ESTTA Tracking number: ESTTA784639 Filing date: 11/22/2016

Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov

ESTTA Tracking number: ESTTA784639

Filing date: 11/22/2016

IN THE UNITED STATES PATENT AND TRADEMARK OFFICE

BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD

Proceeding 91230600

Party DefendantTJ Food Service, LLC

CorrespondenceAddress

CEDRIC D'HUED'HUE LAW, LLC101 NORTH GRANT STREET ROOM 80-115WEST LAFAYETTE, IN 47906

[email protected];[email protected]

Submission Motion to Dismiss - Rule 12(b)

Filer's Name Jason W. Cottrell

Filer's e-mail [email protected], [email protected]

Signature /Jason W. Cottrell/

Date 11/22/2016

Attachments TJ Food Mot. Dismiss 11-22-2016.pdf(486826 bytes )Applicant Mot. Dismss Ex. A.pdf(3045500 bytes )

http://estta.uspto.gov

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IN THE UNITED STATES PATENT AND TRADEMARK OFFICE

BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD

In the matter of trademark Application Serial No. 86921973: LATEA

___________________________________________

YUFAN HU, )

)

Opposer, )

)

v. ) Opposition No.: 91230600

)

TJ FOOD SERVICE, LLC, )

)

Applicant. )

)

)

)

___________________________________________

MOTION TO DISMISS NOTICE OF OPPOSITION

Comes now, TJ Food Service LLC (“Applicant”), by counsel, and submits is Motion to

Dismiss Notice of Opposition (“Motion to Dismiss”) and, in support of said Motion to Dismiss,

states the following:

BACKGROUND

1. Applicant is a limited liability company organized and existing under Indiana law.

2. Applicant is the developer and exclusive owner of the original Latea Bubble Tea

Lounge (hereinafter, the “Latea Business”) which includes, but is not limited to, all proprietary

material, intellectual property, know-how, and trade secrets used in connection or associated

with the Latea Business (hereinafter, the “Assets”).

3. Applicant was originally organized in 2013 for the purpose of carrying out the

Latea Business at a bubble tea restaurant in West Lafayette, IN (the “Original Latea Store”).

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Through subsequent transfers of membership units in Applicant, Opposer has a minority, non-

controlling interest in Applicant.

4. Through Applicant’s founder, General Manager, and majority shareholder Hsiu-

Yen Hsiao (“Jack”), Applicant cultivated and perfected the business model of the Latea Business

at the Original Latea Store. Due to the success and popularity of the Original Latea Store,

Opposer and another minority member of Applicant named Yimei Wan (“Wan”) approached

Applicant in July of 2014 about the possibility of a second Latea store in Champaign Illinois (the

“Champaign Store”).

5. On February 18, 2015, Applicant, Wan and Opposer filed articles of organization

for WNH Food Service LLC (“WNH”), a limited liability company duly organized and existing

under the laws of Indiana.

6. As members of WNH, Applicant, Opposer, and Wan executed a certain WNH

Food Operating Agreement dated February 18, 2015 (the “WNH Operating Agreement”). A true

and accurate copy of the WNH Operating Agreement with initial member resolutions is attached

hereto as Exhibit A.

7. Under the WNH Operating Agreement, WNH is managed by a General Manager

who is vested with legal authority to conduct substantially all aspects of the day-to-day

operations of WNH. WNH Operating Agreement § 4.6.

8. In order to protect the goodwill associated with the Assets which would be

licensed to WNH, Opposer, Wan and Applicant agreed that Applicant would have the “exclusive

authority to appoint a General Manager of WNH. (WNH Operating Agreement §§ 4.2-4.5). The

WNH Operating Agreement confers no authority to Opposer or Wan to appoint a General

Manger or otherwise control the Assets or day-to-day operations of WNH.

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9. At all times relevant, Jack was, and currently is, the General Manager of

Applicant.

10. Between February 18, 2015 and May 1, 2016, Jack was also the General Manager

of WNH. On March 28, 2016, Applicant appointed a second General Manager of WNH named

Nick Hsiao.

11. Between February 18, 2015 and May 1, 2016, Applicant and WNH engaged in a

course of conduct through which Applicant, as licensor, granted to WNH, as licensee an implied

non-exclusive license (the “Implied License”) which allowed WNH to use the Assets subject to

Applicant’s ability to control the Assets through its WNH General Manager appointee pursuant

to §§ 4.4 and 4.6 of the WNH Operating Agreement.

