December 2011 / January 2012 Issue
Benedict v. Super Bakery, Inc.,
101 U.S.Q.P.2d 1089 (Fed. Cir. Dec. 28, 2011)
Respondent failed to timely respond to Petitioner’s discovery requests on multiple occasions, including in violation of two TTAB orders. Instead of responding to discovery after the second TTAB order to do so, Respondent filed a summary judgment motion. Petitioner filed a motion for default judgment as a discovery sanction. The TTAB granted Petitioner’s motion and denied Respondent’s motion for summary judgment as moot. Respondent appealed on the ground that the proceeding should have been automatically suspended upon the filing of his summary judgment motion, and the Federal Circuit vacated the default judgment and remanded the case to the TTAB for a determination of whether the proceeding should have automatically been suspended under the Trademark Rules. The TTAB held that suspension was not automatic and was inappropriate under the circumstances, and reentered judgment against Respondent. Respondent again appealed to the Federal Circuit, contending that the TTAB misinterpreted and misapplied Trademark Rule 2.127(d), which was unqualified in its requirement that when a summary judgment motion is filed, the case “will be suspended by the Trademark Trial and Appeal Board . . . and no party should file any paper which is not germane to the motion except as otherwise specified in the Board’s suspension order.” The Federal Circuit agreed with Respondent that the rule did not clearly state the TTAB’s position, and that its ambiguity did not support the extreme sanction of default judgment. Nevertheless, the Federal Circuit affirmed the TTAB’s entry of default judgment based on the record, which showed that Respondent repeatedly failed to comply with the TTAB’s discovery orders.
Ward E. Benedict (“Respondent”) owned a trademark registration for the mark G THE GOODYMAN and design for pepperoni sticks, cookies, cakes, tarts, rice cakes, strudels, and donuts. Super Bakery, Inc. (“Petitioner”) owned a trademark registration for the mark GOODY MAN for cupcakes, and filed an application to register the mark GOODY MAN for cupcakes, marshmallow treats, glazed rings, cookies, donuts, buns, fruit pies, muffins, and snack cakes. Petitioner’s application was refused registration based on a likelihood of confusion with Respondent’s G THE GOODYMAN registration.
Petitioner sought cancellation of Respondent’s registration for the G THE GOODYMAN mark on grounds of fraud and abandonment, and during the course of that proceeding served discovery requests on Respondent. Respondent subsequently wrote to Petitioner’s counsel requesting an extension of its time to respond. Respondent contended that Petitioner never responded to the extension request, while Petitioner argued that it responded by e-mail, agreeing to the extension and requesting additional documents. In any event, Respondent never responded to the discovery requests.
Petitioner then filed a combined motion to compel discovery responses and a request for suspension. Respondent did not respond to the motion and the TTAB issued an order granting the motion to compel as unopposed. Pursuant to that order, Respondent was allowed thirty days to serve full and complete responses without objection to Petitioner’s outstanding discovery requests. Again, Respondent failed to serve any discovery responses, prompting Petitioner to file a motion for default judgment as a sanction based on Respondent’s failure to comply with the TTAB’s discovery order.
Shortly thereafter, Respondent filed a motion for reconsideration of the TTAB’s order compelling Respondent to respond to the outstanding discovery requests, stating that he never received Petitioner’s motion to compel discovery, and that he did not receive the TTAB’s order granting the motion until weeks after it issued. While observing that there was no proof of service of Petitioner’s motion, the TTAB denied Respondent’s motion as untimely because it had been filed almost two months after the TTAB’s order issued, and a request for reconsideration must be filed within one month of the issuance of the order or decision. The TTAB admonished Respondent for failing to provide the discovery, held that Petitioner’s requests for admissions were deemed admitted pursuant to Trademark Rule 36(a)(3), and ordered Respondent again to provide full and complete responses to Petitioner’s discovery requests without objection within thirty days. The TTAB denied Petitioner’s request for default judgment.
Notwithstanding this order, Respondent still did not respond to any of Petitioner’s discovery requests. Instead, one day before the discovery response deadline, Respondent filed a motion for summary judgment, requesting denial of Petitioner’s petition for cancellation on the ground that the cancellation issue was res judicata because of the PTO’s rejection of Petitioner’s trademark application for the mark GOODY MAN on the ground of likelihood of confusion with Respondent’s registration for the mark G THE GOODY MAN. Respondent invoked the procedure of Trademark Rule 2.127(d), which provides:
[W]hen any party files . . . a motion for summary judgment, or any other motion which is potentially dispositive of a proceeding, the case will be suspended by the Trademark Trial and Appeal Board with respect to all matters not germane to the motion and no party should file any paper which is not germane to the motion except as otherwise specified in the Board’s suspension order. If the case is not disposed of as a result of the motion, proceedings will be resumed pursuant to an order of the Board when the motion is decided.
