

York District Court Order which has been reversed

by the Second Circuit. The Second Circuit held that

G&T was not contractually estopped from

challenging the validity of the IPC’s license

agreement. While recognizing that the Second

Circuit’s decision is not binding on this Court, the

Court finds the reasoning and conclusion of the

Second Circuit decision applicable and persuasive.

Accordingly, G&T’s counterclaim against IPC in

New York District Court, challenging the IPC’s

licensing nie ements did not constitute a breach of

contract.

Order Granting Defendant’s Motion for Reconsideration and

Vacating June 27 Order, 12-13, The State of Idaho Potato

Comm'n v. G&T Terminal Packaging, Inc., Case No. Civ 98-

0088-S-DOC (D. Id. Oct. 24, 2003).

On March 17, 2004, the IPC filed a timely appeal to the

United States Court of Appeals for the Ninth Circuit from the

final judgment entered in the Idaho district court. In its Notice

of Appeal, the IPC specifically referred to the October 24, 2003

16

Order as one of the orders for which it intends to seek review by

the Ninth Circuit. This Court should deny the petition in this

case because the Second Circuit’s judgment is not final and the

IPC will shortly have the opportunity to present the question to

the Ninth Circuit on a fully developed record.

C. The Dire Predictions Of The IPC And The Amici

Curiae Are Undercut By The Dearth Of Similar

Cases Since The 1989 Decision Of The Trademark

Trial and Appeal Board Rejecting Licensee Estoppel

For Certification Marks

The IPC and the amici curiae predict that the Second

Circuit’s decision will result in a dramatic increase in litigation

over the validity of certification marks. The IPC further claims

the certification marks owners, which it describes as being

mainly “government entities with limited budgets (like [itself])

or non-profit organizations,” will be hampered by the expense

and risk of defending such claims. (Pet. at 26.) Both

arguments are wrong.

First, it has been almost fifteen years since the Trademark

Trial and Appeal Board held that “there can be no license

estoppel involving a certification mark because of the unique

character of a certification mark and the basic difference in

concept between a certification mark . . . and a trademark.”

Midwest Plastic Fabricators, 12 U.S.P.Q.2d at 1270 n.6. The

T.T.A.B.’s decision is addressed in the leading treatise on

United States trademark law. 2 McCarthy, supra, § 18.63 at 18-

116.4; id., § 19:92, n.6. Despite the passage of so much time,

no other court has issued a reported decision directly on point.

Cf National Bd. for Certification in Occupational Therapy, Inc.

v. American Occupational Therapy Ass'n, 24 F. Supp. 2d 494,

501 (D. Md. 1998) (holding licensee estoppel not applicable

because agreement was “more a distribution agreement than a

17

traditional ‘license’”). With the exception of the case before

this Court and the related case involving G&T, the record is

devoid of any other case involving these same issues since

Midwest Plastic Fabricators.

Second, the record in this case concerning the financial

positions of the parties does not support the IPC’s contentions.

The IPC has a $10 million annual budget and has spent more

than $1 million prosecuting this case. On the other hand.

Respondents are family farmers who earned a profit of less than

$42.000 packing Idaho potatoes in bags on which Respondents

used the IPC’s marks without its permission.’ The economic

incentive here to challenge the IPC’s marks are unique because

no competing certification mark owner exists and the IPC has

used its marks to prevent out-of-state packers like M & M from

being able to buy potatoes from Idaho in bulk. Moreover,

because the IPC claims all nghts to use the word “Idaho” in

connection with potatoes, Respondents cannot pack Idaho

potatoes (the supposed “‘Cadillac” of baking potatoes) without

the IPC’s blessing. By way of contrast, the “CERTIFIED

ANGUS BEEF” certification mark does not prevent a butcher

from selling Angus Beef. See American Angus Ass'n v. Sysco

Corp., 829 F. Supp. 807, 825-26 (W.D.N.C. 1992).

D. It Is More Appropriate for Congress To Deal With

This Issue

Congress has specifically provided that certification marks,

unlike trademarks, are subject to cancellation at any time on

four designated grounds. The IPC’s license agreement has the

> Following the trial, however, the District Court found that “the

record at trial . . . does not provide the IPC with an excuse for not

granting M & M a license.” (Resp. App. Sa.)

