Trademark Trial and Appeal Board
Patent and Trademark Office (P.T.O.)
*1 PRO-CUTS, AND HAWKINS PRO-CUTS, INC., JOINED AS PARTY PLAINTIFF
SCHILZ-PRICE ENTERPRISES, INC., AND DUKE SPECIALTY VENTURES, INC., JOINED AS
Concurrent Use No. 698
May 11, 1993
Before Sams, Rice and Rooney
Opinion by Rice
This case now comes up on (1) Schilz-Price Enterprises, Inc.'s (hereinafter "Enterprises") motion, filed May 11, 1992, to substitute a successor in interest, (2) Pro-Cuts and Hawkins Pro-Cuts, Inc.'s (hereinafter referred to jointly and severally as "applicant," except as otherwise indicated) motion, filed September 24, 1992, for a further extension of time to respond to Enterprises' motion to substitute, (3) applicant's motion, filed October 16, 1992, to suspend proceedings herein pending consideration by the Board of the effect of a recent assignment to applicant of a particular registration, (4) Enterprises' consented motion, filed November 9, 1992, for an extension of time to respond to applicant's "motion to suspend" and to file a reply brief in support of its own motion to substitute, and (5) applicant's response to a show cause order issued by the Board on February 4, 1993.
The show cause order may be determined quickly. On October 13, 1992, applicant filed a revocation of all previous powers of attorney. On the same date, applicant's attorneys of record filed a request for leave to withdraw as counsel for applicant in this proceeding. In an action dated November 19, 1992, the Board granted the request, suspended proceedings herein, and allowed applicant 30 days in which to either appoint new counsel, or file a paper stating that it wished to represent itself. Having received no response from applicant to this action, the Board, in an action mailed February 4, 1993, allowed applicant 20 days in which to show cause why judgment should not be entered against applicant in view of applicant's apparent loss of interest in the case. In its response to the show cause order, applicant stated that new counsel had, in fact, entered an appearance in behalf of applicant even before applicant's previous counsel withdrew, and that new counsel had filed numerous papers in applicant's behalf since that time. A review of the record confirms applicant's statements. Accordingly, the order to show cause is deemed discharged, and henceforth correspondence for applicant will be sent to the attorney who signed the appearance, namely, Karen M. Simonek, of the firm of Cooter & Gell, 1201 New York Avenue, N.W., Suite 900, Washington, D.C. 20005.
We turn next to Enterprises' consented motion for a one-month extension of time to respond to applicant's "motion to suspend," and for a like extension of time to file a reply brief in support of its own motion to substitute. The motion to extend was filed on November 9, 1992, and had not yet been associated with the file of this case when the Board issued its November 19, 1992 order suspending proceedings herein and allowing applicant 30 days in which to either appoint new counsel, or file a paper stating that it wished to represent itself. Proceedings have remained suspended to date, and the briefs in question have not been filed. However, applicant's "motion to suspend" can be determined without a responding brief from Enterprises. Moreover, reply briefs normally are not favored by the Board, and Enterprises' motion to substitute can be determined by the Board without further briefing by Enterprises. In view of the length of time that the proceedings between the parties have consumed, and in order to expedite matters herein, both applicant's motion to suspend and Enterprises' motion to substitute are determined below. Accordingly, Enterprises' motion to extend is denied as moot.
*2 As to the two remaining motions, namely, applicant's "motion to suspend" and Enterprises' motion to substitute, a recitation of the history of this case will be helpful to an understanding of the motions. On April 25, 1983, applicant Pro-Cuts filed an application (Serial No. 73/422,960) for a geographically unrestricted registration of the mark "PRO-CUTS" and design for hair styling and cutting services. In the application, applicant claimed first use of the mark, and first use of the mark in interstate commerce, on May 1, 1982. The application was eventually published for purposes of opposition, and was opposed (Opposition No. 72,232, filed July 29, 1985) by Enterprises, which pleaded priority of use and likelihood of confusion.
