The TTAB denied Petitioner's motion for leave to add claims of descriptiveness and fraud to a cancellation petition, and granted Respondent's motion for judgment on the pleadings on the issue of priority.
Media Online, Inc. ("Petitioner") filed a petition to cancel El Clasificado, Inc.'s ("Respondent") registration for the mark EL CLASIFICADO ONLINE for "placing advertisements of others on a website via a global computer network." In its petition, Petitioner alleged that Respondent's mark so resembled its previously used marks, CLASIFICADOSONLINE.COM and CLASIFICADOS ONLINE, that it was likely to cause confusion under Section 2(d) of the Lanham Act, and asserted priority of use. Respondent filed a motion for judgment on the pleadings on Petitioner's priority claim. A month later, Petitioner filed a cross-motion to amend its petition for cancellation to add claims of descriptiveness and fraud.
In evaluating the parties' respective claims, the TTAB considered Petitioner's cross-motion to amend its pleadings to add claims of descriptiveness (on the basis that Respondent's mark translated as "The Classified") and fraud. Petitioner based its fraud claim on the allegation that Respondent does not offer the covered services on its website. In rejecting Petitioner's motion for leave to amend, the TTAB noted that the facts that formed the basis for Petitioner's new claims appeared to have been within Petitioner's knowledge at the time of its original filing, including the cited dictionary definitions and Respondent's website content. Accordingly, the TTAB viewed the seven-month delay in Petitioner's filing to constitute "undue delay" that caused prejudice to Respondent. Petitioner argued that its delay in moving to amend was attributable to the fact that the parties were engaged in settlement discussions and that Respondent had "surprised" Petitioner by raising the affirmative defense of priority in its motion for judgment on the pleadings rather than in its answer. Noting that the parties had never filed a stipulation or consented motion to suspend proceedings for settlement discussions, the TTAB concluded Petitioner could not have reasonably concluded that it need not also move forward with its case and prepare all possible claims for trial.
The TTAB also rejected Petitioner's explanation that it delayed filing a motion to amend because it was "surprised" by Respondent's motion for judgment on the pleadings on the issue of priority. In particular, the TTAB noted that priority is an issue in the case by virtue of Petitioner's Section 2(d) claim. Thus, Respondent's ability to rely solely on its application filing date in its motion followed settled law, and its priority filing date is apparent from Respondent's registration.
Concluding that Petitioner had ample time to exercise its responsibility to identify all claims so that Respondent had proper notice, the TTAB held that "allowing piecemeal prosecution of this case would unfairly prejudice respondent by increasing the time, effort, and money that respondent would be required to expend to defend against petitioner's challenge to its registration."
The TTAB also examined Petitioner's fraud claim, finding it to be futile for failure to plead particular facts necessary to establish that Respondent had made knowingly false statements. Petitioner's mere allegation that the Respondent did not currently offer the identified services on its website was insufficient to state a fraud claim because it claimed falsehoods without stating any details about Respondent's purportedly false statements to the USPTO.
Accordingly, based upon its finding that the delay was unsupportable and likely to cause prejudice, that the claims sought to be added were available and/or known to Petitioner at the time of its original filing, and that the fraud claim as pleaded would be futile, the TTAB denied Petitioner's motion to amend.
The TTAB likewise denied Petitioner's petition to cancel and granted Respondent's motion for judgment on the pleadings regarding priority.
Turning to the priority claim, Petitioner alleged that its pleaded marks were first used in commerce on November 27, 1999. Respondent, on the other hand, filed its intent-to-use application for its EL CLASIFICADO ONLINE mark on November 4, 1999 (three weeks earlier), and was thus entitled to rely upon its filing date as its constructive first use date under Section 7(c) of the Lanham Act. Based upon these facts and its conclusion that Petitioner could not prevail on its priority claim as a matter of law, the TTAB granted Respondent's motion for judgment on the pleadings.
This decision highlights the importance of ensuring that cancellation and opposition pleadings are fully investigated and that all possible claims are included prior to initiating an action, as well as the need to plead fraud with particularity, and to act promptly to amend a pleading when additional claims come to light.