TTAB - Trademark Trial and Appeal Board - CAPITAL SPEAKERS INCORPORATED v. CAPITAL SPEAKERS CLUB OF WASHINGTON D.C. INC. Cancellation No. 19,861 May 28, 1996

*1 THIS OPINION IS CITABLE AS PRECEDENT OF THE T.T.A.B.

 

Trademark Trial and Appeal Board

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

 

CAPITAL SPEAKERS INCORPORATED

v.

CAPITAL SPEAKERS CLUB OF WASHINGTON D.C. INC.

Cancellation No. 19,861

May 28, 1996

 

Before Simms, Hanak and Hairston

 

 

Administrative Trademark Judges

 

 

Opinion by Hanak

 

 

Administrative Trademark Judge

 

 

 In June 1991 Capital Speakers Incorporated (CSI or petitioner) filed a petition to cancel service mark Registration No. 1,505,275 owned by Capital Speakers Club of Washington D.C. Inc. (Club or respondent). The mark of this registration is depicted below, and the services, as set forth in the registration, are as follows: "Social club services, including the fostering of interest in public speaking." The registration issued on September 20, 1988 with a claimed first use date of 1951. Respondent disclaimed the exclusive right to use both CAPITAL SPEAKERS CLUB and WASHINGTON, D.C. apart from the mark as shown.

 

 

 

 

 For the sake of clarity, we are reproducing below paragraphs 3, 6, 7 and 8 of the petition for cancellation. In paragraph 3, petitioner describes respondent. In paragraphs 6, 7 and 8 petitioner sets forth the grounds upon which it seeks cancellation.

   3. Upon information and belief, Respondent, Capital Speakers Club of Washington, D.C., Inc. is a corporation organized and existing under the laws of the District of Columbia with a mailing address of 3203 Beech Street, N.W., Washington, D.C. 20015.

   6. Upon information and belief, Respondent is a private club that does not render services in trade to the public other than its membership, and has thus not rendered services in commerce as defined under 15 USC Section 1127, making the application that matured into Registration No. 1,505,275 void ab initio and the registration voidable.

   7. The private activities of private clubs are not lawfully regulable by Congress under the commerce clause of the United States Constitution, and thus the private "services" rendered by Respondent to its membership do not constitute "commerce" as defined under 15 USC Section 1127, making the application that matured into Registration No. 1,505,276 void ab initio and the registration voidable.

   8. Upon information and belief, if Respondent has ever rendered services to the public outside of its membership, Respondent has abandoned its CAPITAL SPEAKERS CLUB WASHINGTON, D.C. CSC AND DESIGN mark, which is the subject of Registration No. 1,505,275, as a result of nonuse of the mark in commerce in connection with the "services" there identified as "social club services, including the fostering of interest in public speaking" for at least the past two (2) years.

 

 

 In September 1991 respondent filed its answer which, among other things, admitted the allegations contained in paragraph 3 of the petition for cancellation, and denied the allegations of paragraphs 6, 7 and 8.

 

 

 In November 1991 respondent filed a 21-page brief titled "Motion to Dismiss or in the Alternative for Summary Judgment." At page 1 of the motion, respondent stated as follows: "In regards to petitioner's first and second theories of relief [petition paragraphs 6 and 7], the petition fails to state a cause of action that entitles petitioner to relief and accordingly respondent is entitled to judgment as a matter of law." At pages 19 and 20 of the motion, respondent stated as follows: "Petitioner's third allegation in the Petition for Cancellation (paragraph 8) asserts that respondent has abandoned the mark. The Club contests this factual allegation and asserts that this allegation has no basis in fact." Respondent's motion was supported with the affidavit of Mrs. William E. Linden, respondent's then president.