During opposer Enterprises' main testimony period in the opposition (but at a time when Enterprises had apparently not yet taken testimony because the parties had been negotiating, albeit unsuccessfully, for settlement), applicant Pro-Cuts filed a motion seeking, in essence, to substitute its successor in interest, Hawkins Pro-Cuts, Inc., in its stead, and also seeking to amend its application to one for concurrent registration. Specifically, applicant sought to amend its application to one seeking registration for the area comprising the States of Texas, Oklahoma, Louisiana, Arkansas, Florida, Missouri, Alabama, New Mexico, Mississippi, Georgia, Kentucky, Tennessee, Kansas, and Colorado. Recited in the proposed amendment as an exception to applicant's right to exclusive use was Enterprises, said by applicant to have been using the mark "PRO-CUTS" for hairstyling and cutting services in the State of California since June 21, 1979. Applicant also indicated its willingness to accept entry of judgment against itself in the opposition with respect to its right to a geographically unrestricted registration.
In a decision dated April 24, 1987, the Board granted both of applicant's motions. Specifically, applicant's motion to amend its application to one seeking concurrent registration was granted; judgment was entered against applicant in the opposition with respect to its right to a geographically unrestricted registration; and the present concurrent use proceeding was instituted to determine applicant's right to the geographically restricted registration sought. In addition, applicant Pro-Cuts' motion to substitute was granted to the extent that its successor in interest, Hawkins Pro-Cuts, Inc., was joined as a party defendant in the opposition, and as a party plaintiff in the concurrent use proceeding.
Immediately after the institution of the concurrent use proceeding, and prior to the filing by Enterprises of an answer under Rule 2.99(d)(2) (in its answer, Enterprises contended, inter alia, that applicant should not be granted any registration at all because applicant adopted and used its mark with knowledge of Enterprises' prior use thereof), applicant moved to amend its application to enlarge the territory for which it sought registration to the area comprising all of the United States except for the State of California. The motion was granted by the Board, over the objections of Enterprises, and the case went to trial on that basis. Both parties took discovery and testimony. After applicant's main brief on the case had been filed, Enterprises filed its motion to substitute. Applicant, in turn, filed a brief in opposition thereto, and its own "motion to suspend."
*3 Against the foregoing background, we turn to applicant's motion to suspend proceedings herein pending consideration by the Board of the effect of a recent assignment to applicant of a particular registration, namely, Registration No. 1,144,560, issued December 23, 1980 (affidavit Section 8 accepted, affidavit Section 15 filed) from an application filed June 23, 1978, claiming use since November 1, 1975, for the mark "PRO-KUT" and design for hair styling services.
In support of its motion, applicant asserts that it stands in the shoes of its assignor; that the mark in the assigned registration is confusingly similar to the mark in its present application; and that applicant is thus entitled to rely on the registration for priority purposes in this proceeding. In addition, applicant asserts that the evidence of record in this case shows that Enterprises itself (despite its pleadings and interrogatory answers to the contrary) has never used the mark "PRO-CUTS"; that instead, use of the mark has been made by 12 limited partnerships (known as Hair Ventures I-XII), whose use was not controlled by, and did not inure to the benefit of, Enterprises; that 11 of the limited partnerships (Hair Ventures II-XII) did not begin use of the mark until after issuance of the registration which has now been assigned to applicant; that the first limited partnership (Hair Venture I) commenced use in 1979, after the filing of the application which matured into applicant's registration, but prior to the issuance of the registration; and that the assigned registration gives applicant rights superior to any rights previously asserted by any party in this proceeding.
Accordingly, applicant requests in its motion that the Board suspend proceedings herein and consider at this time the effect of the assignment of the registration to applicant; that applicant be granted a geographically unrestricted registration; and that Enterprises be denied registration. Alternatively, applicant requests that if the Board determines that applicant is entitled only to a concurrent use registration, applicant be granted a registration for the entire United States except for the area within a three-mile radius of Hair Venture I, i.e., the only one of the limited partnerships which began use of the mark "PRO-CUTS" prior to the issuance of applicant's assigned registration.
Applicant's request that Enterprises be denied registration cannot be granted by the Board. Enterprises did file an application for registration, namely, application Serial No. 73/482,557, filed May 29, 1984 for a geographically unrestricted registration of the mark "PRO-CUTS" for hairdressing salon services for men, women and children. An assignment of the application to Enterprises' asserted successor in interest, Duke Specialty Ventures, Inc., was recorded in the Assignment Branch of the Patent and Trademark Office at reel 730, frame 139. However, that application is not involved in this proceeding, and the Board has no jurisdiction over it. Rather, the application is still before the Examining Attorney, in Law Office 8, and has been suspended pending the outcome of this proceeding. Thus, the question of Enterprises' and/or Duke Specialty Ventures, Inc.'s right to registration is not before the Board. That question cannot, and will not, be determined in this proceeding, unless the application is amended to seek concurrent registration, is published without successful opposition, and is added to this proceeding. Cf.: Georgia-Southern Oil Inc. v. Richardson, 16 USPQ2d 1723 (TTAB1990).
