TTAB - Trademark Trial and Appeal Board - *1 LARAMI CORPORATION v. TALK TO ME PROGRAMS, INC. Opposition No. 85,987 March 14, 1995

Trademark Trial and Appeal Board

Patent and Trademark Office (P.T.O.)

 

*1 LARAMI CORPORATION

v.

TALK TO ME PROGRAMS, INC.

Opposition No. 85,987

March 14, 1995

 

Before Sams, Rice and Hairston

 

 

Administrative Trademark Judges

 

 

By the Board:

 

 

J.D. Sams, J.E. Rice and P.T. Hairston

 

 

Administrative Trademark Judges

 

 

 Talk To Me Programs, Inc. filed an application for registration of the mark THE TOTALLY RAD SOAKER for toy waterguns, based on a bona fide intent to use the mark in commerce (Section 1(b). [FN1] Larami Corporation filed its opposition to the application for registration, alleging that it has used the mark SUPER SOAKER for toy water guns since at least as early as 1989; that applicant has filed a civil action [FN2] against opposer claiming a likelihood of confusion when the respective marks are used on water guns; that, although it maintains there is no likelihood of confusion, to the extent there is a likelihood of confusion, opposer has priority of use and any confusion would be to the damage of opposer. Opposer concurrently requested suspension of the opposition pending termination of the civil action.

 

 

 Applicant filed its answer and its opposition to the motion to suspend. Upon review of the pleadings in the civil action, the Board concluded that suspension was appropriate and thus proceedings herein were suspended until the civil action was finally determined.

 

 

 In October 1992 the District Court granted Larami's motion for summary judgment and dismissed the infringement claims of Talk To Me Products, Inc. (TTMP) under both federal and state law with prejudice. [FN3] After stating that, since TTMP had not yet obtained a registration for its mark, TTMP's federal claim must be considered under Section 43(a), the Court determined that the single sale by TTMP of a water gun under the TOTALLY RAD SOAKER mark prior to Larami's first use date was inadequate to establish priority of use. The Court further held that, although TTMP had filed an intent-to-use application prior to Larami's first use date, [FN4] TTMP was not entitled to rely upon the constructive use date conferred upon an applicant under Section 7(c) of the Trademark Act, as amended by the Trademark Law Revision Act of 1988, because this priority right was contingent upon registration and TTMP had not yet been issued a registration. Thus the Court concluded that "(t)he lack of prior use dooms plaintiff's suit. TTMP cannot show first actual use even though the Court has resolved all ambiguities of fact in favor of TTMP...."

 

 

 The District Court went on, however, to state that "... I decline to rest my holding solely on first use grounds." Accordingly, the Court proceeded to determine whether TTMP's mark in fact qualified for § 43 protection, by classifying the mark on a scale of ascending strength, ranging from generic to arbitrary. The Court concluded:

   In the context of a water gun, the term "Soaker" describes an essential  "purpose or utility" of the product. It is therefore a descriptive mark.

 

 

 The Court went on to state that "(b)ecause the term "Soaker" is descriptive, TTMP must demonstrate secondary meaning." Applying the test set forth in PaperCutter, Inc. v. Fay's Drug Co., Inc., 900 F.2d 588, 14 U.S.P.Q.2d 1450 (2d Cir.1990), namely, that the owner of a descriptive mark must show the acquisition of secondary meaning prior to first use of the mark by its competitor, the Court held that since TTMP had only made a single sale prior to Larami's first use, "... such a showing is inconceivable." The Court concluded that since TTMP's mark was neither inherently distinctive nor had it acquired secondary meaning, a prerequisite for protection under § 43(a), any consideration of the issue of likelihood of confusion was unnecessary.

 

 

  *2 Upon appeal, the Second Circuit affirmed the dismissal of TTMP's federal claims, "substantially for the reasons stated" in the opinion of the District Court. [FN5]

 

 

 Upon reviewing the decision of the District Court, and before proceedings were fully resumed herein, the Board considered it appropriate to allow opposer time to amend its notice of opposition to assert the additional claim of descriptiveness under Section 2(e)(1).

 

 

 Thus opposer filed an amended notice, adding the claim that the mark THE TOTALLY RAD SOAKER was merely descriptive and that it had not acquired distinctiveness in the toy water gun market. Applicant filed its answer to the amended notice, denying the salient allegations thereof, but admitting that it had disclaimed TOTALLY RAD in its application and that "Totally Rad" is "merely laudatory and so descriptive."