12. The Implied License was an oral agreement between Applicant and WNH and

entered into by Jack in his respective capacities as General Manager for Applicant and WNH.

13. The Champaign Store opened in January 28, 2016 under the name “Latea.”

Through the General Manager position, Applicant exercised complete control over the Assets

which were licensed to WNH through the Implied License.

14. On February 26, 2016, while Jack was General Manager of Applicant and WNH,

Applicant filed a trademark application SN 86921973 (the “Application”) for the Latea

Trademark (the “Mark”). Thus, WNH had actual knowledge of the Application and consented to

Applicant’s filing of the Application.

15. In the Application, Applicant has affirmed that the first use of the Mark occurred

at least as early as August 13, 20151, more than five months prior to the opening of the

Champaign Store.

1 The Original Latea Store opened on August 17, 2014.

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16. Moreover, as minority, non-controlling members of WNH2, Opposer and Wan

had actual knowledge of the Implied License and the terms thereof and consented to the Implied

License and the Application.

17. Jack, in his capacity as General Manager of Applicant and WNH oversaw the

fitting out of the Champaign store.

18. In exchange for Applicant’s services and the Implied License, Opposer and Wan

provided capital expenditures for the Champaign Store.

Dispute Among Members of WNH

19. Pursuant to § 8.16 of the WNH Operating Agreement, “[a]ny dispute, claim or

controversy among the Members . . . arising out of or related to this agreement shall be settled by

arbitration in Tippecanoe County, Indiana”.

20. In the spring of 2016, a dispute arose between Applicant and Opposer and Wan.

Namely, Opposer and Wan disagreed with the manner in which Jack, as General Manager of

WNH, had carried out his duties as General Manager of WNH with respect to operations related

to the Champaign Store.

21. On May 1, 2016, Wan and Opposer voted to remove Jack from his position as

General Manager of WNH and wrongfully purported to elect themselves as General Managers of

WNH in contravention of the WNH Operating Agreement. Thereafter, Opposer and Wan

wrongfully seized access to WNH property and accounts.

22. Opposer and Wan have attempted to freeze Applicant out from WNH in an effort

to force Applicant to sell Applicant’s interest in WNH to Opposer for a reduced value.

2 The ownership of WNH is as follows: Applicant (40%), Wan (45%), and Opposer (15%). See Ex. A at

13.

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23. As part of Opposer’s efforts to force a sale of Applicant’s interest in WNH for a

reduced value, Opposer has filed the Notice of Opposition (“Opposition”).

Notice of Opposition

24. The Opposition consists of two arguments that registration of the Mark should be

refused: 1) that Applicant is not the sole owner of the Mark (the “Ownership Claim”); and 2) that

registration of the Mark will result in a likelihood of consumer confusion (the “Section 2(d)

Claim”).3

25. Opposer filed the Opposition in his individual capacity. The deadline for any

other persons to file an opposition to registration of the Mark has passed. Neither WNH nor any

other persons have filed or joined in the filing of any opposition to registration of the Mark.

ARGUMENT

26. The Federal Rules of Civil Procedure apply to proceedings before the Board. 37

CFR § 2.116.

27. Applicant moves to dismiss the Opposition on the following grounds:

a. The Opposition should be dismissed pursuant to Fed. R. Civ. P. 12(b)(3) because

venue is improper;

b. The Opposition should be dismissed pursuant to Fed. R. Civ. P. 12(b)(7) because

an indispensable party, namely WNH does not oppose registration of the Mark.

3 The Section 2(d) Claim should be construed as an ownership claim. See e.g., Wonderbread 5, 115

U.S.P.Q.2d 1296 (T.T.A.B. June 30, 2015) (“[w]ith regard to the Section 2(d) claim, when the parties are

claiming rights in the same mark for the same goods or services, likelihood of confusion is inevitable. . .

[m]oreover, when both parties are relying upon activities the two conducted in concert with one another,

each in an attempt to establish prior rights in a mark over the other, the dispute centers on ownership of

the mark.”); Nahshin v. Product Source Int'l LLC, 107 U.S.P.Q.2d 1257, 1258 (T.T.A.B. 2013)

(“[a]lthough the proceeding was brought on the ground of priority/likelihood of confusion, the actual

issue in this matter is ownership of the mark NIC-OUT/NIC OUT in the United States, as the cigarette

filters that respondent sells under the mark NIC OUT are the same filters that petitioner arranged to have

manufactured under the mark NIC-OUT.”).

