Corcamore, LLC v. Sfm, LLC ( 2020 )

Case: 19-1526 Document: 71 Page: 1 Filed: 10/27/2020
United States Court of Appeals
for the Federal Circuit
______________________
CORCAMORE, LLC,
Appellant
v.
SFM, LLC,
Appellee
______________________
2019-1526
______________________
Appeal from the United States Patent and Trademark
Office, Trademark Trial and Appeal Board in No.
92060308.
______________________
Decided: October 27, 2020
______________________
CHARLES L. THOMASON, Thomason Law Office, Louis-
ville, 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.
Case: 19-1526 Document: 71 Page: 2 Filed: 10/27/2020
2 CORCAMORE, LLC v. SFM, LLC
REYNA, Circuit Judge.
Corcamore LLC appeals an order of the United States
Patent and Trademark Office, Trademark Trial and Ap-
peal Board. The Board entered default judgment as a sanc-
tion against Corcamore, which resulted in the cancellation
of Corcamore’s trademark registration for SPROUT. On
appeal, Corcamore contends that the Board erred in grant-
ing default judgment, in particular because SFM LLC
lacked standing to petition for cancellation of the trade-
mark registration. We conclude that appellee SFM was en-
titled 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 other-
wise 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 com-
merce at least as early as April 15, 2002. Id. The below
Case: 19-1526 Document: 71 Page: 3 Filed: 10/27/2020
CORCAMORE, LLC v. SFM, LLC 3
image illustrates the use of the SPROUTS mark in a
Sprouts Farmers Market grocery store.
J.A. 822.
Corcamore LLC (“Corcamore”) owns a federal trade-
mark 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 cer-
tain 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
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4 CORCAMORE, LLC v. SFM, LLC
promotions offered to holders of the Sprout OneCard (pic-
tured 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 Peti-
tion for Cancellation). SFM claimed that its rights to the
SPROUTS mark were superior to Corcamore’s rights be-
cause 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 reg-
istered trademark, citing the analytical framework estab-
lished by the Supreme Court in Lexmark International,
Inc. v. Static Control Components, Inc., 572 U.S. 118Case: 19-1526 Document: 71 Page: 5 Filed: 10/27/2020
CORCAMORE, LLC v. SFM, LLC 5
(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 reconsidera-
tion. J.A. 11–12, 30–32. The Board reasoned that
Lexmark was limited to civil actions involving false desig-
nation of origin (referred to as false advertising) under 15
U.S.C. § 1125(a) and does not extend to cancellation of reg-
istered 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 dam-
age, as required under 15 U.S.C. § 1064. J.A. 11. As a re-
sult, 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, Corca-
more sent a letter to SFM’s counsel indicating that it would
bring “procedural maneuvers” against SFM and delay dis-
covery. 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, Cor-
camore filed four motions requesting affirmative relief, in-
cluding 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 recon-
sideration 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
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6 CORCAMORE, LLC v. SFM, LLC
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 or-
dered the parties to suspend filing papers not related to
SFM’s motion to compel. See J.A. 82–83. Despite this in-
struction, Corcamore filed numerous motions unrelated to
SFM’s motion to compel, including its own motion to com-
pel 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 an-
other 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 resched-
ule the deposition, Corcamore served objections and again
refused to appear.
On October 25, 2017, SFM filed a motion to compel sup-
plemental responses to certain document requests and in-
terrogatories. 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
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CORCAMORE, LLC v. SFM, LLC 7
Corcamore from “filing any additional unconsented or un-
stipulated motions without first obtaining prior Board per-
mission.” Id. at 71. Corcamore did not comply with the
written-discovery order by, among other reasons, failing to
serve timely supplemental responses, maintaining frivo-
lous 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 proce-
durally impermissible motions. The Board denied Corca-
more’s unapproved filings for failure to comply with the
Second Sanction.
