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Heads Up_ Fed.R.Civ.P. 26 Meets the TTAB Trademark Practice is

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					                                 Heads Up!
                       Fed.R.Civ.P. 26 Meets the TTAB
                      Trademark Practice is Transformed
                                     Elizabeth Ann Morgan*
                                   Epstein Becker & Green, P.C.


        The United States Patent & Trademark Office (USPTO) has proposed a series of

amendments to the rules of practice in proceedings before the Trademark Trial and Appeal Board

(TTAB or the Board) that have the attention of the Trademark Bar. The proposed changes are

based on a modified version of the Federal Rules of Civil Procedure (Fed.R.Civ.P.). The

proposal includes required initial disclosures, changes in how proceedings are commenced,

changes to discovery practice, and the creation of a mandatory protective order.

        The USPTO believes the changes will increase efficiency, encourage procedural fairness,

guarantee that cases are decided on the merits of a complete record, reflect current practice, and

promote earlier settlement. Early comments from the Trademark Bar indicate that TTAB

practice will never be the same.

Commencement of Proceedings:


        The proposed modifications require a party initiating an inter partes proceeding to serve

the Notice of Opposition or Cancellation directly on the owner of record or its domestic

representative along, with anyone the party “had reason to believe” has an ownership interest.

The sole exception is that a concurrent use applicant would not have to serve copies of its

application on any defending applicant, registrant, or common law mark owner until the Board

issues a notice of commencement of the concurrent use proceeding.



* Michael J. Larson, a law student at Emory University, assisted in the preparation of this article.
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        The proposed changes differ from current practice where the Board serves a Notice of

Opposition or Cancellation on the applicant or registrant. The goal of allowing the petitioner to

serve the opposing party directly is procedural efficiency. The USPTO argues that direct service

will facilitate more direct communication between the parties, which is vital to cooperation and

possible settlement. If the papers are not deliverable, the petitioner must inform the TTAB

within 10 days of the service copies being returned. At that point, the TTAB will serve by

publication.

Proposed New Disclosure Requirements:

        A party may not commence discovery until after it has made its disclosures. The Board

states that the initial disclosures are not intended to substitute for all discovery, but rather to

prompt routine disclosure of “core information” that a party may use to support a claim or

defense. The disclosure of this “core information” is supposed to enhance efficiency. As

examples of the “core information” to be disclosed, the TTAB cites the following examples:

        (1) origin of any marks

        (2) dates of use

        (3) extent of past or current use and any plans for future uses

        (4) evidence of actual confusion

        (5) third-party uses or registrations for similar marks

        (6) extent of use in a non-trademark manner of words or designs asserted to be non-
              distinctive

        (7) third-party use of involved words or designs when the party is asserting that such
              words or designs are non-distinctive




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        (8) type and sophistication of customers

        (9) channels of trade

        (10) marketing materials

        (11) surveys of market research

        (12) other TTAB proceedings or litigation regarding the involved marks

        (13) contact information for persons with knowledge of the above subjects

        (14) general descriptions and probable locations of non-privileged documents and things
              related to the above subjects

Given the mandated disclosure of this information the permitted number of interrogatories will

be reduced to 25 because the Board rationalized that interrogatories will not be needed to attain

“core information.”

        The deadline for making initial disclosures is similar to Fed.R.Civ.P. 26(a)(1), although

disclosure under the federal rule is measured from the actual date of the discovery conference

instead of the deadline for discovery conference. The Board approach allows for a longer period

for making disclosures (initial disclosure deadline is 30 days from the opening of the discovery

period) than provided for under the Fed.R.Civ.P. which will accommodate the possibility of

motions to suspend for settlement talks.

Proposed New Discovery Timing:

    •   Answer deadline—40 days from mailing of institution order

    •   Deadline for discovery conference and discovery opens—30 days from answer deadline

    •   Deadline for initial disclosures—30 days from opening of discovery




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    •   Expert disclosures—90 days prior to close of discovery

    •   Discovery closes—180 days from the opening of discovery

        The length of the discovery period is the same as under current Board rules (180 days).