18

effect of overriding Congressional intent as expressed in the

Lanham Act with respect to the only class of persons with any

real incentive to pursue cancellation if a certification mark

owner discriminately refuses to continue to certify their

conforming goods.” If the burdens imposed by Section 13(5)

are too onerous for certification mark owners like the IPC.

Congress, not this Court, is the appropriate body to remedy the

situation. In 1999, Congress amended this section by adding

the last paragraph clarifying the meaning of one of the four

enumerated grounds for cancellation. Pub. L. 105-330, § 301.

112 Stat. 3070 (Oct. 30, 1998). That paragraph was added at

the urging of the IPC in response to arguments made by

Respondents in the District Court. See Hearing on H.R. 3119,

A Bill ‘‘To Amend the Trademark Act of 1946 with respect to

the Dilution of Famous Mark”, and an Oversight Hearing in a

Federal Right of Publicity; State Marketing-Order

Commissions and Product Certifications; International

Expropriation of Registered Marks; and Patent Extension

Review Before the House Subcomm. on Courts and Intellectual

Property, 105" Cong. (May 21, 1998) (statement of Patrick J.

Kole, Vice President of Legal and Governmental Affairs, Idaho

Potato Commission). This issue presents competing policy

issues which are best addressed by Congress. This Court

should therefore deny the IPC’s petition.

* As discussed earlier, some knowledgeable in trademark law

suggest that this very class would be the only one with standing to

seek cancellation on this ground. 3 McCarthy, supra § 20:61, at 20-

116; see American Auto Ass’n, 127 U.S.P.Q. at 427.

CONCLUSION

For the foregoing reasons. the petition for a writ of certiorari

should be denied.

Respectfully submitted,

J. JOSEPH BAINTON”

JOHN GERARD MSCARTHY

BAINTON MSCARTHY LLC

26 Broadway

New York, New York 10004

(212) 480-3500

Counsel for Respondents

March 26, 2004 * Counsel of Record

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APPENDIX

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

97 Civ. 8125 (CLB)

IDAHO POTATO COMMISSION,

Plaintiff,

-against-

M&M PRODUCE FARMS & SALES

d/b/a M&M PRODUCE, M&M PACKAGING, INC.,

MATTHEW J. ROGOWSKI, and MARK ROGOWSKI,

Defendants.

Memorandum and Order

Brieant, J., \

On May 14, 2002, the Court issued a_ post-trial

Memorandum & Order, Findings of Fact and Conclusions of

Law (“Memorandum”), in which it ordered the parties to this

litigation to submit a proposed final judgment in this

certification mark infringement lawsuit. Plaintiff Idaho Potato

Commission (“IPC”) submitted a proposed Notice of

Settlement and a proposed Judgment, both dated May 29, 2002,

which Defendants M&M Produce Farms & Sales d/b/a M&M

Produce, M&M Packaging Inc., Matthew Rogowski and Mark

Rogowski (“M&M” collectively) oppose as to its form and

2a

content. For the reasons set forth below, this Court adheres to

its conclusions in the May 14, 2002 Memorandum and orders

the Clerk of the Court to enter final judgment in this lawsuit

consistent with this Memorandum and Order and all pnor

orders and proceedings.

The issues before the Court in this litigation are (i) whether

Defendants M&M _ infringed IPC’s registered certification

marks, and (ii) whether the acts of Defendants M&M deceived

another person as to the origin of the potatoes M&M sold. See

15 U.S.C. § 1114 and § 1125(a). To resolve these issues, this

Court supervised four years of pre-trial litigation terminated by

a jury trial. On February 26, 2002, the jury returned a Special

Verdict, in which it determined that, with respect to each

Defendant, the IPC proved by a preponderance of the credible

evidence that during the period September 1, 1995 through

April 30, 2001, Defendants sold genuine Idaho grown potatoes

in bags labeled with the IPC’s certification marks for Idaho

grown potatoes without the consent of the IPC. As prompted by

the Special Verdict Form, the jury then found that Defendants

had earned $41,962.00 from such transactions. The jury also

found that, with respect to each Defendant, the IPC had not

proved by a preponderance of the credible evidence that during

the relevant period Defendants had sold as Idaho potatoes,

potatoes not grown in Idaho (misbranded potatoes).

