[00:00:02] Speaker 03:
Not that it wasn't.

[00:00:23] Speaker 02:
Our next case is Australian Therapeutic versus Naked TMLC.

[00:00:30] Speaker 02:
Case number 19-1567.

[00:01:06] Speaker 02:
Mr. Manker, you have reserved four minutes of your time for rebuttal, correct?

[00:01:09] Speaker 02:
Yes, sir.

[00:01:10] Speaker 02:
Okay, we're ready when you are.

[00:01:12] Speaker 02:
Okay.

[00:01:14] Speaker 00:
May it please the court, my name is James Manker.

[00:01:17] Speaker 00:
I'm here on behalf of Australian Therapeutic, the appellant in this case, and the petitioner at the Tremont trial appeal board.

[00:01:23] Speaker 00:
We're here because the board made the not infrequent mistake of mistaking a grounds or merits determination with a standing determination.

[00:01:33] Speaker 03:
On page eight of the blue brief,

[00:01:35] Speaker 03:
In your statement of facts, you say the parties were unable to agree orally or otherwise to the terms of the settlement.

[00:01:44] Speaker 03:
On page 20 of the blue brief, you say you vigorously disagreed with the board's conclusion that the ongoing settlement negotiations amounted to an enforceable binding contract.

[00:01:59] Speaker 03:
You don't otherwise develop the argument in your brief.

[00:02:03] Speaker 00:
Your Honor, because it's immaterial whether there was an agreement.

[00:02:06] Speaker 03:
So why should we conclude that that portion of your argument is waived?

[00:02:11] Speaker 00:
We don't believe that it has any relevance to the proceedings.

[00:02:15] Speaker 00:
So it is waived.

[00:02:16] Speaker 00:
We contest that it's the interpretation of that contract.

[00:02:21] Speaker 00:
But working for purposes of this appeal and the issue of standing, it really has no relevance to whether my client is standing.

[00:02:29] Speaker 03:
When you make a point in your brief and you don't have arguments for it, you shouldn't have made the point.

[00:02:36] Speaker 03:
OK.

[00:02:38] Speaker 00:
A party does not need to have, the board starts it by explaining that owner to have a claim under section 2D, likely to confusion.

[00:02:45] Speaker 00:
You have to have a proprietary right or a property right in the mark.

[00:02:49] Speaker 00:
And it cites the Otto Roth case for that proposition.

[00:02:52] Speaker 00:
It then goes on to explain that because of an agreement between the party, that my party does not have a property right and therefore cannot have standing.

[00:03:00] Speaker 00:
This court has repeatedly rejected that line of argument.

[00:03:04] Speaker 00:
In the books on tape case, the board

[00:03:06] Speaker 00:
The court, and I'll read it quickly, the board is holding that under Otto Roth versus Universal Foods, petitioner has no standing to bring a cancellation proceeding under Section 2D because it does not establish proprietary rights on books on tape, is wrong as a matter of law.

[00:03:20] Speaker 00:
Petitioner is a competitor.

[00:03:21] Speaker 00:
Respondent, to respondent, clearly has an interest in the outcome beyond the general public.

[00:03:27] Speaker 00:
The same issue was addressed in the jeweler's case.

[00:03:32] Speaker 00:
The court there said that you cannot conflate.

[00:03:36] Speaker 00:
a standing argument with the merits, that it doesn't matter whether the party alleging likely to confusion has any property rights.

[00:03:45] Speaker 00:
In books on tapes, the mark was generic.

[00:03:48] Speaker 00:
In Jeweler's case, they had not used the mark.

[00:03:50] Speaker 00:
They had no intention of using the mark.

[00:03:52] Speaker 00:
They were simply a trade association, in this court said.

[00:03:54] Speaker 00:
It doesn't matter what the grounds are.

[00:03:56] Speaker 00:
Standing is an entirely separate issue.

[00:03:58] Speaker 00:
In the Cuba tobacco case, Empresa Cubana del Tobacco,

[00:04:06] Speaker 00:
Appellant in that case and the petitioner in that case was forbidden by Congress from selling their products.