 

 

  *2 In an order dated April 13, 1992, the Board noted that respondent's motion "refers to matters outside the pleadings" and thus "under Rule 12(b) the motion must be treated in its entirety as one for summary judgment." (Order page 2). The Board also permitted petitioner time to take discovery (including the deposition of Mrs. Linden) before having to respond to respondent's motion for summary judgment. In orders dated August 26, 1992; December 15, 1992; and June 4, 1993, the Board resolved discovery disputes and, in each case, permitted petitioner additional time to file a response to respondent's motion for summary judgment. [FN1]

 

 

 Subsequently, the parties filed stipulated motions to suspend this proceeding pending settlement discussions. In an order dated November 7, 1994 the Board inquired as to "whether settlement negotiations are still continuing or whether proceedings should be resumed." In an order dated January 20, 1995, the Board noted that "petitioner has responded to the Board's [November 7, 1994] status request by asking that proceedings herein be resumed. Respondent has failed to respond." Accordingly, the Board allowed petitioner time to respond to respondent's motion for summary judgment, and noted that "proceedings otherwise remain suspended."

 

 

 On March 17, 1995 petitioner filed two papers: (1) "Petitioner's Opposition to Respondent's Motion for Summary Judgment," and (2) "Petitioner's Motion for Leave to File an Amended and Supplemental Petition for Cancellation." As clarified in a paper dated April 13, 1995, petitioner's motion to amend sought to add the claim that respondent committed fraud when it applied to register its mark.

 

 

 On April 4, 1995 respondent filed a paper opposing petitioner's motion to amend its petition for cancellation, noting that said motion is "not germane to the issues raised in the Summary Judgment." (Respondent's Motion to Strike page 1).

 

 

 In an order dated August 1, 1995, the Board noted that "if petitioner is not allowed to raise the matter of amending its petition to cancel at the present point, and respondent is successful in its motion for summary judgment, petitioner will be without recourse to raise the additional ground for cancellation." The Board then permitted respondent time "to file a response to petitioner's motion [to amend the petition] on the merits, if it [respondent] so desires." (Order page 2).

 

 

 Thereafter, respondent filed a brief opposing petitioner's motion to amend on the merits, and petitioner filed a "Reply Memorandum in Further Support of Its Motion for Leave to File an Amended Petition for Cancellation," which we have elected to consider. [FN2]

 

 

 Thus, there are pending before us two motions: (1) Respondent's motion for summary judgment on the grounds set forth in the original petition for cancellation, and (2) Petitioner's motion to amend the cancellation petition to add a claim that respondent committed fraud during the application process which resulted in the issuance of Registration No. 1,505,275. We will consider this latter motion first.

 

 

  *3 As previously noted, petitioner's motion to amend to add a claim of fraud was filed in March 1995, nearly four years after the original petition for cancellation was filed in June 1991. The basis of petitioner's claim of fraud is that when respondent filed on September 30, 1986 the application which matured into Registration No. 1,505,275, respondent had "clear knowledge of [petitioner] CSI and its use of the mark CAPITAL SPEAKERS," and yet respondent, in its application, represented to the PTO that to the best of its "knowledge and belief no other person, firm, corporation, or association has the right to use said mark in commerce, either in the identical form or in such near resemblance thereto as may be likely, when applied to the goods of such other person, to cause confusion, to cause mistake or to deceive ..." (Petitioner's motion pages 2 and 3). There is no dispute that in response to petitioner's Request for Admission No. 5, respondent stated, in part, as follows: "Respondent admits it had knowledge of the petitioner's business activity and infringing use of the mark CAPITAL SPEAKERS prior to filing its application for registration on September 30, 1986." (Petitioner's motion page 2). Petitioner then argues that "the amendment is based in part upon facts wholly within the knowledge and control of the Club since 1986," and that petitioner "only first discovered the facts underlying the amended allegation concerning fraud-in-the-procurement during the progress of discovery." (Petitioner's motion page 4, emphasis added).

 

 

 Even assuming for the sake of argument that petitioner "first discovered the facts underlying the amended allegation concerning fraud-in-the-procurement during the progress of discovery," what petitioner fails to note is that respondent's answer to petitioner's Request for Admission No. 5 was served on petitioner on November 4, 1991, well over three years before petitioner moved for leave to amend its petition in March 1995. Indeed, respondent's answer to petitioner's Request for Admission No. 5 was served on petitioner ten days before respondent moved for summary judgment on November 14, 1991. While it might well have been impractical for petitioner to have moved to amend the petition in the short period between November 4 and November 14, 1991, petitioner could have and should have moved to amend its petition in late 1991 or early 1992. Obviously, at that time all of the facts in the file history of Registration No. 1,505,275 were available to petitioner as was respondent's answer to petitioner's Request for Admission No. 5. Moreover, in its November 14, 1991 motion for summary judgment, respondent stated that "in 1985 [respondent] became aware of [petitioner's] adverse use on the mark CAPITAL SPEAKERS ... [and] notified [petitioner] that its use of the mark was conflicting and adverse to [respondent]." (Motion p. 5). Therefore, in November 1991, petitioner had all of the facts that it needed to file a motion to amend its original petition for cancellation to add a claim that respondent committed fraud during the application process.

