605 Settlement
605.01 In General
A substantial percentage of the inter partes cases filed with the Board are eventually settled. [Note 1.] The Board encourages settlement, and several aspects of Board practice and procedure, including its discovery practice (see TBMP Chapter 400) and its usual willingness to suspend proceedings for reasonable times while parties negotiate for settlement serve to facilitate the resolution of cases by agreement. See TBMP § 510.03 and TBMP § 605.02.
1. See MISCELLANEOUS CHANGES TO TRADEMARK TRIAL AND APPEAL BOARD RULES, 72 Fed. Reg. 42242, 42257 (August 1, 2007); MISCELLANEOUS CHANGES TO TRADEMARK TRIAL AND APPEAL BOARD RULES, 81 Fed. Reg. 69950, 69951 (October 7, 2016).
605.02 Suspension for Settlement Negotiations
37 CFR §2.117 Suspension of proceedings.
(c) Proceedings may also be suspended sua sponte by the Board, or, for good cause, upon motion or a stipulation of the parties approved by the Board. Many consented or stipulated motions to suspend are suitable for automatic approval by ESTTA, but the Board retains discretion to condition approval on the party or parties providing necessary information about the status of settlement talks, discovery activities, or trial activities, as may be appropriate.
Parties that are negotiating for settlement, and wish to defer further litigation of the case pending conclusion of their negotiations, should remember to file stipulations to extend or suspend the running of the time periods set in the case. The parties must use ESTTA to file their consented motions (using the "consent motions" option), which in most cases provides an immediate grant of the consented scheduling motion. [ Note 1.] For further information regarding ESTTA, see TBMP § 110.
When the Board is notified that parties are negotiating for settlement, the Board may suspend proceedings for a period of up to six months, either upon request or sua sponte, subject to the right of either party to request resumption at any time prior to the expiration of the suspension period. See TBMP § 510.03. The suspension period may be further extended upon request, or upon notification to the Board that the parties are still engaged in their settlement negotiations. However, once proceedings have been suspended for over a year, the Board may require that the parties submit a report as to the status of their negotiations in order to show good cause for continued suspension. [ Note 2.] This report should include a summary of the progress of the parties’ negotiations, without disclosure of any confidential information or matter, and an anticipated timetable for resolution. Absent such a report, any subsequent motion to extend or suspend for settlement negotiations may be denied, even though agreed to by the parties. [ Note 3.] Even if the parties state that they are engaged in settlement negotiations and wish to postpone discovery and trial, protracted suspension without substantial progress toward resolution of the matter may be taken to indicate that further suspension would not be useful. Consequently, further suspension requests may be denied even though the parties have provided a report on the status of their negotiations. For a discussion of motions to suspend, see TBMP § 510.
The Board generally will not find good cause to suspend proceedings or extend the schedule after an answer is filed but before the scheduled discovery conference has taken place, even upon stipulation or consent. [ Note 4.] See TBMP § 401.01 (Discovery Conferences); TBMP § 509.01(a) (Motions to Extend Time) and TBMP § 510.03(a) (Suspension). This is because the discovery conference provides the parties with the opportunity to discuss settlement. [ Note 5.]
NOTES:
1. See 37 CFR § 2.126(a), 37 CFR § 2.126(b), and 37 CFR § 2.117(c).
3. Cf. Central Manufacturing Inc. v. Third Millennium Tech. Inc., 61 USPQ2d 1210, 1211 (TTAB 2001) (where opposer’s statements that the parties were engaged in settlement negotiations were found to be false and filed in bad faith, opposer was sanctioned with dismissal).
4. See Miscellaneous Changes to Trademark Trial and Appeal Board Rules, 72 Fed. Reg. 42242, 42245 (August 1, 2007).
5. See Miscellaneous Changes to Trademark Trial and Appeal Board Rules, 72 Fed. Reg. 42242, 42245 (August 1, 2007); MISCELLANEOUS CHANGES TO TRADEMARK TRIAL AND APPEAL BOARD RULES, 81 Fed. Reg. 69950, 69951 (October 7, 2016) ("Many trial cases … involve cooperative parties who engage in useful settlement and discovery planning conferences.").