The Board states it will be liberal in granting extensions or suspensions of time to answer in

order to accommodate settlement talks or submission to arbitration or mediation. But if a motion

to extend or suspend is not filed prior to the answer, then the parties must proceed to their

discovery conference after the filing of the answer. The Board warned that it will be rare for the

Board to find good cause for a motion to extend or suspend for settlement talks when the motion

is filed after the answer but before the discovery conference.

Interrogatories:


        The proposed changes would reduce the number of interrogatories from 75 to 25.


Protective Order § 2.116(g):


        The proposed changes would make the TTAB’s standard protective order mandatory in

all inter partes proceedings unless the parties agree to modify the order and get TTAB approval.

Critics are concerned that the standard protective order does not actually make all submissions

confidential because of the Board’s jurisdictional limitations. Parties can vary the terms of the

protective order via stipulation approved by the Board. Parties also may request the Board

modify the standard protective order in a given case.

Expert Disclosure:

        A party’s plan to use experts must be disclosed no later than 90 days prior to the close of

discovery so to allow any adverse party an opportunity to take necessary discovery. If the expert



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is retained early and an adverse party has inquired about experts through discovery, the party

may not delay revealing the expert until the deadline for disclosure of experts. Additionally, the

Board realized that there may be instances in which a party retains an expert after the deadline

for expert disclosure, in which case the new rules state that disclosure must be made “promptly”

when the expert is retained.

Pre-Trial Disclosure:

        Pre-trial disclosure will require disclosure of the identity of witnesses that a party expects

to present, or may present if needed. General summaries or descriptions of the subjects on which

the witness will testify and the documents or things to be introduced during the deposition must

be disclosed for each witness. Pre-trial disclosures must be made 30 days prior to the opening of

trial. A party may move to strike the testimony of a witness for lack of proper pre-trial

disclosure. Pre-trial disclosure of plans to file notices of reliance is not necessary.

Submissions on CD-ROM:

        The Office proposes to remove from Trademark Rule § 2.126, 37 CFR 2.126 the option

to file submissions in CD-ROM form because CD-ROMs present technical problems and are

rarely used.

Briefing Motions:

        The Office proposes to amend Trademark Rule § 2.127, 37 CFR 2.127 to maintain that a

table of contents, index of cases, description of records, statement of the issues, recitation of

facts, argument and summary, all count against the limit of 25 pages for a brief in support of a

motion or in response to a motion and the limit of 10 pages for a reply brief.




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Conclusion:


        The proposed rules along with the TTAB’s rationale for the changes are available on the

USPTO website.




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  Highlights of the Stop Counterfeiting in Manufactured Goods Act

                                   Elizabeth Ann Morgan*
                                 Epstein Becker & Green, P.C.

        President Bush signed the Stop Counterfeiting in Manufactured Goods Act into effect on

March 16, 2006. The bill is part of the Bush Administration’s STOP (Strategy Targeting

Organized Piracy) initiative, which is the product of nine federal agencies working together in an

effort to stop fraud. Counterfeit goods comprise five to seven percent of world trade—for nearly

every legitimate product manufactured and sold in the United States, there is a parallel

counterfeit product being sold— and the Stop Counterfeiting in Manufactured Goods Act is

designed to fight this growing problem.

Purposes of the Act:

        Prior to this Act, criminal law prohibited the trafficking in counterfeit trademarks “on or

in connection with goods or services.” The law did not contemplate that counterfeiters would

separate trademarks from the counterfeit goods to avoid customs and defeat prosecution. But

that is exactly what occurred.

          In 2000, with a fact pattern where the labels were separated from the goods, the Tenth

Circuit created a loophole in counterfeiting law. In the case of United States v. Giles, it held that

Section 2320 of Title 18 did not prohibit trafficking in counterfeit labels that are not attached to

any goods (defendant had manufactured and sold counterfeit Dooney & Bourke labels that would

later be attached to fake purses). United States v. Giles, 213 F. 3d 1247, 1253 (10th Cir. 2000).

The Tenth Circuit found that persons, who sold labels with counterfeit trademarks that were not




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attached to those goods or services for which the trademark was registered, were not punishable

under the then-existing law. Id. Other courts followed Giles. In U.S. v. Luong et al., the U.S.

Attorney’s Office could not prosecute trafficking charges on more than 50,000 counterfeit labels

and medallions that were found in addition to but not attached to counterfeit handbags.

