Firsthealth of the Carolinas v. Carefirst of Maryland [Reposted With Cover Sheet] ( 2007 )

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United States Court of Appeals for the Federal Circuit
2006-1148
(Opposition No. 91124847)
FIRSTHEALTH OF THE CAROLINAS, INC.,
Appellant,
v.
CAREFIRST OF MARYLAND, INC.,
Appellee.
Anthony J. Biller, Coats & Bennett, P.L.L.C., of Cary, North Carolina, argued for
appellant. Of counsel was David E. Bennett.
Barth X. DeRosa, Stevens Davis Miller Mosher LLP, of Washington, DC, argued
for appellee.
Appealed from: United States Patent and Trademark Office, Trademark Trial
and Appeal Board
United States Court of Appeals for the Federal Circuit
2006-1148
(Opposition No. 91124847)
FIRSTHEALTH OF THE CAROLINAS, INC.,
Appellant,
v.
CAREFIRST OF MARYLAND, INC.,
Appellee.
__________________________
DECIDED: February 27, 2007
__________________________
Before BRYSON, GAJARSA, and LINN, Circuit Judges.
LINN, Circuit Judge.
FirstHealth of the Carolinas, Inc. (“FirstHealth”) appeals from a dismissal by the
Trademark Trial and Appeal Board (“Board”) of its counterclaim to cancel trademarks
registered by CareFirst of Maryland, Inc. (“CareFirst”). CareFirst of Md., Inc. v.
FirstHealth of the Carolinas, Inc., Opposition Nos. 91116355, 91124847 (T.T.A.B. Dec.
2, 2005) (“Dismissal”). Because the Board’s findings are supported by substantial
evidence, we affirm.
I. BACKGROUND
In 1998 and 2001, FirstHealth filed intent-to-use trademark applications—Serial
Nos. 75/455,343 and 76/222,230, respectively—for the FIRSTCAROLINACARE mark
used in conjunction with healthcare insurance claims administration and health
maintenance organizations (“HMOs”). In each instance, CareFirst filed a notice of
opposition alleging a likelihood of confusion with and dilution of its registered
CAREFIRST mark. The two proceedings were consolidated on March 7, 2003.
FirstHealth counterclaimed against CareFirst, seeking cancellation of the
CAREFIRST trademark registrations based on abandonment due to uncontrolled
licensing of the mark and failure to use the mark in connection with services other than
HMO services. In accordance with 37 C.F.R. § 2.121, the parties entered into a
stipulation that provided a two-month extension of FirstHealth’s case-in-chief testimony
period until January 31, 2004.
On February 26, 2004, FirstHealth filed a motion to reopen its testimony period
for the purpose of filing notices of reliance to introduce into evidence the discovery
deposition of David Wolf (and related exhibits), certain discovery responses, and
certified copies of third-party registrations. FirstHealth attributed its late filing to the birth
of counsel’s son, the significant amount of testimony that was taken, counsel’s time
conflicts with unrelated matters, and a docketing error made by a new paralegal. The
Board found that FirstHealth failed to demonstrate excusable neglect and denied
FirstHealth’s motion to reopen the testimony period. Dismissal, slip op. at 13.
Noting that FirstHealth’s counterclaim arguments relied principally on the Wolf
deposition—which was not of record—the Board found that FirstHealth had failed to
prove uncontrolled licensing of the mark or failure to use the mark by a preponderance
of the evidence. Id., slip op. at 29-33. Accordingly, FirstHealth’s counterclaims for
cancellation were dismissed. Id., slip op. at 33. The Board also dismissed CareFirst’s
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oppositions, finding that there was no likelihood of confusion with or dilution of its
registered mark. Id., slip op. at 75.
Although both parties initially appealed the Board’s decision, CareFirst eventually
moved to dismiss its appeal. That motion was granted on February 28, 2006. This
case therefore concerns FirstHealth’s appeal from the Board’s denial of its motion to
reopen the testimony period and the Board’s dismissal of its counterclaim for
cancellation of CareFirst’s registered trademarks. We have jurisdiction pursuant to 28
U.S.C. § 1295(a)(4)(B).
