Corcamore, LLC v. SFM, LLC

• Citation: 978 F.3d 1298
• Decision Date: 27 October 2020
• Docket Number: 2019-1526
• Parties: CORCAMORE, LLC, Appellant v. SFM, LLC, Appellee
• Court: U.S. Court of Appeals — Federal Circuit

978 F.3d 1298

CORCAMORE, LLC, Appellant

v.SFM, LLC, Appellee

2019-1526

United States Court of Appeals, Federal Circuit.

Decided: October 27, 2020

Charles L. Thomason, Thomason Law Office, Louisville, KY, argued for appellant.

Johanna Wilbert, Quarles & Brady LLP, Milwaukee, WI, argued for appellee. Also represented by Nicole Murray, Christian G. Stahl, Chicago, IL.

Before Reyna, Chen, and Hughes, Circuit Judges.

Reyna, Circuit Judge.

Corcamore LLC appeals an order of the United States Patent and Trademark Office, Trademark Trial and Appeal Board. The Board entered default judgment as a sanction against Corcamore, which resulted in the cancellation of Corcamore's trademark registration for SPROUT. On appeal, Corcamore contends that the Board erred in granting default judgment, in particular because SFM LLC lacked standing to petition for cancellation of the trademark registration. We conclude that appellee SFM was entitled to bring and maintain a petition under 15 U.S.C. § 1064, the statutory cause of action for cancellation of trademark registrations, and that the Board did not otherwise abuse its discretion in imposing default judgment as a sanction. We affirm.

BACKGROUND

A. The Parties and Trademarks

SFM LLC ("SFM") owns the federal registration for SPROUTS and other SPROUTS nominative trademarks for use in connection with retail grocery store services. J.A. 121 ¶ 5. The SPROUTS mark was first used in commerce at least as early as April 15, 2002. Id. The below image illustrates the use of the SPROUTS mark in a Sprouts Farmers Market grocery store.

J.A. 822.

Corcamore LLC ("Corcamore") owns a federal trademark registration for SPROUT for use in connection with vending machine services. The registration claims a first use date of May 1, 2008. J.A. 121 ¶ 4. Corcamore's SPROUT mark is used by its affiliate, Sprout Retail, Inc., in combination with a cashless payment card, the "Sprout OneCard," and an associated SPROUT-branded loyalty program for consumers that buy food and beverages at certain vending machines. J.A. 1222–23 ¶¶ 3–5; J.A. 643–48. Corcamore's SPROUT mark is also used on a SPROUT-branded website where users of the Sprout OneCard can monitor their food purchases and loyalty points and view promotions offered to holders of the Sprout OneCard (pictured below). See J.A. 423–24; J.A. 643; J.A. 645; J.A. 648.

J.A. 424, 643.

B. Procedural History

SFM filed a petition with the United States Patent and Trademark Office's Trademark Trial and Appeal Board ("TTAB" or "Board") to cancel Corcamore's registration for SPROUT. J.A. 98–104; J.A. 120–25 (First Amended Petition for Cancellation). SFM claimed that its rights to the SPROUTS mark were superior to Corcamore's rights because the mark had been in use since "at least as early as 2002," and Corcamore "did not make use of the trademark SPROUT prior to May 1, 2008, the date of first use claimed in the registration." J.A. 121–22 ¶¶ 3, 8. SFM alleged that it would be damaged by the continued registration of the SPROUT mark because use of the mark was "likely to cause confusion or mistake, or to deceive the purchasing public" with respect to the source of the goods it sold under its SPROUTS mark. J.A. 122–23 ¶¶ 9, 16.

Corcamore moved to dismiss SFM's petition for lack of standing under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See J.A. 136–40. Corcamore argued that SFM lacked standing to bring a petition for cancellation of a registered trademark, citing the analytical framework established by the Supreme Court in Lexmark International, Inc. v. Static Control Components, Inc. , 572 U.S. 118, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014), for determining whether the requirements for maintaining a statutory cause of action have been satisfied. See J.A. 136–40. The Board determined that Lexmark was not applicable in this case, and denied Corcamore's motion to dismiss for lack of standing and motion for reconsideration. J.A. 11–12, 30–32. The Board reasoned that Lexmark was limited to civil actions involving false designation of origin (referred to as false advertising) under 15 U.S.C. § 1125(a) and does not extend to cancellation of registered marks under 15 U.S.C. § 1064. J.A. 11–12. The Board instead relied on the analysis adopted by this court in Empresa Cubana del Tabaco v. General Cigar Co. , 753 F.3d 1270 (Fed. Cir. 2014), and concluded that SFM had standing because it sufficiently alleged a real interest in the cancellation proceeding and a reasonable belief of damage, as required under 15 U.S.C. § 1064. J.A. 11. As a result, the Board found that SFM had standing to bring a petition to cancel Corcamore's trademark registration. J.A. 11.