        Not all courts followed the reasoning and holding in Giles. But often stretches were made

to apply to the existing statute. In Boston Prof’l Hockey Ass’n v. Dallas Cap & Emblem Mfg.,

Inc., for example, the Fifth Circuit held that patches sold bearing National Hockey League team

emblems were the actual “goods” and that the trademark was the thread design embroidered

upon it. Boston Prof’l Hockey Ass’n v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004, 1010

(5th Cir. 1975). Thus, the court in Boston Prof’l Hockey Ass’n was able to find that trafficking

in the emblems constituted a trademark counterfeiting violation. Id. at 1011-1012.

        The Stop Counterfeiting in Manufactured Goods Act eliminates the loophole that Giles

created. The legislation makes illegal the shipment of falsified labels or packaging, which are

frequently attached to fake products to create an authentic appearance. Section 2320 of Title 18,

as amended, specifically prohibits trafficking of “…labels, patches, stickers, wrappers, badges,

emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or

packaging of any type or nature, knowing that a counterfeit mark has been applied thereto, the

use of which is likely to cause confusion, to cause mistake or to deceive.”

        The Act also strengthens penalties for counterfeiters and gives prosecutors greater ability

to fight fraud. In addition to the sentencing imposed on a person convicted of an offense, the Act

requires mandatory seizure, forfeiture, and destruction of counterfeit marks. Section 2320 of

Title 18 states that “any articles bearing or consisting of a counterfeit mark used in committing a

violation of subsection (e)” and “any property used, in any manner or part, to commit or to



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facilitate the commission of a violation of subsection (a)” is subject to forfeiture to the United

States and no property right shall exist in such property. Furthermore, the person must forfeit to

the government: “any property constituting or derived from any proceeds the person obtained,

directly, or indirectly, as the result of the offense; any of the person’s property used, or intended

to be used, in any manner or part, to commit, facilitate, aid, or abet the commission of the

offense; and any article that bears or consists of a counterfeit mark used in committing the

offense.” The forfeiture of property, including seizure and disposition of the property, is

governed by Section 413 of the Comprehensive Drug Abuse Prevention and Control Act. At the

end of the forfeiture proceedings, the court, unless otherwise requested by a United States

agency, shall order any forfeited article displaying a counterfeit mark be destroyed.

Additionally, the Act requires convicted counterfeiters to turn over their profits and equipment

used in their operations. And convicted counterfeiters are ordered to pay restitution. A copy of

the Act is attached.




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To amend title 18, United States Code, to provide criminal penalties for
trafficking in counterfeit marks. (Enrolled as Agreed to or Passed by Both
House and Senate)

--H.R.32--

H.R.32

                                One Hundred Ninth Congress
                                           of the
                                 United States of America
                                  AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the third day of January, two thousand and six

An Act

To amend title 18, United States Code, to provide criminal penalties for trafficking
in counterfeit marks.

              Be it enacted by the Senate and House of Representatives of the United
              States of America in Congress assembled,

SECTION 1. TRAFFICKING IN COUNTERFEIT MARKS.

              (a) SHORT TITLE; FINDINGS-
                    (1) Short title- This section may be cited as the `Stop Counterfeiting
                    in Manufactured Goods Act'.
                    (2) Findings- The Congress finds that--
                           (A) the United States economy is losing millions of dollars in
                           tax revenue and tens of thousands of jobs because of the
                           manufacture, distribution, and sale of counterfeit goods;
                           (B) the Bureau of Customs and Border Protection estimates
                           that counterfeiting costs the United States $200 billion
                           annually;
                           (C) counterfeit automobile parts, including brake pads, cost
                           the auto industry alone billions of dollars in lost sales each
                           year;
                           (D) counterfeit products have invaded numerous industries,
                           including those producing auto parts, electrical appliances,
                           medicines, tools, toys, office equipment, clothing, and many
                           other products;