[00:04:12] Speaker 00:
They were ordered by the Second Circuit that they had no right to enjoin the register in that case from using their mark.

[00:04:21] Speaker 00:
But they still could have standing because they had filed an application and the application had been refused.

[00:04:28] Speaker 00:
And the fact that they had filed that application had been refused.

[00:04:31] Speaker 00:
was on its own without anything more standing.

[00:04:34] Speaker 00:
The party has a real interest.

[00:04:36] Speaker 00:
The definition of real interest is whether the party is an intermeddler.

[00:04:41] Speaker 00:
And in this case, the party is my client is clearly not an intermeddler.

[00:04:44] Speaker 00:
They have an interest.

[00:04:46] Speaker 03:
Does your client sell condoms in the United States under the nude trademark?

[00:04:51] Speaker 00:
Yes.

[00:04:53] Speaker 03:
How much product do they sell?

[00:04:55] Speaker 00:
I'm not aware of the volume of the nude.

[00:04:59] Speaker 00:
The Naked Trademark, they've sold an order of $14.50 a year.

[00:05:06] Speaker 00:
I'm not aware of his volume of sales and news.

[00:05:09] Speaker 03:
Is there any record evidence that the Naked Trademark sells under Nude?

[00:05:14] Speaker 00:
It's a sub-brand under Four Seasons.

[00:05:17] Speaker 00:
Both of them are.

[00:05:18] Speaker 00:
They're separate sub-brands.

[00:05:27] Speaker 00:
So as this court ruled in jewelers, its standing exists irrespective of the ground.

[00:05:33] Speaker 00:
So whether or not my client has a claim under Section 2D, if it has standing, it still can bring its claims under lack of bona fide intent and also false association, which also are irrelevant.

[00:05:48] Speaker 00:
The question does not start and end whether a party has a proprietary right for jurisdiction under 15 USC 1064.

[00:05:55] Speaker 00:
It's not an Article III case.

[00:05:57] Speaker 00:
As courts make clear, that standing is much more liberally construed before board proceedings than it is in an Article III case.

[00:06:04] Speaker 03:
On pages 16 to 17 of the blue brief, you cite a Third Circuit case, official commission of unsecured creditors versus Lafferty, for the proposition that an analysis standing

[00:06:16] Speaker 03:
doesn't include an analysis of equitable defenses.

[00:06:19] Speaker 03:
Correct.

[00:06:19] Speaker 03:
That's an Article III standing.

[00:06:21] Speaker 00:
That was the case cited by the board in their decision for justifying having, complaining the arguments that they could analyze the affirmative defense essentially as part of the standing analysis.

[00:06:32] Speaker 00:
But if you read the case closely, they clearly talk about standing in the first section and make it very clear that they're not going to mix that.

[00:06:39] Speaker 00:
Only after they find that there was standing do they get to the,

[00:06:42] Speaker 00:
to the issue of issue preclusion that was relevant in that case.

[00:06:46] Speaker 00:
So as an affirmative defense, it certainly can be argued that there is a stopple, but only after they found sanding.

[00:06:53] Speaker 00:
They didn't analyze those two issues together, and that's exactly what the board did here.

[00:06:57] Speaker 00:
They said they weren't going to do that, but then they proceeded to do exactly that.

[00:07:08] Speaker 00:
So we have not only

[00:07:11] Speaker 00:
So we have a situation where the board said that they found an agreement that my client would not use the mark.

[00:07:18] Speaker 00:
But he nevertheless did use the mark.

[00:07:20] Speaker 00:
And he used the mark for several years continuously.

[00:07:23] Speaker 00:
And they found that that had been proven in the record that my client had continued to use it since 2003.

[00:07:29] Speaker 00:
And in six weeks before we filed the original petition to cancel, we received a cease and desist letter from the

[00:07:40] Speaker 00:
registrant in this case, not saying that we were in breach of contract from continuing to sell condoms in the United States, but that we were infringing the mark.

[00:07:48] Speaker 00:
So my client, wanting to prevent the invisibility of the registration, wanting to remove the registration from the register, had certainly a real interest in the outcome of cancellation of that registration.