It was the theory of Plaintiff's case that Defendants sold

misbranded potatoes in bags labeled with the certification

marks. Because of a failure of proof at trial, it now appears that

the potatoes sold were genuine, although Defendants may well

have been unlicenced.

By its post trial Memorandum dated May 14, 2002, the

Court concluded that the Clerk of the Court shall enter

judgment against Plaintiff on Counts II and III of its Amended

Complaint dated June 12, 1998, the federal claims for

3a

trademark dilution and false designation of origin under 15

U.S.C. § 1125(a) and (c); based on the jury’s conclusion that

the IPC failed to prove that M&M had falsely labeled bags of

non-Idaho potatoes with the IPC certification mark. See

Memorandum May 14, 2002 at 13. The Court reached the same

conclusion with respect to Counts IV through VII, the

corresponding state law claims. The Court adheres to this

decision.

With respect to Count I of the Amended Complaint, the

federal infringement claim under 15 U.S.C. § 1114, the Court

concluded in its Memorandum that the jury verdict, which

found that M&M had earned $41,692.00 in profits should be

vacated, because the evidence bearing on this issue does not

sustain the right to recover monetary damages in that amount.

See Memorandum at 13. This Court held that as a matter of law,

M&M was not liable to the IPC for damages because the [PC’s

certification mark rights required that it grant a license to re-

sellers of genuine Idaho potatoes. Because the jury concluded

that the IPC had failed to prove that M&M had sold counterfeit

potatoes, no damages can be awarded simply because

Defendants failed to seek a license and pay the licensing fees.

The Court upheld the IPC’s right to enforce its licensing

scheme, and therefore, determined that injunctive relief would

be appropriate to enjoin M&M from selling genuine Idaho

potatoes using the certification mark in the future without a

license.

The IPC now requests the Court to revisit this issue,

predicting that its effect will be catastrophic upon all

certification mark licensing schemes. Specifically, the IPC

contends that no incentive remains for a purchaser, packer,

seller, reseller or repacker ever to obtain an IPC license and pay

a licensing fee because the IPC has no recourse if a party uses

its certification mark without a license.

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The Court disagrees. First, the Court has upheld and

continues to recognize the validity of the certification mark

owner's license requirement, as well as a certification mark

owner’s right to ensure the genuine origin of goods labeled with

its mark through licensing fees, marketing and advertising, and

periodic audit and inspection. In its Memorandum, this Court,

bound by the ruling of our Court of Appeals in Community of

Roquefort v. William Faehndrich, Inc., 303 F.2d 494, 497 (2d

Cir. 1962), simply reaffirmed the obligation of a certification

mark owner to grant its license to those who sell a genuine

product. Here, the jury determined that the IPC failed to prove

that M&M sold counterfeit potatoes from September 1, 1995

through April 30, 2001. Without more evidence that M&M was

engaging in counterfeit sales, the IPC, by virtue of its status as

a certification mark owner, did not have the right to recoup the

profits of M&M from sale of genuine Idaho potatoes. In the

entry of Judgment, any court is bound by the trial record of the

issues as actually litigated. The entire focus of plaintiff's proof

of damages was addressed to misbranded potatoes. As to any

such sales, recovery of profits would have been an appropriate

measure of damages. There were none. Perhaps, had it chosen

to do so, Plaintiff could have presented to our jury an alternate

theory of damages, if, as turned out to be the case, the offense

of Defendants was not misbranding, but simply failure to take

a license for the repacking of genuine Idaho potatoes. In such a

situation, the damages would at most be the withheld fees, plus

the reasonable costs of obtaining an injunction against further

violation. For obvious reasons of trial tactics, Plaintiff did not

present an alternative damage theory in the event the jury found,

as it did, that the misbranding claim failed. Having so tried the

case, Plaintiff may not now reopen the record to present another

theory of damages to fit the facts as found.

In any event, the Court need not reach the issue of whether

certification mark infringement occurs in the case of a former

licensee who continues to sell genuine product, post-revocation

Sa

of a certification mark license agreement. A prior licensee

enjoys some protection when selling genuine products without

_ a license because no fraud is perpetrated upon the consuming

public: the product is what it purports to be, and the consumer

pays for what it gets. See Memorandum of May 14, 2002 at 18.

