January 2011 Issue

TTAB Cases

Orouba Agrifoods Processing Co. v. United Food Imps.,
Canc. No. 92050739 (TTAB Dec. 28, 2010)

ABSTRACT
Petitioner sought to cancel Respondent’s registration for the BASMA and Design mark for certain food products, alleging priority and likelihood of confusion, false suggestion of a connection, fraud, and misrepresentation.  Respondent moved to dismiss the petition on res judicata grounds based on a prior opposition filed by Petitioner against Respondent alleging similar claims in which judgment had been entered against Petitioner for failure to prosecute.  The TTAB converted the motion to dismiss to a motion for summary judgment because it relied on facts outside the scope of the pleadings and found that there was no genuine issue of material fact that Petitioner’s claims were barred by res judicata because the prior judgment involved the identical parties, constituted a final judgment on the merits (even though the TTAB had not issued a decision “on the merits” in that proceeding), and was based on the same transactional facts as the first case and claims that could and should have been litigated in the prior case.

CASE SUMMARY

FACTS
Orouba Agrifoods Processing Company (“Petitioner”) filed a petition to cancel United Food Imports’ (“Respondent”) registration for the mark BASMA and Design, alleging likelihood of confusion based on its prior use of an identical mark, ownership of a prior pending application for a mark contained within the BASMA and Design mark for certain foods, and the fact that Respondent was Petitioner’s authorized importer for a period of time, as well as claims of fraud and misrepresentation.  Petitioner had previously filed a notice of opposition against the application that matured into the registration at issue in this cancellation, alleging, among other things: prior use of the BASMA mark, ownership of the same application pleaded in this proceeding, that Respondent was Petitioner’s authorized importer for a period of time, that Respondent’s claim of ownership of the mark was false, that Respondent was not the owner of the mark and filed a false verification, and that Petitioner reasonably believed that Respondent’s application would be cited against Petitioner’s application.  In that prior proceeding, Petitioner failed to timely file its brief on the case, or take any testimony or submit any evidence in support of its claims.  As a result, the TTAB entered judgment against Petitioner and dismissed the opposition with prejudice.  The application thereafter matured into the registration at issue in the present cancellation.

ANALYSIS
In this cancellation proceeding, Petitioner argued that although the TTAB rendered a final decision in the prior opposition proceeding, it did so without reaching the “substantive merits” of the case.  Further, Petitioner argued that the cancellation proceeding was based on a different set of transactional facts, including allegations based on facts discovered after the opposition proceeding, and that the merits of the case should be considered because of the grave allegations of the case, i.e., the misappropriation of a mark by a distributor.  The TTAB disagreed, finding res judicata because the parties in the prior opposition were identical to those in the cancellation, there had been a final judgment on the merits of the prior claims, and the claims in the cancellation were based on the same transactional facts as the claims in the opposition.

First, the TTAB noted that the parties to the prior opposition and this cancellation were identical.  Second, the TTAB dismissed the Petitioner’s argument that res judicata did not apply because it did not reach “the substantive merits” of the prior opposition proceeding.  The TTAB noted that even default judgments for failure to answer, or dismissals for failure to prosecute, where there has been no decision “on the merits,” can act as a bar under the doctrine of claim preclusion.  Accordingly, for purposes of res judicata, the TTAB’s order in the prior opposition was a final judgment on the merits.  Third, the TTAB found that there was no genuine issue that Petitioner’s claims in the cancellation proceeding were based on the same transactional facts as, or could have been litigated in, the prior opposition.  The TTAB noted that Petitioner’s argument that the petition included allegations that were discovered subsequently was not credible because they concerned Petitioner’s own use of the mark and the new allegations were simply the same transactional facts with more detail.

Further, the TTAB reasoned that the Petitioner could not avoid the application of res judicata by merely bringing additional claims into the subsequent cancellation proceeding based on the same transactional facts as in the prior opposition.  Specifically, although the grounds for the prior opposition did not include priority and likelihood of confusion or false suggestion of a connection or misrepresentation, all of those claims were based on the same facts alleged in the opposition.  And, based on the factual allegations in the prior opposition, the TTAB pointed out that Petitioner could and should have asserted each of those claims in the earlier case. 

Finally, the TTAB was not persuaded by Petitioner’s assertion that the merits of the case should be considered because of the “grave” allegations in the case.  The TTAB found that there was no genuine issue of material fact as to any of the elements of Respondent’s res judicata claim and Petitioner had an opportunity to be heard in the prior proceeding but failed to pursue that opportunity.

CONCLUSION
Res judicata may preclude a party’s claim, even where the prior judgment against the party was through a default judgment or judgment resulting from a failure to prosecute.