[00:08:08] Speaker 00:
Even if my client had not been using, which he has and he never stopped using it, he had been advertising in the United States.

[00:08:14] Speaker 00:
The defendant was aware of that advertisement.

[00:08:17] Speaker 00:
And so he could have rights beyond property rights, like the first Niagara case where they had use similar to trademark rights in order to establish his priority.

[00:08:28] Speaker 00:
So he could have a real interest in the outcome, even if you accept that he had agreed that he would not use the mark in the United States.

[00:08:38] Speaker 00:
One further point I wanted to make, and that is that standing does not require that, excuse me a second.

[00:09:05] Speaker 02:
It seems to me that the law is very clear as to the legal interest or legal right and that going to the merits of the case and not standing.

[00:09:16] Speaker 02:
Would you agree with that?

[00:09:17] Speaker 00:
I would agree exactly.

[00:09:20] Speaker 00:
The issue of whether there is a contractual estoppel would be an affirmative defense that would go to the merit.

[00:09:25] Speaker 00:
So, you know, obviously in order of progress, we present our evidence, they present their affirmative defense, and then the board decides.

[00:09:34] Speaker 00:
Now the board in this case has already decided that

[00:09:37] Speaker 00:
the affirmative defenses are inapplicable, that my client has already proved that there's a likelihood of confusion, not just that there's a likelihood of confusion, but confusion is inevitable and as a result that they have no affirmative defenses that they can raise and they've already struck them.

[00:09:51] Speaker 00:
They've kept these alive for the purposes of the issue as standing.

[00:09:55] Speaker 00:
But there are still affirmative defenses, and that would be something that they would have to prove in order to rebut the case of a likelihood of confusion.

[00:10:04] Speaker 00:
They did not appeal the findings of the board in summary judgment that there was a likelihood of confusion and that confusion was inevitable and that those estoppel, laches, and acquiescence, and waiver had all been waived or are inapplicable because of the doctrine of inevitable confusion.

[00:10:24] Speaker 00:
And that ties back to my original point, why the agreement makes no difference, because they cannot go back and relitigate this.

[00:10:32] Speaker 00:
If this case is remanded on the grounds that there is standing, they cannot go back and argue that there is a contract.

[00:10:38] Speaker 00:
And therefore, our claims are barred by the affirmative defense.

[00:10:42] Speaker 00:
That's an equitable claim that the board has already said is inapplicable.

[00:10:46] Speaker 00:
But for the purposes of standing, it doesn't make sense to argue for that evaluation to be made in the context of determining whether a party has a real interest in the outcome of a petition to cancel a notice of opposition.

[00:11:12] Speaker 02:
Okay.

[00:11:12] Speaker 02:
Councillor Mealy, is that correct?

[00:11:14] Speaker 04:
Mealy, yes.

[00:11:16] Speaker 04:
Morning.

[00:11:20] Speaker 04:
I would like to make a few corrections as to some of the representations that were made by Mr. Menker respectfully.

[00:11:31] Speaker 04:
The board specifically did not reach the affirmative defenses in this case.

[00:11:40] Speaker 04:
The board did cite the law.

[00:11:43] Speaker 04:
Regarding equitable offenses, but our equitable equitable defense is not Being applicable in this case because of the inevitable confusion that it found What the board then said is that has your client ever sold condoms in the United States under the nude?

[00:12:01] Speaker 04:
Trademark under nude we do not believe so now Our client refrained from using nude because of an agreement between the parties That's not a sort of I don't believe so kind of

[00:12:13] Speaker 03:
Yes or no?

[00:12:15] Speaker 04:
It is a no.

[00:12:17] Speaker 04:
Our client has exclusively used naked for its branding.

[00:12:24] Speaker 04:
Equitable defenses do not include contractual defenses, contractual estoppel, waiver based on contract, abandonment based on contract.

[00:12:36] Speaker 04:
Regardless, what the board did was look at the facts of this case and the testimony

[00:12:42] Speaker 04:
of their chief witness, who was Graham Porter, the chief executive of Australian Therapeutic, and determined that there was a course of conduct here that led to effectively abandonment.