 

 

  *4 Finally, we note that in respondent's opposition to petitioner's motion for leave to amend, respondent's counsel stated that "on information and belief, petitioner had discussions with respondent's representatives regarding the trademark conflict as early as 1985. Thus, petitioner was fully aware or on notice that respondent had knowledge of petitioner's conflicting use of the mark before respondent applied for its registration in 1986." (Respondent's brief p. 3). See also the allegations at page 5 of respondent's November 1991 motion for summary judgment regarding each party's awareness in 1985 of the other party's use of its respective mark. Supra. In petitioner's reply memorandum in further support of its motion for leave to amend, petitioner's counsel does not contend that there were no 1985 settlement discussions, but rather argues that "none of these alleged conversations had anything whatsoever to do with the fraud issues raised in [petitioner's] present motion to amend." (Reply p. 5). We fail to understand this reasoning inasmuch as if there were settlement discussions in 1985 between petitioner and respondent, then petitioner clearly would have been aware of the fact that respondent was in turn aware of petitioner. Respondent's knowledge of petitioner and petitioner's mark in 1985 and 1986 is the crux of petitioner's fraud claim that respondent failed to disclose to the PTO the existence of petitioner when respondent applied to register its mark on September 30, 1986.

 

 

 Nevertheless, even if we were to assume that there were no 1985 settlement discussions, there is still no dispute that in November 1991 when respondent answered petitioner's Request for Admission No. 5 and filed its motion for summary judgment, petitioner was then fully aware of all the facts that it needed to amend its petition to add its fraud claim. This Board will simply not grant petitioner's March 1995 motion to amend to add a claim of fraud when petitioner was fully aware of all the facts that it needed to add such a claim in November 1991, well over 3 years earlier.

 

 

 By way of analogy, Trademark Rule 2.114(b)(2)(i) requires that a  "counterclaim shall be pleaded promptly after the grounds therefor are learned during the course of the cancellation proceeding." This Board has held that a delay of 1 year (June 1987-June 1988) in filing a counterclaim once the grounds for the counterclaim were learned was not prompt, and our primary reviewing Court affirmed our grant of summary judgment noting that a determination of what is prompt is "a determination to be made by the board in the first instance." Vitaline Corp. v. General Mills Inc., 891 F.2d 273, 13 USPQ2d 1172, 1174 (Fed. Cir. 1989). See also Long John Silver's, Inc. v. Lou Scharf Inc., 213 USPQ 263, 265 (TTAB 1982). To grant petitioner's very untimely motion to amend would prejudice respondent by needlessly prolonging this proceeding because, as will be discussed below, respondent's motion for summary judgment will be granted.

 

 

  *5 Moreover, petitioner's proposed fraud claim is legally insufficient because petitioner does not deny that respondent is the prior user. As the prior user, respondent was under no obligation to disclose to the PTO petitioner's subsequent use when respondent applied to register its mark on September 30, 1986. See 3 J. McCarthy, McCarthy on Trademarks and Unfair Competition; 31.21[3][d] at page 31-114 (3d ed. 1995) ("If applicant has a good faith belief that it is the senior user, then the oath cannot be fraudulent. Any alleged failure to disclose use by junior users is irrelevant and cannot be material to the grant of a federal registration.").

 

 

 Turning to respondent's motion for summary judgment, we note that in Petitioner's Opposition to Respondent's Motion for Summary Judgment, petitioner has failed to address respondent's argument that there is no factual dispute that respondent has not abandoned its registered mark. Moreover, the record demonstrates that there is no factual dispute that respondent has used the registered mark continously since 1951. Accordingly, summary judgment is hereby entered in respondent's favor on petitioner's claim that respondent abandoned its registered mark (paragraph 8 of the original petition for cancellation). To the extent that petitioner's abandonment claim (paragraph 8) might be interpreted as a contention that respondent never used its mark in commerce, then petitioner's abandonment claim (paragraph 8) is merely an elaboration of the claims which petitioner set forth in paragraphs 6 and 7 of the original petition for cancellation.

