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Amended trademark registration raises suspicion

Cantor Colburn June / July 2023 IP Newsletter

Cantor Colburn June / July 2023 IP Newsletter

Can a trademark holder facing a cancellation proceeding avoid judgment by simply deleting goods from its registration? The Trademark Trial and Appeal Board (TTAB) recently addressed this question for the first time — and the answer shouldn’t surprise you.

Goods deleted

On August 30, 2021, Ruifei (Shenzhen) Smart Technology Co. filed a petition to cancel a trademark registered to Shenzhen Chengyan Science and Technology Co. The mark was registered for use with a variety of electronic goods — such as earphones and headphones, wearable electronic devices, and portable media players. Ruifei alleged that the mark should be canceled based on abandonment and fraud related to nonuse.

After the cancellation proceeding was initiated, Chengyan filed a Declaration of Use for the contested registration in connection with all the identified goods. It received notice that an audit was necessary to determine whether the mark was in fact in use in commerce on or in connection with the goods.

Chengyan was also required to submit verified specimens of certain goods or to delete the goods for which a specimen couldn’t be provided, pay a deletion fee, and provide verified specimens for the remaining goods. In response, it deleted those goods and several others. It did submit verified specimens for additional goods, though. Chengyan eventually deleted all goods except earphones, headphones and MP3 players, submitting verified specimens for them and paying a deletion fee.

Motive questioned

Ruifei sought approval to amend its cancellation petition to amplify the fraud allegations and also filed a motion for partial summary judgment before trial on its fraud claim. In its motion, Ruifei referred to Chengyan’s amendments to its registration.

The TTAB found that Chengyan’s deletion of certain goods raised issues that had to be addressed before it could consider the motion for partial summary judgment. Specifically, the TTAB considered whether the deletion of goods as the result of an audit during cancellation proceedings triggered Trademark Rule 2.134. The rule is typically triggered when a respondent in a cancellation proceeding allows its registration to be cancelled during the proceeding.

Under the rule, the cancellation of goods or services from a registration subject to a pending cancellation action without the written consent of the party seeking cancellation generally results in a judgment against the party in the cancellation proceeding. But respondents do get the opportunity to explain, or “show cause,” why judgment shouldn’t be entered against them. If a respondent can show that the cancellation or expiration was the result of an inadvertence or mistake, judgment won’t be entered against it.

The rule is intended to prevent respondents from avoiding judgment by cancelling certain goods and services to render the cancellation action moot. In this case, though, the deletion of goods didn’t moot the proceeding because Ruifei sought to cancel the registration in its entirety, and the goods that weren’t deleted remained subject to cancellation.

Nonetheless, the TTAB found that the abandonment and fraud claims related to nonuse relied in part on nonuse of the mark on the deleted goods. For that reason, it said, the policies underlying Rule 2.134 applied. In other words, Chengyan couldn’t moot the proceeding and avoid judgment as to the deleted goods by deleting certain goods subject to the cancellation without the written consent of Ruifei.

Proceedings paused

The TTAB ordered Chengyan to file a response showing cause why its deletion of goods shouldn’t result in a judgment against it on the abandonment claim for those goods. Chengyan responded by asking that the TTAB deny cancellation of the entire class of goods for which it sought registration and permit cancellation only for those goods that it had discontinued. Ruifei’s motion for partial summary judgment on the fraud claim was deferred pending resolution of the abandonment issue.

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