Trademark Trial and Appeal Board
Patent and Trademark Office (P.T.O.)
*1 PARFUMS NAUTEE, LTD., INCORPORATED
AMERICAN INTERNATIONAL INDUSTRIES
Cancellation No. 18,174
January 15, 1992
Before Sams, Simms and Quinn
Opinion by Quinn
Parfums Nautee, Ltd., Inc. has petitioned to cancel a registration owned by American International Industries of the mark NAUGHTY for perfumes and toilet waters. [FN1] As grounds for cancellation petitioner asserts that respondent has discontinued use of the registered mark with intent not to resume use, thus resulting in an abandonment of the mark; and that the registered mark was obtained by an assignment in gross, thereby invalidating the registration. Respondent has denied the salient allegations of the petition.
This case now comes up on petitioner's motion for summary judgment. Petitioner contends that there are no genuine issues of material fact remaining for trial and that it is entitled to summary judgment in its favor. Petitioner essentially asserts that the registered mark was abandoned by its previous owner and that, therefore, the mark was not capable of assignment to the present owner, respondent. Petitioner further asserts that, following this purported assignment, respondent itself made no actual commercial use of the mark for at least three years thereafter. Petitioner's motion is accompanied by several exhibits, including respondent's responses to certain discovery requests; the affidavit of Barry Reifler, an officer of the parent company of the prior owner (assignor) of the involved registration; and excerpts from the discovery depositions of Zvi Ryzman, respondent's chief executive officer, and Terri Cooper, respondent's vice president of operations.
Respondent has objected to the entry of summary judgment, contending that genuine issues of material fact remain in this case. Respondent contends that the facts surrounding its use and the prior owner's use demonstrate that there has been no abandonment. In support of its position respondent has submitted the declaration of Zvi Ryzman.
The purpose of summary judgment is one of judicial economy, that is, to save the time and expense of a useless trial where no genuine issue of material fact remains and more evidence than is already available in connection with the summary judgment motion could not reasonably be expected to change the result. See: Pure Gold, Inc. v. Syntex (U.S.A.), Inc., 739 F.2d 624, 222 USPQ 741 (Fed.Cir.1984). In the instant case, we find that there was an abandonment of the registered mark as a matter of law and that, accordingly, petitioner is entitled to summary judgment in its favor.
As a response to a threshold question, we find that there are no genuine issues of material fact regarding petitioner's standing in this case. In opposing summary judgment respondent asserts, inter alia, that petitioner has failed to furnish any evidence of its own alleged use of NAUTEE and that, therefore, petitioner has failed to show any damage (i.e., standing) by the continued existence of the registered mark.
*2 Respondent, in attacking petitioner's standing, overlooks a crucial admission made by it in the answer. In the petition for cancellation, petitioner asserted that petitioner's mark NAUTEE has been in continuous use in connection with perfumes and fragrances since September 1987; that it owned an application to register the mark NAUTEE for perfumes and fragrances; [FN2] and that the application had been refused under Section 2(d) on the basis of respondent's registration (paragraphs 3-5). Respondent stated in its answer as follows: "Respondent admits the allegations of paragraphs 3 through 5 of the Petition." No more is necessary to prove petitioner's standing. The pleadings thus establish, as a matter of law, petitioner's standing to be heard on its claim of abandonment. Lipton Industries, Inc. v. Ralston Purina Co., 670 F.2d 1024, 213 USPQ 185, 189 (CCPA 1982).
We now turn to the pleaded grounds for cancellation. Petitioner contends that the predecessor owner of the registered mark did not use the mark for at least three years with intent not to resume use, and that following such abandonment, the registered mark was assigned to respondent, thereby constituting an assignment in gross. Moreover, petitioner contends that respondent, since acquiring the registered mark in August 1987, likewise made no use of the mark for over three years.
We find that petitioner has shown, as a matter of law, that respondent's predecessor-in-interest abandoned the mark. The name of the predecessor owner is Neslemur. [FN3] Petitioner has furnished the affidavit of Barry Reifler, vice president and chief financial officer of Kleer-Vu Industries, Inc., the parent corporation of the predecessor Neslemur. He confirmed that assets, including all right, title and interest in and to the registered mark, were conveyed to respondent in August 1987. Mr. Reifler goes on to aver as follows:
4. Pursuant to Deposition Subpoenas served upon Kleer-Vu, Neslemur and myself on April 24, 1991, I caused a complete review to be conducted of Neslemur's physical inventory listings to determine whether Neslemur had used the NAUGHTY trademark for any product or service for the period of 1985 through 1987, inclusive.
5. Based upon such review, it was determined that Neslemur did not use the NAUGHTY trademark for any product or service during the years 1985, 1986 and 1987.
6. Inasmuch as Kleer-Vu functions solely as a holding company, Kleer-Vu could not and thus did not make any use of the NAUGHTY trademark for any product or service during the years 1985, 1986 and 1987.