At the close of discovery, SFM moved for default judg-
ment 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 Cor-
camore for its violations of the deposition order and numer-
ous 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 re-
solve 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 occa-
sions 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,
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8 CORCAMORE, LLC v. SFM, LLC
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 pe-
tition for cancellation of a registered trademark. Corca-
more contends that the Board erred as a matter of law
when it applied this court’s analysis in Empresa Cubana
instead of the analytical framework established by the Su-
preme Court in Lexmark. Second, Corcamore argues that
the Board abused its discretion in granting default judg-
ment as a sanction. We first address the standing issue.
Whether a party is entitled to bring or maintain a stat-
utory cause of action is a legal question that we review de
novo. Empresa Cubana, 753 F.3d at 1274 (citing Lexmark,
572 U.S. at 129). In this appeal, we review de novo whether
SFM pleaded sufficient facts to establish entitlement to
challenge Corcamore’s registered trademark under § 1064.
We first observe that there exists confusion in the law
stirred by the inconsistent use of the term “standing.” As
Justice Scalia observed, certain issues often discussed in
terms of “standing” are more appropriately viewed as re-
quirements for establishing a statutory cause of action.
Lexmark, 572 U.S. at 128 n.4. That is the case here. To be
clear, this appeal does not involve the traditional legal no-
tions of Article III standing. This appeal focuses instead
on the requirements that a party must satisfy to bring or
maintain a statutory cause of action, such as a petition to
cancel a registered trademark under 15 U.S.C. § 1064.
A. Lexmark
Corcamore contends that we should reverse the Board’s
ruling because it applied the standard articulated by this
court in Empresa Cubana instead of the analytical
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CORCAMORE, LLC v. SFM, LLC 9
framework established in Lexmark. We hold that the
Lexmark analytical framework is the applicable standard
for determining whether a person is eligible under § 1064
to bring a petition for the cancellation of a trademark reg-
istration. However, because we discern no meaningful,
substantive difference between the analytical frameworks
expressed in Lexmark and Empresa Cubana, we do not
agree that the Board reached the wrong result in this case.
In Lexmark, the Supreme Court established two re-
quirements for determining whether a party is entitled to
bring or maintain a statutory cause of action: a party must
demonstrate (i) an interest falling within the zone of inter-
ests protected by the statute and (ii) proximate causation.
572 U.S. at 129–34. The Court explained that those two
requirements “suppl[y] the relevant limits on who may
sue” under a statutory cause of action. Id. at 134. The
Court made clear that the zone-of-interests requirement
applies to all statutory causes of action, and that proximate
causation generally applies to all statutory causes of ac-
tion. Id. at 129, 133.
In Lexmark, the Court addressed the cause of action for
false advertising provided in 15 U.S.C. § 1125(a). Id. at
129–37. The Court held that in order for a person to “come
within a zone of interests in a suit for false advertising un-
der § 1125(a), a plaintiff must allege an injury to a commer-
cial interest in reputation or sales.” Id. at 131–32. The
Court explained that the zone-of-interests test is “not espe-
cially demanding,” and that “the benefit of any doubt goes
to the plaintiff.” Id. at 130 (citation and internal quotation
marks omitted). The Court further explained that the pur-
pose of the zone-of-interests test is to “foreclose[] suit only
when a plaintiff's interests are so marginally related to or
inconsistent with the purposes implicit in the statute that
it cannot reasonably be assumed that Congress authorized
that plaintiff to sue.” Id. (citation and internal quotation
marks omitted).
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10 CORCAMORE, LLC v. SFM, LLC
As to the second requirement, proximate causation, the
Court noted that it is “generally presume[d]” that “a statu-
tory cause of action is limited to plaintiffs whose injuries
are proximately caused by violations of the statute.” Id. at
132. The Court explained that “the proximate-cause re-
quirement generally bars suits for alleged harm that is ‘too
remote’ from the defendant’s unlawful conduct.” Id. at 133
(citation omitted). Regarding false advertising, the Court
held that “a plaintiff suing under § 1125(a) ordinarily must
show economic or reputational injury flowing directly from
the [alleged false advertising].” Id. The Court explained,
however, that the proximate-causation requirement “is not
easy to define,” has “taken various forms,” and “is con-
trolled by the nature of the statutory cause of action.” Id.
