Here’s another 2017 precedential interlocutory ruling that slipped under the TTABlog radar. In this consolidated opposition and cancellation proceeding, the Board considered whether an answer may be amended to add an omitted counterclaim “when justice so requires,” or whether under FRCP 15 a compulsory counterclaim must be pleaded in the original answer (unless based on newly discovered grounds). The Board ruled that the failure to plead a compulsory counterclaim in an original answer is not a per se bar to its later assertion in the same proceeding. Jive Software, Inc. v. Jive Communications, Inc., Opposition No. 91218826 (parent) (December 20, 2017) [precedential].

This proceeding began with an opposition filed on October 14, 2014. Applicant Jive Communications filed its answer on November 5, 2014, without any counterclaim. Beginning on December 12, 2014, the parties sought and obtained numerous suspensions of the opposition in view of settlement negotiations, and the proceeding remained in suspension until May 11, 2017.

Each of the parties then filed two petitions for cancellation. Shortly thereafter, Applicant Jive Communications also filed a motion for leave to amend its answer in the opposition to add a counterclaim for cancellation, and it also sought to amend its answer as a matter of course in one of the cancellation proceedings brought by opposer, to add a counterclaim for cancellation of two of opposer’s registrations. Applicant also moved to consolidate all five proceedings.

Opposer Jive Software challenged applicant’s amendments and its two petitions for cancellation on the ground that the new claims were compulsory counterclaims that should have been raised in applicant’s original answer and therefore were time barred.

The Board observed that, under Trademark Rule 2.106(b)(3)(i),  a “defense attacking the validity of a registration pleaded in an opposition is a compulsory counterclaim if grounds for the counterclaim exist at the time when the answer is filed or are learned during the course of the opposition proceeding.”

The purpose of the compulsory counterclaim rule is to avoid multiple proceedings. The Rule states that “[i]f grounds for a counterclaim are known to the applicant when the answer to the opposition is filed, the counterclaim shall be pleaded with or as part of the answer. If grounds for a counterclaim are learned during the course of the opposition proceeding, the counterclaim shall be pleaded promptly after the grounds therefor are learned.” The Board observed that the language of the Rule “does not suggest that the answer may never be amended to include an omitted counterclaim.”

The Trademark Rules explicitly provide that “[p]leadings in [Board proceedings] may be amended in the same manner and to the same extent as in a civil action in a United States district court.” Trademark Rule 2.107(a) (oppositions), 2.115 (petitions for cancellation). Federal Rule 15(a), made applicable to inter partes proceedings by Trademark Rule 2.116(a), further provides that “leave [to amend a pleading] shall be freely given when justice so requires.”

The Board has ruled on motions to amend to add an omitted compulsory counterclaim under the Trademark Rules, in view of the flexible standard of Fed. R. Civ. P. 15(a), allowing amendment when justice so requires, even in cases where the counterclaim was not included in the original answer and was not based on newly discovered evidence. [see cited cases].

To be clear, Trademark Rules 2.106(b)(3)(i) and 2.114(b)(3)(i) do not require that, after a defendant’s initial answer, amendment to add an omitted compulsory counterclaim must be denied where the movant has not demonstrated that the counterclaim is based on newly-acquired evidence.

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The rules require compulsory counterclaims to be pleaded in the answer, if known, but under Fed. R. Civ. P. 15(a), where justice requires, answers may be amended to add an omitted compulsory counterclaim, subject to the same rules applicable to other amendments to pleadings.

Turning to the circumstance of this case, the Board found that Applicant Jive Communications did not unduly delay by waiting two years after filing its answer to introduce the counterclaim. Applicant’s delay in attempting to amend its answer and assert its counterclaim was limited to the brief period of time during which the case was not suspended. Neither party pointed to any evidence of prejudice caused by the short delay.

Although it would have been better practice for Applicant to plead the counterclaim with its original answer, Applicant’s forbearance from filing an amendment as a matter of course, or later with a motion for leave to amend was not unreasonable.

Moreover, the Board observed, it would be unfair to deem Applicant’s motion to amend untimely just because a few weeks passed after the answer was filed and before proceedings were formally suspended. Opposer Jive Software would not be prejudiced by the amendment, whereas a refusal to allow a compulsory counterclaim “could preclude Applicant from raising those claims in any subsequent proceeding between these parties.”

Taking all circumstances into account, and applying the liberal standards of Rule 15, the Board ruled in favor of applicant on the subject motion to amend and it deemed the its two petitions for cancellation to be timely. The Board also ordered consolidation of the proceedings in view of their common claims of priority and likelihood of confusion as to the parties’ marks.