605.03 Settlement Agreements
605.03(a) In General
When an inter partes proceeding before the Board is settled, the parties should promptly notify the Board of the settlement. It is not necessary that the parties file a copy of their settlement agreement with the Board. Rather, they may simply file electronically a stipulation stating the desired disposition of the proceeding (i.e., "It is hereby stipulated that the opposition be sustained," "It is hereby stipulated that the petition for cancellation be dismissed with prejudice," or the like). If there is a counterclaim, the stipulation should also state the desired disposition of the counterclaim. If, in a proceeding with a counterclaim, the parties stipulate to the disposition of the claim against which the counterclaim was brought, but there is no stipulation to dispose of the counterclaim, and there is no withdrawal of the counterclaim, consent by one party to entry of judgment against itself on the counterclaim, etc., the counterclaim will go forward, notwithstanding the fact that judgment has been entered on the original claim. See TBMP § 606.
If the proceeding is to be dismissed, the stipulation should specify whether the dismissal is to be with prejudice or without prejudice. If no specification is made, the Board, in its action dismissing the proceeding, will simply state that the proceeding is being dismissed "in accordance with the agreement of the parties." However, if the agreement itself also fails to indicate whether the dismissal is to be with or without prejudice, at some later time a dispute may arise between the parties as to whether they intended the dismissal to be with or without prejudice. A clear specification in the stipulation may avoid future trouble.
A settlement agreement may simply call for a party to withdraw with, or without, prejudice, or with, or without, consent. In such a case, the parties need not file a settlement stipulation, because the withdrawal, when filed, will result in a final disposition of the proceeding in accordance with the applicable rules. [ Note 1.] See TBMP § 544 for information regarding settlements wherein the parties agree to vacate or set aside a final judgment of the Board.
A settlement stipulation, which is not in accordance with the applicable rules and the statute, will be given no effect by the Board.
NOTES:
605.03(b) With Amendment of Subject Application or Registration
If a settlement agreement is contingent upon amendment of a defendant’s subject application or registration, the request for amendment is governed by 37 CFR § 2.133(a) and should be filed electronically with the Board. See TBMP § 514 (Motion to Amend Application or Registration). Applicants must use ESTTA for filing an amendment to an opposed application. [ Note 1.] The request should list at the top of the page both the number of the subject application or registration, and the Board proceeding number and title. The request also should include proof of service thereof upon every other party to the proceeding. [ Note 2.] See TBMP § 113. Use of the TEAS system is not appropriate for filing an amendment to an application that is the subject of a Board proceeding.
A proposed amendment to a defendant’s application or registration must comply with all applicable rules and statutory provisions. See TBMP § 514.01. Thus, for example, a proposed amendment to a § 1 or § 44 application or registration that materially alters the character of the defendant’s subject mark, [ Note 3.] or a proposed amendment to a § 66(a) application or registration that involves an amendment to the mark at all, [ Note 4.] cannot be approved by the Board. [ Note 5.] If a settlement agreement calls for an amendment that may amount to a material change in the defendant’s mark, the parties may wish to also agree that if a request for amendment of the defendant’s subject application or registration is denied by the Board, the defendant will abandon that application, or voluntarily surrender that registration, and file a new application for registration of the altered mark; and that the plaintiff will not oppose the new application or seek to cancel any registration that matures therefrom. See TBMP § 602 (Withdrawal by Opposition or Cancellation Defendant) for a discussion of abandonment of an application and surrender or voluntary cancellation of a registration.
In an opposition to any application having multiple classes, if the applicant files a request to amend the application to delete an opposed class in its entirety, the request for amendment is, in effect, an abandonment of the application with respect to that class, and is governed by 37 CFR § 2.135. Similarly, in a cancellation proceeding against any registration having multiple classes, if the respondent files a request to amend the registration to delete an entire class sought to be cancelled, the request for amendment is, in effect, a voluntary surrender of the registration with respect to that class, and is governed by 37 CFR § 2.134(a). See TBMP § 602.01 (Withdrawal by Applicant) and TBMP § 602.02 (Withdrawal by Respondent).