The relevant question, the Court explained, is “whether the
harm alleged has a sufficiently close connection to the con-
duct the statute prohibits.” Id.
Empresa Cubana was this court’s first post-Lexmark
appeal to address the requirements to bring a cancellation
proceeding under § 1064. 753 F.3d at 1274–76. 1 We recog-
nized Lexmark’s impact on the false advertising cause of
action under § 1125(a), but we addressed Lexmark only in
passing and, in particular, did not address whether the
Lexmark framework applies to § 1064. Instead, we relied
on our precedents in Ritchie v. Simpson, 170 F.3d 1092(Fed. Cir. 1999) and Lipton Indus., Inc. v. Ralston Purina
Co., 670 F.2d 1024, 1029 (CCPA 1982), and concluded that
petitioner had a cause of action under § 1064 because it
1 In Australian Therapeutic Supplies Pty. Ltd. v. Na-
ked TM, LLC, we addressed § 1064 eligibility criteria and
affirmed the Board’s reliance on the Empresa Cubana “real
interest in the proceeding” and “reasonable belief in dam-
age” approach. 965 F.3d 1370, 1376 (2020). In Australian
Therapeutic Supplies, however, neither the parties nor the
Board addressed the applicability of Lexmark.
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CORCAMORE, LLC v. SFM, LLC 11
demonstrated “a real interest in cancelling the [registered
trademarks at issue] and a reasonable belief that the [reg-
istered trademarks] are causing it damage.” Id. at 1274.
Here, the Board determined that the Lexmark frame-
work does not apply to § 1064 because Lexmark addresses
§ 1125(a), a different statutory provision. See J.A. 11–12
(explaining that “Lexmark involved a case of false advertis-
ing in a civil action arising under § 43(a) of the Lanham
Act, 15 U.S.C. § 1125(a); that is not the statutory provi-
sion(s) at issue in this Board cancellation”). The Board’s
interpretation of Lexmark is unduly narrow.
To be clear, § 1064, like § 1125(a), is a statutory cause
of action provided in the Lanham Act. See Empresa
Cubana, 753 F.3d at 1275–76 (holding that appellant
demonstrated entitlement to a “statutory cause of action”
under the Lanham Act). A “cause of action” consists of two
elements: operative facts and the right or power to seek and
obtain redress for infringement of a legal right which those
facts show. See 1A C.J.S. Actions § 53; see also Cause of
Action, Black’s Law Dictionary (11th ed. 2019) (“A group of
operative facts giving rise to one or more bases for suing.”).
Congress created in § 1064 a group of operative facts
that grant to “any person” the right to petition for cancel-
lation of a registered mark if that person “believes that he
is or will be damaged . . . by the registration of a mark on
the principal register.” 15 U.S.C. § 1064. Whether a spe-
cific person alleging a specific injury meets these operative
facts requires us to interpret § 1064. See Lexmark, 572
U.S. at 128. To that end, we apply the “traditional princi-
ples of statutory interpretation” articulated in Lexmark:
zone of interests and proximate causation. Id.
The Lexmark analytical framework applies to § 1064
and § 1125(a) because both are statutory causes of action.
As Justice Scalia exhorted, the zone-of-interests require-
ment “applies to all statutorily created causes of action”
and it “applies unless it is expressly negated.” Lexmark,
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12 CORCAMORE, LLC v. SFM, LLC
572 U.S. at 129. The proximate-causation requirement
generally applies to all statutory causes of action, even
where a statute does not expressly recite a proximate-cau-
sation requirement. See id. at 132 (“generally presum[ing]”
that the proximate-causation requirement applies to all
statutory causes of action); see also id. (identifying three
exemplary federal causes of action where the Supreme
Court “incorporate[d] a requirement of proximate causa-
tion”). In view of the Supreme Court’s instructions, we see
no principled reason why the analytical framework articu-
lated by the Court in Lexmark should not apply to § 1064.