 

 

 After resumption of proceedings, opposer filed a motion for summary judgment, limited solely to the descriptiveness claim under Section 2(e)(1). In its motion, opposer maintains that, as a matter of law, the mark THE TOTALLY RAD SOAKER is merely descriptive of toy water guns and thus not entitled to registration. Opposer argues, as an initial premise, that, under the doctrine of collateral estoppel, the adjudications of the District Court with respect to the issues both of descriptiveness and of secondary meaning are precluded from being relitigated in the present opposition.

 

 

 Opposer supplements this argument with its own contentions that applicant's mark is descriptive, relying upon the definition of "soaker" in Webster's New Universal Unabridged Dictionary, Deluxe Second Edition, Simon and Schuster (1983) as "one who or that which soaks" and applicant's admissions as to the descriptiveness of the phrase "Totally Rad". Opposer maintains that the combination of these two descriptive terms fails to create a new or different commercial impression, but rather remains an apt description of the water guns to which it is applied. Insofar as secondary meaning is concerned, opposer reiterates the PaperCutter test relied upon by the Court and insists that, since applicant cannot establish the acquisition of secondary meaning under this test, it cannot rebut the conclusion that its mark is merely descriptive.

 

 

 Applicant, in its opposition to opposer's motion, contends that the doctrine of collateral estoppel is not applicable here, in that the Court's holdings on the issues of descriptiveness and secondary meaning were not necessary and essential to its determination of applicant's § 43(a) claim. Applicant argues that the District Court dismissed the claim on the basis of its resolution of the priority of use issue in opposer's favor and thus its consequent holdings on the issues of descriptiveness and secondary meaning were not conclusive and cannot preclude the consideration of the issues in this proceeding. Applicant further contends that the holdings of the Court are irrelevant to this proceeding, since the Court directed its attention only to the term "Soaker" and not to applicant's composite mark.

 

 

  *3 Turning to the issue of the descriptiveness of the mark per se, applicant argues that, even if the individual terms in its mark were admitted to be descriptive, the combination is not and that opposer has failed to present any evidence that the impression of the mark as a whole on consumers is that of a description, rather than an indication of source. Applicant refuses, however, to acknowledge that "soaker" is descriptive of its product, pointing to numerous definitions in Webster's Third New International Dictionary of the English Language (1992 edition) for the noun "soaker" which have no connection with a water gun.

 

 

 Moreover, even if its mark is merely descriptive, applicant contends that in seeking registration of its mark, rather than in asserting infringement of the same, applicant should not be required to show secondary meaning prior to use by opposer. Applicant argues that in this proceeding applicant is entitled to the benefit of the constructive use provisions of Section 7(c) and to rely upon this date to demonstrate priority of use. As a result, applicant argues, it need only show the acquisition of secondary meaning as of the present date. Thus applicant urges that opposer has failed to meet its burden of showing that no genuine issues of material fact remain or that opposer is entitled to summary judgment.

 

 

 Opposer has filed a reply and, at a later date, a copy of a subsequent holding by the same District Court in a declaratory judgment suit filed by Larami directed to the use of the involved "Soaker" marks on products other than water guns. [FN6] In that case, the Court granted Larami's motion for summary judgment, holding, inter alia, that TTMP had no trademark rights in the mark "Soaker" or "Totally Rad Soaker" superior to those of Larami in the mark "SUPER SOAKER", and specifically referring to its prior holdings on the descriptiveness of TTMP's mark and the failure of TTMP to establish secondary meaning for the same.

 

 

 The purpose of summary judgment is one of judicial economy, to avoid a trial where no genuine issue of material fact remains and additional evidence from that presented in connection with the motion would not be reasonably expected to change the result. See Pure Gold Inc. v. Syntex (U.S.A.), Inc., 739 F.2d 624, 222 USPQ 741 (Fed.Cir.1984). In the present case, the applicability of the doctrine of collateral estoppel, or issue preclusion, may well be determinative of whether opposer is entitled to the grant of summary judgment on its claim under Section 2(e)(1).

 

 

 Under this doctrine, if an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is normally conclusive in a subsequent suit involving the parties to the prior litigation. The requirements which must be met for issue preclusion to apply are:

   (1) the issue to be determined must be identical to the issue involved in the prior action;

    *4 (2) the issue must have been raised, litigated and actually adjudged in the prior action;

   (3) the determination of the issue must have been necessary and essential to the resulting judgment; and

   (4) the party precluded must have been fully represented in the prior action.

