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“An applicant’s assertion that it has attained the status of recognition as the source of goods carrying a given mark is not undermined only by uses made by another person that has attained that status for itself.” – CAFC
The U.S. Court of Appeals for the Federal Circuit (CAFC) on Friday, November 12, vacated and remanded a decision of the Trademark Trial and Appeal Board (TTAB) that had found Galperti S.r.l (Galperti-Italy) had not committed fraud on the U.S. Patent and Trademark Office (USPTO) in asserting that it had substantially exclusive use of the mark GALPERTI in the five years preceding its registration. The appeal to the CAFC stems from Galperti, Inc.’s (Galperti-USA’s) petition for cancellation based on its own prior use of the same mark, in which the TTAB found that Galperti-USA had demonstrated only insignificant use of the mark and therefore had not proven fraud or falsity on the part of Galperti-Italy. The CAFC cited two legal errors in the TTAB’s analysis that warranted vacatur and remand.
First, the CAFC said that the TTAB’s premise that Galperti-USA had to have trademark-protected rights in its use of the mark (i.e., secondary meaning) in order to count as “significant” rather than “insignificant” use, was incorrect as a matter of law. Galperti-Italy’s application to register GALPERTI was initially rejected by the USPTO because Galperti is primarily just a surname. Thus, Galperti-Italy was required to assert, “in reliance on the Section 2(f) proof standard for acquired distinctiveness: ‘The mark has become distinctive of the goods listed in the application through the Applicant’s substantially exclusive and continuous use in commerce for at least the five years immediately before the date of this statement.’”
Within five years of the date Galperti-Italy’s registration issued, Galperti-USA petitioned for cancellation on three grounds. Galperti-USA claimed that 1) its use of the GALPERTI mark predated Galperti-Italy’s relevant use of the mark and Galperti-Italy’s use was likely to cause confusion; 2) Galperti-Italy obtained the mark by fraud as a result of its false assertion of substantially exclusive use from 2002 to 2007; and 3) Galperti-Italy made a false claim of ownership, again invoking fraud. The TTAB deemed the third ground forfeited and rejected the other two on the merits. Galperti-USA appealed, and in a 2019 ruling the CAFC affirmed the TTAB’s finding that Galperti-USA had failed to demonstrate its prior use of the mark but vacated the determination that it had failed to prove fraud. The CAFC said that, on remand, the TTAB need to conduct “an inquiry…into whether the uses to which Galperti-USA pointed as showing the falsity of Galperti-Italy’s representation to the PTO were significant or, instead, inconsequential.”
When reviewing the case on remand, the TTAB again found “that Galperti-USA had failed to prove the significant, not inconsequential, use that would make Galperti-Italy’s representation false.” In so ruling, the TTAB said that Galperti-USA had to prove it had obtained proprietary rights in the mark by acquiring secondary meaning and its failure to do so rendered Galperti-USA’s use inconsequential. Secondly, the TTAB said that Galperti-USA could not benefit from third-party use of GALPERTI because there was “no proven privity (though there was affiliation)” between Galperti-USA and the named third-party users. Galperti-USA again appealed the TTAB ruling.
On second appeal, Galperti-USA argued that the TTAB had made the two legal errors cited above, and the CAFC agreed. Consequently, the CAFC remanded again, explaining that “we cannot be confident that the Board’s bottom-line finding of no significant non-Galperti-Italy use was unaffected by the two legal errors.”
The CAFC further explained that, with respect to the first legal error, that Galperti-USA had to have trademark-protected rights in its use of the mark (i.e., secondary meaning) in order to count as “significant” rather than “insignificant” use, “that requirement is counter to our precedent on what uses count as undermining a claim of acquired distinctiveness of a term based on substantially exclusive use of the term as a mark for the statutory five-year period.” The court continued:
Our precedents hold that even marketplace uses of a term lacking secondary meaning for the users are among the uses that legitimately play that role. After all, a significant amount of marketplace use of a term not as a source identifier for those users does tend to undermine an applicant’s assertion that its own use has been substantially exclusive so as to create a prima facie case that the term has come to acquire distinctiveness as a source identifier for the applicant. An applicant’s assertion that it has attained the status of recognition as the source of goods carrying a given mark is not undermined only by uses made by another person that has attained that status for itself.
As to the legal error regarding its requirement that Galperti-USA had to demonstrate privity with other users of the mark during the 2002–2007 period at issue in order to rely on those uses to show falsity of Galperti-Italy’s claim of substantially exclusive use, this is similarly inconsistent with CAFC precedent, said the court. “Use by anyone, regardless of relation to the challenger, may undercut a claim of substantially exclusive use,” said the court. “This straightforward point is reflected in our prior opinion in the present matter, where we said that ‘any use by a third party’ could be significant.”
The CAFC did not address the intent aspect of the fraud charge, but vacated and remanded, explaining that “further analysis of the falsity issue must proceed in the absence of the legal errors we have identified.”