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c. The Opposition should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) because

Opposer has not stated a claim upon which relief may be granted.

A. The Opposition Should be Dismissed Because Opposer’s Ownership Claim and Section 2(d) Claim are Subject to Arbitration.

28. A motion to dismiss based on a contractual arbitration clause may be raised as an

objection to venue under Fed. R. Civ. P. 12(b)(3). See generally, 9 U.S.C. § 1 et seq.; Auto.

Mechs. Local 701 Welfare & Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740,

746 (7th Cir.2007); see also Cont'l Cas. Co. v. Am. Nat'l Ins. Co., 417 F.3d 727, 733 (7th

Cir.2005); 5B Charles A. Wright and Arthur R. Miller, FEDERAL PRACTICE & PROCEDURE § 1352

at 318–19 (3d ed.2004).

29. The WNH Agreement requires Opposer and Applicant to resolve any disputes in

binding arbitration in Tippecanoe County Indiana. Specifically, § 8.16 provides:

Any dispute, claim or controversy among the Members or between a Member and

the Company arising out of or related to this agreement shall be settled by

arbitration in Tippecanoe County. Indiana. Such arbitration shall be conducted by

a single arbitrator in accordance with the rules of The American Arbitration

Association, and judgment may be entered upon the award rendered and enforced

by appropriate judicial action. Unless otherwise allocated by the arbitrator, the

losing party shall bear any fees and expenses of the arbitrator, other arbitration

fees and expenses, reasonable attorney's fees of both parties, any costs of

producing witnesses and any other reasonable costs or expenses incurred by him

or the prevailing party. BY EXECUTING THIS AGREEMENT YOU ARE

AGREEING TO HAVE CERTAIN DISPUTES DECIDED BY NEUTRAL

ARBITRATION AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT

POSSESS TO HAVE SUCH DISPUTES LITIGATED IN A COURT OR JURY

TRIAL. BY EXECUTING THIS AGREEMENT YOU ARE GIVING UP YOUR

JUDICIAL RIGHTS TO DISCOVERY AND APPEAL. IF YOU REFUSE TO

SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION,

YOU MAY BE COMPELLED TO ARBITRATE. YOUR AGREEMENT TO

THIS ARBITRATION PROVISION IS VOLUNTARY.

30. The Ownership Claim and Section 2(d) Claim each involve a “dispute, claim or

controversy among the Members or between a Member and” WNH. Thus, by filing the

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Opposition, Opposer has breached the WNH Operating Agreement and thereby damaged

Applicant.4

31. Because the Ownership Claim and Section 2(d) Claim are the only claims raised

in the Opposition and each must be arbitrated in Tippecanoe County, Indiana, dismissal of the

Opposition is required. See e.g., Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th

Cir. 1992) (“[t]he weight of authority clearly supports dismissal of the case when all of the issues

raised . . . must be submitted to arbitration”); Sea–Land Service, Inc. v. Sea–Land of P.R., Inc.,

636 F.Supp. 750, 757 (D.Puerto Rico 1986); Sparling v. Hoffman Const. Co., Inc., 864 F.2d 635,

638 (9th Cir.1988); Hoffman v. Fidelity and Deposit Co. of Maryland, 734 F.Supp. 192, 195

(D.N.J.1990); Dancu v. Coopers & Lybrand, 778 F.Supp. 832, 835 (E.D.Pa.1991)(“[a]s stated in

Sea–Land: . . . [g]iven our ruling that all issues raised in this action are arbitrable and must be

submitted to arbitration, retaining jurisdiction and staying the action will serve no purpose.”)

32. Applicant respectfully requests that the Board dismiss Opposer’s Ownership

Claim and Section 2(d) Claim with prejudice.

B. The Opposition Should be Dismissed Because WNH is an Indispensable Party which

Cannot be Properly Joined.

33. Fed. R. Civ. P. 12(b)(7) requires dismissal when there is an absent person without

whom complete relief cannot be granted or whose interest in the dispute is such that to proceed

in that person’s absence might prejudice that individual or entity or the parties already before the

court. Fed. R. Civ. P. 12(b)(7) and 19; § 1359 Motions to Dismiss—Failure to Join a Party Under

Rule 19, 5C FED. PRAC. & PROC. CIV. § 1359 (3d ed.).

