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TTAB’s Entry of Default Judgment Affirmed as Sanction for Failure to Comply with Discovery Orders

11-1131
December 28, 2011

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Last Month at the Federal Circuit - January 2012

Judges: Newman (author), Lourie, Moore

[Appealed from: TTAB]

In Benedict v. Super Bakery, Inc., No. 11-1131 (Fed. Cir. Dec. 28, 2011), the Federal Circuit affirmed the TTAB’s entry of default judgment against Respondent Ward E. Benedict and the TTAB’s sanction of cancellation of Benedict’s trademark registration for failure to comply with discovery orders. On appeal of a prior TTAB ruling in this matter, the Court vacated the TTAB’s default judgment in view of Trademark Rule 2.127(d) and remanded. See Benedict v. Super Bakery, Inc., 367 F. App’x 161 (Fed. Cir. Mar. 3, 2010).

Benedict owned a trademark registration for the mark G THE GOODYMAN and design for pepperoni sticks, cookies, cakes, tarts, rice cakes, strudels, and donuts. Petitioner Super Bakery, Inc. (“Super Bakery”) 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. Super Bakery’s application was refused registration based on Benedict’s G THE GOODYMAN registration on the ground of likelihood of confusion.

At the TTAB, Super Bakery filed a petition to cancel Benedict’s registration for the G THE GOODYMAN mark on grounds of fraud and abandonment. After Benedict failed to comply with the TTAB’s order to respond to Super Bakery’s discovery requests, Super Bakery filed a motion for default judgment as a sanction. The TTAB denied Super Bakery’s motion and ordered Benedict again to provide full and complete responses to Super Bakery’s discovery requests.

One day before the discovery response deadline, Benedict filed a motion for SJ. Benedict also invoked the procedure of Rule 2.127(d), which provides that when any party files a motion for SJ, “the case will be suspended by the [TTAB] 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.” Slip op. at 4. Eighteen days later, the TTAB suspended the proceedings pending determination of Benedict’s motion for SJ. Super Bakery then filed a second motion for sanctions, asking the TTAB to enter judgment against Benedict for its failure to comply with the TTAB’s orders. In considering Super Bakery’s motion for sanctions, the TTAB described Benedict’s motion for SJ as “a likely effort to avoid his discovery obligations once again.” Id. at 5. The TTAB found that Benedict’s discovery obligations were not suspended automatically upon his filing of the SJ motion, but only after the TTAB ordered the suspension of the proceedings. Because Benedict had failed to respond to Super Bakery’s discovery requests and had not complied with the TTAB’s discovery orders, the TTAB granted Super Bakery’s motion for sanctions, entering default judgment against Benedict, cancelling Benedict’s registration, and denying Benedict’s motion for SJ as moot. Benedict appealed.

In the prior appeal, Benedict argued that the TTAB incorrectly granted Super Bakery’s motion for discovery sanctions, because Benedict’s filing of a motion for SJ should have suspended his obligation to comply with the TTAB’s discovery sanction. The Court vacated the default judgment and remanded the case for consideration of the application of Rule 2.127(d) to the facts of the case.

On remand, the TTAB explained that the mere filing of a motion for SJ 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, in which the PTO “comment” stated that, “[b]ecause 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.” Id. at 6. Accordingly, the TTAB held that Benedict was obligated to respond to Super Bakery’s discovery requests as ordered by the TTAB until a formal suspension of the proceeding and that filing a motion for SJ did not constitute good cause for not complying with the discovery order. Benedict again appealed the TTAB’s decision.

In the instant appeal, Benedict argued that the TTAB misinterpreted and misapplied Rule 2.127(d), which, in Benedict’s view, is unqualified in its requirement that when an SJ motion is filed, the case will be suspended by the TTAB and “no party should file any paper which is not germane to the motion.”
Id. at 8. Benedict 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 Court agreed with Benedict 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 Rule 2.127(d) was considered with the PTO “comment,” and that comment was not stated in the rule as adopted. Specifically, Rule 2.127(d) 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 Rule 2.127(d)’s prohibition on filing. Accordingly, the Court found that Rule 2.127(d) ambiguity did not support the extreme sanction of default judgment.

Nonetheless, the Court found that default judgment was well supported for other reasons. Specifically, Benedict had failed to comply with discovery requests and orders for two years. The TTAB had discussed Benedict’s repeated noncompliance with Super Bakery’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, Super Bakery would fulfill its obligations as a party to the proceeding in the future, was supported by the entire experience of the case. Thus, the Court found that the TTAB had not abused its discretion in granting default judgment because of Benedict’s repeated failures to comply with established and reasonable procedural orders, and the Court affirmed the TTAB’s decision.

Summary authored by Stephanie H. Bald, Esq.