Denying Respondent Tru Development’s abandonment counterclaim, the Board granted Petitioner Double Coin’s petition for cancellation of a registration for the mark ROAD WARRIOR for tires, finding a likelihood of confusion with the registered mark WARRIOR, in the stylized form shown below, for automobile tires. Tru was unable to prove nonuse of the WARRIOR mark for three consecutive years, and failed to carry its burden of proof to establish that Double Count intended not to resume use of the mark during the period of nonuse. Double Coin Holdings, Ltd. v. Tru Development, Cancellation No. 92063808 (October 1, 2019) [precedential] (Opinion by Judge Jonathan Hudis).

Likelihood of Confusion: In a cancellation proceeding in which both parties own registrations, priority is an issue. Couch/Braunsdorf Affinity, Inc. v. 12 Interactive, LLC, 110 USPQ2d 1458, 1474 (TTAB 2014). Double Coin established priority from a date “well prior” to Tru’s constructive first use date of November 13, 2014, the filing date of its underlying application.

The Board found the goods of the parties to be in part legally identical, and presumed that those goods travel in the same channels of trade to the same classes of purchasers. Cai v. Diamond Hong, Inc., 127 USPQ2d 1797, 1801 (Fed. Cir. 2018); In re Viterra, Inc., 101 USPQ2d 1905, 1908 (Fed. Cir. 2012)).

As to the marks, the Board deemed the word “road” to be weak highly suggestive of, and a weak source identifier for, tires. Observing that adding a generic, descriptive, or highly suggestive term to the entire mark of another is generally not sufficient to avoid confusion, the Board found that ROAD WARRIOR “looks, sounds, and conveys the impression of being a line extension of WARRIOR,” and that the marks at issue are “similar in their entireties in appearance, sound, connotation and overall commercial impression.”

There was no evidence that consumers exercise a higher than ordinary degree of purchasing case in buying tires, and so this du Pont factor was neutral. Tru pointed to the lack of evidence of actual confusion, but the Board found that there had not been a reasonable opportunity for confusion to occur, since Double Coin had “temporarily withdrawn” its tires from the United States market. In any case, “it is unnecessary to show actual confusion in establishing likelihood of confusion.” Giant Food, Inc. v. Nation’s Foodservice, Inc., 218 USPQ 390, 396 (Fed. Cir. 1983).

Balancing the relevant du Pont factors, the Board found a likelihood of confusion.

Laches: Tru’s affirmative defense of laches fell flat. There was no evidence that Double Coin had actual knowledge of Tru’s use of the ROAD WARRIOR mark, and so the date of issuance of the challenged registration (September 1, 2015) was the applicable date for the beginning of the laches period. Double Coin’s cancellation petition was filed a mere 8 months later, and no case law supports a finding that this amount of time is unreasonable. The Board therefore found that this is “an insufficient period to be considered undue or unreasonable for laches to apply.” Moreover, Tru failed to show that it suffered economic prejudice resulting from Double Coin’s delay in petitioning for cancellation.

Abandonment: Section 45 of the Lanham Act states that abandonment of a mark occurs when its use “has been discontinued with an intent not to resume such use.” Furthermore, “‘Use’ of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark.” The concept of “nonuse” should be “interpreted with flexibility to encompass a variety of commercial uses.” See Lewis Silkin LLP v. Firebrand LLC, 129 USPQ2d 1015 (TTAB 2018). Section 45 further states that “Nonuse for 3 consecutive years shall be prima facie evidence of abandonment.”

In August 2015, Double Coin announced that it intended to halt shipments of tires to the United States due to high tariffs that had been imposed on Chinese goods. The article also stated that Double Coin’s parent was seeking production facilities outside of China, including possibly the United States, in order to bring its tires sales back to the United States. Double Coin’s expert witness testified, without rebuttal, that the approach taken by Double Coin to avoid the high tariffs was undertaken in other industries, such as the furniture industry.

The question for the Board was “whether Double Coin’s decision to discontinue sales in the United States in response to the imposition of tariffs, in-and-of-itself, was ‘excusable,’ that is, a reasonable business judgment under the circumstances.”

To prove excusable nonuse, the registrant must produce evidence showing that, under his particular circumstances, his activities are those that a reasonable businessman, who had a bona fide intent to use the mark in United States commerce, would have undertaken. Rivard v. Linville, 133 F.3d 1446, 45 USPQ2d 1374, 1376 (Fed. Cir. 1998).

The evidence of record failed to show that Double Coin had discontinued use of its mark for “three consecutive years,” and so there was no prima facie abandonment under Section 45 of the Lanham Act. Therefore the burden of proving abandonment remained with Tru.

Double Coin had discontinued use of its mark for two-and-one-half years, but did it intend not to resume use? In addition to its statements in the article discussed above, Double Coin (1) was active in opening a new facility in Thailand to avoid the tariffs on some tires, (2) was active in seeking lower tariffs on other tires, (3) renewed it importation of certain tires in January 2018, (4) prepared new price lists simultaneously with the resumed importation of certain tires from China, and (5) maintained its website during the period of non-use.

Finding this case similar to Crash Dummy Movie, LLC v. Mattel, Inc., 94 USPQ2d 1315 (Fed. Cir. 2010), the Board found Double Coin’s efforts to be sufficient to show that its cessation of use of the WARRIOR mark was “unaccompanied by any intent not to resume use.”

When it announced discontinuation of sales in the United States due to the imposition of high tariffs, Double Coin also publicly stated that it intended to find an alternative source of manufacture, including possibly in the United States. *** Double Coin subsequently followed through on its intention to build a new factory to source the goods outside China by building a factory in Thailand, which Double Coin’s expert Ms. Coates explained “included finding a suitable location, obtaining operating permits, building the actual factory, acquiring and installing manufacturing equipment, hiring and training workers, beginning production, and achieving quality standards for export to the U.S.” *** These are not the statements and acts of an entity that intended to leave the U.S. market permanently, never to return.

The Board therefore found that Tru failed to prove abandonment by a preponderance of the evidence.

Conclusion: The Board denied the counterclaim for abandonment and granted the petition for cancellation.

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TTABlog comment: Good discussion of the abandonment issue but in the end not a difficult conclusion.

Text Copyright John L. Welch 2019.