312    Default

312.01    In General

37 C.F.R. § 2.106(a)  If no answer is filed within the time initially set, or as may later be reset by the Board, the opposition may be decided as in case of default. The failure to file a timely answer tolls all deadlines, including the discovery conference, until the issue of default is resolved.

37 C.F.R. § 2.114(a)  If no answer is filed within the time initially set, or as may later be reset by the Board, the petition may be decided as in case of default. The failure to file a timely answer tolls all deadlines, including the discovery conference, until the issue of default is resolved.

If a defendant fails to file an answer to a complaint during the time allowed therefor, the Board may issue a notice of default. The notice states that neither an answer nor any extension of time to answer has been filed; that notice of default under Fed. R. Civ. P. 55(a) is entered; and that defendant is allowed 30 days from the mailing date of the notice in which to show cause why default judgment should not be entered against it. If the defendant fails to file a response to the notice, or files a response that does not show good cause, default judgment may be entered against it. [ Note 1.] Cf. TBMP § 508.

If the defendant fails to file a response to the notice, or files a response which does not show good cause in a case where the plaintiff is seeking to partially cancel a registration or partially oppose an application under Trademark Act § 18, 15 U.S.C. § 1068, default judgment will be entered only to the extent that the restriction requested by plaintiff will be entered. [ Note 2.]

The issue of whether default judgment should be entered against a defendant for failure to file a timely answer to the complaint may also be raised by means other than the Board’s issuance of a notice of default. For example, the plaintiff, realizing that the defendant is in default, may file a motion for default judgment (in which case the motion may serve as a substitute for the Board’s issuance of a notice of default); or the defendant itself, realizing that it is in default, may file a motion asking that its late-filed answer be accepted. [ Note 3.] Cf. TBMP § 508. However the issue is raised, the standard for determining whether default judgment should be entered against the defendant for its failure to file a timely answer to the complaint is the Fed. R. Civ. P. 55(c) standard, that is, whether the defendant has shown good cause why default judgment should not be entered against it. [ Note 4.]

When a defendant who has not yet filed an answer to a complaint files a response to a notice of default, or to a motion for default judgment, the late answer normally should be submitted with the response. However, in some cases it may not be necessary for the defendant to submit its answer with the response. Examples include cases where the defendant has not received its copy of the complaint, and its copy of the notification letter sent to it by the Board, or where the parties have settled the case or agreed to an extension of the defendant’s time to file an answer.

In the case where a notice of default has not yet issued and a defendant files a late answer, a party is technically in default. [ Note 5.] If the parties have continued to litigate after a late-filed answer, it will generally be viewed as a waiver of the technical default. [ Note 6.]

Please Note: In instances where the defendant is in default, the parties’ obligations to conference and, subsequently, to make initial disclosures are stayed until the issue of default is resolved. [ Note 7.] If default is set aside, the Board will reset the deadline for the discovery conference as well as all subsequent dates. [ Note 8.] For more information regarding the parties' obligations with respect to initial disclosures and the discovery conference, see TBMP § 401.01, TBMP § 401.02, TBMP § 408.01(a), and TBMP § 408.01(b).

NOTES:

 1.   See 37 C.F.R. § 2.106(a)  and 37 C.F.R. § 2.114(a); Fed. R. Civ. P. 55(a), 55(b) and 55(c); DeLorme Publishing Co v. Eartha’s Inc., 60 USPQ2d 1222, 1224 (TTAB 2000); Paolo’s Associates L.P. v. Bodo, 21 USPQ2d 1899, 1902-03 (Comm’r 1990);Identicon Corp. v. Williams, 195 USPQ 447, 449 (Comm’r 1977).

 2.   See Eurostar, Inc. v. "Euro-Star" Reitmoden GmbH & Co. KG, 34 USPQ2d 1266, 1275 n.4 (TTAB 1994) (concurring opinion). Cf. Jack Lenor Larsen Inc. v. Chas. O. Larson Co., 44 USPQ2d 1950, 1952 (TTAB 1997) (where registrant defaulted in case involving petition to partially cancel registration to delete certain items identified therein on ground of abandonment and registration was cancelled in its entirety, Board, while noting that it may have been error to order cancellation of registration in its entirety, declined to set aside order, finding that default was properly entered and therefore not "void" under Fed. R. Civ. P. 60(b)(4)).