[00:12:55] Speaker 04:
That he, from an objective standard, somebody sitting outside of Mr. Porter's head would believe that they had wound up operations in the United States.

[00:13:07] Speaker 04:
That he stated that we have no more naked condoms in the U.S.

[00:13:12] Speaker 04:
You're good to go.

[00:13:13] Speaker 04:
Clear sailing was what he said.

[00:13:15] Speaker 02:
What about the other elements, though, where they actually opposed the application at one point, there were shows at one point, and these other findings that were made?

[00:13:27] Speaker 04:
And as of April 4, 2007, there is a fixed point in time of April 4, 2007 when, by Graham Porter's admission,

[00:13:41] Speaker 04:
there were no more sales in the United States, and that our client was freed and had his consent, his blessing, to register this trademark.

[00:13:51] Speaker 04:
If we look at a case that I found very instructive that we do- And that consent is in the contract?

[00:13:57] Speaker 04:
Is that- That consent is in the contract, yes.

[00:14:01] Speaker 02:
And the validity of that contract is being debated.

[00:14:05] Speaker 02:
Now, aside from the estoppel,

[00:14:07] Speaker 02:
But the validity of the contract itself is debatable.

[00:14:13] Speaker 04:
The validity of the contract, whether it's debatable or not, wasn't necessary to reach the conclusion that the board did.

[00:14:22] Speaker 02:
However, the board is... But if the contract is debatable, then doesn't that give rise to standing?

[00:14:29] Speaker 04:
If the contract is debatable, it could give rise to standing.

[00:14:33] Speaker 04:
However, the board here

[00:14:35] Speaker 04:
by substantial evidence determined there was no real legitimate interest in the marks.

[00:14:41] Speaker 04:
Australian therapeutics had no more legitimate interest in this mark in the United States.

[00:14:47] Speaker 04:
It continued to operate solely out of Australia.

[00:14:50] Speaker 04:
The sales and what they considered to be advertising in the US was on a .AU website in Australia marketed to and targeted at Australian customers.

[00:15:05] Speaker 02:
It seems to me that the board may have been a little too fixated on Deciding this case on whether there's any type of error on the merits But that's not what we look at when we're looking at a standing issue is it?

[00:15:20] Speaker 04:
No, we're we you can't conflate standing and the merits but the the evidence involved is Substantially the same such that they're inextricably intertwined

[00:15:34] Speaker 04:
That's Otto Roth.

[00:15:36] Speaker 04:
That's actually also Jewelers.

[00:15:39] Speaker 04:
If we look at FAMI versus JZ, which is a Ninth Circuit case, admittedly a court case and not a board case, and even though standing is more liberal in an administrative hearing, it's instructive to note that the court analyzed the existence of the contract and the terms of that contract

[00:16:02] Speaker 04:
in analyzing standing.

[00:16:07] Speaker 04:
Standing must be a real interest, and there must be a reasonable belief that one would be damaged by a registration.

[00:16:14] Speaker 04:
There's not that reasonable belief based on Mr. Porter's own statements.

[00:16:19] Speaker 04:
Everything that he said was subjective.

[00:16:22] Speaker 04:
There was an agreement, but I decided I'd put it aside after I received a demand letter.

[00:16:28] Speaker 02:
Why doesn't that agreement show a real interest under Lipton?

[00:16:33] Speaker 04:
The agreement between the parties?

[00:16:36] Speaker 02:
Yes.

[00:16:36] Speaker 04:
No, it doesn't show that he had any more real interest.

[00:16:40] Speaker 02:
What kind of impact does the existence of the agreement have on the real interest test?

[00:16:47] Speaker 04:
We have the existence of an agreement and the conduct of the parties in taking the affirmative steps to perform on the agreement.

[00:16:59] Speaker 04:
included winding up operations of Australian therapeutics in the United States, ceasing to sell condoms in the United States, and informing our client that he could go ahead with registering this trademark in the United States because they had no further use.

[00:17:16] Speaker 04:
If they had no further use as of April 4, 2017, no further use in the United States, then any sales after that are, in fact, infringement.

