Hollywood Vodka wins over Kaszuba in an appeal alleging fraudulent measures in obtaining trademark
Date Published: Jun 14, 2021
Kris Kaszuba (“Kaszuba”) owns a trademark HOLLYWOOD BEER which is registered on July 15, 2008 as Registration No. 4,469,935. The purpose of the registration was for use in commerce for beer. Hollywood Vodka, LLC (“HVL”) filed an application under Section 1064 of the Lanham Act for cancellation of Kaszuba’s mark at the Trademark Trial and Appeal Board (“Board”) in August 2015. It alleged that (1) the Board had refused registration of HVL’s pending trademark application partly because of the registration of Kaszuba’s mark; (2) Kaszuba had committed fraud on the USPTO in obtaining registration of its mark; and (3) Kaszuba had not used his mark in commerce. Following a lengthy procedure, the parties moved on to discovery. Even after repeated notices, Kaszuba delayed the case with its unnecessary filings which ultimately concluded in grant of the motion for sanctions in the form of default judgment. Kaszuba aggrieved by the Board Decision, appealed to the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) (Kaszuba v. Iancu, 2019-1547 (Fed. Cir. Aug. 5, 2020))
On August 4, 2015, HVL filed an application for cancellation of Kaszuba’s mark and Kaszuba answered the petition on September 15, 2015 following a filing of motion to dismiss, which was rejected by the Board due to its filing after the filing of the answers. The Board reviewed the pleadings and conducted a discovery conference whereby it determined that HVL had failed to plead fraud claims and was directed to file an amended petition re-pleading the fraud claims within fifteen days. After the due date, HVL filed the amended petitions, to which Kaszuba contended that the filing of HVL was untimely and thereby it had no real interest. Nevertheless, the Board accepted the petition on HVL’s stating untimely filing because of “excusable neglect” and that HVL had plausibly alleged a real interest in the proceeding. The Board concluded that HVL through its filing had (1) sufficiently pleaded entitlement to bring this cancellation proceeding; and (2) adequately pleaded its fraud claim; and (3) failed to plead the elements of an abandonment claim.
Due to multiple filings from both the parties, the Board noted that “[p]rogress in this case has been delayed significantly based on the filings of both parties.” Due to multiple failures of Kaszuba in responding to the interrogatories and document requests the Board granted-in-part HVL’s motion to compel discovery, in November 2017. The Board ordered Kaszuba to respond to the discovery request denying HVL’s request for sanction and even warned Kaszuba that if they failed to respond to the discovery, HVL’s “remedy may lie in a renewed motion for sanctions, including entry of judgment as appropriate.” Kaszuba filed a request to Board for seeking re-consideration of the Board’s 2017 decision on HVL’s motion to compel which was further denied by the Board, after conducting a telephone conference.
Kaszuba again failed to respond to the discovery request which lead to another motion of sanction and another motion of reconsideration. In its denials of these motions, the Board remarked that Kaszuba had “deliberately sought to evade and frustrate” HVL’s efforts to obtain discovery. The Board granted an additional extension of time so that Kaszuba could serve the Discovery response again warning that if Kaszuba failed, it will enter judgment against him. Kaszuba failed again to serve the discovery response; and kept on filing numerous submissions for seeking re-consideration of Board’s order. Kaszuba also filed two untimely petitions with the Director alleging unfair treatment by the Board, despite the Board granting him a third extension to serve the delayed discovery.
Not responding effectively, HVL filed renewed motion of sanction after obtaining leave from the Board. It sought one of the two things. Either an entry of judgment against Kaszuba, or an order precluding Kaszuba from introducing any evidence at trial. Finally, the Board granted the motion of sanction against Kaszuba. The Board noted that “default judgment is a harsh remedy” but it was warranted under the circumstances because “no less drastic remedy would be effective and there is a strong showing of willful evasion.” Aggrieved by this, Kaszuba timely appealed to the Federal Circuit. It appealed on three issues, (1) impermissibly allowed HVL’s “untimely” and “futile” amendments to the petition; (2) erred in denying Kaszuba’s motion to dismiss for failure to plead entitlement to the cancellation proceeding and fraud; and (3) abused its discretion in imposing sanctions and entering default judgment against Kaszuba.
For “untimely” amendment to the petition, the Federal Circuit noted that there was no evidence of prejudice to Kaszuba, whereby the delay was not significant with just three days out of time. There was no such disruption to the orderly administration of the proceedings on account of minimally delayed filing. Also there was no allegation of bad faith against Kazuba for the delay. Considering these factors, the Federal Circuit noted that the HVL had established excusable neglect.
Kaszuba argued that the “Board erred in its excusable neglect determination.” Combining the first two factors, the Board overlooked the filing of HVL’s amended petition which was filed seven months after the initial petition further arguing that the cancellation of his mark as a sanction was unjust and based on “erroneous and inadequate findings.” The Federal Circuit however, found no error in the discretion of the Board’s analysis. Instead the Court noted that Kaszuba does not offer any explanation for his refusal to comply with the Board’s orders compelling discovery, despite the multiple extensions afforded to him. The Court noted that Kaszuba, even failed to provide any solid evidences that can lead the Court to conclude that the Board abused its discretion in imposing the sanction of default judgment.
The Federal Circuit noted that the Board never abused its discretion. It gave repeated warnings to Kaszuba for responding to the Discovery request and its failure led to entering default judgment against Kaszuba. While imposing the sanction of default judgment, the Court noted that “the Board found that no less drastic remedy would be effective and that there was a strong showing of willful evasion by Kaszuba.” The entry into default judgment was only due to Kaszuba’s “repeatedly and willfully acted in a manner to evade” the Discovery requests.