Thursday, February 27, 2014

The Tasmanian Devil does not Approve of Beer

Taz-Looney Tunes.svg 

The Tasmanian Devil cartoon character has been described as a "ferocious albeit dim-witted omnivore with a notoriously short temper and little patience". See: I'm sure that Steinbeck Brewing Company would agree with this assessment after Warner Brothers filed an opposition proceeding against its application to register the mark TASMANIAN DEVIL. 

Steinbeck Brewing Company is a California company which does business as Buffalo Bill's Brewery. See: Steinbeck filed applications for the marks TASMANIAN DEVIL and TASMANIAN DEVIL BARLEY TASMANIAN HOPS WATER YEAST BUFFALO BILL'S BREWERY & Design in January 2012.  The application for the design mark received an objection based on a third party application for the mark BUFFALO BILL CODY, but the application for the TASMANIAN DEVIL word mark was allowed and published for opposition in January 2013. After obtaining an extension, Warner Bros filed the opposition in July 2013.

The Opposition:
Warner Bros. did not pull any punches in its Notice of Opposition, attacking both the quality and reputation of Buffalo Bill's as well as Steinbeck's motivation in choosing the TASMANIAN DEVIL mark. For example, Warner Bros. alleged that:
  • "Applicant operates "Buffalo Bill's Brew Pub, a disreputable bar and restaurant in Hayward, California that often receives customer complaints about the poor quality of its operations."
  • "[I]t is because of Applicant's obvious inability to build a good reputation on its own that Applicant decided to boost its sales by misappropriating Opposer's TASMANIAN DEVIL and TAZ marks, with the added ulterior motive of inducing children or minors familiar with these marks to consumer alcohol sold by Applicant."
While Warner Bros.'s hard-hitting allegations make for an interesting read on their own, there are also a few intriguing legal issues raised in the Opposition.  For example, in addition to the usual likelihood of confusion and dilution claims, Warner Bros. also alleged that Steinbeck should be precluded from registering the TASMANIAN DEVIL mark pursuant to the doctrine of res judicata or collateral estoppel. It turns out that Warner Bros.' predecessor in interest, Time Warner, prevailed in an opposition proceeding against Steinbeck over 10 years ago. In that case, the Board sustained Time Warner's opposition against Steinbeck's application for the mark TASMANIAN DEVIL GOOD FOR DRINKIN' 'N DOG BITES & Design on the ground that Steinbeck did not own the mark, and therefore, the application was void ab initio. So should the fact that Steinbeck was not the owner of the previous mark in 1999 preclude it from obtaining a registration for the TASMANIAN DEVIL mark today?

Res Judicata:
The doctrine of res judicata encompasses two related concepts: "issue preclusion" and "claim preclusion". "Issue preclusion refers to the effect of a judgment in foreclosing relitigation of a matter that has been litigated and decided. This effect also is referred to as direct or collateral estoppel." See: Migra v. Warren City Sch. Dist. Bd. of Educ. (465 U.S. 75).  In other words, if a specific issue has been litigated and a decision issued on the merits, a party cannot seek to raise that issue again in a different proceeding. "Claim preclusion refers to the effect of a judgment in foreclosing litigation of a matter that never has been litigated, because of a determination that it should have been advanced in an earlier suit." Id. In other words, a party may be precluded from raising a claim in a second proceeding, even if that particular claim was not raised in the first proceeding.

In the previous proceeding, Steinbeck stipulated to entry of summary judgment, without prejudice, because it was merely a licensee of the mark at issue. It explained that it mistakenly believed that its status as a licensee provided it with authority to seek registration of the mark.  In its stipulation filing, Steinbeck expressly noted that it continued to oppose the other grounds for Time Warner's opposition.

In its decision granting Time Warner's motion for summary judgment, the Board noted that "Applicant has indicated that it was not the owner of the mark when it filed the application. Thus, as a matter of law, the application is void."  Therefore, the Board found that "opposer's motion for summary judgment on the pleaded issue of ownership is granted; the remaining pleaded issues upon which opposer's motion is based, as well as the remaining pleaded issues in the notice of opposition, are moot."See:

It appears that Warner Bros. is arguing that the issue of ownership of the mark was already decided, and therefore issue preclusion should apply to this question. One would have to assume that Steinbeck would not make the same mistake twice, and that it is now the owner of the applied-for mark. If that is the case, Steinbeck will likely counter that there have been changed circumstances sufficient to prevent the application of issue preclusion.

On the claim preclusion issue, Warner Bros. will likely argue that there was a previous final decision on the merits involving a substantially similar mark, and therefore, Steinbeck should be precluded from taking a second bite at the apple.

In order to prevail on the issue of claim preclusion, Warner Bros. must show:
(1) identity of the parties or those in privity with the parties
(2) a final judgment on the merits of the prior claim; and
(3) that the second claim is based on the same transactional facts as the first and should have been litigated in the prior case. 
See: Sharp Kabushiki Kaisha v. Thinksharp, Inc., 448 F.3d 1368 (Fed. Cir. 2006).

There likely won't be any dispute about the first and second factors, but presumably Buffalo Bill's will argue that the claims at issue here are based on a different set of transactional facts than those in the prior case, and that res judicata would also be inappropriate because the judgment in the previous case was entered without consideration of the merits of the likelihood of confusion and dilution claims.

The TTAB has previously applied claim preclusion to situations where an applicant sought to register a mark that was only a slight variation of an earlier mark that had been the subject of a successful opposition proceeding (even where the prior proceeding ended in a default judgment). See: On the other hand the TTAB has rejected a claim preclusion argument where parties have chosen to default in one proceeding, but defend against another proceeding for a substantially similar mark. See: Steinbeck will be able to point to certain language in the Sharp decision to support its position that claim preclusion is inappropriate here, such as: "[t]he Supreme Court has cautioned that the offensive use of res judicata should be examined carefully to determine whether it would be unfair to the defendant."

It will be interesting to see how the Board comes out on this issue if the case proceeds to a decision.

[An interesting sidenote: this isn't the first time that a brewery has encountered an opposition based on the TASMANIAN DEVIL mark--Boston Beer Company's application for the mark DEVIL MOUNTAIN TASMANIAN PALE ALE was opposed by Time Warner in 1998. The matter was resolved by Boston Beer Company withdrawing the application, and Time Warner withdrawing the opposition. See:]

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