*4 Nor are applicant's requests that it be granted a geographically unrestricted registration, or at least a registration for the entire United States except for the area within a three-mile radius of Hair Venture I, well taken. As noted above, these requests are based upon applicant's acquisition of Registration No. 1,144,560, and its claim that the assigned registration gives applicant rights superior to any rights previously asserted by any party to this proceeding. In essence, applicant seeks to "tack," for purposes of priority, the earlier use of the assigned mark onto the use of the mark sought to be registered herein.
A party seeking to "tack" its use of an earlier mark onto its use of a later mark for the same goods or services may do so only if the earlier and later marks are legal equivalents, or are indistinguishable from one another. To meet the legal equivalents test, the marks must create the same commercial impression, and cannot differ materially from one another. Thus, the fact that two marks may be confusingly similar does not necessarily mean that they are legal equivalents. See, for example: Lincoln Logs Ltd. v. Lincoln Pre-Cut Log Homes Inc., 971 F.2d 732, 23 USPQ2d 1701 (Fed.Cir.1992); Van Dyne-Crotty Inc. v. Wear-Guard Corp., 926 F.2d 1156, 17 USPQ2d 1866 (Fed.Cir.1991); Ilco Corp. v. Ideal Security Hardware Corp., 527 F.2d 1221, 188 USPQ 485 (CCPA1976); Baroid Drilling Fluids Inc. v. Sun Drilling Products, 24 USPQ2d 1048 (TTAB1992); and American Paging Inc. v. American Mobilphone Inc., 13 USPQ2d 2036 (TTAB1989), affirmed in an unpublished opinion, 17 USPQ2d 1726 (Fed.Cir.1990).
In the present case, the mark sought to be registered by applicant is the mark "PRO-CUTS" and design, as shown below:
The mark shown in the assigned registration is the mark "PRO-KUT" and design, as shown below (in reduced form):
Aside from the differences between the marks in spelling and pluralization, there is a very material difference between them because of their different design features. In short, although we agree that these marks are confusingly similar, they clearly are not legal equivalents. [FN1] Under the circumstances, applicant cannot tack onto its use of the mark "PRO-CUTS" and design the earlier use of the mark "PRO-KUT" and design. While applicant's ownership of the assigned registration might well enable it to prevail in an opposition against any application owned by Enterprises (or its asserted successor, Duke Specialty Ventures, Inc.) for an unrestricted registration of the mark "PRO-CUTS" and design for hairdressing salon services, the assigned registration is of no particular benefit to applicant in this proceeding, where the critical question is applicant's date of first use of its mark sought to be registered (or a legal equivalent thereof). Cf.: Baroid Drilling Fluids Inc. v. Sun Drilling Products, supra.
*5 For the foregoing reasons, applicant's "motion to suspend" is denied.
This brings us to Enterprises' motion to substitute. [FN2] Although Enterprises specifically asks in its motion that we substitute as user herein the twelve limited partnerships, Hair Ventures I-XII, and their asserted current owner, Duke Specialty Ventures, Inc. (hereinafter "Duke"), it appears to us that what the motion really seeks is the substitution of Duke as user.
In support of the motion, Enterprises asserts that it is a small closely held corporation; that it has done business through a number of hair care limited partnerships; that the money of each partnership was invested in a particular hair salon; that either William Schilz (president of Enterprises) or, after its inception, his corporation, Enterprises, was the general partner in each limited partnership; that it was William Schilz who actually ran the chain of salons, the limited partners being mere passive investors; that all of the rights and assets, in the "PRO-CUTS" business, of William Schilz himself, Enterprises, and 11 of the 12 limited partnerships, including their rights in the mark "PRO-CUTS" and the good will of the business associated therewith, have been sold to Duke; that the remaining limited partnership (Hair Venture XI) has been sold to a third party, which has been granted a license by Duke to use the mark "PRO-CUTS" for one year only; that the limited partnerships, having been sold, no longer exist; and that a short testimony period can be had for the purpose of allowing the parties to introduce evidence concerning, inter alia, the sale of the hair salon partnerships to Duke.