Lukens Inc. v. Vesper Corporation, 1 U.S.P.Q.2d 1299 (TTAB 1986), aff'd,  Appeal No. 87-1187 (Fed.Cir. Sept. 18, 1987).

 

 

 The crux of the matter here is whether the determinations of the District Court in the prior litigation between the parties with respect to the issues of descriptiveness and secondary meaning were "necessary and essential to the resulting judgment." It is the opinion of the Board that the Court's holdings as to the descriptiveness of applicant's mark were in fact an integral part of its determination of the § 43(a) claim and thus preclude the relitigation of the issue in this proceeding. The explicit statement of the Court that it was not basing its holding solely on Larami's priority of use cannot be ignored. Moreover, although the Court continually refers to the term "Soaker" rather than the mark THE TOTALLY RAD SOAKER, the Court directed its consideration of the classification, and thus the qualification for protection, to TTMP's mark as a whole and clearly stated that the "mark" was descriptive. Therefore, unless applicant is able to establish that its mark has acquired distinctiveness, the mark will be refused registration on the ground that it is merely descriptive.

 

 

 The interrelated issues of priority and distinctiveness (secondary meaning), on the other hand, are not so readily resolved. The Court found that TTMP could not establish priority because (1) it could not base its claim of priority on the filing date of its application for registration and (2) under Second Circuit law, a plaintiff charging infringement of a descriptive mark must establish that the mark had acquired secondary meaning prior to the first use by the alleged infringer--an impossible burden for TTMP, whose first actual use of the mark in commerce, other than a token use, was later than Larami's first use. These findings by the Court concerning priority, for purposes of the infringement action, are not binding for purposes of this opposition proceeding.

 

 

 First of all, the Board and the Court treat differently the constructive use provisions of Section 7(c). In Zirco Corp. v. American Telephone and Telegraph Co., 21 U.S.P.Q.2d 1542 (TTAB 1991), the Board described the operation of the constructive use provision of Section 7(c) (added to the Lanham Act by the Trademark Law Revision Act of 1988) in inter partes proceedings before the Board. Relying upon the legislative history and commentaries thereon, as well as its own reading of Section 7(c) in conjunction with concurrent amendments to other portions of the Lanham Act implementing this provision, the Board held that the right of an intent-to-use applicant to rely upon its constructive use date in Board proceedings comes into existence with the filing of its intent-to-use application, and that the intent-to-use applicant can rely upon this date in an opposition for purposes of establishing priority (albeit entry of final judgment in favor of the intent-to-use applicant must be deferred until the mark is registered), if that applicant cannot prevail without establishing constructive use pursuant to Section 7(c). Thus, an intent-to-use applicant was held to be entitled, under this provision, to rely upon the filing date of its application in an opposition filed by a party alleging common law rights based on use prior to any actual use which might be asserted by the applicant. The Board pointed out that if the constructive use provision only came into play after the issuance of a registration, an intent-to-use applicant would never be able to defend its application in an opposition based on likelihood of confusion, brought by a third party asserting common law rights. Such was not, in the Board's view, the intent behind the adoption of the constructive use provision, since the legislative history clearly indicated the goal of fostering the filing of intent-to-use applications and giving an applicant under Section 1(b) superior rights over a subsequent user of a similar mark, provided the applicant's mark was ultimately used and registered. To require registration of an applicant's mark prior to realization of its rights under Section 7(c) would defeat the purpose of filing applications based on intent-to-use.

 

 

  *5 The District Court concluded that a different interpretation should be accorded to Section 7(c), when relied upon by an intent-to-use applicant bringing an infringement suit against a competitor. Under these circumstances the Court determined that the priority rights conferred by Section 7(c) were contingent upon registration of the mark and thus not available to TTMP, whose intent-to-use application remained pending. The Court explicitly pointed out that the Board's interpretation was rendered in the course of an opposition proceeding in which the party relying upon the contingency portion of Section 7(c), the common law user, was attempting to defeat registration of the mark filed by the intent-to-use applicant, whereas, in the action before it, the common law user was attempting to defend itself in an infringement suit brought by the intent-to-use applicant, prior to the registration of its mark.