The IPC contends that it revoked M&M’s license in

February 1995 because M&M failed to keep adequate records.

M&M contended during trial that the required records were

destroyed during a warehouse fire, and thus it failed to comply

with the document requirements of the IPC license. The jury

was not asked by either side to determine whether this

testimony about the fire, easily verifiable, was true, but here

was no contrary evidence concerning the destruction of

Defendants’ records. This testimony is entitled to a

presumption of regularity by this Court and the record at trial

therefore does not provide the IPC with an excuse for not

granting M&M a license.

Based on the jury’s finding and the law in this Circuit with

respect to certification marks, the Court concludes that liability

in the form of money damages for certification mark

infringement will not lie on this trial record, in which the

quantum of such damages could have been litigated, but for

tactical reasons was not, nor may profits be recovered as

damages in any case where the certification mark licensor

denies a license to the seller of a genuine product. Equitable

relief is the appropriate remedy in such a case. A court may

order the seller enjoined from such sales without a license, but

will not award the licensor damages for infringement where it

unlawfully refused to grant a license. The availability of

equitable relief avoids rendering meaningless all certification

mark licensing schemes, as now predicted by the IPC.

In various letter briefs, the latest of which is dated June 10,

2002, Defendants ask this Court to “enter a mandatory

; 6a

injunction” compelling IPC, in effect, to license the Defendants.

This application is denied without prejudice. The issue was not

litigated in this case, and it is time for this Court to bring this

case to an end. In passing, we are somewhat surprised that

having been unjustly accused of serious wrongdoing by the IPC,

Defendants apparently desire to enter into a relationship with

IPC’s present management to become a licensed reseller of

Idaho potatoes, and to use this Court’s equitable powers, rather

than arms length negotiation, to achieve such a result. While

Idaho potatoes enjoy a certain cachet and command a market

premium, there are other fine russet baking potatoes, just as

there are blue cheeses other than Roquefort, and the right to

repack them seem hardly the key to happiness. A license

arrangement compelled by a court is likely to lead to frequent

visits of high priced auditors to the Rogowski homestead.

Conclusion

It is time for this litigation (more than 300 separate docket

entries over four and one-half years) to come to an end in this

Court. No more papers or letter are to be filed except for

Notices of Appeal.

A judgment has been signed.

SO ORDERED.

Dated: White Plains, New York

June 11, 2002

CHARLES L. BRIEANT

Charles L. Brieant, U.S.D.J.

7a

15 U.S.C. § 1052(e)(2). Trademarks registrable on

principal register; concurrent

registration

No trademark by which the goods of the applicant may be

distinguished from the goods of others shall be refused

registration on the principal register on account of its nature

unless it—

* * *

(e) Consists of a mark which . . . (2) when used on or in

connection with the goods of the applicant is primarily

geographically descriptive of them, except as indications of

regional origin may be registrable under section 1054 of this

Hie ....

(July 5, 1946, ch. 540, title I, Sec. 2, 60 Stat. 428; Pub. L. 87-

772, Sec. 2, Oct. 9, 1962, 76 Stat. 769; Pub. L. 93-596, Sec. 1,

Jan. 2, 1975, 88 Stat. 1949; Pub. L. 100-667, title I, Sec. 104,

Nov. 16, 1988, 102 Stat. 3937; Pub. L. 103-182, title III, Sec.

333(a), Dec. 8, 1993, 107 Stat. 2114; Pub. L. 103-465, title V,

Sec. 522, Dec. 8, 1994, 108 Stat. 4982; Pub. L. 105-330, title II,

Sec. 201(a)(2), (12), Oct. 30,-1998, 112 Stat. 3069, 3070; Pub.

L. 106-43, Sec. 2(a), Aug. 5, 1999, 113 Stat. 218; Pub. L. 106-

113, div. B, Sec. 1000(a)(9) [title IV, Sec. 4732(b)(1)(B)], Nov.

29, 1999, 113 Stat. 1536, 1501 A-583.)