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                              (E) ties have been established between counterfeiting and
                              terrorist organizations that use the sale of counterfeit goods to
                              raise and launder money;
                              (F) ongoing counterfeiting of manufactured goods poses a
                              widespread threat to public health and safety; and
                              (G) strong domestic criminal remedies against counterfeiting
                              will permit the United States to seek stronger
                              anticounterfeiting provisions in bilateral and international
                              agreements with trading partners.
              (b) TRAFFICKING IN COUNTERFEIT MARKS- Section 2320 of title 18, United
              States Code, is amended as follows:
                      (1) Subsection (a) is amended by inserting after `such goods or
                      services' the following: `, or intentionally traffics or attempts to
                      traffic in labels, patches, stickers, wrappers, badges, emblems,
                      medallions, charms, boxes, containers, cans, cases, hangtags,
                      documentation, or packaging of any type or nature, knowing that a
                      counterfeit mark has been applied thereto, the use of which is likely
                      to cause confusion, to cause mistake, or to deceive,'.
                      (2) Subsection (b) is amended to read as follows:
              `(b)(1) The following property shall be subject to forfeiture to the United
              States and no property right shall exist in such property:
                      `(A) Any article bearing or consisting of a counterfeit mark used in
                      committing a violation of subsection (a).
                      `(B) Any property used, in any manner or part, to commit or to
                      facilitate the commission of a violation of subsection (a).
              `(2) The provisions of chapter 46 of this title relating to civil forfeitures,
              including section 983 of this title, shall extend to any seizure or civil
              forfeiture under this section. At the conclusion of the forfeiture
              proceedings, the court, unless otherwise requested by an agency of the
              United States, shall order that any forfeited article bearing or consisting of
              a counterfeit mark be destroyed or otherwise disposed of according to law.
              `(3)(A) The court, in imposing sentence on a person convicted of an
              offense under this section, shall order, in addition to any other sentence
              imposed, that the person forfeit to the United States--
                      `(i) any property constituting or derived from any proceeds the
                      person obtained, directly or indirectly, as the result of the offense;
                      `(ii) any of the person's property used, or intended to be used, in
                      any manner or part, to commit, facilitate, aid, or abet the
                      commission of the offense; and
                      `(iii) any article that bears or consists of a counterfeit mark used in
                      committing the offense.
              `(B) The forfeiture of property under subparagraph (A), including any
              seizure and disposition of the property and any related judicial or
              administrative proceeding, shall be governed by the procedures set forth in
              section 413 of the Comprehensive Drug Abuse Prevention and Control Act
              of 1970 (21 U.S.C. 853), other than subsection (d) of that section.
              Notwithstanding section 413(h) of that Act, at the conclusion of the


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              forfeiture proceedings, the court shall order that any forfeited article or
              component of an article bearing or consisting of a counterfeit mark be
              destroyed.
              `(4) When a person is convicted of an offense under this section, the court,
              pursuant to sections 3556, 3663A, and 3664, shall order the person to pay
              restitution to the owner of the mark and any other victim of the offense as
              an offense against property referred to in section 3663A(c)(1)(A)(ii).
              `(5) The term `victim', as used in paragraph (4), has the meaning given
              that term in section 3663A(a)(2).'.
                      (3) Subsection (e)(1) is amended--
                             (A) by striking subparagraph (A) and inserting the following:
                             `(A) a spurious mark--
                                    `(i) that is used in connection with trafficking in any
                                    goods, services, labels, patches, stickers, wrappers,
                                    badges, emblems, medallions, charms, boxes,
                                    containers, cans, cases, hangtags, documentation, or
                                    packaging of any type or nature;
                                    `(ii) that is identical with, or substantially
                                    indistinguishable from, a mark registered on the
                                    principal register in the United States Patent and
                                    Trademark Office and in use, whether or not the
                                    defendant knew such mark was so registered;
                                    `(iii) that is applied to or used in connection with the
                                    goods or services for which the mark is registered with
                                    the United States Patent and Trademark Office, or is
                                    applied to or consists of a label, patch, sticker, wrapper,
                                    badge, emblem, medallion, charm, box, container, can,
                                    case, hangtag, documentation, or packaging of any type
                                    or nature that is designed, marketed, or otherwise
                                    intended to be used on or in connection with the goods
                                    or services for which the mark is registered in the
                                    United States Patent and Trademark Office; and
                                    `(iv) the use of which is likely to cause confusion, to
                                    cause mistake, or to deceive; or'; and
                             (B) by amending the matter following subparagraph (B) to
                             read as follows:
                      `but such term does not include any mark or designation used in
                      connection with goods or services, or a mark or designation applied
                      to labels, patches, stickers, wrappers, badges, emblems, medallions,
                      charms, boxes, containers, cans, cases, hangtags, documentation, or
                      packaging of any type or nature used in connection with such goods
                      or services, of which the manufacturer or producer was, at the time
                      of the manufacture or production in question, authorized to use the
                      mark or designation for the type of goods or services so
                      manufactured or produced, by the holder of the right to use such
                      mark or designation.'.
                      (4) Section 2320 is further amended--