The Board’s conclusion to the contrary fails to recog-
nize that Lexmark binds all lower courts not only regarding
§ 1125(a) but also with respect to the analytical framework
the Court used to reach its decision. See, e.g., Seminole
Tribe of Florida v. Florida, 517 U.S. 44, 67 (1996) (“When
an opinion issues for the Court, it is not only the result but
also those portions of the opinion necessary to that result
by which we are bound.”); County of Allegheny v. Am. Civil
Liberties Union, Greater Pittsburgh Chapter, 492 U.S. 573,
668 (1989) (Kennedy, J., concurring in the judgment in part
and dissenting in part) (“As a general rule, the principle of
stare decisis directs us to adhere not only to the holdings of
our prior cases, but also to their explications of the govern-
ing rules of law.”). Once the Supreme Court adopts “a rule,
test, standard, or interpretation . . . that same rule, test,
standard, or interpretation must be used by lower courts in
later cases.” United States v. Duvall, 740 F.3d 604, 609
(D.C. Cir. 2013) (Kavanaugh, J., concurring in the denial of
rehearing en banc). Lexmark established the analytical
framework to be used for determining eligibility require-
ments for all statutory causes of action, including under
§ 1064, absent contrary Congressional intent. Like all
lower tribunals, we are obligated to apply that framework
where applicable. We thus hold that the Lexmark zone-of-
interests and proximate-causation requirements control
the statutory cause of action analysis under § 1064.
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CORCAMORE, LLC v. SFM, LLC 13
B. Empresa Cubana
The Board failed to apply the Lexmark analytical
framework, but it reached the correct result. As noted
above, we see no meaningful, substantive difference in the
analysis used in Lexmark and Empresa Cubana.
The zone-of-interests requirement and the real-inter-
est requirement share a similar purpose and application.
The purpose of the zone-of-interests test is to “foreclose[]
suit only when a plaintiff’s interests are so marginally re-
lated to or inconsistent with the purposes implicit in the
statute that it cannot reasonably be assumed that Con-
gress authorized that plaintiff to sue.” Lexmark, 572 U.S.
at 130 (citation and quotation marks omitted). Likewise, a
purpose of the real-interest test is to “distinguish [parties
demonstrating a real interest] from mere intermeddlers
or . . . meddlesome parties acting as self-appointed guardi-
ans of the purity of the Register.” Selva & Sons, Inc. v.
Nina Footwear, Inc., 705 F.2d 1316, 1325–26 (Fed. Cir.
1983) (citation and internal quotation marks omitted).
Also like the zone-of-interests test, a petitioner can satisfy
the real-interest test by demonstrating a commercial inter-
est. Compare Lexmark, 572 U.S. 131–32 (“[T]o come within
a zone of interests in a suit for false advertising under
§ 1125(a), a plaintiff must allege an injury to a commercial
interest in reputation or sales.” (emphasis added)), with
Empresa Cubana, 753 F.3d at 1275 (“[T]he desire for a reg-
istration with its attendant statutory advantages is a legit-
imate commercial interest, so to satisfy the requirements
for bringing a cancellation proceeding.” (emphasis added)).
Given those similarities in purpose and application, a party
that demonstrates a real interest in cancelling a trademark
under § 1064 has demonstrated an interest falling within
the zone of interests protected by § 1064.
Similarly, a party that demonstrates a reasonable be-
lief of damage by the registration of a trademark demon-
strates proximate causation within the context of § 1064.