15 U.S.C. § 1057(a)&(b). Certificates of registration

(a) Issuance and form

Certificates of registration of marks registered upon the

principal register shall be issued in the name of the United

States of America, under the seal of the Patent and Trademark

Office, and shall be signed by the Director or have his signature

placed thereon, and a record thereof shall be kept in the Patent

and Trademark Office. The registration shall reproduce the

8a

mark, and state that the mark is registered on the principal

register under this chapter, the date of the first use of the mark,

the date of the first use of the mark in commerce, the particular

goods or services for which it is registered, the number and date’

of the registration, the term thereof, the date on which the

application for registration was received in the Patent and

Trademark Office, and any conditions and limitations that may

be imposed in the registration.

(b) Certificate as prima facie evidence

A certificate of registration of a mark upon the principal

register provided by this chapter shall be prima facie evidence

of the validity of the registered mark and of the registration of

the mark, of the registrant's ownership of the mark, and of the

registrant's exclusive nght to use the registered mark in

commerce on or in connection with the goods or services

specified in the certificate, subject to any conditions or

limitations stated in the certificate.

* * *

(July 5, 1946, ch. 540, title I, Sec. 7, 60 Stat. 430; Aug. 17,

1950, ch. 733, 64 Stat. 459; Pub. L. 87-772, Sec. 4, Oct. 9,

1962, 76 Stat. 769; Pub. L. 93-596, Sec. 1, Jan. 2, 1975, 88 Stat.

1949; Pub. L. 100- 667, title I, Sec. 109, Nov. 16, 1988, 102

Stat. 3938; Pub. L. 105-330, title II, Sec. 201(a)(3), Oct. 30,

1998, 112 Stat. 3070; Pub. L. 106- 113, div. B, Sec. 1000(a)(9)

[title IV, Sec. 4732(b)(1)(B)], Nov. 29, 1999, 113 Stat. 1536,

1501A-583.)

9a

15 U.S.C. § 1065 Incontestability of right to use mark

under certain conditions -

Except on a ground for which application to cancel may be

filed at any time under paragraphs (3) and (5) of section 1064

of this title, and except to the extent, if any, to which the use of

a mark registered on the principal register infringes a valid right

acquired under the law of any State or Territory by use of a

mark or trade name continuing from a date prior to the date of

registration under this chapter of such registered mark, the right

of the registrant to use such registered mark in commerce for

the goods or services on or in connection with which such

registered mark has been in continuous use for five consecutive

years subsequent to the date of such registration and is still in

use in commerce, shall be incontestable: Provided, 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 nght 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; and

(3) an affidavit is filed with the Director within one year

after the expiration of any such five-year period setting

forth those goods or services stated in the registration on or

in connection with which such mark has been in continuous

use for such five consecutive years and is still in use in

commerce, and other matters specified in paragraphs (1)

and (2) of this section; and

(4) no incontestable nght shall be acauired in a mark

which is the generic name for the goods or services or a

portion thereof, for which it is registered.

Subject to the conditions above specified in this section, the

incontestable nght with reference to a mark registered under

10a

this chapter shall apply to a mark registered under the Act of

March 3, 1881, or the Act of February 20, 1905, upon the filing

of the required affidavit with the Director within one year after

the expiration of any period of five consecutive years after the

date of publication of a mark under the provisions of subsection

(c) of section 1062 of this title. |

The Director shall notify any registrant who files the above-

prescribed affidavit of the filing thereof.

(July 5, 1946, ch. 540, title I, Sec. 15, 60 Stat. 433; Pub. L. 87-

772, Sec. 10, Oct. 9, 1962, 76 Stat. 771; Pub. L. 93-596, Sec. 1,

Jan. 2, 1975, 88 Stat. 1949; Pub. L. 97-247, Sec. 10, Aug. 27,

1982, 96 Stat. 320; Pub. L. 100-667, title I, Sec. 116, Nov. 16,

1988, 102 Stat. 3941; Pub. L. 106-113, div. B, Sec. 1000(a)(9)

[title IV, Sec. 4732(b)(1)(B)], Nov. 29, 1999, 113 Stat. 1536,

1501A-583.)

