TTAB - Trademark Trial and Appeal Board - *1 MIDWEST PLASTIC FABRICATORS, INC. v. UNDERWRITERS LABORATORIES INC. Cancellation No. 15,133 October 13, 1987

Trademark Trial and Appeal Board

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





Cancellation No. 15,133

October 13, 1987


Pearne, Gordon, Sessions, McCoy, Granger & Tilberry for Midwest Plastic Fabricators, Inc.



Francis J. Higgins and J. William Hayton for Underwriters Laboratories Inc.



By the Board:



J.D. Sams, L.E. Rooney and R.L. Simms






 Midwest Plastic Fabricators, Inc. [petitioner] has filed a petition to cancel two registrations of the certification mark 'UL' owned by Underwriters Laboratories Inc. [respondent] for certifying that certain types of electrical equipment, chemicals, etc. meet prescribed safety standards. The grounds for the petition to cancel are that the use of these certification marks is not being properly controlled by respondent, such that goods which do not meet the prescribed standards are being certified with the registered certification marks.



 This case now comes up on respondent's motion for leave to file an amended answer by adding two affirmative defenses ('FOURTH AFFIRMATIVE DEFENSE' and 'FIFTH AFFIRMATIVE DEFENSE'), essentially defenses of unclean hands and laches. Specifically, respondent's fourth affirmative defense is a claim that petitioner filed the petition to cancel to obtain a money payment from respondent, whereas Section 14 of the Trademark Act does not provide for money damages and that petitioner's filing of the petition is nothing more than an attempt to put pressure on respondent to 'take actions in petitioner's interest.' Respondent's fifth affirmative defense is a claim that petitioner did not and does not have a genuine belief that it is damaged by the registrations it seeks to cancel herein. In particular, the affirmative defense states that (i) petitioner waited until 1985 to file the petition to cancel, when it knew of one of the alleged improper uses of the certification mark some fourteen years prior to the filing of the petition to cancel and (ii) petitioner has already received monetary compensation for another of the improper certifications complained of in its petition for cancellation.



 In support of its motion, respondent states that the facts on which the two affirmative defenses are based came to light recently, during discovery depositions of petitioner; and that under Rule 15(a), FRCP, leave to amend 'shall be freely given when justice so requires.'



 Petitioner argues [FN1] that entry of the proposed amended pleading will not serve justice, but to the contrary will only complicate and delay this case; and that respondent's proposed amendment should not be allowed because respondent has cited no precedent for adding the two defenses which it seeks to include in this case; and both defenses are 'legally and factually insufficient'.



 Petitioner specifically states for the record that it brought this cancellation proceeding in a good faith belief that it has been and is being damaged by respondent's failure to police and enforce its certification marks; and that there is a strong public interest in whether respondent permits use of its certification marks on products which do not comply with respondent's standards. [FN2] The affidavits of Thomas F. Moran, Jr., petitioner's president and chief executive officer, and William C. McCoy, Jr., petitioner's counsel, accompanied petitioner's papers. Petitioner moved to strike the amended pleading in the event that it should be allowed. Respondent filed a response thereto.



  *2 Amendments to pleadings are to be allowed with liberality. See Rule 15(a), FRCP. However, the granting of leave to amend the pleadings under the rule is within the discretion of the court (or in this instance, the Board), and the court will normally deny a motion to enter a proposed amendment which seeks to add a claim or a defense which is obviously insufficient under the law. See United States v. Two Lots of Ground, etc., 5 FR Serv 2d 178 (ED Pa. 1962); and Klamoth-Lake Pharmaceutical Assn v. Klamoth Medical Service Bureau, 701 F.2d 1276, 36 FR Serv 2d 472 (9th Cir. 1983).



 In this case, respondent's fourth affirmative defense does not include allegations that state a defense of unclean hands. There are no specific allegations of conduct by petitioner that, if proved, would prevent petitioner from prevailing on its claim; instead, the allegations of the fourth affirmative defense are either unclear, non-specific, irrelevant to a pleading of unclean hands, or merely conclusory in nature.