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14 CORCAMORE, LLC v. SFM, LLC
Congress incorporated a causation requirement in § 1064,
which provides a right to bring a cause of action “by any
person who believes that he is or will be damaged . . . by
the registration of a mark on the principal register.” § 1064
(emphasis added). While our precedent does not describe
the causation requirement as one of “proximate causation,”
it nonetheless requires petitioner’s belief of damage to have
“a sufficiently close connection,” Lexmark, 572 U.S. at 133,
to the registered trademark at issue. For example, in
Ritchie v. Simpson, 170 F.3d 1092, 1098 (Fed. Cir. 1999),
we explained that possession of “a trait or characteristic
that is clearly and directly implicated in the proposed
mark” demonstrates a reasonable belief of damage. In
Jewelers Vigilance Comm., Inc. v. Ullenberg Corp., 823
F.2d 490, 493 (Fed. Cir. 1987), we explained that a peti-
tioner can demonstrate “standing” by asserting “some di-
rect injury to its own established trade identity if an
applicant’s mark is registered.” 2 The direct connection be-
tween the belief of damage and the registered mark suffices
to demonstrate proximate causation. Cf. Lexmark, 572
U.S. at 133 (holding that “a plaintiff suing under § 1125(a)
ordinarily must show economic or reputational injury flow-
ing directly from the deception wrought by the defendant’s
advertising.” (emphasis added)). This direct connection
also satisfies the purpose of the proximate-causation re-
quirement—barring suits for alleged harm that is “too re-
mote” from the unlawful conduct. Id. at 133. Given these
similarities, a party that can demonstrate a reasonable
2 While both Ritchie and Jewelers discussed opposi-
tion proceedings under 15 U.S.C. § 1063, “[t]he statutory
requirements to cancel registration of a mark under § 1064
are substantively equal to the statutory requirements to
oppose the registration of a mark under § 1063.” Austral-
ian Therapeutic Supplies, 965 F.3d at 1373.
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CORCAMORE, LLC v. SFM, LLC 15
belief of damage by the registration of a mark also demon-
strates damage proximately caused by the registered mark.
C. SFM
Applying Lexmark’s analytical framework to the cir-
cumstances of the underlying case, we reach the same con-
clusion as the Board—that SFM pleaded allegations
sufficient to demonstrate a right to challenge Corcamore’s
registered mark under § 1064. J.A. 11–12. SFM alleges
that because the goods sold under SFM’s SPROUTS trade-
marks and Corcamore’s SPROUT trademark are substan-
tially similar, purchasers will believe that Corcamore’s use
of SPROUT is sponsored by SFM. J.A. 122, ¶ 9. This alle-
gation is well-pleaded 3 and is sufficient to establish a real
interest in the cancellation proceeding. See Selva, 705 F.2d
at 1326 (“[Petitioner] has demonstrated its real interest in
the proceeding through its reasonable allegation that its
trademark . . . and the trademark [sought to be canceled]
are confusingly similar.” (citation and internal quotation
marks omitted)). SFM’s allegation, therefore, identifies an
interest falling within the zone of interests protected by
§ 1064.
SFM also alleges that “[b]ecause the goods sold under
SFM’s trademark and [Corcamore’s] trademark are sub-
stantially similar, purchasers will be led to the mistaken
belief that SFM’s goods and [Corcamore’s] goods originate
from the same source, or that [Corcamore’s] use of
SPROUT has been sponsored, authorized, or warranted by
SFM, all to SFM’s detriment.” J.A. 122 ¶ 9. This allegation
is well-pleaded and is sufficient to establish proximate
3 In a Rule 12(b)(6) motion to dismiss, all well-
pleaded allegations in a petition must be accepted as true
and the claims must be construed in the light most favora-
ble to the non-moving party. TBMP § 503.02 (2020); Young
v. AGB Corp., 152 F.3d 1377, 1379 (Fed. Cir. 1998).
Case: 19-1526 Document: 71 Page: 16 Filed: 10/27/2020
16 CORCAMORE, LLC v. SFM, LLC
causation because it demonstrates SFM’s reasonable belief
of damage resulting from a likelihood of confusion between
SFM’s SPROUTS mark and Corcamore’s SPROUT mark.
See Lipton, 670 F.2d at 1029 (“To establish a reasonable
basis for a belief that one is damaged by the registration
sought to be cancelled, a petition may assert a likelihood of
confusion which is not wholly without merit.”).