[00:17:28] Speaker 04:
Just because Mr. Porter would now like to say, never mind the man behind the curtain, doesn't mean you shouldn't look at it.

[00:17:34] Speaker 02:
It seems to me you're addressing the merits or damages type issue.

[00:17:38] Speaker 02:
Well, for standing for the real interest test, we don't look at the merits of the case or damages, but whether there's a real interest.

[00:17:48] Speaker 02:
And if there's an agreement and that agreement is debatable, then why does that not create

[00:17:55] Speaker 02:
real interest that renders standing, Article III standing.

[00:18:03] Speaker 04:
They're bound up together in this particular case.

[00:18:07] Speaker 04:
And what the board did, and what the board did correctly following Impreza, in Impreza cigar, a legitimate commercial interest is a real interest.

[00:18:19] Speaker 04:
That's at 753, 1270, or F3, 1270 at 1275.

[00:18:25] Speaker 04:
And we see it all over in Gal versus Israel Military Industries Ministry of Defense, which admittedly is, I mean, it's more an example here.

[00:18:41] Speaker 04:
That was the Uzi case.

[00:18:44] Speaker 04:
Mr. Gal had transferred the Uzi name and therefore had no more right and therefore lacked standing.

[00:18:55] Speaker 04:
Standing must be pleaded, but it must also be affirmatively proved.

[00:18:59] Speaker 04:
So if we're looking at the grounds for standing that are sufficient to sustain an opposition or a cancellation, then they still must prove those grounds.

[00:19:10] Speaker 04:
What they alleged was that they had continuous use of the mark and proprietary rights, and that was a basis for their standing.

[00:19:23] Speaker 04:
They failed to prove that they had continuous use in proprietary rights.

[00:19:27] Speaker 04:
What they pled and what they proved were different.

[00:19:31] Speaker 04:
Just because there's a low threshold for standing doesn't mean there's no threshold for standing.

[00:19:37] Speaker 04:
In this case, what was pleaded and what was proved are what are essential here.

[00:19:44] Speaker 04:
They pled a commercial interest, an ongoing commercial interest in the mark in the United States by Mr. Porter's own testimony

[00:19:52] Speaker 04:
There was no further use in the United States.

[00:19:55] Speaker 04:
They ceased operations.

[00:19:56] Speaker 04:
They wound up their business.

[00:19:58] Speaker 04:
They were done.

[00:20:00] Speaker 04:
And based on that, the board found no further legitimate interest.

[00:20:08] Speaker 04:
So based on substantial evidence, the board found that what was pleaded as to standing was not enough, that what was pleaded was not proven.

[00:20:23] Speaker 04:
We look to the pleadings.

[00:20:24] Speaker 04:
We look to the proof.

[00:20:26] Speaker 04:
For this case, they pleaded likelihood of confusion based on priority and based on a real, legitimate commercial interest in ongoing sales in the United States.

[00:20:37] Speaker 04:
And they failed to prove that.

[00:20:42] Speaker 04:
Do you have any further questions?

[00:20:45] Speaker 02:
No, thank you.

[00:20:49] Speaker 02:
You have a little over five minutes of time.

[00:20:50] Speaker 03:
Should we require that much?

[00:20:53] Speaker 03:
Your client testified that the two companies had a gentleman's agreement.

[00:21:01] Speaker 03:
How's that different than a regular agreement?

[00:21:07] Speaker 00:
In terms of substance, it could, in my mind... Offer acceptance, neutrality.

[00:21:14] Speaker 00:
Right.

[00:21:14] Speaker 00:
There's no parameters to that gentleman's agreement, just more of a...

[00:21:22] Speaker 03:
He had an offer, acceptance, neutrality, and mutual benefits, right?

[00:21:27] Speaker 00:
I would say that, without getting too far afield on this, that he said that he had no more condoms in the United States under that brand.

[00:21:38] Speaker 00:
He never said he wasn't going to sell them.

[00:21:40] Speaker 00:
He never said he wasn't going to file an application.

[00:21:42] Speaker 00:
He never said he was going to not oppose their use.

[00:21:45] Speaker 00:
All he said was, and then he was silent when they said, hey, you know, you can't use it anymore.

