Adaptrend, Inc. v. Stewart

• Court: Court of Appeals for the Federal Circuit
• Decided: January 28, 2025
• Docket: 23-1195
• Status: Unpublished

Opinion

Case: 23-1195 Document: 57 Page: 1 Filed: 01/28/2025

NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit ______________________

ADAPTREND, INC., Appellant

v.

COKE MORGAN STEWART, ACTING UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND ACTING DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Intervenor ______________________

2023-1195 ______________________

Appeal from the United States Patent and Trademark Office, Trademark Trial and Appeal Board in No. 92074784. ______________________

Decided: January 28, 2025 ______________________

GORDON E. GRAY, III, Gray Law Firm, Long Beach, CA, for appellant.

SARAH E. CRAVEN, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, for Case: 23-1195 Document: 57 Page: 2 Filed: 01/28/2025

intervenor. Also represented by CHRISTINA J. HIEBER, FARHEENA YASMEEN RASHEED. ______________________

Before LOURIE and HUGHES, Circuit Judges, and GILSTRAP, Chief District Judge. 1 LOURIE, Circuit Judge. Adaptrend, Inc. (“Adaptrend”) appeals from a decision of the United States Trademark Trial and Appeal Board (“the Board”) cancelling its registration of the TONOSAMA mark. Narita Exp. LLC v. Adaptrend, Inc., Cancellation No. 9207478, 2022 WL 15328960 (T.T.A.B. Sept. 20, 2022) (“Decision”). For the following reasons, we affirm. BACKGROUND This appeal arises from a trademark cancellation pro- ceeding under 15 U.S.C. § 1064 brought by Narita Export LLC (“Narita Export”). Narita Export sought to cancel Adaptrend’s U.S. Trademark Registration No. 5,873,672 (“the ’672 registration”) on the ground that it was likely to cause confusion with Narita Export’s same mark for simi- lar goods. Under 15 U.S.C. § 1064, “[a] petition to cancel a regis- tration of a mark . . . may . . . be filed . . . by any person who believes that he is or will be damaged . . . by the regis- tration of a mark.” A petitioner may seek cancellation on the ground that the “registration was obtained . . . contrary to . . . section 1052 of this title.” Id. § 1064(3). Specifically, § 1052(d) prohibits the registration of a mark that is likely to cause confusion with “a mark . . . previously used in the United States by another.” Id. § 1052(d).

1 Honorable J. Rodney Gilstrap, Chief District Judge, United States District Court for the Eastern Dis- trict of Texas, sitting by designation. Case: 23-1195 Document: 57 Page: 3 Filed: 01/28/2025

ADAPTREND, INC. v. STEWART 3

Adaptrend’s ’672 registration was filed on March 27, 2019, issued on October 1, 2019, and is directed to the word mark TONOSAMA, for “[g]ift baskets containing candy; [c]andy; [ca]ndies; [g]ift baskets containing candy and Jap- anese candies.” S.A. 234. 2 On October 23, 2019, Narita Export filed Application 88665122 (“the ’122 application”). S.A. 236. The ’122 ap- plication is directed to the same word mark, TONOSAMA, and the same category of goods as the ’672 registration. Id. The United States Patent and Trademark Office (“the USPTO”) refused Narita Export’s ’122 application based on a likelihood of confusion with Adaptrend’s ’672 registra- tion. S.A. 116. In response to the rejection, Narita Export petitioned to cancel Adaptrend’s registration, asserting a likelihood of confusion with its identical TONOSAMA mark of the ’672 registration. Decision, at *1. Specifically, Narita Export asserted that its predecessor-in-interest, Kabushiki Kai- sha TI Express (“KKTI”), made its first commercial use of the TONOSAMA mark on March 27, 2016, S.A. 115–16, ¶ 9, prior to the first commercial use of the mark of the ’672 registration, S.A. 117, ¶ 10. Narita Export further asserted that because the subject marks are identical, the ’672 reg- istration creates consumer confusion and is a source of damage. S.A. 116–18, ¶¶ 6, 11. During the discovery phase of the cancellation proceed- ings, Adaptrend withdrew its previously-asserted affirma- tive defenses of abandonment and non-ownership. Decision, at *3; S.A. 161–62. Thereafter, upon close of dis- covery, Narita Export filed a motion for summary judg- ment. S.A. 20–41. Narita Export asserted entitlement to a statutory cause of action under § 1064 and alleged

2 “S.A.” refers to the supplemental appendix filed in connection with Adaptrend’s brief. Case: 23-1195 Document: 57 Page: 4 Filed: 01/28/2025