15 U.S.C. § 1115. Registration on principal register as

evidence of exclusive right to use mark;

defenses

(a) Evidentiary value; defenses

- Any registration issued under the Act of March 3, 1881, or

the Act of February 20, 1905, or of a mark registered on the

principal register provided by this chapter and owned by a party

to an action shall be admissible in evidence and shall be prima

facie evidence of the validity of the registered mark and of the

registration of the mark, of the registrant's ownership of the

mark, and of the registrant's exclusive right to use the registered

mark in commerce on or in connection with the goods or

services specified in the registration subject to any conditions

or limitations stated therein, but shall not preclude another

person from proving any legal or equitable defense or defect,

including those set forth in subsection (b) of this section, which

might have been asserted if such mark had not been registered.

lla

(b) Incontestability; defenses

To the extent that the right to use the registered mark has

become incontestable under section 1065 of this title, the

registration shall be conclusive evidence of the validity of the

registered mark and of the registration of the mark, of the

registrant's ownership of the mark, and of the registrant's

exclusive nght to use the registered mark in commerce. Such

conclusive evidence shall relate to the exclusive right to use the

mark on or in connection with the goods or services specified

in the affidavit filed under the provisions of section 1065 of this

title, or in the renewal application filed under the provisions of

section 1059 of this title if the goods or services specified in the

renewal are fewer in number, subject to any conditions or

limitations in the registration or in such affidavit or renewal

application. Such conclusive evidence of the right to use the

registered mark shall be subject to proof of infringement as

defined in section 1114 of this title, and shall be subject to the

following defenses or defects:

(1) That the registration or the incontestable right to use

the mark was obtained fraudulently; or

(2) That the mark has been abandoned by the registrant;

or

(3) That the registered mark is being used by or with the

permission of the registrant or a person in privity with the

registrant, so as to misrepresent the source of the goods or

services On or in connection with which the mark is used; or

(4) That the use of the name, term, or device charged to

be an infringement is a use, otherwise than as a mark, of the

party's individual name in his own business, or of the

individual name of anyone in privity with such party, or of

a term or device which is descriptive of and used fairly and

in good faith only to describe the goods or services of such

party, or their geographic origin; or

(5) That the mark whose use by a party is charged as an

infringement was adopted without knowledge of the

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registrant's prior use and has been continuously used by

such party or those in privity with him from a date prior to

(A) the date of constructive use of the mark established

pursuant to section 1057(c) of this title, (B) the registration

of the mark under this chapter if the application for

registration is filed before the effective date of the

Trademark Law Revision Act of 1988, or (C) publication of

the registered mark under subsection (c) of section 1062 of

this title: Provided, however, That this defense or defect

shall apply only for the area in which such continuous prior

use is proved; or

(6) That the mark whose use is charged as an

infringement was registered and used prior to the

registration under this chapter or publication under

subsection (c) of section 1062 of this title of the registered

mark of the registrant, and not abandoned: Provided,

however, That this defense or defect shall apply only for the

area in which the mark was used prior to such registration

or such publication of the registrant's mark; or

(7) That the mark has been or is being used to violate

the antitrust laws of the United States; or

(8) That the mark is functional; or

(9) That equitable principles, including laches, estoppel,

and acquiescence, are applicable.

(July 5, 1946, ch. 540, title VI, Sec. 33, 60 Stat. 438; Pub. L.

-87-772, Sec. 18, Oct. 9, 1962, 76 Stat. 774; Pub. L. 100-667,

title I, Sec. 128(a), (b), Nov. 16, 1988, 102 Stat. 3944; Pub. L.

105-330, title II, Sec. 201(a)(9), Oct. 30, 1998, 112 Stat. 3070.)

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15 U.S.C. § 1119. Power of court over registration

In any action involving a registered mark the court may

determine the right to registration, order the cancellation 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. Decrees and orders shall

be certified by the court to the Director, who shall make

appropriate entry upon the records of the Patent and Trademark

Office, and shall be controlled thereby.

(July 5, 1946, ch. 540, title VI, Sec. 37, 60 Stat. 440; Pub. L.

93-596, Sec. 1, Jan. 2, 1975, 88 Stat. 1949; Pub. L. 106-113,

div. B, Sec. 1000(a)(9) [title IV, Sec. 4732(b)(1)(B)], Nov. 29,

1999, 113 Stat. 1536, 1501A-583.)