The TTAB suspended the proceedings pending determination of Respondent’s motion for summary judgment eighteen days after that motion was filed. In responding to Respondent’s motion for summary judgment, Petitioner filed a second motion for sanctions, asking the TTAB to enter judgment against Respondent for his failure to comply with the TTAB’s orders. In considering Petitioner’s motion for sanctions, the TTAB described Respondent’s motion for summary judgment as a “likely effort to avoid his discovery obligations once again.” The TTAB found that Respondent’s discovery obligations were not suspended automatically upon his filing of the summary judgment motion, but only after the TTAB, eighteen days later, ordered the suspension of the proceedings. Because Respondent had failed to respond to Petitioner’s discovery requests and had not complied with the TTAB’s two discovery orders, the TTAB granted Petitioner’s motion for sanctions, entering default judgment against Respondent, cancelling Respondent’s registration, and denying Respondent’s motion for summary judgment as moot.
Respondent appealed the TTAB’s decision to the Federal Circuit on the ground that Respondent’s obligation to comply with the TTAB’s discovery sanctions should have been deemed suspended automatically upon the filing of Respondent’s motion for summary judgment, including any pending discovery requests or discovery orders pursuant to Rule 2.127(d), which states that “no party should file any paper” after a motion is filed for summary judgment. Respondent thus argued that the TTAB incorrectly granted Petitioner’s motion for discovery sanctions. The Federal Circuit vacated the default judgment and remanded the case for consideration of the application of Trademark Rule 2.127(d) to the facts of the case.
On remand, the TTAB explained that the mere filing of a motion for summary judgment does not automatically suspend a proceeding. Rather, only an order of the TTAB formally suspending proceedings has such effect. The TTAB explained that it had considered and declined to adopt an automatic suspension of proceedings, and referred to the PTO summary of the notice-and-comment exchange on the rule when it was proposed, which stated:
Accordingly, Respondent was obligated to respond to Petitioner’s discovery requests as ordered by the TTAB until a formal suspension of the proceeding was issued. The TTAB found that filing a motion for summary judgment did not constitute good cause for not complying with the discovery order. By footnote, the TTAB also indicated that Respondent’s summary judgment motion was without merit. Respondent again appealed the TTAB’s decision to the Federal Circuit.
Comments: One organization suggested the section should be amended to provide that the filing of a potentially dispositive motion automatically suspends proceedings, without any action by the Board.Response: The suggested modification has not been adopted. A variety of motions are potentially dispositive, including a motion for sanctions in the form of entry of judgment. Because of the number of situations in which a party may make a potentially dispositive motion, it is believed better for the Board to determine whether proceedings should be suspended based on the situation presented by the particular case.
On appeal, Respondent argued that the TTAB misinterpreted and misapplied Trademark Rule 2.127(d), which is unqualified in its requirement that when a summary judgment motion is filed, the case “will be suspended by the Trademark Trial and Appeal Board . . . and no party should file any paper which is not germane to the motion except as otherwise specified in the Board’s suspension order.” Respondent argued that the TTAB had restated the rule, and that it was unfair to apply the restatement retroactively to him because he relied on its clear and plain terms.
The Federal Circuit agreed with Respondent that Rule 2.127(d) did not clearly present the interpretation of the rule that the TTAB attributed to it. The interpretation only became clear if the rule was considered with the PTO “comment,” and that comment was not stated in the rule as adopted. Specifically, the rule does not state that no suspension shall occur until the TTAB separately acts to impose it, and that any filing deadlines will remain in force despite the rule’s prohibition on filing. Further, the rule does not state that the requirement that no papers should be filed does not come into effect when a motion for summary judgment is filed, despite the rule’s prohibition. Accordingly, the Federal Circuit found that the ambiguity of Rule 2.127(d) did not support the extreme sanction of default judgment.Nevertheless, the Federal Circuit found that default judgment was well supported for other reasons. Specifically, Respondent had failed to comply with discovery requests and orders for two years. The TTAB had discussed Respondent’s repeated noncompliance with Petitioner’s discovery requests and his noncompliance with the TTAB’s orders. And the TTAB’s finding that there was no reason to assume that, given additional opportunities, Petitioner would fulfill its obligations as a party to the proceeding in the future, was supported by the entire experience of the case. Thus, the Federal Circuit found that the TTAB had not abused its discretion in granting default judgment because of Respondent’s repeated failures to comply with established and reasonable procedural orders, and the appeals court affirmed the TTAB’s decision.
The Board has taken the position that a proceeding is not automatically suspended upon the filing of a motion for summary judgment. This Federal Circuit decision, however, calls into question whether that position is sufficiently supported by Trademark Rule 2.127. In addition, this decision reaffirms that default judgment may be warranted in cases of repeated failure to comply with reasonable orders of the TTAB, when it is apparent that a lesser sanction would not be effective.