(1) priority of use of the TONOSAMA mark based on KKTI’s first sale in March 2016, and (2) a likelihood of con- fusion based on Adaptrend’s use of the same mark for sim- ilar goods. S.A. 20. To support its priority of use claim, Narita Export re- lied, in part, on the declarations of Mr. Izumi, KKTI’s for- mer president, and Mr. Narita, Narita Export’s current president, regarding the use and assignment of the TONOSAMA mark (collectively, “the Izumi and Narita dec- larations”). Decision, at *3. Mr. Izumi testified that KKTI made its first commercial use of the TONSAMA mark on March 27, 2016, and that, on or about November 25, 2016, KKTI and Narita Export came to an oral agreement to as- sign KKTI’s rights in the TONSAMA mark to Narita Ex- port. Id.; S.A. 50–52. Mr. Izumi further testified that this oral assignment was memorialized by a nunc pro tunc, or backdated, assignment agreement on October 20, 2020. Decision, at *3; S.A. 52. Similarly, Mr. Narita testified to the oral assignment on November 25, 2016, and further de- scribed Narita Export’s sales under the mark from Novem- ber 25, 2016, onwards. Decision, at *4; S.A. 48–49. Both declarants’ testimony was based on “personal knowledge or on business records that were made at the time or in the regular course of business.” S.A. 48, 50. Adaptrend opposed the motion, arguing that there were genuine issues of material fact regarding Narita Ex- port’s priority of use and continuous use of the mark. Spe- cifically, Adaptrend argued that Mr. Narita’s testimony lacked foundation by failing to assert any personal knowledge and constituted inadmissible hearsay. Deci- sion, at *4. Adaptrend therefore contended that Narita Ex- port could not establish its alleged common law rights in the mark via KKTI. See id. Narita Export, in response, provided rebuttal declarations from Mr. Izumi and Mr. Narita reaffirming that they had personally reached an oral agreement to transfer and assign all rights in the mark in November 2016. Decision, at *5; S.A. 230–233. Case: 23-1195 Document: 57 Page: 5 Filed: 01/28/2025

ADAPTREND, INC. v. STEWART 5

The Board granted Narita Export’s motion for sum- mary judgment, determining that Narita Export estab- lished (1) its entitlement to a statutory cause of action under § 1064 and (2) priority of use and a likelihood of con- fusion under § 1052(d) as a matter of law. Decision, at *10– 11. Regarding Narita Export’s statutory cause of action, the Board determined that because it was undisputed that the USPTO refused to register Narita Export’s ’122 appli- cation in view of the ’672 registration, “there [was] no gen- uine dispute that [Narita] ha[d] a legitimate interest in seeking cancellation of [the ’672 registration] and a reason- able belief in damage should [Adaptrend’s] mark continue to be registered.” Id. at *6. Turning to the merits, the Board found no genuine dis- pute of material fact regarding (1) Narita’s priority of use of the TONOSAMA mark or (2) a likelihood of confusion between the identical marks of the ’122 application and the ’672 registration. Decision, at *7–11. Addressing priority of use, the Board explained that “the Izumi and Narita dec- larations present the undisputed fact that [Narita Export] first used in commerce the TONOSAMA mark with candy on March 27, 2016.” Id. at *8. And because Adaptrend as- serted that June 13, 2016, was its date of first use, the Board found that “there [was] no genuine dispute that [Narita Export’s] prior use date of the TONOSAMA mark on candy [was] earlier than either priority date asserted by [Adaptrend],” such that Narita Export had established pri- ority of use. Id. The Board rejected Adaptrend’s eviden- tiary objections to the Izumi and Narita declarations, explaining that it “f[ound] no genuine dispute of material fact that the Izumi and Narita declarations made a suffi- cient showing of personal knowledge of the facts stated therein” because “each declaration is based on the declar- ant’s position as president.” Id. at *5. Finally, the Board determined that there was a likeli- hood of confusion between the identical marks. Id. at *10. The Board therefore held that Narita Export was entitled Case: 23-1195 Document: 57 Page: 6 Filed: 01/28/2025