 

 

 We find no difficulty in reconciling these two interpretations of Section 7(c), depending upon the circumstances under which the provision has been invoked. In a proceeding before the Board, whose jurisdiction is limited solely to the registration of a party's mark, it would defeat the purpose of filing an intent-to-use application if an applicant were not able to rely upon its constructive use date in defending its right to registration, as pointed out in the Zirco decision. On the other hand, in a civil action involving a party's right to use a mark, such as TTMP's infringement action, it would not be equitable for an intent-to-use applicant to be entitled to rely upon a constructive use date prior to registration of its mark, and thus potentially prior to any use whatsoever, to defeat the common law rights of a first actual user of its mark. [FN7] Accordingly, in this proceeding before the Board, applicant is entitled to rely upon its constructive use date, namely, its filing date of July 31, 1990, and to assert priority of use based thereupon.

 

 

 Moreover, the Court's holding that, under Second Circuit law, TTMP was obliged to, but could not, prove distinctiveness of its mark prior to Larami's first use in commerce is not binding under the doctrine of issue preclusion in this opposition proceeding. That is so, because the issue of priority of secondary meaning is not involved in the opposition. Larami, not TTMP, is in the position of plaintiff here, and there has been no allegation that Larami's mark is merely descriptive. [FN8] The issue of priority of secondary meaning, therefore, does not arise.

 

 

 Moreover, in this opposition proceeding, if applicant establishes that its mark has acquired distinctiveness, it may, for purposes of establishing its priority, rely upon the filing date of its application. [FN9] Congress made Section 7(c) applicable to all applications for registration on the Principal Register. That statutory section does not bestow the benefits of constructive use on only those marks that are inherently distinctive and those marks that, though not inherently distinctive, had become distinctive as of the filing date of the application for registration. Nor are we willing to find such a limitation implicit in Section 7(c). Indeed, Section 2(f), in setting out the showing that the Commissioner may take as a prima facie case of distinctiveness, provides that

    *6 [t]he Commissioner may accept as prima facie evidence that the mark has become distinctive, as used on or in connection with the applicant's goods in commerce, proof of substantially exclusive and continuous use thereof as a mark by the applicant in commerce for the five years before the date on which the claim of distinctiveness is made. (emphasis added)

Thus, a mark may be registered--and receive the benefits of constructive use under Section 7(c)--even if the claim of acquired distinctiveness was made after the filing date of the application and even if the use on which the claim of distinctiveness was predicated was made mostly after the filing date of the application. [FN10]

 

 

 Accordingly, opposer has failed to establish that no genuine issues of material fact remain with respect to the distinctiveness of applicant's mark. Applicant is entitled to an opportunity to plead and to prove, if it so desires, that its mark, though initially merely descriptive, has acquired secondary meaning. Moreover, applicant is correct in its arguments that, in demonstrating its right to registration, it is not restricted to any limitations on the time period in which it must show the acquisition of secondary meaning, but instead is entitled to prove the same as of the present date. Although applicant has not pleaded the acquisition of secondary meaning as an affirmative defense in its answer to the amended notice, the Board will allow applicant time to amend its pleadings to include allegations of this nature.

 

 

 In summary, opposer's motion for summary judgment is granted as to the issue of descriptiveness, retrial being precluded on the basis of issue preclusion. Opposer's motion is denied as to the issue of secondary meaning, with applicant being allowed until twenty days from the date hereof to amend its answer to the amended notice to assert as an affirmative defense the acquired distinctiveness of its mark.

 

 

 The uncontested motion filed by opposer on December 29, 1993, to reschedule trial dates, including a period for discovery, is noted. The Board finds that, in view of the common issues of law and fact which are involved in this opposition and copending Opposition No. 88,180, consolidation would be appropriate prior to the resumption of proceedings. Accordingly, the parties are allowed until twenty days from the date hereof to raise any objections they might have to consolidation, failing which the cases will be consolidated and trial dates, including a period for discovery, will be scheduled for the consolidated proceeding.

 

 

J.D. Sams

 

 

J.E. Rice

 

 

P.T. Hairston

 

 

Administrative Trademark Judges, Trademark Trial and Appeal Board

 

 

FN1. Serial No. 74/083,579, filed July 31, 1990. Although applicant refers to Talk To Me Programs, Inc. as the predecessor to Talk To Me Products, Inc., no transfer of interest for this application has been recorded by the Assignment Branch and thus there has been no change in the parties named in this proceeding.

 

 

FN2. Talk To Me Products, Inc. v. Larami Corp., 91 Civ 4885 (CSH) (S.D.N.Y.).