Enterprises also cites certain admissions made by applicant in applicant's brief on the case. The pertinent portion of applicant's brief on the case reads as follows:
... Defendant alleges, and Applicant does not contest, that four of the California users (Hair Ventures I-IV) commenced use of the PRO-CUTS mark before Applicant and have continuously used the mark to date. Thus, even though the California users themselves have forfeited the right to prove their uses, Applicant's acquiescence to these allegations of use specify them as exceptions, in the San Francisco Bay area only, to Applicant's claim of territorially exclusive use. (citation omitted)
Second, Applicant does not assert in this proceeding exclusive rights against the latter eight California users in the Bay area only. Applicant has no desire to become mired in whatever claims or cross-claims may exist between and among the twelve California users. Applicant does, therefore, acquiesce to the naming of all twelve California users (Hair Ventures I-XII) as exceptions, in the Bay area only, to Applicant's claim of territorially exclusive use of the PRO-CUTS mark.
It is Enterprises' contention that if applicant "truly wishes to define the Hair Ventures as third parties" to its concurrent use applications and wants them included in this proceeding, "then the third parties should be given the opportunity to defend themselves and substitute for themselves their legitimate successor in interest, which has purchased all the rights to all of the Hair Ventures and user."
*6 Enterprises' motion to substitute is accompanied by the declaration of its attorney. The declaration, in turn, is accompanied by certain exhibits identified therein, including redacted copies of an "AGREEMENT OF PURCHASE AND SALE OF ASSETS" dated March 7, 1990, and a "BILL OF SALE AND ASSIGNMENT" dated April 30, 1990. [FN3]
The first document is an agreement between
WILLIAM F. SCHILZ and SCHILZ-PRICE ENTERPRISES, INC., a California corporation (collectively with William F. Schilz the "General Partner"), the limited partnerships named in Schedule 1 (individually, including the General Partner, "Seller", in the aggregate "Sellers"), and DUKE SPECIALTY VENTURES, INC., a California corporation ("Buyer")
whereby Sellers agree to sell to Buyer all of the assets and properties owned and utilized by Sellers on or in connection with the business of owning and operating in the aggregate 11 hair care salons under the name "PRO-CUTS". The agreement is signed by Duke and by Hair Ventures I, II, IV, V, VI, VII, VIII, IX, X, and XII, the ten limited partnerships listed in Schedule 1. [FN4] Signature on behalf of Hair Venture I is made by William F. Schilz as an individual. Signature on behalf of the other nine listed Hair Ventures is made by William F. Schilz as president of Enterprises, the General Partner.
The second document is a bill of sale and assignment between
Schilz-Price Enterprises, Inc., a California corporation (the "General Partner"), the Limited Partnerships named in Schedule 1 (the "Sellers"), and Duke Specialty Ventures, Inc., a California corporation ("Buyer")
whereby the Sellers sell, convey, transfer, assign and deliver to Duke the assets of their hair care salon business, including the mark "PRO-CUTS" and the good will associated therewith. The document is signed by the same parties, and in the same manner, as the first document (again, there is no reference anywhere to Hair Venture III).
Applicant, in its brief in opposition to the motion, asserts that Enterprises never itself used the mark "PRO-CUTS" nor did it license any other entity to do so; that the users of the marks were the 12 limited partnerships in the San Francisco Bay area; that Enterprises cannot benefit from the use by the limited partnerships because that use was not licensed or controlled by Enterprises; that Enterprises was not even incorporated until one year after the use of Hair Venture I commenced; that Enterprises therefore has no standing to participate in this proceeding, which should be dismissed; that Enterprises had no transferable interest in the mark; that only the partnerships, and not Enterprises, are listed in the assignment document as assignors; that Enterprises is not a proper party to this proceeding; that whatever rights the partnerships had have assertedly been transferred to Duke; and that because they no longer have any rights in the mark, they should not be substituted as party defendants herein.