 3.   See, e.g., DeLorme Publishing Co v. Eartha’s Inc., 60 USPQ2d 1222, 1224 (TTAB 2000) (motion for default judgment); Paolo’s Associates L.P. v. Bodo, 21 USPQ2d 1899, 1902-03 (Comm’r 1990) (plaintiff’s motion for default judgment and defendant’s motion to accept late answer); Fred Hayman Beverly Hills, Inc. v. Jacques Bernier, Inc., 21 USPQ2d 1556, 1557 (TTAB 1991) (motion to accept late answer filed before notice of default issued).

 4.   See, e.g., Fred Hayman Beverly Hills, Inc. v. Jacques Bernier, Inc., 21 USPQ2d 1556, 1557 (TTAB 1991) (motion to accept late answer filed before notice of default issued was treated as response to notice of default). See also DeLorme Publishing Co v. Eartha’s Inc., 60 USPQ2d 1222, 1224 (TTAB 2000); Paolo’s Associates L.P. v. Bodo, 21 USPQ2d 1899, 1902 (Comm’r 1990).

 5.   DeLorme Publishing Co v. Eartha’s Inc., 60 USPQ2d 1222, 1223 n.4 (TTAB 2000).

 6.   MISCELLANEOUS CHANGES TO TRADEMARK TRIAL AND APPEAL BOARD RULES OF PRACTICE, 81 Fed. Reg. 69950, 69952 (October 7, 2016).

 7.   37 C.F.R. § 2.106(a)  and 37 C.F.R. § 2.114(a); MISCELLANEOUS CHANGES TO TRADEMARK TRIAL AND APPEAL BOARD RULES OF PRACTICE, 81 Fed. Reg. 69950, 69952 (October 7, 2016).

 8.   37 C.F.R. § 2.106(b)(3)(iv); 37 C.F.R. § 2.114(b)(3)(iv); MISCELLANEOUS CHANGES TO TRADEMARK TRIAL AND APPEAL BOARD RULES OF PRACTICE, 72 Fed. Reg. 42242, 42255 (August 1, 2007).

312.02    Setting Aside Notice of Default

If a defendant who has failed to file a timely answer to the complaint responds to a notice of default by filing a satisfactory showing of good cause why default judgment should not be entered against it, the Board will set aside the notice of default. [ Note 1.] Similarly, if the defendant files such a showing in response to a motion by the plaintiff for default judgment, or in support of its own motion asking that its late-filed answer be accepted, default judgment will not be entered against it.

Good cause why default judgment should not be entered against a defendant, for failure to file a timely answer to the complaint, is usually found when the defendant shows that (1) the delay in filing an answer was not the result of willful conduct or gross neglect on the part of the defendant, (2) the plaintiff will not be substantially prejudiced by the delay, and (3) the defendant has a meritorious defense to the action. [ Note 2.] The showing of a meritorious defense does not require an evaluation of the merits of the case. All that is required is a plausible response to the allegations in the complaint. [ Note 3.]

The determination of whether default judgment should be entered against a party lies within the sound discretion of the Board. [ Note 4.] In exercising that discretion, the Board must be mindful of the fact that it is the policy of the law to decide cases on their merits. Accordingly, the Board is very reluctant to enter a default judgment for failure to file a timely answer, and tends to resolve any doubt on the matter in favor of the defendant. Nevertheless, entry of default judgment may be necessary in some cases. [ Note 5.]