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                             (A) by redesignating subsection (f) as subsection (g); and
                             (B) by inserting after subsection (e) the following:
              `(f) Nothing in this section shall entitle the United States to bring a criminal
              cause of action under this section for the repackaging of genuine goods or
              services not intended to deceive or confuse.'.
              (c) SENTENCING GUIDELINES-
                     (1) Review and amendment- Not later than 180 days after the date
                     of enactment of this Act, the United States Sentencing Commission,
                     pursuant to its authority under section 994 of title 28, United States
                     Code, and in accordance with this subsection, shall review and, if
                     appropriate, amend the Federal sentencing guidelines and policy
                     statements applicable to persons convicted of any offense under
                     section 2318 or 2320 of title 18, United States Code.
                     (2) AUTHORIZATION- The United States Sentencing Commission
                     may amend the Federal sentencing guidelines in accordance with the
                     procedures set forth in section 21(a) of the Sentencing Act of 1987
                     (28 U.S.C. 994 note) as though the authority under that section had
                     not expired.
                     (3) RESPONSIBILITIES OF UNITED STATES SENTENCING
                     COMMISSION- In carrying out this subsection, the United States
                     Sentencing Commission shall determine whether the definition of
                     `infringement amount' set forth in application note 2 of section
                     2B5.3 of the Federal sentencing guidelines is adequate to address
                     situations in which the defendant has been convicted of one of the
                     offenses listed in paragraph (1) and the item in which the defendant
                     trafficked was not an infringing item but rather was intended to
                     facilitate infringement, such as an anti-circumvention device, or the
                     item in which the defendant trafficked was infringing and also was
                     intended to facilitate infringement in another good or service, such
                     as a counterfeit label, documentation, or packaging, taking into
                     account cases such as U.S. v. Sung, 87 F.3d 194 (7th Cir. 1996).

SEC. 2. TRAFFICKING DEFINED.

              (a) Short Title- This section may be cited as the `Protecting American
              Goods and Services Act of 2005'.
              (b) Counterfeit Goods or Services- Section 2320(e) of title 18, United
              States Code, is amended--
                    (1) by striking paragraph (2) and inserting the following:
                    `(2) the term `traffic' means to transport, transfer, or otherwise
                    dispose of, to another, for purposes of commercial advantage or
                    private financial gain, or to make, import, export, obtain control of,
                    or possess, with intent to so transport, transfer, or otherwise dispose
                    of;';
                    (2) by redesignating paragraph (3) as paragraph (4); and
                    (3) by inserting after paragraph (2) the following:



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                     `(3) the term `financial gain' includes the receipt, or expected
                     receipt, of anything of value; and'.
              (c) Conforming Amendments-
                     (1) SOUND RECORDINGS AND MUSIC VIDEOS OF LIVE MUSICAL
                     PERFORMANCES- Section 2319A(e) of title 18, United States Code, is
                     amended by striking paragraph (2) and inserting the following:
                     `(2) the term `traffic' has the same meaning as in section 2320(e)
                     of this title.'.
                     (2) COUNTERFEIT LABELS FOR PHONORECORDS, COMPUTER
                     PROGRAMS, ETC- Section 2318(b) of title 18, United States Code, is
                     amended by striking paragraph (2) and inserting the following:
                     `(2) the term `traffic' has the same meaning as in section 2320(e)
                     of this title;'.
                     (3) ANTI-BOOTLEGGING- Section 1101 of title 17, United States
                     Code, is amended by striking subsection (b) and inserting the
                     following:
              `(b) Definition- In this section, the term `traffic' has the same meaning as
              in section 2320(e) of title 18.'.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.




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