In addition, with respect to a cancellation proceeding against a § 66(a) registration, if the respondent requests cancellation with the International Bureau (IB) as to some of the goods and services in a single class in the international registration, without the written consent of every adverse party to the proceeding, the request is, in effect, a voluntary cancellation of the § 66(a) registration with respect to those goods or services and judgment will be entered against the registrant as to the deleted goods or services. [ Note 6.] See TBMP § 602.02 (Withdrawal by Respondent). However, if the respondent requests a deletion of some of the goods or services in a single class, and such deletion will effect only the registered extension of protection to the United States, the deletion is considered an amendment, and may be filed with the USPTO, subject to 37 CFR § 2.133 (amendment of application or registration during proceedings). Similarly, if the USPTO is notified by the IB that a limitation of the list of goods and services affects the registered extension of protection to the United States, but not the international registration, and such limitation results in a deletion of some of the goods and services in a single class, the deletion is considered an amendment to the § 66(a) registration. [ Note 7.] Such a limitation is also subject to 37 CFR § 2.133.
NOTES:
1. See 37 CFR § 2.126(a) and 37 CFR § 2.126(b).
2. See 37 CFR § 2.119(a).
3. See Trademark Act § 7(e), 15 U.S.C. § 1057(e); 37 CFR § 2.72 and 37 CFR § 2.173.
4. The mark in a § 66(a) registration cannot be amended under Trademark Act § 7, 15 U.S.C. § 1057. See 37 CFR § 2.72, providing only for amendments to the mark in § 1 and § 44 applications; and the International Bureau’s Guide to the International Registration of Marks under the Madrid Agreement and the Madrid Protocol, at www.wipo.int/madrid/en/guide. See also TMEP § 1609.02 and TMEP § 1904.02(j); Rules of Practice for Trademark-Related Filings Under the Madrid Protocol Implementation Act, 68 Fed. Reg. 55748, 55756 (September 26, 2003).
5. See Trademark Act § 7(e), 15 U.S.C. § 1057; 37 CFR § 2.71, 37 CFR § 2.72, 37 CFR § 2.173, and 37 CFR § 2.73; Vaughn Russell Candy Co. v. Cookies In Bloom, Inc., 47 USPQ2d 1635, 1636 (TTAB 1998) (material alteration); Aries Systems Corp. v. World Book Inc., 23 USPQ2d 1742, 1745 (TTAB 1992), summ. judgment granted in part, 26 USPQ2d 1926 (TTAB 1993) (expansion of scope of goods); Mason Engineering and Design Corp. v. Mateson Chem. Corp., 225 USPQ 956, 957 (TTAB 1985) (amendment to dates of use not supported by affidavit or declaration).
6. Cf. Trademark Act § 70, 15 U.S.C. § 1141j. Cf. 37 CFR § 2.172 (for registrations under §§ 1 and 44, a deletion of fewer than all the goods or services in a single class constitutes an amendment of the registration as to that class, not a surrender.).
7. See TMEP § 1904.15.
605.03(c) With Amendment of Plaintiff’s Pending Application
The plaintiff in an inter partes proceeding before the Board may own a pending application for registration that has been rejected by the examining attorney in view of the defendant’s subject registration, or which may be rejected by the examining attorney when and if defendant’s subject application matures to registration. In such a case, a settlement agreement may be contingent upon the approval of an amendment to be filed in the plaintiff’s application, or acceptance of a consent agreement to be filed therein, and the consequent approval of the application for publication.
The Board has no jurisdiction over a plaintiff’s application which is still pending before the examining attorney. [ Note 1.] Thus, when the plaintiff in an inter partes proceeding before the Board owns an application which is still pending before the trademark examining attorney, and an amendment or consent agreement is filed in the application pursuant to a settlement agreement between the parties, the amendment should be filed with the examining attorney, not with the Board. The examining attorney should consider the amendment or agreement and take appropriate action (including, if the amendment or consent agreement puts the application in condition for publication, approving the application for publication), notwithstanding the fact that action on the application may previously have been suspended pending the final determination of the inter partes proceeding before the Board. Indeed, if settlement of the inter partes proceeding is contingent upon approval of the amendment, or acceptance of the consent agreement by the examining attorney, proceedings before the Board may be suspended pending action by the examining attorney on the amendment or consent agreement.