Mr. Reifler's assertions stand uncontroverted by any evidence. Rather than presenting contravening facts, respondent has elected to criticize the Reifler affidavit. In the declaration of Zvi Ryzman, respondent's chief executive officer, Mr. Ryzman, while conceding that respondent "does not know all of the particulars of the business operations of Neslemur previous to AII's taking over the business," nonetheless goes on to attack the competency of Mr. Reifler to make his assertions about Neslemur's use of the mark NAUGHTY. Mr. Ryzman contends that Kleer-Vu (the parent) and Neslemur (the subsidiary) manufactured different products, did business in different states and had different officers and directors. Mr. Ryzman alleges that the parent corporation did not make any of the routine business decisions for Neslemur; similarly, Mr. Ryzman states that Mr. Reifler "who was merely a vice-president and financial officer of Kleer-Vu, and who would clearly not be privy to the plans and intentions of the Neslemur management" is incompetent to testify about respondent's predecessor-in-interest's business activities.
*3 Respondent has failed to furnish any evidence to corroborate its criticisms of Mr. Reifler's sworn averments of nonuse. Respondent states that it does not know all of the particulars of the business of its predecessor in interest, yet in the same breath attacks the uncontroverted averments of Mr. Reifler. It is respondent's asserted lack of knowledge about the predecessor's business activities that led petitioner to obtain the Reifler affidavit in the first place. Even Mr. Ryzman admits that Neslemur was a "troubled business" and that it "was not doing well financially, and that it probably was forced to suspend some of its business operations such as the manufacture and sale of perfumes and toilet waters bearing the 'Naughty' mark, but with the intent to resume use as soon as it was feasible to do so." [FN4] Again, while professing that it has no information about the business of its predecessors-in-interest, respondent was able to answer Interrogatory No. 4 as follows:
Identify by product type, e.g. NAUGHTY perfume, each NAUGHTY Product sold by Respondent and/or to the extent Respondent has knowledge, sold by the Neslemur Company and/or Maison Joubert Inc. [the original registrant] prior to August 13, 1987.
From the trademark files obtained from counsel to the Neslemur Company, it appears that as recently as 1983, THE NESTLE-LeMUR COMPANY [sic] asserted use of the mark on Lucien LeLong Body Powder, Eau de Cologne and Cologne Mist. Respondent has no other information as to products produced or sold by its predecessors in interest The Neslemur Company or Maison Joubert, Inc.
Especially telling about the predecessor's nonuse is the testimony of Terri Cooper, respondent's vice president of operations. When asked whether the predecessor was selling any product under the mark NAUGHTY at the time respondent acquired the registered mark, Ms. Cooper responded "Not to my knowledge." Ms. Cooper also testified that she had never seen any invoices for sales under the mark and that she had no idea of the last sale by the predecessor under the registered mark. Ms. Cooper's sworn testimony is entirely consistent with the sworn statements in the Reifler affidavit; the Ryzman affidavit furnished by respondent simply fails to raise any genuine issue of material fact for trial regarding Neslemur's nonuse for at least three years prior to the assignment to respondent.
In view of respondent's predecessor's nonuse for at least three years prior to the assignment to respondent, we find, as a matter of law, that the assignor/predecessor had abandoned the registered mark NAUGHTY for perfumes and toilet waters. This abandonment resulted in an invalid assignment (i.e., an assignment in gross) since "[a]n abandoned trademark is not capable of assignment." See: Money Store v. Harriscorp Finance, Inc., 689 F.2d 666, 216 USPQ 11, 19 (7th Cir.1989). See generally: J.T. McCarthy, Trademarks and Unfair Competition, § 18:5 (2d ed. 1984). Inasmuch as respondent has maintained that it has no information regarding the business activites of its predecessor Neslemur, we do not see how respondent could produce at trial any evidence not currently before us which could reasonably be expected to change the result in this case.
*4 The fact that respondent paid "valuable consideration" for the registered mark does not raise a material fact issue. Respondent argues that it would have been "ludicrous" for respondent to pay for an abandoned mark. That one registered mark out of more than seventy listed in the purchase agreement and assignment documents might be abandoned, especially given the financial difficulties of Neslemur, should be no surprise to respondent. Moreover, the Ryzman declaration is silent as to the amount of consideration.
As to respondent's contention that there somehow was residual goodwill in the registered mark by virtue of the product's long shelf life and possible continued sales by retailers, this contention is wholly speculative and, in any event, unsupported. A party cannot defend against a claim of abandonment by relying on some residual goodwill generated through post-abandonment sales of the product by distributors or retailers. See: Societe Des Produits Marnier Lapostolle v. Distillerie Moccia S.R.L., 10 USPQ2d 1241, 1244 n. 5 (TTAB 1989).
Even assuming, arguendo, that there was no abandonment by Neslemur (or that there was a genuine issue of material fact relating thereto), respondent itself made no use of the registered mark for at least two years after the date of the purported assignment, thereby resulting in an abandonment by respondent.
