Piano Factory Grp., Inc. v. Schiedmayer Celesta GMBH

• Decision Date: 01 September 2021
• Docket Number: 2020-1196
• Parties: PIANO FACTORY GROUP, INC., Sweet 16 Musical Properties, Inc., Appellants v. SCHIEDMAYER CELESTA GMBH, Appellee Andrew Hirshfeld, Performing the Functions and Duties of the Undersecretary of Commerce for Intellectual Property and Director of The United States Patent and Trademark Office, Intervenor
• Court: U.S. Court of Appeals — Federal Circuit

11 F.4th 1363

PIANO FACTORY GROUP, INC., Sweet 16 Musical Properties, Inc., Appellants

v. SCHIEDMAYER CELESTA GMBH, AppelleeAndrew Hirshfeld, Performing the Functions and Duties of the Undersecretary of Commerce for Intellectual Property and Director of The United States Patent and Trademark Office, Intervenor

2020-1196

United States Court of Appeals, Federal Circuit.

Decided: September 1, 2021

Adam Reid Stephenson, Adam R. Stephenson, LTD., Scottsdale, AZ, argued for appellants. Also represented by Kevin Hawkes, Iptechlaw, Scottsdale, AZ.

Michael J. Striker, Delray Beach, FL, argued for appellee.

Jennifer Utrecht, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for intervenor. Also represented by Bryan M. Boynton, Scott R. Mcintosh, Melissa N. Patterson; Thomas L. Casagrande, Erica Jeung Dickey, Christina J. Hieber, Thomas W. Krause, Farheena Yasmeen Rasheed Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA.

Before Prost, Bryson, and Stoll, Circuit Judges.

Bryson, Circuit Judge.

In this trademark case, the appellants, Piano Factory Group, Inc., and Sweet 16 Musical Properties, Inc. (collectively, "Sweet 16"), seek review of a decision of the Trademark Trial and Appeal Board ("TTAB" or "Board") that ordered the cancellation of a trademark registration owned by the appellants. We affirm.

I

A

Appellee Schiedmayer Celesta GmbH makes and sells celestas, which are keyboard instruments that resemble small pianos and are played like pianos. In both instruments, depressing the keys activates felt hammers inside the body of the instrument. The principal difference between the two instruments is that the felt hammers in celestas make tones by striking metal plates, while the felt hammers in pianos strike metal strings.

The facts, as found by the TTAB, are as follows: Schiedmayer Celesta is the successor to a line of German companies that have sold keyboard musical instruments, including pianos, clavichords, celestas, and glockenspiels, under the Schiedmayer name for nearly 300 years. The company asserts that it is the successor in interest to the "Schiedmayer" trademark, that its predecessors have long sold a variety of keyboard instruments under that name, and that it continues to sell certain keyboard instruments—celestas and glockenspiels—throughout the world. The evidence before the TTAB showed that Schiedmayer celestas have been sold to universities, conservatories, and orchestras in the United States and elsewhere. The owner of a Los Angeles piano store testified that her company has offered sales, rentals, and service of Schiedmayer celestas continuously for the past 50 years. Schiedmayer Celesta GmbH v. Piano Factory Grp., Inc. , Cancellation No. 92061215, 2019 WL 4322918, at *2–3 (Sept. 11, 2019).

In 1980, Georg Schiedmayer, the owner of the business, which was then named Schiedmayer & Soehne, stopped making pianos and renamed the company Schiedmayer GmbH & Co. KG. At that time, Mr. Schiedmayer entered into a joint venture with another German company, Rud. Ibach GmbH, under which the Ibach company manufactured pianos under the Schiedmayer name. That arrangement ended quickly, however, and Mr. Schiedmayer shifted his focus to making celestas. The "Schiedmayer" trademark was not sold, assigned, or otherwise transferred to Ibach or any other entity. At some point, the Ibach company entered into an agreement with the Kawai Company under which Kawai produced some pianos carrying the Schiedmayer name. That arrangement was not authorized by Schiedmayer, however.¹

After Georg Schiedmayer died in 1992, his widow, Elianne Schiedmayer, became the sole owner of Schiedmayer GmbH & Co. KG. In 1995, she founded a new company that became the appellee, Schiedmayer Celesta, which continues to sell celestas worldwide.

Appellant Sweet 16 Musical Properties, Inc., acquired the assets of Piano Factory Group, Inc., in 2006 and sells pianos from retail outlets in the Los Angeles area under the name "Hollywood Piano." Despite the name "Piano Factory," none of the related corporations manufacture pianos; they are purely retail outlets.

The owner of those companies, Glenn Treibitz, believed that the "Schiedmayer" mark had been abandoned for pianos and decided to use the mark in his business. In 2002, he acquired the domain name "schiedmayer.com" and filed an application to register the "Schiedmayer" mark for pianos. The Patent and Trademark Office issued a registration for that mark on the principal register in November 2007. Piano Factory Group, Inc., assigned the registration to Sweet 16 Musical Properties, Inc.

