Sanctions and Standing Issues SPROUT from Appeal of Board Decision

In Corcamore, LLC v. SFM, LLC, No. 2019-1526 (Fed. Cir. Oct. 27, 2020), the Federal Circuit affirmed the Trademark Trial and Appeal Board’s entrance of default judgment as a sanction against Corcamore.

SFM owns a registered trademark for SPROUTS for use in connection with grocery store services. Corcamore owned a registered trademark for SPROUT in connection with vending machine services.  SFM filed a petition to cancel Corcamore’s registered SPROUT mark.  Corcamore moved to dismiss SFM’s petition for lack of standing.  The Board, relying on Empresa Cubano v. General Cigar, concluded that SFM established standing to bring suit because it sufficiently alleged a real interest and a reasonable belief of damage.  At the close of fact discovery, SFM moved for judgment as a sanction for Corcamore’s litigation misconduct.  The Board granted SFM’s motion and ordered that Corcamore’s registered mark be canceled. 

The Federal Circuit acknowledged that the analytical framework set forth in Lexmark v. Static Control is the applicable standard for determining eligibility to bring a cancelation petition.  Nevertheless, the Court explained that the Board reached the correct result because there is no meaningful, substantive difference between the Lexmark and Empresa analytical frameworks.  The Court further held that the Board did not abuse its discretion by granting default judgment as a sanction for Corcamore’s misconduct.