*7 Applicant also asserts that the substitution of Duke as a party defendant at this late date would be unduly prejudicial to applicant; that Enterprises' delay in moving to substitute is not excused by the fact that applicant named the wrong party in its application as an exception to its right to exclusive use; that applicant was misled, by Enterprises' pleadings in the opposition, into naming Enterprises as an exception; that Enterprises continued its deception in its answer herein and in the interrogatory answers which it provided in this proceeding; that applicant did not know about the limited partnerships until the taking by Enterprises of the testimony deposition of Enterprises' president during this proceeding; that Enterprises' proposed additional evidence is contrary to its previous evidence, including its interrogatory answers, wherein Enterprises denied that it was a partner in any partnership; and that Enterprises' motion to substitute should be denied because of Enterprises' failure to provide truthful interrogatory answers.
There are a number of problems with applicant's position. To begin with, "standing" is a concept which has to do with whether a plaintiff has a right to maintain a proceeding. This concept has no applicability to a defendant in a concurrent use proceeding. Second, applicant accepted entry of judgment against itself in the opposition with respect to its right to an unrestricted registration, and that judgment carries with it certain res judicata effects. Third, applicant has conceded in its brief on the case that Hair Ventures I-IV commenced use of the mark "PRO-CUTS" before applicant and have continuously used the mark to date, and also that applicant does not assert exclusive rights against the other Hair Ventures users in the San Francisco Bay area. It is manifest therefrom that applicant is not entitled to a geographically unrestricted registration. Fourth, even when a user in a concurrent use proceeding defaults (and there has been no default here), the applicant still has the burden of proving its entitlement to the concurrent registration sought. See: Rule 2.99(d)(3). Fifth, one of the questions which must be determined in a concurrent use proceeding is who is the owner of the adverse rights recognized by the concurrent use applicant, and who thus should be the party defendant to the proceeding and the named exception in any concurrent use registration which may ultimately be issued to applicant.
While the ultimate decision in this case as to who is the owner of the adverse rights recognized by applicant will have to await final decision (or agreement of the parties), the documents submitted by Enterprises in support of its motion to substitute indicate that at least 10 of the limited partnerships have assigned whatever rights they may have had in the mark to Duke. Inasmuch as the partnerships no longer have any rights in the mark, and indeed, according to Enterprises, no longer exist, it would be pointless to join them as party defendants to this proceeding. On the other hand, the assignment document indicates, at least prima facie, that Duke now owns the rights which the 10 listed limited partnerships had in the mark.
*8 It is not clear to the Board whether Enterprises still claims to have had, in and of itself, any ownership rights in the mark, and, if so, whether whatever rights Enterprises may have had have been assigned to Duke. We note in this regard that the assignment document is not signed by Enterprises in its own right but rather only as the general partner of 9 of the 10 signing limited partnerships. We also note that Enterprises apparently was not incorporated until one year after Hair Venture I commenced use of the mark, and was not the general partner in that firm. Further, the brief and supporting documents submitted by Enterprises in connection with its motion to substitute are totally silent with respect to the rights of Hair Venture III.
Accordingly, Enterprises' motion to substitute is granted only to the extent that Duke is hereby joined with Enterprises as a party defendant herein.
Moreover, the Board is mystified and deeply troubled by Enterprises' interrogatory answers, which, inter alia, claimed use of the mark by Enterprises; denied that Enterprises was a partner in any partnership; and stated that Enterprises owned and managed 12 hair care salons which rendered their services under the mark, but were not separate legal entities. These interrogatory answers effectively denied applicant the opportunity to obtain meaningful discovery concerning ownership of the adverse rights.
Under the circumstances, justice demands that the discovery and testimony periods be reopened, if applicant so desires, in order that applicant can take discovery concerning both this matter and the apparent transfer of rights in the mark to Duke, and introduce evidence thereon. Applicant is allowed until 30 days from the date hereof in which to advise the Board whether it wishes to have the discovery and testimony periods reopened. If applicant chooses to have these periods reopened, the party defendants will also be allowed an opportunity to offer additional evidence.
One final matter requires the Board's attention. The briefs submitted by the parties in connection with the foregoing motions indicate that in its brief on the case, applicant, which went to trial on the basis of an application seeking concurrent registration for the area comprising all of the entire United States except for the State of California, now asks that it be granted a registration for all of the United States except for the San Francisco Bay area.