 

 

 Turning next to the claims set forth in paragraphs 6 and 7 of the original petition for cancellation (see above), it appears that petitioner's "claims" in reality are but one claim stated in different wording. In essence, petitioner contends that respondent is a private club which renders its services solely to its members and not to other segments of the public. Paragraph six alleges that respondent "has thus not rendered services in commerce as defined under 15 USC 1127," and paragraph 7 alleges that "the private 'services' rendered by respondent to its membership do not constitute 'commerce' as defined under 15 USC 1127." Both paragraphs 6 and 7 conclude with the following identical wording:" ... making the application that matured into Registration No. 1,505,275 void ab initio and the registration voidable."

 

 

 In Petitioner's Opposition to Respondent's Motion for Summary Judgment, petitioner elaborates on its claim as follows: "The Club [respondent] is nothing more than a private society that promotes and renders its purported services solely to its members, not the general public. The Club's activities are not, and never have been, an engagement in commerce or trade. ... The Club's objectives, however, are not accomplished by rendering any 'services' to the public. Rather, the Club's 'membership comes together for joint luncheons, special workshops, and social meetings such as the Fall Tea and the Speakers Ball.' ... There is no indication in the record that these 'events' are offered to or attended by the general public ... Consistent with the Club's discovery responses to date, there is no indication other than that the activities engaged in by the Club in connection with its mark consist of services provided solely for the Club's membership." (Petitioner's Opposition to Respondent's Motion for Summary Judgment pages 1, 3, and 6). [FN3]

 

 

  *6 To clarify matters at the outset, as previously noted, petitioner stated in paragraph 3 of its petition for cancellation (see above) that respondent "is a corporation organized and existing under the laws of the District of Columbia with a mailing address of 3203 Beech Street, N.W., Washington, D.C. 20015." Obviously, Congress can regulate commerce within the District of Columbia. Thus, the issue in this case is not one of deciding whether respondent's activities are in intrastate or interstate commerce, as was the case in Larry Harmon Pictures Corp. v. The Williams Restaurant Corp., 929 F.2d 662, 18 USPQ2d 1292 (Fed. Cir. 1991). Moreover, in its opposition to respondent's motion for summary judgment, petitioner has not taken issue with respondent's contention that "the Club [respondent] presently operates three chapters which primarily operate in Virginia, Maryland and the District of Columbia." (Respondent's Motion for Summary Judgment page 2).

 

 

 Rather, the only legal issue to be decided is whether a private club (or society) which renders services solely to its members and no one else is entitled to obtain and maintain a federal registration based simply upon those member-only services.

 

 

 To be perfectly clear, it is respondent's contention that it has been engaged in "fostering improved public speaking for its members and the public since the Club's [respondent's] inception." (Respondent's Motion for Summary Judgment page 2, emphasis added). However, for the purposes of deciding respondent's motion for summary judgment, we will assume that the facts are as petitioner (the non-moving party) says they are. See Larry Harmon Pictures, 18 USPQ2d at 1293 ("In [granting summary judgment the Board] stated that it 'resolved all factual disputes in favor of [the non-moving party]' and 'construed all inferences to be drawn from established facts in the light most favorable to [the non-moving party].' The proper standard for considering a summary judgment motion was therefore applied. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).") In other words, in deciding respondent's motion for summary judgment, we will accept petitioner's allegation that respondent is a private club which provides its services of fostering interest in public speaking solely to its members, and to no one else.

 

 

 Having so framed the issue, we note that petitioner has cited no authority for the proposition that a private club which provides services solely to its members may not obtain a federal service mark registration for providing such member-only services, nor has petitioner cited any authority that member-only services are not commerce.

 

 

 On the other hand, we note that it is quite common for associations, clubs, societies, fraternities, sororities etc. to obtain federal registrations for services provided to their members. Indeed, the Trademark Manual of Examining Procedure (2d ed. 1993) explains International Class 42 (Miscellaneous Services) by listing various examples of said services including the following: "services (not included in other classes) rendered by associations to their own members." TMEP at page 1400-14.

