Is Peloton Spinning Its Wheels? Peloton Petitions to Cancel “SPINNING” Registrations
Recently the Trademark Trial and Appeal Board (the “TTAB”) decided TV Azteca, S.A.B. de C.V. v. Jeffrey E. Martin, Can. No. 92068042 (TTAB Dec. 7, 2018) using the expedited cancellation procedure that is the subject of a current pilot program at the TTAB. The rationale for exploring the expedited procedure is to protect the integrity of the US PTO register. In that sense, the expedited cancellation procedure is akin to the “streamlined cancellation proceeding” the TTAB explored a year or two ago (and which we discussed here). Consideration of the streamlined cancellation proceeding is on hold pending exploration of the pilot program for the expedited cancellation procedure.
Unlike the streamlined cancellation proceeding, the TTAB initiates the process for expedited cancellation procedure. To do this, the TTAB identifies cancellation cases that have not concluded in default and in which the only claims are abandonment and/or non-use. Once candidate cases are identified, TTAB board members participate in the parties’ discovery conference and encourage the parties to agree to use one of the TTAB’s accelerated case resolution (“ACR”) procedures.
The TTAB makes ACR procedures available to parties with cases pending before the TTAB who seek a final determination in their matter without the time and expense of a full trial. Parties are urged to discuss the option of ACR procedures during their settlement conference, though they may decide whether to use ACR procedures later, for example after some disclosures and discovery (though the further the parties proceed into discovery, the less time and resources they save through ACR). Key to an ACR proceeding is the parties’ stipulation that the TTAB may resolve any genuine issues of material fact in lieu of trial.
In TV Azteca, the parties agreed to exchange initial disclosures and forego formal discovery. In this case, Azteca sought to register MYST for use with entertainment services related to theater productions and variety television shows. Registration was refused because of Mr. Martin’s registration for the mark for use with live performances by a musical group. To remove the obstacle to registration of its mark, Azteca sought to cancel Mr. Martin’s registration alleging non-use of the mark for at least three years prior to the petition to cancel without intent to resume use.
In an effort to prove abandonment, Azteca focused on a flyer Mr. Martin included in his disclosures promoting a March 25 performance at Pennant East. Azteca produced numerous news articles discussing Pennant East’s closure and the fact Pennant East’s liquor licenses were not renewed to suggest the March 25 performance must have occurred more than three years prior to the petition filing date because the articles indicated Pennant East had closed by then and the liquor licenses had not been renewed. But the TTAB declined to admit the news articles into evidence because they are hearsay and did not fall within the residual hearsay exception. The TTAB declined to infer that Pennant East closed just because its liquor license had not been renewed. This left Azteca with no proof that Mr. Martin had discontinued use of his mark during the three year period preceding the filing date of the petition.
Although the TTAB expressed sympathy for Azteca’s predicament of having to prove a negative (non-use) and recognized that proper inferences may be necessary to enable a plaintiff to succeed in such a claim, it maintained the requirement that inferences be based on proven foundational facts. Here, even with all reasonable inferences available, Azteca could not prove non-use. On top of that, the TTAB noted in a footnote that even if the parties had stipulated to all the evidence in the record, the outcome would have been no different because of an article published close enough to the filing date of the petition to support an inference that Mr. Martin planned to resume use.
TV Azteca highlights the risks of the expedited cancellation procedure, or at least the risks of forfeiting discovery while bearing the burden of proof. Considering how much expediting a procedure depends on removing or reducing discovery (since discovery can take so much time¹), this case may illustrate why relatively few cases have been resolved using expedited cancellation procedures or ACR generally. According to statistics about TTAB filings and performance measures posted by the PTO here, only 19 ACR cases were decided during fiscal year 2018 (up from 17 during the previous fiscal year). It is not clear how many of these were expedited cancellation proceedings. On the other hand, if the circumstances are appropriate (for example, if the parties are able to stipulate to most facts and/or there are not many witnesses), the parties may want to give ACR serious consideration because it could result in meaningful savings. The TTAB statistics indicate that total pendency for ACR trial cases during fiscal year 2018 was 106.3 weeks whereas total pendency for trial cases during the same period was 140.3 weeks. Whether an expedited cancellation procedure (or ACR more generally) is appropriate will depend a lot on the circumstances of each case and should be considered carefully by the parties.
¹Indeed, as the TTAB points out, the further the parties go into discovery, the less likely ACR is to save them time and resources.