to judgment in its favor and cancelled the ’672 registration accordingly. Id. at *11. Adaptrend timely appealed and we have jurisdiction under 15 U.S.C. § 1071(a) and 28 U.S.C. § 1295(a)(4)(B). DISCUSSION Adaptrend challenges the Board’s summary judgment decision, arguing that (1) Narita Export failed to establish a statutory cause of action under § 1064, and (2) the Board abused its discretion in relying on the Izumi and Narita declarations to prove priority of use and establish Narita Export’s continuous use. 3 We address each issue in turn. I We first address whether the Board erred in determin- ing that Narita Export established a statutory cause of ac- tion under § 1064, an issue we review de novo. Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC, 965 F.3d 1370, 1373 (Fed. Cir. 2020). As the Board explained, § 1064 requires a party to demonstrate a real interest in the proceeding and a reasonable belief of having incurred damage. Decision, at *6 (citing Corcamore LLC v. SFM, LLC, 978 F.3d 1298, 1303–04 (2020)); see also Empresa Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270, 1275 (Fed. Cir. 2014). The real interests “test is ‘not especially demanding,’” Corcamore, 978 F.3d at 1303 (quoting Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 130 (2014)), and can be satisfied by demon- strating a direct commercial interest in cancelling the reg- istered mark. Id. at 1305–06. Adaptrend argues that because “the [’]122 trademark application was void ab initio, Narita Export did not have evidence of entitlement to a statutory cause of action prior

3 Adaptrend does not challenge the Board’s likeli- hood of confusion determination on appeal. Case: 23-1195 Document: 57 Page: 7 Filed: 01/28/2025

ADAPTREND, INC. v. STEWART 7

to filing its petition to cancel.” Reply Br. 3. Specifically, it contends that “Narita Export has provided no admissible evidence that it acquired the alleged use-based rights from March 2016 and KKTI” because “[a]t the time the petition was filed, Narita Export did not have a [backdated] assignment from KKTI and the declarations of [] Narita and Izumi are not admissible to establish that the assignment occurred prior to the filing of the petition to cancel.” Id. at 5. Adaptrend also argues that its standing argument was not “waived” because “the Board raised the issue on its own decision.” Id. at 3. Narita Export is not participating in this appeal. But the Patent and Trademark Office (“the PTO”), as interve- nor, contends that “Adaptrend admittedly failed to raise a challenge to Narita [Export]’s entitlement to a statutory cause of action before the Board,” and thus its challenge is forfeited. Intervenor Br. 12. The PTO also argues that, should we consider the merits of that argument, “[t]he PTO’s refusal to register Narita [Export]’s mark based on a confusingly similar mark is sufficient to prove both an interest falling within the zone of interests protected by the statute and damage proximately caused by the registration of a mark.” Id. at 15. We conclude that the Board correctly determined that Narita Export is entitled to a statutory cause of action un- der § 1064. Narita Export has a direct commercial interest in the TONOSAMA mark as evidenced by the PTO’s undis- puted refusal of Narita Export’s pending ’122 application, which was based on a likelihood of confusion with the ’672 registration. S.A. 31; See Empresa Cubana, 753 F.3d at 1275 (“[A] pending application that has been refused registration based on a likelihood of confusion with a reg- istered mark is sufficient to show that the petitioner seek- ing to cancel the registered mark is the type of party Congress authorized under 15 U.S.C. § 1064.”). Case: 23-1195 Document: 57 Page: 8 Filed: 01/28/2025

Adaptrend’s arguments regarding Narita Export’s evi- dence of an earlier oral assignment and a backdated agree- ment memorializing that assignment are also misplaced. Narita Export’s acquisition of prior common law rights to the subject mark goes to the merits of Narita Export’s pri- ority of use claim, not its statutory cause of action. See Australian Therapeutic, 965 F.3d at 1374 (“Neither § 1064 nor our precedent requires that a petitioner have a propri- etary right in its own mark in order to demonstrate a cause of action before the Board.”). We therefore agree with the Board that there is no gen- uine dispute of material fact regarding Narita Export’s en- titlement to a statutory cause of action under § 1064. II We next consider Narita Export’s priority of use of the TONOSAMA mark under § 1052(d). “The Board’s determi- nation of priority is a question of fact reviewed for substan- tial evidence,” Araujo v. Framboise Holdings Inc., 99 F.4th 1377, 1380 (Fed. Cir. 2024), while the Board’s evidentiary rulings are reviewed for abuse of discretion, Zheng Cai v. Diamond Hong, Inc., 901 F.3d 1367, 1370–71 (Fed. Cir. 2018). Under § 1052(d), a party may petition to cancel the registration of a mark that has been on the Principal Reg- ister for fewer than five years based on a likelihood of con- fusion with the petitioner’s ownership of a mark used in the United States and not abandoned. 15 U.S.C. § 1052(d). Adaptrend argues the Board’s priority of use determi- nation was flawed because the Izumi and Narita declara- tions regarding the oral assignment agreement between Narita Export and KKTI in November 2016 lack founda- tion under Federal Rule of Evidence 602 (requiring a testi- fying witness to have personal knowledge of the matter they are testifying to) and constitute inadmissible hearsay under Federal Rule of Evidence 802 (barring out of court statements offered for the truth of the matter asserted), be- cause neither Mr. Izumi nor Mr. Narita were present for Case: 23-1195 Document: 57 Page: 9 Filed: 01/28/2025