II. DISCUSSION
A. Jurisdiction
As a threshold matter, CareFirst argues that this appeal is moot and that we lack
appellate jurisdiction. Specifically, CareFirst argues that by having dismissed its appeal
from the opposition decision, the Board’s rulings on the likelihood of confusion with and
dilution of the CAREFIRST mark have a preclusive effect against CareFirst in any future
proceedings against FirstHealth for use of the FIRSTCAROLINACARE mark. CareFirst
argues that, as a result, the CAREFIRST mark cannot be asserted against FirstHealth
and thus there is no potential “damage” as contemplated by 15 U.S.C. § 1064 to
support FirstHealth’s cancellation counterclaim.
CareFirst overstates the impact of the Board’s findings. As the Board’s
regulations correctly recognize: “The Board is empowered to determine only the right to
register. The Board is not authorized to determine the right to use, nor may it decide
broader questions of infringement or unfair competition.” T.B.M.P. § 102.01. The
Board’s decision does not bar CareFirst from using the CAREFIRST mark or from
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asserting that mark in subsequent claims against FirstHealth for trademark infringement
or unfair competition. See 15 U.S.C. § 1114(1) (registrant may bring infringement
action against those using or reproducing marks for certain purposes when “such use is
likely to cause confusion, or to cause mistake, or to deceive”). Although the Board’s
findings may preclude CareFirst from re-litigating the narrow issues addressed by the
Board in the opposition proceeding,1 the CAREFIRST mark may still be used to cause
“damage” by means that do not involve inquiries into likelihood of confusion or dilution.
Accordingly, the appeal is not moot, and we turn to the merits of the case.
B. Excusable Neglect
The primary issue on appeal is whether the Board erred in denying FirstHealth’s
motion to reopen the testimony period for failure to show excusable neglect, which we
review for an abuse of discretion. See Hewlett-Packard Co. v. Olympus Corp., 931 F.2d
1551, 1552 (Fed. Cir. 1991). FirstHealth argues that the Board abused its discretion in
applying the factors identified by the Supreme Court in Pioneer Investment Services Co.
v. Brunswick Associates Ltd., 507 U.S. 380 (1993), because each factor weighs in favor
of accepting FirstHealth’s late filing.
The Board’s regulations allow a testimony period to be reopened upon a showing
of “excusable neglect,” but do not specify what is meant by that term. See 37 C.F.R.
§ 2.116(a) (inter partes proceedings before the Board are generally governed by the
1
We do not decide whether the Board’s likelihood of confusion and dilution
findings would have a preclusive effect on the same issues in some hypothetical future
litigation; indeed, they may not. See Jim Beam Brands Co. v. Beamish & Crawford,
Ltd., 937 F.2d 729, 734-36 (2d Cir. 1991) (holding that the issue of likelihood of
confusion in a prior cancellation proceeding was sufficiently different from the issue of
likelihood of confusion presented in subsequent litigation such that the Board’s finding
did not have preclusive effect).
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Federal Rules of Civil Procedure); Fed. R. Civ. P. 6(b)(2). In Pioneer, the Supreme
Court addressed the meaning of “excusable neglect” in the context of the Federal Rules
of Bankruptcy Procedure. According to the Court, the determination of whether a
party’s neglect is excusable is:
at bottom an equitable one, taking account of all relevant circumstances
surrounding the party’s omission. These include . . . [1] the danger of
prejudice to the [non-moving party], [2] the length of the delay and its
potential impact on judicial proceedings, [3] the reason for the delay,
including whether it was within the reasonable control of the movant, and
[4] whether the movant acted in good faith.
507 U.S. at 395. The Board adopted these factors for determining excusable neglect in
Pumpkin Ltd. v. The Seed Corps, 43 USPQ2d 1582 (T.T.A.B. 1997), and has found the
third factor—the reason for the delay and whether it was within the movant’s control—to
be of paramount importance. Old Nutfield Brewing Co., v. Hudson Valley Brewing Co.,
65 USPQ2d 1701 (T.T.A.B. 2002) (citing Pumpkin, 43 USPQ2d at 1586 n.7).
The Board has discretion to reasonably interpret the meaning of “excusable
neglect” in the context of its own regulations. See Thomas Jefferson Univ. v. Shalala,
512 U.S. 504, 512 (1994) (an agency’s interpretation of its own regulation is given
“controlling weight unless it is plainly erroneous or inconsistent with the regulation”
(quoting Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945))). Although
the Board was not required to adopt the interpretation of “excusable neglect” articulated
in Pioneer, doing so was reasonable, and we defer to that interpretation. See Custom
Computer Servs., Inc. v. Paychex Props., Inc., 337 F.3d 1334, 1336 (Fed. Cir. 2003)
(deferring to the Board’s interpretation of “mistake” in the context of 37 C.F.R.
