TTAB Decisions and Developments

JANE SHAY WALD Irell & Manella LLP

DIFFERENT TRANSACTIONAL FACTS DID NOT SUPPORT A FINDING OF CLAIM PRECLUSION OVER FRAUD CLAIM

THE PARTIES (BY PETITIONER’S PREDECESSOR IN INTEREST) were embroiled in prior proceedings over the mark DANTANNA’S for a restaurant. In the first proceeding, Petitioner (by its predecessor) pleaded fraud against Respondent, alleging that Respondent had not informed the examining attorney during prosecution of the registration at issue that the mark identified a living individual. The Board suspended that case pending the disposition of a civil action between the parties in federal district court concerning the DAN TANA and DANTANNA’S marks. While the district court case was pending, Respondent filed a Combined Declaration of Use and Incontestability under Sections 8 & 15 with respect to the subject registration. Its declaration falsely set forth that there was "no proceeding involving said rights…pending and not disposed of…." However, Petitioner never added this to its Board case, even after the suspension ended. Subsequently, Respondent alerted the Board that the district court case had been finally determined, ending the TTAB suspension. In the interim, during suspension, the Federal Circuit ruled in In re Bose Corp., 580 F. 3d 1240 (Fed. Cir. 2009), the now-controlling fraud case. In view of a change in the law brought about by In re Bose, the Board sua sponte reviewed the then-pending Petition to Cancel, and found the claims were insufficiently pleaded. The Board so advised the parties, and allowed the Petitioner time to amend. Petitioner took no action and even ignored an Order to Show Cause why the original petition should not be dismissed with prejudice due to Petitioner’s loss of interest to the case. The prior case was therefore dismissed with prejudice. No appeal was brought.

More than six years after the prior Board proceeding was dismissed with prejudice as described, Petitioner’s successor, Chutter, Inc. ("Chutter") filed another Petition to Cancel the Respondent’s same registration. This Petition for the first time alleged fraud arising from the Respondent’s filing of a Section 15 declaration during the pendency of the stayed prior proceeding. Respondent argued that any claim "that could have been raised" in the prior proceeding is now barred. It urged that since the fraud claim based on Respondent’s filing of a Section 15 declaration could have been raised but was not raised, it cannot be brought now. The Board disagreed. It explained that the "could have been raised" language does not refer to any claim whatsoever. "Instead, it refers to the assertion ‘of a different cause of action or theory of relief’ based on ‘the same transactional facts’ as earlier asserted." That is, claim preclusion does not bar a different cause of action based on a different set of transactional facts. The Board emphasized that the requirement for "a common nucleus of operative facts" wasn’t met: The facts in the prior Petition and the present one were not "so woven together as to constitute a single claim in their relatedness in time, space, origin or motivation," so that "taken together, they form a convenient unit for trial purposes." Citing Restatement (Second) of Judgments Sec. 24 (1982). The Board also cited Federal Circuit authority that " [r]estraint is particularly warranted when the prior action was dismissed on procedural grounds."