[00:21:50] Speaker 00:
He just ignored them.

[00:21:51] Speaker 00:
So whether that amounts to a remin, I can't really say.

[00:21:54] Speaker 00:
The board obviously thought it did.

[00:21:58] Speaker 03:
And you can't say it didn't.

[00:22:00] Speaker 00:
And I can't say it.

[00:22:00] Speaker 00:
But the burden of proof should be on the party alleging a equitable offense to prove that there was a contract and that they relied on that.

[00:22:10] Speaker 00:
Not the plaintiffs had to prove that they have standing by virtue of the fact that there was a contract.

[00:22:17] Speaker 03:
Your client said that when he received

[00:22:21] Speaker 03:
demand letter, he thought that it was flippant, if I recall, and consequently that voided the gentleman's agreement, is that right?

[00:22:31] Speaker 00:
It was a very short demand letter to saying, hey, we have all these registrations and the use is infringing and we'll seek damages.

[00:22:40] Speaker 03:
And it wasn't his testimony in effect that that voided the gentleman's agreement?

[00:22:44] Speaker 00:
That's what he felt, yes.

[00:22:46] Speaker 03:
Where is that found in the law?

[00:22:48] Speaker 00:
He, in his defense, he's Australian.

[00:22:51] Speaker 00:
So maybe in Australia, they have a different view of the law of common law of trade contracts.

[00:22:57] Speaker 00:
I'm not sure.

[00:22:58] Speaker 00:
But I do want to make one point follow up on the point that made.

[00:23:03] Speaker 00:
by the other side, and that is that we do look to the pleadings.

[00:23:07] Speaker 00:
We do look to the proof.

[00:23:09] Speaker 00:
In the pleadings, we alleged we had the application.

[00:23:11] Speaker 00:
We proved that it was filed.

[00:23:13] Speaker 00:
They admitted that it was filed.

[00:23:14] Speaker 00:
We showed that it was refused.

[00:23:15] Speaker 00:
They never objected on the grounds that it wasn't really refused.

[00:23:20] Speaker 00:
On that basis alone, the Cuba tobacco case clearly says that nothing more is needed.

[00:23:25] Speaker 00:
Richie B. Simpson in Lipton and

[00:23:30] Speaker 00:
One of the other cases clearly said nothing more is needed beyond filing an application that's refused, then you have a real interest.

[00:23:38] Speaker 00:
The goal of sanding in these cases is to separate the general public, somebody who has no interests different from the rest of the world, versus somebody that does.

[00:23:48] Speaker 00:
And here you have a competitor.

[00:23:50] Speaker 00:
You have actual use of the mark.

[00:23:52] Speaker 00:
You have an application that's been refused.

[00:23:54] Speaker 00:
You have a cease and desist letter telling them that it can't use this anymore.

[00:23:57] Speaker 00:
And there's valuable rights that come with the registration and with an incontestable registration that my client was going to be damaged by if he allowed him to stand for those reasons.

[00:24:08] Speaker 01:
And there is standing in this case, unless your owners have any further questions.

[00:24:13] Speaker 01:
How do you view the Sylvan Sons case impacting your position?

[00:24:19] Speaker 00:
So I believe the Southern Suns was not a standing case.

[00:24:26] Speaker 00:
It was a merits case.

[00:24:39] Speaker 00:
In that case, they had a written settlement agreement.

[00:24:42] Speaker 00:
It was clear and unambiguous.

[00:24:44] Speaker 00:
And then the board granted summary judgment on the grounds

[00:24:51] Speaker 00:
the party did not have on the grounds that the defendant showed that there was equitable stop.

[00:24:56] Speaker 00:
It wasn't a standing.

[00:24:57] Speaker 00:
It wasn't denied.

[00:24:59] Speaker 00:
And that also predates the court's decisions and jeweler's and subsequent decisions.

[00:25:09] Speaker 00:
Thank you.

[00:25:10] Speaker 02:
Thank you.

[00:25:11] Speaker 02:
Thank all the parties for their arguments this morning.

[00:25:15] Speaker 02:
This court now remains in recess.