It was the practice at Sweet 16's Hollywood Piano stores to purchase "no-name" pianos from China and to affix labels on them, including the Schiedmayer label. The pianos labeled "Schiedmayer" would then be sold as Schiedmayer pianos.

The practice of falsely branding "no-name" pianos, Mr. Treibitz testified, is not uncommon in the industry. The falsely branded pianos are referred to as "stencil pianos," many of which are made in Indonesia or mainland China. Mr. Treibitz admitted that a "classic example of stencil pianos is when manufacturers produce a cheap-end piano that has a German sounding name." Piano Factory , 2019 WL 4322918, at *4 (quoting J.A. 831). He also agreed that "many buyers are deceived into believing that these pianos are produced in famous geographical locations that are recognized for their production of quality instruments, most notably Germany."² J.A. 831–32. Mr. Treibitz testified that Sweet 16 sold approximately 29 stencil pianos bearing the "Schiedmayer" mark between 2007 and 2018, although that estimate was not supported by business records, but was based only on Mr. Treibitz's general recollection.

B

In 2015, Schiedmayer Celesta filed a cancellation petition with the TTAB, seeking to cancel Sweet 16's registration for the "Schiedmayer" mark. The cancellation petition alleged that the mark falsely suggested a connection with Schiedmayer Celesta, in violation of section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a). Following discovery and briefing, the Board issued an opinion granting the petition to cancel the registration.

The Board first found that appellee Schiedmayer Celesta had standing to bring the cancellation proceeding. Schiedmayer Celesta, the Board found, "is named after the Schiedmayer family known for keyboard musical instruments, [and] is owned by a member of that family and uses Schiedmayer as a trademark for keyboard musical instruments." Piano Factory , 2019 WL 4322918, at *6. As such, the Board concluded, appellee "has a personal stake in this proceeding, and is not an intermeddler." Id.

On the merits, the Board upheld the appellee's false suggestion of a connection (or "false association") claim. The Board applied the four-part test for a false association bar to registration that was derived from this court's opinion in University of Notre Dame Du Lac v. J.C. Gourmet Food Imports Co. , 703 F.2d 1372 (Fed. Cir. 1983). In so doing, the Board found (1) that Sweet 16's registered "Schiedmayer" mark is effectively the same as the appellee's name and identity; (2) that the registered mark points uniquely and unmistakably to the appellee; (3) that the appellee is not connected with the activities performed by Sweet 16 under the mark; and (4) that the appellee's name or identity is of sufficient fame or reputation that when Sweet 16 uses the mark in connection with its sales and rentals of pianos, a connection with the appellee would be presumed.³ Piano Factory , 2019 WL 4322918, at *6–10.

Based on those findings, the Board concluded that because Sweet 16 has used the appellee's "unique name and identity in connection with keyboard musical instruments similar to those for which [Schiedmayer Celesta] and the Schiedmayer family are famous," Sweet 16's use of the mark "will falsely suggest a connection between [Schiedmayer Celesta] and [Sweet 16]." Id. at *14.

In addressing Sweet 16's defense of laches, the Board found that the seven and one-half year period of delay between Sweet 16's registration of the "Schiedmayer" mark and Schiedmayer Celesta's filing of its petition for cancellation of that mark was "fairly long, and in the absence of extenuating circumstances or an excuse, unreasonable." Id . at *11. However, the Board further found that Sweet 16 had not met its burden of showing prejudice as a result of the delay.

The Board observed that "the entirety of [Sweet 16's] argument that [it has] suffered material prejudice" is that it had "sold and rented Schiedmayer branded pianos continuously for seven years." Id. at *12. The only evidence of any marginal expenses incurred in selling the Schiedmayer-labeled pianos, the Board found, was the cost of buying Schiedmayer labels from trophy shops or decal makers to place on the no-name pianos. The Board further found that relabeling those pianos with a name other than Schiedmayer "would be quick, easy and inexpensive." Id. at *13. Accordingly, the Board found that the delay in seeking cancellation did not entail the forfeiture of any monetary investment or the incurrence of any other financial injury that likely would have been avoided if the cancellation proceeding had been initiated earlier.

II

On appeal, Sweet 16 raises a constitutional challenge to the composition of the TTAB panel that decided this case. Sweet 16 contends that the administrative trademark judges ("ATJs") who sat on the panel were appointed in violation of the Appointments Clause of Article II of the Constitution, and that the Board's decision therefore must be vacated. Appellants’ Opening Br. 18–19. The Acting Director of the Patent and Trademark Office, as intervenor, argues that the ATJs were lawfully appointed.⁴

The parties’ briefs in this case were filed prior to the Supreme Court's decision in United States v. Arthrex, Inc. , ––– U.S. ––––, 141 S. Ct. 1970, 210 L.Ed.2d 268 (2021). In that case, the Court anal...