It is not the practice of the Board, in a contested concurrent use registration proceeding, to grant a concurrent use applicant a registration for an area greater than that which it claimed at trial. To do otherwise would be unjust to the other party or parties to the proceeding, who are entitled to notice prior to trial of the area for which applicant seeks registration as well as the extent of the area conceded by applicant to the other party or parties. Applicant itself recognized as much when it moved, just after the institution of this proceeding, to enlarge the territory for which it sought registration to that upon which it went to trial. Ordinarily, a request by a concurrent use applicant, at this late stage of the proceeding, to enlarge the territory for which it seeks registration would be denied.
*9 However, the Board, in its determination above of Enterprises' motion to substitute, has offered applicant the option of having the discovery and testimony periods reopened. If applicant opts for reopening, the Board will entertain a motion from applicant to amend its application to seek a concurrent registration covering a larger area than that which applicant sought at the time of trial. The motion, if filed, should be filed within 30 days from the date hereof and should describe the area for which applicant now wishes to seek registration with specificity. A description reading "all of the United States except for the San Francisco Bay area" is not sufficiently definite. The excepted area, if less than an entire state, should be described in terms of counties or in other specific and definite terms. If the motion is granted, the party defendants will be allowed to take discovery and offer additional evidence concerning applicant's right to a registration for the enlarged area. The granting of such a motion does not, of course, necessarily mean that applicant will be granted a registration for the area sought. Whether applicant is entitled to a concurrent registration, and, if so, for the area sought or for some lesser area, is a matter to be determined at final hearing based on the evidence of record (in the absence of the submission by the parties of a persuasive settlement agreement).
In summary, the order to applicant to show cause is deemed discharged; Enterprises' motion filed November 9, 1992 to extend time is denied as moot; applicant's motion filed September 24, 1992 to extend time is granted; applicant's "motion to suspend" is denied; and Enterprises' motion to substitute is granted to the extent that Duke Specialty Ventures, Inc. is joined as a party defendant herein. In addition, applicant is allowed until 30 days from the date hereof in which to advise the Board whether it wishes to have the discovery and testimony periods reopened in this case, and, if applicant opts for reopening, until the same time to file, if it so desires, a motion to amend its application to enlarge the territory for which it seeks registration.
Proceedings herein, including the time for the party defendants to file their brief on the case, will remain otherwise suspended pending applicant's response to the above. [FN5]
Members, Trademark Trial and Appeal Board
FN1. Applicant also acquired, by assignment, another, later, registration, namely, Registration No. 1,461,575, issued October 20, 1987 from an application filed October 29, 1986 with a claimed date of first use of May 1, 1986, for the mark "PRO-KUT" with a different palm tree design for, inter alia, hair styling services. Although the two registered marks are not legal equivalents of applicant's mark "PRO-CUTS" and design, we agree with applicant's contention that they are confusingly similar to that mark. Likewise, they are confusingly similar to the "PRO-CUTS" and design mark of Enterprises. Accordingly, both registrations must be added to this proceeding. In the event that the Board ultimately determines that applicant is entitled to a concurrent use registration for the mark "PRO-CUTS" and design, the two registrations will be geographically restricted also.
FN2. In view of the circumstances set forth therein, and because Enterprises filed no objection thereto, applicant's motion filed September 24, 1992 for a further extension of time to respond to Enterprises' motion to substitute is granted, and applicant's response filed October 16, 1992 is accepted as timely.
FN3. These documents were executed after Enterprises' testimony period closed, on August 30, 1989, but before the beginning of applicant's rebuttal testimony period, which, as reset, closed October 25, 1990.
FN4. As noted above, Hair Venture XI was sold to a third party, which assertedly was granted a license by Duke to use the mark for one year only. No reference is made anywhere in the agreement or accompanying attachments to Hair Venture III, notwithstanding the fact that the agreement purports to sell 11 of the limited partnerships to Duke.
FN5. It appears to the Board that this is a case which could, and probably should, be settled. If, upon further consideration, the parties wish to resume negotiations for settlement, and notify the Board thereof, the Board will suspend applicant's time to file the responses called for above. For information concerning settlement agreements in concurrent use registration proceedings, see: Meijer, Inc. v. Purple Cow Pancake House, 226 USPQ 280 (TTAB1985).