NOTES:

 1.   See Fed. R. Civ. P. 55(c).

 2.   See DeLorme Publishing Co v. Eartha’s Inc., 60 USPQ2d 1222, 1224 (TTAB 2000) (willful conduct shown where although applicant may not have intended that proceedings be resolved by default, applicant admittedly intended not to answer for six months); Paolo’s Associates L.P. v. Bodo, 21 USPQ2d 1899, 1903-04 (Comm’r 1990) (no evidence that failure was willful; costs incurred in preparing and filing motion not sufficient to support finding of prejudice); Fred Hayman Beverly Hills, Inc. v. Jacques Bernier, Inc., 21 USPQ2d 1556, 1557 (TTAB 1991) (failure to answer due to inadvertence on part of applicant’s counsel; answer had been prepared and reviewed by applicant but counsel inadvertently failed to file it; nine-day delay would cause minimal prejudice; by submission of answer which was not frivolous meritorious defense was shown). Cf. regarding a motion to set aside judgment under Fed. R. Civ. P. 60(b), Djeredjian v. Kashi Co., 21 USPQ2d 1613, 1615 (TTAB 1991) (the two other factors having been shown, applicant was allowed time to show meritorious defense by submission of answer).

 3.   See DeLorme Publishing Co v. Eartha’s Inc., 60 USPQ2d 1222, 1224 (TTAB 2000).

 4.   See, e.g., Identicon Corp. v. Williams, 195 USPQ 447, 449 (Comm’r 1977) (fact that in response to order to show cause applicant filed answer but no response to show cause order does not mandate entry of default judgment; applicant allowed time to show cause).

 5.   See DeLorme Publishing Co v. Eartha’s Inc., 60 USPQ2d 1222, 1224 (TTAB 2000) (although no specific prejudice to opposer, and while meritorious defense was shown, Board found applicant’s conduct amounted to gross neglect and granted motion for default judgment where applicant filed its answer six months late, viewing the notice of opposition as "incomplete," instead of filing appropriate motion or taking other appropriate action).

312.03    Setting Aside Default Judgment

The standard for setting aside default judgment is stricter than the standard for setting aside a notice of default.

A notice of default may be set aside on a showing of good cause. [ Note 1.] See TBMP § 312.02. However, once default judgment has actually been entered against a defendant pursuant to Fed. R. Civ. P. 55(b), the judgment may be set aside only in accordance with Fed. R. Civ. P. 60(b), which governs motions for relief from final judgment. The stricter standard reflects public policy favoring finality of judgments and termination of litigation. [ Note 2.]

The factors considered in determining a motion to set aside notice of default are also considered in determining a motion for relief from a default judgment entered pursuant to Fed. R. Civ. P. 55. [ Note 3.] Among the factors to be considered in determining a motion to vacate a default judgment for failure to answer the complaint are (1) whether the plaintiff will be prejudiced, (2) whether the default was willful, and (3) whether the defendant has a meritorious defense to the action. [ Note 4.]

However, the showing submitted by the defendant is likely to be viewed with less leniency when defendant seeks relief from default judgment than when defendant seeks to show cause why default judgment should not be entered against it. [ Note 5.]

Nevertheless, because default judgments for failure to timely answer the complaint are not favored by the law, a motion under Fed. R. Civ. P. 55(c) or 60(b) seeking relief from such a judgment is generally treated with more liberality by the Board than are other motions under Fed. R. Civ. P. 60(b) for relief from other types of judgments such as default judgments entered against plaintiffs for failure to prosecute the case. [ Note 6.]

For information concerning motions under Fed. R. Civ. P. 60(b) for relief from final judgment, see TBMP § 544.

NOTES:

 1.   See Fed. R. Civ. P. 55(c).

 2.   See Waifersong Ltd. v. Classic Music Vending, 976 F.2d 290, 24 USPQ2d 1632, 1634 (6th Cir. 1992); Jack Lenor Larsen Inc. v. Chas. O. Larson Co., 44 USPQ2d 1950, 1952 (TTAB 1997).