NOTES:
1. See Home Juice Co. v. Runglin Cos., 231 USPQ 897, 898 n.7 (TTAB 1986) (Board cannot instruct examining attorney to pass application to registration).
605.03(d) Breach of Settlement Agreement
If an agreement settling an inter partes proceeding before the Board is breached by one of the parties, an adverse party’s remedy is by way of civil action. The Board has no jurisdiction to enforce such an agreement. However, while the Board does not have jurisdiction to enforce the contract, agreements to cease use of a mark or not to use a mark in a certain format are routinely upheld and enforced to the extent a party may not obtain a registration for exclusive use that may be precluded by the terms of a settlement agreement. [ Note 1.]
NOTES:
1. See Bausch & Lomb, Inc. v. Karl Storz GmbH & Co. KG, 87 USPQ2d 1526, 1528 (TTAB 2008) (registration refused where agreement recited the parties’ rights to the marks containing a common term and applicant’s use was not expressly authorized); Vaughn Russell Candy Co. and Toymax Inc. v. Cookies in Bloom Inc., 47 USPQ2d 1635, 1638 n.6 (TTAB 1998) (registration refused where settlement agreement precluded use of a portion of applicant’s mark); In re Sun Refining and Marketing Co., 23 USPQ2d 1072, 1074 (TTAB 1991) (refusal affirmed since settlement agreement containing geographic restrictions clearly showed that applicant was not entitled to unrestricted registration).
605.03(e) Effect of Judgment Based Upon Agreement
For information concerning the effect of agreements and judgments resulting therefrom, see cases cited in the note below. [ Note 1.] For information concerning the effect of agreements, including consent judgments, that resolve court challenges to Board decisions under 15 U.S.C § 1071(b) and include agreed vacaturs, see TBMP § 544 & note 13 thereto.
NOTES:
1. Kimberly-Clark Corp. v. Fort Howard Paper Co., 772 F.2d 860, 227 USPQ 36, 39 (Fed. Cir. 1985) (construction of 1924 agreement found that goods in current application not encompassed within agreement, registration permitted); Chromalloy American Corp. v. Kenneth Gordon (New Orleans), Ltd., 736 F.2d 694, 222 USPQ 187, 191 n.4 (Fed. Cir. 1984) (unless principles of res judicata apply, consent given in a decree should be treated as any other contractual consent and as a factor to be taken into consideration in determining likelihood of confusion); Wells Cargo, Inc. v. Wells Cargo, Inc., 606 F.2d 961, 203 USPQ 564, 567 (CCPA 1979) (although agreement can be implied from applicant’s withdrawal of application with consent and with prejudice in prior opposition, that agreement was not itself a settlement of the substantive rights of the parties and estoppel does not rest on that agreement but instead on the act of withdrawing the application with prejudice); Danskin, Inc. v. Dan River, Inc., 498 F.2d 1386, 182 USPQ 370, 372 (CCPA 1974) (equitable estoppel barring opposition rested on terms of the agreement between parties in settlement of prior proceeding ); United States Olympic Comm. v. Bata Shoe Co., 225 USPQ 340, 342 (TTAB 1984) (abandonment of application without consent in prior opposition does not operate as res judicata when different marks were involved in subsequent proceeding). See also Epic Metals Corp. v. H.H. Robertson Co., 870 F.2d 1574, 10 USPQ2d 1296, 1299 (Fed. Cir. 1989) (district court erred in construction of consent judgment); Hartley v. Mentor Corp., 869 F.2d 1469, 10 USPQ2d 1138, 1142 (Fed. Cir. 1989) (intent of the parties is generally controlling with respect to preclusive effect of stipulated judgment).
605.03(f) Consent Orders
The Board will dismiss, sustain, etc., a Board inter partes proceeding, if the parties so stipulate and will also enter judgment against a party which submits its written consent to entry of judgment against itself, or which concedes that its case is not well taken. See TBMP § 605.03(a). Further, the Board encourages the use of stipulated evidence in Board inter partes proceedings. [ Note 1.] See TBMP § 705. However, the Board does not issue advisory opinions. Nor does the Board issue consent orders.
NOTES:
1. See 37 CFR § 2.123(b).