We therefore hold that the Board correctly determined
that SFM falls within the class of parties whom Congress
has authorized to sue under the statutory cause of action
of § 1064. Cf. Lexmark, 572 U.S. at 137–40. We are not
persuaded that we should disturb the result reached by the
Board. In other words, SFM is entitled under § 1064 to
petition for cancellation of the trademark registration to
SPROUT.
D. Sanctions
We next review the Board’s grant of default judgment
as a discovery sanction. J.A. 79–91. We review a grant of
default judgment as a sanction for abuse of discretion. See
Benedict v. Super Bakery, Inc., 665 F.3d 1263, 1268 (Fed.
Cir. 2011). An abuse of discretion occurs if the decision
(1) is clearly unreasonable, arbitrary, or fanciful; (2) is
based on an erroneous conclusion of law; (3) rests on clearly
erroneous fact findings; or (4) involves a record that con-
tains no evidence on which the Board could rationally base
its decision. Abrutyn v. Giovanniello, 15 F.3d 1048, 1050–
51 (Fed. Cir. 1994).
In its Order, the Board analyzed its express and inher-
ent authority to sanction and found that both supported its
decision to grant default judgment as a sanction. J.A. 87–
91. Corcamore does not challenge the Board’s express au-
thority to grant default judgment as a sanction under 37
C.F.R. § 2.120(h) and Fed. R. Civ. P. 37(b)(2). Instead, Cor-
camore argues that the Court had no factual and legal ba-
sis to enter default judgment in the first place.
Case: 19-1526 Document: 71 Page: 17 Filed: 10/27/2020
CORCAMORE, LLC v. SFM, LLC 17
First, Corcamore contends that the Board abused its
discretion by entering default judgment without ever hav-
ing addressed Corcamore’s motion to compel discovery.
Second, Corcamore argues that the Board abused its dis-
cretion by conducting an ex parte teleconference with SFM
and, thereafter, denying Corcamore’s motion for a protec-
tive order to delay a Rule 30(b)(6) deposition. Third, Cor-
camore argues that the Board abused its discretion by
finding that SFM did not receive Corcamore’s discovery re-
sponses mandated by the Board’s February 27, 2018 order.
We are not persuaded.
Corcamore’s argument regarding its motion to compel
is immaterial because, even if true, discovery misconduct
by one party does not excuse the discovery misconduct of
another party. See TBMP § 408.01 (“A party is not relieved
of its discovery obligations, including its duty to cooperate,
in spite of the fact that an adverse party wrongfully may
have failed to fulfill its own obligations.”). The record does
not support Corcamore’s allegation regarding ex parte com-
munications because the Board explained that it “termi-
nated the telephone conference” when Corcamore failed to
appear and that it denied Corcamore’s motion because
“[Corcamore] failed to include a statement in support of its
good faith effort . . . to resolve the [discovery] dispute.”
J.A. 45 (Order denying Corcamore’s motion for a protective
order). Finally, Corcamore failed to follow Rule 2.119 and
provided no written explanation for why it failed to effect
email service, as required by the Board 4 and under
37 C.F.R. § 2.119(b)(4). Under these circumstances, we see
no abuse of discretion by the Board. Accordingly, we con-
clude that the Board’s entry of default judgment as a sanc-
tion was not an abuse of discretion.
4 May 31, 2017, Board Order, 36 TTBVUE 3, SFM,
LLC v. Corcamore, LLC, Cancellation No. 92060308 (2019).
Case: 19-1526 Document: 71 Page: 18 Filed: 10/27/2020
18 CORCAMORE, LLC v. SFM, LLC
CONCLUSION
We have considered the parties’ remaining arguments
and find them unpersuasive. Because SFM meets the stat-
utory requirements to challenge Corcamore’s registered
mark and because the Board did not abuse its discretion in
imposing sanctions, we affirm.
AFFIRMED
COSTS
Costs to SFM LLC.