 3.   ComparePaolo’s Associates L.P. v. Bodo, 21 USPQ2d 1899, 1902-03 (Comm’r 1990), and Fred Hayman Beverly Hills, Inc. v. Jacques Bernier, Inc., 21 USPQ2d 1556, 1557 (TTAB 1991) both of which involved the question whether default judgment should be entered against defendant, with Djeredjian v. Kashi Co., 21 USPQ2d 1613, 1615 (TTAB 1991), and Regatta Sport Ltd. v. Telux-Pioneer Inc., 20 USPQ2d 1154, 1156 (TTAB 1991) both involving relief from default judgment. See also 10A C. WRIGHT, A. MILLER& M. KANE, FEDERAL PRACTICE AND PROCEDURE Civil § 2692 (4th ed. 2018); Waifersong Ltd. v. Classic Music Vending, 976 F.2d 290, 24 USPQ2d 1632, 1634 (6th Cir. 1992).

 4.   See Jack Lenor Larsen Inc. v. Chas. O. Larson Co., 44 USPQ2d 1950, 1952 (TTAB 1997) (motion based on alleged failure to receive correspondence from the Board denied given presumption of receipt of correspondence, passage of 12 years and resulting hardship to third parties); Djeredjian v. Kashi Co., 21 USPQ2d 1613, 1615 (TTAB 1991) (motion granted pending showing of meritorious defense where other two elements were established); Regatta Sport Ltd. v. Telux-Pioneer Inc., 20 USPQ2d 1154, 1155-56 (TTAB 1991) (motion granted; respondent’s employees had limited knowledge of English and were unaware opposition and cancellation were separate proceedings).

 5.   See Waifersong Ltd. v. Classic Music Vending, 976 F.2d 290, 24 USPQ2d 1632, 1633 (6th Cir. 1992) (while the factors are similar, the methodology for considering the factors in deciding motion under Fed. R. Civ. P. 60(b)(1) and the weight to be accorded them differs); Jack Lenor Larsen Inc. v. Chas. O. Larson Co., 44 USPQ2d 1950, 1952 (TTAB 1997) (a significant factor is the hardship that reopening a judgment may cause to others and whether other actions have been taken in reliance on the judgment); 10A C. WRIGHT, A. MILLER& M. KANE, FEDERAL PRACTICE AND PROCEDURE Civil § 2692 (4th ed. 2018).

 6.   See Information System and Networks Corp. v. United States, 994 F.2d 792, 795 (Fed. Cir. 1993) ("Rule 60(b) is applied most liberally to judgments in default.") (quoting Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 403 (5th Cir. 1981)); Ruiz v. Quarterman, 504 F.3d 523, 532 (5th Cir. 2007) ("[T]his lesser standard of review has been applied most liberally to motions to re-open default judgments").

Compare Djeredjian v. Kashi Co., 21 USPQ2d 1613, 1615 (TTAB 1991) and Regatta Sport Ltd. v. Telux-Pioneer Inc., 20 USPQ2d 1154, 1155 (TTAB 1991) both of which involved default judgments for failure to answer, with CTRL Systems Inc. v. Ultraphonics of North America Inc., 52 USPQ2d 1300, 1303 (TTAB 1999) (motion to set aside judgment denied since opposer is equally as accountable as its counsel for lack of attention to case); Syosset Laboratories, Inc. v. TI Pharmaceuticals, 216 USPQ 330, 332 (TTAB 1982) (motion to set aside judgment against opposer for failure to prosecute denied; incompetent attorney); Marriott Corp. v. Pappy’s Enterprises, Inc., 192 USPQ 735, 736 (TTAB 1976) (motion to set aside judgment for failure to prosecute denied; inattention and carelessness not excusable); Williams v. Five Platters, Inc., 181 USPQ 409, 410 (TTAB 1974) (motion to set aside default judgment for failure to respond to motion for summary judgment denied; carelessness and inattention of counsel), aff’d, 510 F.2d 963, 184 USPQ 744 (CCPA 1975). See also Smart Inventions Inc. v. TMB Products LLC, 81 USPQ2d 1383, 1384 (TTAB 2006) (cancellation respondent’s motion to set aside default judgment on ground that it never received actual or constructive notice of proceeding granted under Fed. R. Civ. P. 60(b)(4) where assignment of mark to respondent recorded before proceeding instituted but notification of proceeding sent to prior owner); 10A C. WRIGHT, A. MILLER & M. KANE, FEDERAL PRACTICE AND PROCEDURE Civil § 2693 (4th ed. 2018).