Big Little Lies: Guidelines for Challenging Claims of Acquired Distinctiveness by a Trademark

For the second time, the United States Court of Appeals for the Federal Circuit has considered the standard for demonstrating fraud in claiming part of the acquired distinctiveness of a trademark for the purposes of registration under the Lanham Act Section 2 (f). The Federal Circuit concluded that a party contesting a claimant’s claim under Article 2 (f) on the basis of an essentially exclusive use of that mark need not establish a secondary meaning in its own trademark to thwart the claimant’s claim for essentially exclusive use. The Court also concluded that the use of the mark by any party, regardless of its relationship to the challenger, may undermine the claim of an essentially exclusive use of a trademark applicant. Galperti, Inc. v Galperti SRL, Case n ° 21-1011 (Cir. Fed. 12 Nov. 2021) (Taranto, J.)

Galperti SRL (Galperti-Italy) filed a trademark registration in the United States for the trademark GALPERTI in 2008. In an effort to overcome the initial refusal of the United States Patent and Trademark Office (PTO) to register the trademark as “mainly simply a family name” (and therefore not registrable unless the mark has become distinctive of the applicant’s products in the trade), Galperti-Italy claimed to have acquired the distinctive character of the GALPERTI mark by virtue of the section 2 (f) and stated that the mark had become distinctive of Galperti-Italy’s metal hardware products thanks to its essentially exclusive character and continued use in commerce during the five years preceding the registration of the mark. In 2013, Galperti-USA, an American company unrelated to Galperti-Italy which operates in the similar sector of metal flanges and related products, requested the cancellation of the registration of Galperti-Italy on various grounds, including the fraud in Galperti-Italy’s claim of substantially exclusive use of the GALPERTI mark during the years 2002 – 2007. Galperti-USA has claimed that it and other third parties also used the mark during this period, contradicting the allegations of “substantially exclusive use” of Galperti-Italy.

The Trademark Trial and Appeal Board (Commission) dismissed Galperti-USA’s requests for annulment, including the fraud claim. Galperti-USA filed its first appeal, and the Federal Circuit overturned the Council’s decision that Galperti-USA failed to prove the falsity of Galperti-Italy’s claim under Article 2 (f). The court referred to the board of directors to assess whether the other uses of GALPERTI identified by Galperti-USA were important or inconsequential, which would have an impact on the proof of the falsity of the declarations of Galperti-Italy to the PTO. On referral, the Commission again found that Galperti-USA had failed to prove significant, rather than insignificant, uses of GALPERTI between the years 2002 and 2007, so as to make Galperti-Italy’s statements false. ” Substantially exclusive use ‘. Galperti-USA has filed its second appeal.

In that appeal, Galperti-USA challenged the Commission’s findings that (1) Galperti-USA had to show that it had acquired a secondary meaning in its own brand GALPERTI during the relevant period, and (2) Galperti- USA could not reduce the value of Galperti-Italy claims of substantially exclusive use with proof of use by third parties unrelated to Galperti-USA. The Federal Circuit determined that both the Commission’s premises for its fraud analysis were incorrect in law, and it was therefore unclear whether the Commission’s decision was affected by these errors. Looking more closely at the Commission’s findings, the Court concluded that the Commission’s requirement that Galperti-USA demonstrate its own acquired distinctiveness in the GALPERTI trademark to undermine Galperti-Italy’s claim of use substantially exclusive of the mark was contrary to the precedent of the Federal Circuit. Citing several supporting cases, the Court explained that even market uses of a term devoid of a secondary meaning are uses which could undermine a claimant’s claims that his own use of the mark has been substantially exclusive. The Court noted that a significant use in the market of a term not as a source identification mark could be very relevant in showing that a mark is descriptive and that a party does not have a substantially exclusive use of that same term.

The Federal Circuit also explained that the Council had erred in requiring Galperti-USA to demonstrate a link with other users of the GALPERTI mark during the period 2002-2007. Referring again to its own precedent, the Court noted that “any” use by a third party may thwart a claim of substantially exclusive use of a mark, regardless of that third party’s relationship with the disputing party. The Court therefore set aside the Board’s decision and remanded for further analysis of the issue of falsity in the correct frame.

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