 Respondent's fifth affirmative defense is, first of all, a claim of laches. It is the Board's view that, assuming the allegations of respondent's fifth affirmative defense would, ordinarily, be sufficient to state a laches defense, the defense of laches is not available where the petition to cancel is based on a claim that a respondent has failed to control the use of a certification mark, such that the mark is being used to certify goods that do not meet specified standards. Whether to allow a laches defense in such a case is a question of first impression before the Board. We believe that there exists a public policy interest here analogous to the public policy interest in precluding laches as a defense when the ground for opposition or cancellation is genericness. See International Assoc. of Fire Chiefs, Inc. v. H. Marvin Ginn Corp., 225 USPQ 940, 947 (TTAB 1985), rev'd on other grounds, 782 F.2d 987, 228 USPQ 528 (Fed. Cir. 1986) (and cases cited there). See also Vol. 1, McCarthy, Trademarks and Unfair Competition, § 20:20 D, p. 1074 (2d ed. 1984). The public interest in certification marks and the assurance that registered certification marks are being properly controlled outweighs any possible injury to the respondent resulting from inaction by petitioner.



 Finally, respondent's allegation in the fifth affirmative defense that the petition was not brought in good faith because petitioner has already been compensated monetarily for one of the alleged instances of improper certification does not state a proper affirmative defense. Proof that petitioner has been compensated for any damage it may have suffered due to improper certification would not amount to proof of petitioner's bad faith. The underlying basis for petitioner's claim is not that there has been no monetary compensation for improper certification but that, whether compensated or not, those who rely on the 'UL' certification are damaged by the misuse of those certification marks. In short, the fifth affirmative defense fails to state a proper defense of either laches or unclean hands.



  *3 On September 25, 1987, respondent filed a motion to dismiss, under Rule 2.132(a), in view of petitioner's failure to offer any evidence during the extended period scheduled for its presentation of its case-in-chief (which period was requested by petitioner, with respondent's consent, and which expired September 16, 1987). We believe it would be unfair to enter judgment against petitioner for failure to offer evidence in support of its case during a time when there was pending before the Board a motion to amend the answer, the decision on which might affect the nature of the evidence petitioner wished to offer in its behalf. Put more simply, petitioner had a right to know the issues before the Board before proceeding to trial. The motion under Rule 2.132(a) is, therefore, denied.



 In view of the delay occasioned in acting on these matters, trial dates will be rescheduled, beginning with petitioner's testimony period, as soon as the Board has decided petitioner's 'Request for Disclosure Order,' a request filed on July 22, 1987. [FN3] By that paper, petitioner seeks, under the terms of paragraph 7 of the stipulated protective order previously approved by the Board on March 13, 1987, an order allowing disclosure of certain confidential information provided to petitioner by respondent. A third party has filed an amicus brief requesting partial denial of petitioner's request, as well as requesting that the Board treat petitioner's paper requesting disclosure as confidential. Pending a decision on this matter, the papers related thereto will be treated by the Board as confidential. Petitioner's request for a disclosure order will be determined in due course, after petitioner is allowed time to respond to the paper filed by said third party.



 Proceedings are otherwise suspended.



 Respondent is again reminded of Rule 2.120(j)(8), which provides that discovery materials should not be filed with the Board except in circumstances set forth in the Trademark Rules of Practice.



 Decision: Respondent's motion to amend is denied.



 Petitioner's motion to strike is denied as moot. Petitioner's consented motion to extend discovery and trial dates filed June 4, 1987 is granted. Discovery closed, therefore, on July 17, 1987; neither party has requested further time for discovery. Respondent's motion for judgment under Rule 2.132(a) is denied. Petitioner is allowed until October 26, 1987 to respond to the paper filed by the third party opposing the request for an order allowing disclosure of confidential information. Proceedings are otherwise suspended.



J. D. Sams



L. E. Rooney



R. L. Simms



Members, Trademark Trial and Appeal Board



FN1. Petitioner's consented motion to extend its time to respond to the motion for leave to amend is granted.



FN2. In a cover letter to its brief, petitioner noted that on March 13, 1987 a protective order was approved by the Board (which order provided, inter alia, that all 'confidential information' produced or exchanged in the course of the cancellation proceeding be used solely for purposes of the cancellation proceeding). Petitioner requested that paragraphs 3 and 4 on page 3 of petitioner's brief be treated as confidential information. Paragraphs 3 and 4 on page 3 of petitioner's brief have been removed from the record and said matter is now under confidential seal at the Board.



FN3. For reasons unknown to the Board, petitioner's request was not received by the Board until September 9, 1987.


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