 

 

  *7 Of course, the TEMP is not binding on this Board, and it is certainly not binding upon a court. See West Florida Seafood, Inc. v. Jet Restaurants, Inc., 31 F.3d 1122, 31 USPQ2d 1660, 1664 n. 8 (Fed. Cir. 1994); In re Wine Society of America Inc., 12 USPQ2d 1139, 1141 (TTAB 1989). However, absent any authority to the contrary, we see no purpose in prohibiting associations (clubs, societies etc.) from obtaining service mark registrations for the provision of services to their own members.

 

 

 In its motion for summary judgment, respondent has cited a plethora of cases where federal registrations were granted to private associations. As respondent points out at page 19 of its motion for summary judgment, denying a federal registration to private associations, clubs, societies etc. "would cause confusion in the marketplace not only for these clubs [and their members], but for other businesses." Moreover, as respondent further points out, denying federal registration to private, non-profit associations would result in a situation where commercial businesses like petitioner "would be virtually unimpeded to unfairly benefit and profit from pirating the reputation of such [private] organizations." (Motion for Summary Judgment page 19).

 

 

 We frankly confess that we have been unable to locate any authority where the precise argument advanced by petitioner has been discussed. That is to say, we have not located any authority which directly addresses the issue of whether an association, society, etc. which renders services solely to its members is entitled to federal registration. However, the Court's decision in American International Reinsurance Co., Inc. v. Airco, Inc., 570 F.2d 941, 197 USPQ 69 (CCPA 1978); cert. denied 439 U.S. 866, 200 USPQ 64 (1978) is instructive. In affirming the granting of applicant's cross-motion for summary judgment, the Court had this to say at pages 70-71:

   The dispositive issue, as briefed and argued by the parties, is whether the "administering of annuity plans for others," where the "others" is restricted to employees and ex-employees (and their surviving beneficiaries) of applicant or of a subsidiary or affiliate of applicant is capable of forming the basis of a service mark registration.

   While the [Lanham Trademark] Act defines the term "service mark," it does not define the broad term "services." Similarly, the legislative history of the Act addresses the term "service mark" but sheds little light on what was intended to be meant by "services." It would appear self-evident that no attempt was made to define services simply because of the plethora of services that the human mind is capable of conceiving. This, ipso facto, would suggest that the term be liberally construed....

   The fact that the services in question are offered only to applicant's employees (and the employees of its subsidiaries and affiliates) is of no moment; the Act does not preclude registration simply because the services are offered only to a limited segment of the public (that the employees are, indeed, members of the public cannot be seriously questioned - being employed by applicant does not strip them of this status).

 

 

  *8 In view of the reasoning in American International Reinsurance and the long-standing practice of the PTO to grant service mark registrations to associations, clubs, societies, etc. who render services "to their own members" (TMEP at p. 1400-14), we find that, as a matter of law, respondent is entitled to its service mark registration even assuming for the sake of argument that respondent provides services solely to its own members, as petitioner contends. [FN4]

 

 

 In summary, petitioner's motion to amend the petition for cancellation to add a fraud claim is denied; respondent's motion for summary judgment is granted; and the cancellation proceeding is dismissed.

 

 

R. L. Simms

 

 

E. W. Hanak

 

 

P. T. Hairston

 

 

Aministrative Trademark Judges

 

 

Trademark Trial and Appeal Board

 

 

FN1. In retrospect, the better practice would have been for the Interlocutory Attorney to have separated respondent's motion to dismiss for failure to state a claim as to the allegations of paragraphs 6 and 7 of the cancellation petition from respondent's motion for summary judgment as to the allegations of paragraph 8 of the cancellation petition. The former could then have been dealt with expeditiously because no discovery was needed. This might well have shortened this entire proceeding dramatically.

 

 

FN2. Likewise, we have elected to consider respondent's reply brief in support of its summary judgment motion filed on April 4, 1995. In so doing, we are denying petitioner's motion to strike respondent's reply brief filed on April 13, 1995. Respondent's original brief in support of its summary judgment motion was filed in November 1991, well over three years prior to the filing of its reply brief in April 1995. However, in its motion to strike respondent's reply brief, petitioner also asked that all "alleged facts ... be viewed in the light most favorable to CSI as the party opposing the present motion for summary judgment." (Motion page 1). Obviously, we are granting this request, as we would have even if petitioner had not made the request. See infra.