After the Board denied its motion to dismiss, Corcamore sent a letter to SFM's counsel indicating that it would bring "procedural maneuvers" against SFM and delay discovery. J.A. 891, ¶ 2; J.A. 894. Corcamore then embarked on a path of conduct that resulted in two separate sanctions and entry of default judgment in favor of SFM. First, Corcamore filed four motions requesting affirmative relief, including a motion for reconsideration of the Board's denial of its motion to dismiss, a motion for Rule 11 sanctions, a motion for summary judgment on the ground of collateral estoppel or issue preclusion, and a motion to strike. See J.A. 93. The Board deferred action on the motion for reconsideration but denied the motions for summary judgment, Rule 11 sanctions, and to strike. J.A. 16–26. Second, the Board determined that Corcamore had filed an "inordinate number of motions (all of which were denied) at a very early stage in this proceeding." J.A. 23. Accordingly, the Board sanctioned Corcamore, prohibiting it from filing any additional unconsented motions without first obtaining Board permission (the "First Sanction"). J.A. 23–25.

At the opening of discovery, the Board stayed the First Sanction and SFM filed a motion to compel responses to its written discovery requests. See J.A. 40, 94. The Board ordered the parties to suspend filing papers not related to SFM's motion to compel. See J.A. 82–83. Despite this instruction, Corcamore filed numerous motions unrelated to SFM's motion to compel, including its own motion to compel discovery, a motion for a protective order to halt SFM's Rule 30(b)(6) deposition of a Corcamore representative, a motion to reconsider the denial of its motion for a protective order, and a motion to consolidate the proceeding with another proceeding. See J.A. 94.

The Board denied Corcamore's motion for a protective order to halt the deposition, which was filed on the eve of the deposition, and ordered Corcamore's witness to appear the following day as noticed. The Board cautioned that should Corcamore fail to comply, "the Board may entertain an appropriate motion for relief." J.A. 87. Corcamore failed to appear and did not alert SFM or the Board that the witness would not appear at the deposition. See J.A. 901, ¶¶ 16–17, 20. When SFM attempted to reschedule the deposition, Corcamore served objections and again refused to appear.

On October 25, 2017, SFM filed a motion to compel supplemental responses to certain document requests and interrogatories. On February 27, 2018, the Board granted-in-part SFM's motion and ordered Corcamore to comply with several enumerated instructions. J.A. 69–70. The Board instructed Corcamore that an evasive or incomplete response would be equivalent to a failure to disclose and advised SFM that the Board would entertain a motion for appropriate sanctions if Corcamore failed to comply with the order. J.A. 70. In the same order, the Board imposed another sanction (the "Second Sanction"), prohibiting Corcamore from "filing any additional unconsented or unstipulated motions without first obtaining prior Board permission." Id. at 71. Corcamore did not comply with the written-discovery order by, among other reasons, failing to serve timely supplemental responses, maintaining frivolous objections, and filing nonresponsive answers. See J.A. 87–88.

Unperturbed by the Second Sanction, Corcamore filed an "objection" to the Board's February 27, 2018 order and made several requests to file a variety of different procedurally impermissible motions. The Board denied Corcamore's unapproved filings for failure to comply with the Second Sanction.

At the close of discovery, SFM moved for default judgment as a sanction for Corcamore's litigation misconduct. J.A. 95. The Board granted the order on two grounds. First, the Board pointed to its express authority to award judgment as a sanction under 37 C.F.R. § 2.120(h) and Fed. R. Civ. P. 37(b)(2). Relying on its express authority, the Board granted default judgment as a sanction against Corcamore for its violations of the deposition order and numerous provisions of the written discovery order. J.A. 84–85; J.A. 87–88. Second, pointing to its inherent authority to control its cases and docket, the Board entered judgment as a sanction against Corcamore for litigation misconduct, including its refusal to cooperate with SFM's counsel to resolve discovery issues, violation of Board orders not to file non-germane papers, and violation of Board orders to properly serve documents. J.A. 85–86; J.A. 89–91.

The Board concluded that a lesser sanction would be inappropriate because Corcamore had on numerous occasions already violated the First and Second Sanctions. J.A. 89–90. The Board recognized that Corcamore engaged in willful, bad-faith tactics, consistent with its "procedural maneuvers" letter, frustrated SFM's ability to advance its case, and taxed Board resources. J.A. 91. Consequently, the Board entered default judgment against Corcamore and ordered that Corcamore's registration "be cancelled in due course." Id. Corcamore timely filed this appeal. We have jurisdiction under 28 U.S.C. § 1295 (a)(4)(B).

DISCUSSION

Corcamore makes two arguments on appeal. First, Corcamore contends that SFM lacks standing to bring a petition for cancellation of a registered trademark....