ADAPTREND, INC. v. STEWART 9

the alleged agreement or provided any evidence of firsthand knowledge. See generally Appellant’s Br. 7–19. Adaptrend also contends that the declarations are not cred- ible. Id. Adaptrend alternatively argues that, even if the decla- rations are admissible, they are not sufficient evidence of Narita Export’s continuous use of the mark. In particular, Adaptrend argues that Narita Export’s declarations fail to account for sales after 2017, resulting in a genuine dispute of fact regarding Narita Export’s priority of use claim. Ap- pellant’s Br. 20. The PTO responds that the Board did not abuse its dis- cretion in relying on Narita Export’s declarations because the testimony of Mr. Izumi and Mr. Narita, as the respec- tive corporate officers of KKTI and Narita Export, is suffi- cient to show personal knowledge of the oral assignment agreement and any deficiencies in their initial declarations are properly resolved by their rebuttal declarations, which “unambiguously assert Izumi’s and Narita’s personal knowledge of the oral assignment of the TONOSAMA mark from KKTI to Narita on November 25, 2016.” Intervenor Br. 20–21; S.A. 10. The PTO further argues that Narita Export is not required to show continuous use of the TONOSAMA mark for priority of use purposes, and regard- less, Adaptrend affirmatively waived its abandonment de- fense. Intervenor Br. 25. We conclude that the Board’s priority of use determi- nation was supported by substantial evidence, and the Board did not abuse its discretion in relying on the Izumi and Narita declarations. Narita Export’s priority of use of the TONOSAMA mark is based on its acquired common- law rights to the mark from KKTI, as memorialized by the backdated trademark assignment. Adaptrend’s eviden- tiary challenges that purport to create a dispute regarding Narita’s priority of use were appropriately rejected. Case: 23-1195 Document: 57 Page: 10 Filed: 01/28/2025

The Izumi and Narita declarations were based on the witnesses’ personal knowledge and are admissible to sup- port Narita Export’s motion for summary judgment. See S.A. 230, (Reply Decl. of Mr. Narita: “I personally reached an oral agreement with Mr. Izumi to transfer all the right, title, and interest in the TONOSAMA trademark to Narita [Export]”); S.A. 232 (Reply Decl. of Mr. Izumi: “Mr. Narita and I personally reached an oral agreement regarding this transfer on November 25, 2016.”). To avoid any doubt, and as the Board explained, the declarants “are positioned to know or have access to information relevant to the sub- stance of their respective declarations and the assignment referenced therein.” Decision, at *5; see also In re DBC, 545 F.3d 1373, 1383 (Fed. Cir. 2008) (explaining that an employee’s declaration reciting personal knowledge of the subject content was sufficient). Moreover, “[w]hen pre- sented with the evidence provided in the [Izumi and Narita] declaration[s] and nothing to contradict it, a rea- sonable mind could conclude that [Narita Export] had es- tablished its priority date.” Araujo, 99 F.4th at 1381. Turning to the merits of the Board’s priority of use de- termination, it is undisputed that KKTI first used the TONOSAMA mark on March 27, 2016, Appellant’s Br. 25, several months before Adaptrend’s alleged first commer- cial use on June 13, 2016, id. at 7. And based on the Izumi and Narita declarations, it is also undisputed that on Oc- tober 20, 2020, Izumi and Narita executed a backdated trademark assignment with an effective date of Novem- ber 25, 2016, memorializing the parties’ oral trademark as- signment and thereby providing Narita Export with prior common law rights to the mark as of March 27, 2016. S.A. 48, 52. We therefore conclude that the Board’s priority of use decision was supported by substantial evidence. Adaptrend’s belated argument regarding abandonment is deemed waived, and regardless, it is without merit because “continuous use” is not a statutory requirement of a likeli- hood-of-confusion claim. Case: 23-1195 Document: 57 Page: 11 Filed: 01/28/2025

ADAPTREND, INC. v. STEWART 11

CONCLUSION We have considered Adaptrend’s remaining arguments and find them unpersuasive. For the foregoing reasons, we affirm. AFFIRMED