§ 2.102(b)).
2006-1148 5
The Board’s decision in Pumpkin is on point. In that case, a party in an
opposition proceeding filed a motion to reopen its testimony period, arguing that its
failure to submit evidence during the assigned testimony period was the result of
excusable neglect. 43 USPQ2d at 1583. The Board found that there was no danger of
prejudice to the non-moving party and no evidence of bad faith. Id. at 1587-88. The
Board nevertheless denied the motion based on the second and third Pioneer factors.
Id. In doing so, the Board noted that because the reason for delay—a docketing error—
was “wholly within the reasonable control of [the movant], the third Pioneer factor
weighs heavily against a finding of excusable neglect.” Id. at 1587. The Board also
noted that its interest in deterring delay due to “sloppy practice or inattention to
deadlines” was relevant to the second Pioneer factor and also “weighs heavily against a
finding of excusable neglect.” Id. at 1588.
Here, the reasons given for delay were wholly within FirstHealth’s reasonable
control.2 Indeed, two of the reasons for delay were accounted for in FirstHealth’s
Stipulated Motion for Enlargement of Testimony and Briefing Periods, which extended
the testimony period to January 31, 2004 “to accommodate [FirstHealth’s] witness’ [sic]
schedules and conflicts with counsels’ schedules.” FirstHealth’s complaint of a
docketing error is belied by its reference to the January 31, 2004 deadline in a motion it
filed before the deadline had expired. Finally, to the extent an attorney’s family matters
caused delay, FirstHealth provides no explanation as to why other authorized
2
On appeal, FirstHealth also points to the hospitalization of counsel’s son
as a reason for delay. That hospitalization did not occur until after the testimony period
closed and was not raised in FirstHealth’s motion to reopen the testimony period.
Although unfortunate, there is no explanation as to how this event resulted in
FirstHealth’s failure to submit its notices of reliance before the testimony period expired.
We therefore do not consider it on appeal.
2006-1148 6
individuals in the same firm could not have assumed responsibility for the case. See
HKG Indus., Inc. v. Perma-Pipe, Inc., 49 USPQ2d 1156 (T.T.A.B. 1998) (finding that a
failure to explain why other authorized individuals could not have assumed responsibility
after counsel’s death weighed against finding excusable neglect). As in Pumpkin,
substantial evidence supports a finding that the second and third factors weigh against
excusable neglect. Accordingly, the Board’s finding in this case is consistent with its
prior practice, and it did not abuse its discretion in denying FirstHealth’s motion to
reopen the testimony period.
FirstHealth argues that the undisputed facts of record prove its cancellation
counterclaims even without the excluded evidence. We find that argument
unpersuasive. Abandonment is a question of fact, and the Board’s findings are
sustained if supported by substantial evidence. On-Line Careline, Inc. v. Am. Online,
Inc., 229 F.3d 1080, 1087 (Fed. Cir. 2000). FirstHealth bears the burden of proving
abandonment by a preponderance of the evidence. Rivard v. Linville, 133 F.3d 1446,
1449 (Fed. Cir. 1999). Without the properly excluded testimony evidence, the Board’s
finding that FirstHealth failed to prove uncontrolled licensing or failure to use by a
preponderance of the evidence is supported by substantial evidence.
III. CONCLUSION
Because the Board did not abuse its discretion in denying FirstHealth’s motion to
reopen the testimony period, and because substantial evidence supports the Board’s
finding that FirstHealth failed to prove its cancellation counterclaims, the Board’s
decision is
AFFIRMED.
2006-1148 7
COSTS
No costs.
2006-1148 8