Central District of Cal. Rejects Counterclaim Seeking Cancellation of Registration for WOULD YOU RATHER. . .? Mark Based on Fraud on the PTO
This trademark case was back before the District Court after the Ninth Circuit's reversal of the court's grant of summary judgment for the defendant.
The consolidated cases dealt with the parties' respective uses of the mark "WOULD YOU RATHER" in connection with board games and books involving questions posing humorous, bizarre or undesirable choices. The District Court had previously granted summary judgment on Spin Master's (formerly Falls Media, LLC) claims for trademark infringement and unfair competition with respect to Spin Master's federally registered WOULD YOU RATHER . . .? mark, concluding that the mark was descriptive and lacked secondary meaning. For the same reason, the District Court granted summary judgment on Zobmondo's counterclaim for cancellation of the registration. The District Court entered final judgment which, in part, dismissed as moot Zobmondo's counterclaim for cancellation of Spin Master's registration based on fraud on the PTO in light of the court's ruling canceling the registration based on descriptiveness.
The Ninth Circuit reversed the grant of summary judgment, concluding that the issues of descriptiveness and secondary meaning were disputed issues of fact not amenable to summary judgment. As a result of the Ninth Circuit's ruling, the District Court's cancellation of Spin Master's registration was reversed and Zobmondo's counterclaim for cancellation based on fraud on the PTO was revived.
The latter issue was before the District Court on Spin Master's motion for summary judgment on Zobmondo's counterclaim for cancellation of Spin Master's registration for the WOULD YOU RATHER . . .? mark based on fraud on the PTO under 15 U.S.C. 1064(3).
Emphasizing that the burden of proving fraud is "heavy" and relying on the Federal Circuit's In re Bose Corp. decision (580 F.3d 1240 (Fed. Cir. 2009)), the District Court concluded that Zobmondo failed to carry that burden and granted summary judgment to Spin Master on Zobmondo's counterclaim. Specifically, the District Court concluded that Zobmondo had failed to offer clear and convincing evidence from which a jury could infer that Spin Master subjectively intended to deceive the PTO in connection with its intent-to-use ("ITU") application, an "indispens[a]ble" element of a fraud cancellation claim.
The District Court's opinion described in detail the actions Spin Master had taken with respect to use of the WOULD YOU RATHER . . .? mark in connection with board games during the relevant time periods (Zobmondo's fraud claims only applied to the initial ITU application and the first two extensions of time Spin Master requested after the PTO issued a notice of allowance for the application). Although the District Court noted more than once that development of the game bearing the WOULD YOU RATHER . . .? mark proceeded slowly ("at a snail's pace"), the evidence regarding the development process was sufficient for the court to concluded that no reasonable jury could find a subjective intent to deceive the PTO by clear and convincing evidence.
Of note, the District Court rejected Zobmondo's repeated argument
that there is a negative inference to be drawn from the fact that [Spin Master] sought and obtained all possible extensions of time to file [its] statement of use. But absent a subjective intent to deceive the PTO during this time, there is nothing wrong with [Spin Master] requesting (and being granted) all of the available statutory extensions. Congress created the intent-to-use system and the Court will not treat compliance with statutory procedures as evidence of fraud. Indeed, [Spin Master is] far from the only one[] to have used the full set of procedures created by Congress: as of 2008, almost 15,000 registrations had been issued after the maximum number of extensions was granted. Thus, Zobmondo cannot demonstrate fraud by pointing to the authorized use of the full system of statutory extensions.
But interestingly, the District Court earlier cited to the Senate Report on the amendments that created the ITU system which stated that only the "rare applicant" would take advantage of all of the possible extensions (a total of five, six-month extensions) before it filed a statement evidencing use of the mark in commerce.
The case cite is Spin Master, Ltd. v. Zobmondo Entm't, LLC, Case Nos. CV 06-3459, CV 07-0571 (C.D. Cal. Feb. 22, 2011).