 

 

FN3. Talk To Me Products, Inc. v. Larami Corp., 804 F.Supp. 555  (S.D.N.Y.1992).

 

 

FN4. The filing date of TTMP's application was July 31, 1990, whereas Larami had established an actual first use date of August 24, 1990.

 

 

FN5. Talk To Me Products, Inc. v. Larami Corp., 992 F.2d 469 (2d Cir.1993).

 

 

FN6. Larami v. Amron, 92 Civ. 7823 (CSH) (S.D.N.Y. July 13, 1994).

 

 

FN7. In the Senate Judiciary Committee Report on S.1883, Senate Report No. 100-515 (September 15, 1988), the committee stated that it did not intend for constructive use to replace equity. It noted that courts should react no differently to the constructive use provision than they do to "calendar priority", if they determine that doing so will lead to inequitable results.

 Moreover, in the commentary provided for the final version of the amended Lanham Act by the U.S. Trademark Association, it was pointed out that although Sections 18, 21 and 24 were amended to defer entry of final judgment in intent-to-use cases originating before the Board, a similar provision was not included in Section 34, which is directed to injunctive relief in actions brought under Section 43(a). The reason given for this omission was the concern of the House Judiciary Committee that, if such a provision were included, the courts would be hearing cases not ripe for decision and applicants who have not perfected their rights would be filing suit. United States Trademark Association, The Trademark Law Revision Act of 1988, 365 (1989). It is clear therefrom that Congress intended Section 7(c) to operate differently in the district courts than it does in proceedings before the Board.

 Finally, we want to emphasize that, although in Zirco (as in the case now before us) it was the applicant for registration--that is, the party in the position of defendant--who sought to rely on the constructive use provisions of Section 7(c) to defeat the opposer's priority claim, a party in the position of opposer may, likewise, rely on the constructive use provisions of Section 7(c) to establish its priority for purposes of Section 2(d). An opposer may rely on Section 7(c) to establish priority if it owns a registration for the mark it is asserting under Section 2(d) or if it has filed an application for registration of that mark. We might put the matter more simply by saying that in proceedings before the Board the constructive use provisions of Section 7(c) may be used both defensively and offensively. (Of course, as we have noted, Section 7(c) provides that any judgment entered in favor of a party relying on constructive use--whether that party is in the position of plaintiff or defendant in a Board proceeding--is contingent upon the ultimate issuance of a registration to that party.)

 

 

FN8. We note the Dialog database report submitted by applicant showing several trademark applications which have been filed by opposer for various SOAKER marks, without any disclaimer of the term SOAKER. Opposer has responded by arguing that many of the marks are not descriptive when viewed in their entireties and that its SUPER SOAKER mark has acquired secondary meaning. Opposer made no allegations of distinctiveness, however, in its pleadings.

 

 

FN9. The Board has held that, where neither party's mark in an opposition proceeding is inherently distinctive, priority lies with the party whose mark is the first to become distinctive through use in commerce. Perma Ceram Enterprises Inc. v. Preco Industries Ltd., 23 U.S.P.Q.2d 1134 (TTAB 1992). In Perma Ceram, the applicant had used its mark long prior to the filing date of its application for registration and claimed distinctiveness from a date long prior to the filing date of that application. Therefore, it was not relying on its constructive use date to establish priority. For that reason, we do not believe our decision in Perma Ceram is at odds with our present holding.

 

 

FN10. Constructive use is but one of the benefits that flow from federal registration, as the U.S. Court of Appeals for the Federal Circuit and, before it, the Court of Customs and Patent Appeals have long recognized. See, e.g., In re Clorox Co., 578 F.2d 305, 198 USPQ 337 (CCPA 1978) [a "mark" that has not become distinctive but that has been registered on the Supplemental Register can be used as a basis for refusing registration to another mark under Section 2(d) ]; Lincoln Logs Ltd. v. Lincoln Pre-Cut Log Homes Inc., 971 F.2d 732, 23 U.S.P.Q.2d 1701 (Fed.Cir.1992) [in an opposition that was sustained on basis of opposer's incontestable registration, in spite of applicant's prior use of a confusingly similar mark, the court noted that

   [o]pposer's right to prevail in this proceeding arises from the particular provisions of the Lanham Act that are designed to encourage registration of marks. Opposer took advantage of those provisions. Applicant did not. Applicant, as prior user, could and should have taken steps to prevent registration by Opposer.... (23 U.S.P.Q.2d at 1704) ].

 

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