Respondent, in partial response to Interrogatory No. 40, indicated that "Respondent has not used the mark NAUGHTY, but full [sic] intends to in the near future...." During Mr. Ryzman's discovery deposition he was asked: "Are you aware of any activity within [respondent] regarding plans to use or actually [sic] uses of the trademark NAUGHTY prior to October 20, 1989?" Mr. Ryzman answered: "I am not aware of it." Ms. Cooper was identified by Mr. Ryzman as being the most appropriate person to testify about respondent's use of the mark NAUGHTY. Ms. Cooper testified at her discovery deposition that as of the date of her deposition (October 19, 1990), respondent had not yet selected a supplier for the NAUGHTY brand fragrance product; that the packaging design for the product was not yet completed; that no order for containers for the product had been placed; and that no decision had been made as to what media in which the product might be advertised.
Mr. Ryzman, in his declaration, maintains that respondent purchased the registered mark with the intent that respondent would use the mark in connection with perfumes and toilet waters; that Neslemur, upon purchase of it by respondent, could not immediately be restarted but that a plan had to be developed "before jumping into the business purchased from Neslemur"; and that "as soon as it was feasible, AII drew up plans to manufacture and market perfumes and toilet waters bearing the 'Naughty' mark." Mr. Ryzman then goes on to state that respondent began its own actual use:
AII planned to market perfumes and toilet waters trademarked "Naughty" as of Christmas, 1990. In fact, AII began selling "Naughty" products in early January, 1991. By Christmas of 1991, AII expects to make extensive sales of "Naughty" perfumes and toilet waters throughout the United States.
*5 Mr. Ryzman's statement of no intent to abandon is little more than a denial in a pleading. Respondent's burden, which it has not met, was to provide more than a conclusory declaration. See: Imperial Tobacco Ltd. v. Philip Morris Inc., 899 F.2d 1575, 14 USPQ2d 1390, 1394 (Fed.Cir.1990). While respondent apparently began its own use in January 1991, no corroborating evidence has been furnished. We have no invoices, sales figures, and the like. Mr. Ryzman's self-serving statements are belied by respondent's inaction, an objective analysis of which furnishes a sufficient basis upon which to find abandonment.
The earliest (and only) documentation furnished by respondent of its intention to resume use is dated October 20, 1989. The two documents, captioned "New Product Request," list (in handwritten form) fourteen marks, one of which is NAUGHTY. However, when Ms. Cooper was asked in October 1990 "Has Mr. Ryzman ever told you that he intends to use the trademark NAUGHTY on a perfume or any other product by a certain date?", she replied "No, there was no indication as to the date." Respondent's declaration and the October 1989 documents simply fall short in raising an issue for trial. Given the other evidence of record, respondent's intention relative to future conduct was speculative and remote. See: Continental Grain Co. v. Strongheart Products Inc., 9 USPQ2d 1238, 1240 (TTAB 1988).
Respondent would have us conclude that its purported sales in January 1991 show that there has been no abandonment or, at the very least, show that respondent never intended not to resume use of the mark NAUGHTY.
Abandonment of a registered mark cannot be reversed by subsequent re-adoption of a mark. See: First National Bank of Omaha v. Autoteller Systems Service Corp., 9 USPQ2d 1740, 1743 (TTAB 1988). Respondent's later efforts, of whatever nature and quality, represent a new and separate use, [FN5] and cannot serve to cure the prior abandonment. See: Cerveceria India Inc. v. Cerveceria Centroamericana, S.A. 10 USPQ2d 1064, 1069 (TTAB 1989), affirmed 892 F.2d 1021, 13 USPQ2d 1307 (Fed.Cir.1989); First National Bank of Omaha, supra at 1743. Respondent has not demonstrated any constancy of effort in marketing any NAUGHTY perfume products which would constitute persuasive evidence of an intention to resume meaningful commercial use of the mark between August 1987 and January 1991. Respondent's purported actual use occurred some two and one- half years after the filing of this petition for cancellation. Such use is insufficient to maintain respondent's rights, if any. See: Continental Grain Co., supra at 1240 [defensive token use after filing of petition to cancel is insufficient to maintain rights]. [FN6]
In view of the above, petitioner's motion for summary judgment is granted. [FN7] The petition for cancellation is granted and Registration No. 348,500 will be cancelled in due course.
Members, Trademark Trial and Appeal Board
FN1. Reg. No. 348,500, issued July 27, 1937; second renewal.
FN2. Application Serial No. 73/689,392, filed October 13, 1987, alleging first use on September 17, 1987.
FN3. The assignment document identifies the predecessor as The Nestle-LeMur Company while other documents of record, including the purchase agreement, refer to the predecessor as The Neslemur Company or Neslemur Inc. We have adopted the name used by the parties in their briefs which apparently is the correct name. The discrepancy is of no moment in this case.
FN4. As shown by the Ryzman declaration, respondent is "in the business of acquiring distressed businesses with the intent of reinvigorating and turning such businesses around."
FN5. Respondent's counsel refers to respondent's use as "the sale of a new, more contemporary 'Naughty' perfume" (brief, p. 4).
FN6. It seems to us that respondent had a duty to quantify its sales to show that they were more than just a "defensive, token use."
FN7. To the extent that respondent claims that petitioner has a heavy burden of proof in this case, we direct respondent's attention to the Cerveceria Centroamericana S.A. case, supra at 1309-10 [no basis for higher burden of proof in cancellation proceedings for abandonment--cancellation petitioner claiming abandonment bears a burden of proof by a preponderance of the evidence].