 

 

FN3. Petitioner also argues that the Lanham Trademark Act was enacted entirely for economic purposes, and that respondent "does not 'sell' its services" and "derives no revenue from its [respondent's] activities, but rather from membership dues." (Petitioner's Opposition to Respondent's Motion for Summary Judgment pages 9-11). One need only look to Sections 4 and 45 of the Lanham Trademark Act (15 USC 1054 and 1127) to see that registrations can be granted to entities possessing no "industrial or commercial establishment" (15 USC 1054) and that "persons" entitled to registrations include not only firms and corporations, but also associations (15 USC 1127, definitions of "person; juristic person" and "service mark"). Moreover, the giving of services is sufficient for registration. A for-profit sale is not required. Cf. NCTA v. American Cinema Editors, 937 F.2d 1572, 19 USPQ2d 1424, 1425 (Fed. Cir. 1991) (subject registration was for "conducting award presentation ceremonies for excellence in cable television broadcasting").

 Finally, as for the claim in paragraph 7 of the cancellation petition that  "the private activities of private clubs are not lawfully regulable by Congress under the commerce clause of the United States Constitution," suffice it to say that this Board -- as an administrative tribunal -- lacks authority to make such a determination. In re Mavety Media Group Ltd., 33 F.3d 1367, 31 USPQ2d 1923, 1928 (Fed. Cir. 1994); Zirco Corp. v. AT&T, 21 USPQ2d 1542, 1544 (TTAB 1991); Harjo v. Pro Football Inc., 30 USPQ2d 1828, 1833 (TTAB 1994).

 

 

FN4. We recognize that subsequent to American International Reinsurance, the Court held that a corporation's shareholder dividend reinvestment and share purchase plan (Plan) did not constitute a service because "the 'owner' of a corporation is the body of shareholders as a whole" and hence "the Plan's offer to the shareholders, as a whole, to increase their ownership in Enterprises is akin to an offer to the owner of the corporation, and thus is equivalent to an offer of a service to the corporation itself." In re Canadian Pacific Limited, 754 F.2d 992, 224 USPQ 971, 974 (Fed. Cir. 1985) (original emphasis). At first blush, the reasoning of Canadian Pacific appears applicable here. In response to petitioner's Request for Admission No. 4, respondent stated, in part, that respondent "is an organization comprised of its members and is not a publicly owned or operated organization." One could argue that because respondent Club is "comprised of its members" and because, for the purposes of deciding respondent's summary judgment motion, we are assuming that respondent Club provides its services solely to its own members, that hence there is no rendering of a service because, to use the words of Canadian Pacific, "there is no benefit or service conferred upon 'another,"' 224 USPQ at 974.

 However, we believe that this is a superficial interpretation of Canadian Pacific. In that case, the Court was careful to state that "we must look closely at what is being offered here and to whom it is being offered." 224 USPQ at 973. Petitioner acknowledges that the "what" in this case is "fostering improved public speaking." (Petitioner's Opposition to Respondent's Motion for Summary Judgment page 4). Moreover, petitioner further acknowledges that there is a "membership fee charged to the Club's members for services provided to the Club's members." (Id. p.4, original emphasis).

 In Canadian Pacific, the "what" provided by the Plan was -- to use appellant's own words -- "reinvestment [of dividends], which in turn increases capitalization, [benefiting] the shareholder and not just the corporation." 224 USPQ at 974. The Court stated "that in this particular respect shareholders and corporations are inseparably tied together." 224 USPQ at 974 (emphasis added).

 In the present case, the fees or dues paid to the respondent Club by its members do not increase the Club's capitalization. Instead, as acknowledged by petitioner, the fees paid by the members are for services (fostering improved public speaking) provided by the Club to its members. Hence, the present case presents a fact situation more like that of American International Reinsurance where services (administering annuity plans) were provided to a limited group of people (applicant's employees).

 In Canadian Pacific, had the services to shareholders been air transportation services for which the shareholders paid fees, the "what" would have changed dramatically and the shareholders and corporation would, in that particular respect, not have been "inseparably tied together."

 

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