4 Applicant will be entitled to an award of damages, costs and attorney’s fees from Opposer and/or WNH

for Applicant’s damages, costs and attorney’s fees related to this proceeding. Applicant acknowledges that the Board does not have jurisdiction to award monetary damages, costs or attorney’s fees in this proceeding. See 37 CFR § 2.127; TBMP 502.05; Central Manufacturing Inc. v. Third Millennium

Technology Inc., 61 U.S.P.Q.2d 1210, 1213 (T.T.A.B. 2001). Applicant expressly reserves all rights to

seek damages, costs and attorney’s fees from Opposer and/or WNH.

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34. Under Fed. R. Civ. P. 19(a), a party is an indispensable party when that party has

an interest relating to the subject of the action and is so situated that disposing of the action in the

person’s absence may as a practical matter impair or impede the person’s ability to protect the

interest or leave an existing party subject to a substantial risk of incurring double, multiple, or

otherwise inconsistent obligations because of the interest. Fed. R. Civ. P. 19(a).

35. Opposer’s Ownership Claim and Section 2(d) Claim allege that WNH has

ownership rights in the Mark. Specifically, Opposer makes the following allegations:

a. “Applicant contributed certain intellectual property to WNH” . . . [t]his

intellectual property included . . . the Mark”. ¶ 5.

b. “WNH mixes, produces and sells LATEA brand tea-based beverages . . . using

the Mark” ¶ 6.

c. “Applicant has cobranded the Mark with WNH . . . at each of Applicant’s and

WNH’s respective LATEA restaurants.” ¶ 7.

d. “WNH has utilized the Mark in practically all of its marketing and sales

activities.” ¶ 8.

e. “if Applicant registers the Mark, Applicant will attempt to enforce the rights

granted by registration of the Mark against WNH.” ¶ 11.

f. “Registration of the Mark by Applicant will necessarily lead to a likelihood of

confusion unless the registration of the Mark is held jointly by WNH and

Applicant.” ¶ 13

36. Opposer thus improperly seeks to have this Board adjudicate the potential rights

that WNH may have in the Mark although WNH is an indispensable party and has not been

joined. See e.g., Minnesota Mining & Mfg. Co. v. Chavannes Indus. Synthetics, Inc.,

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D.C.Del.1955, 128 F.Supp. 659 (assignee of applicant's entire interest is an indispensable party);

Gold Seal Co. v. Sawyer, D.C.D.C.1952, 106 F.Supp. 494.; and Cleveland Heater Co. v. Sawyer,

D.C.D.C.1952, 105 F.Supp. 458.

37. WNH may not be joined as a party to this proceeding for two reasons. First, WNH

may not be joined to this proceeding because WNH claims involving WNH and Applicant are

also subject to arbitration in Tippecanoe County, Indiana. WNH Operating Agreement § 8.16.

38. Second, while WNH is an indispensable party for purposes of adjudicating its

rights to use the Mark, it has waived its right to oppose registration of the Mark. Specifically,

while all members of WNH had actual knowledge of the publication of the Mark, WNH did not

make any effort to oppose registration of the Mark. Further, WNH may no longer file an

opposition. TBMP 303.05(a): (“[a]n extension of time to oppose is a personal privilege which

insures only to the benefit of the party to which it was granted and those in privity with that

party.”).

39. Because the Ownership Claim and Section 2(d) Claim involve the rights of WNH

and WNH does not (and cannot) oppose registration of the Mark or otherwise be joined, the

Ownership Claim and Section 2(d) Claim should be dismissed pursuant to Fed. R. Civ. P.

12(b)(7).

C. The Ownership Claim and Section 2(d) Claim Should be Dismissed Because Opposer has

Failed to State a Claim Upon Which Relief may be Granted.

40. Ownership of a trademark occurs by one of two methods: 1) affixing a mark to

goods/using it in commerce or 2) through a written assignment of a mark pursuant to 15 USC §

1060. Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713 (1916) (“It

is an axiomatic principle of trademark law that priority in adoption and actual use of a name of

designation, as a trademark, is the essential criterion upon which ownership is based.”)

Page 10 of 12

41. In establishing ownership of a trademark, “it is a basic tenet that trademark

ownership depends on whether a party had both actual and first use of the mark.” See, e.g., Gen.

Bus. Servs., Inc. v. Rouse, 495 F. Supp. 526, 533 (E.D. Pa. 1980). It is priority of trademark use,

in commerce, that confers ownership upon the user. Id. “Use” is defined as affixing the

trademark to the goods, and selling or transporting the marked goods in commerce. In re N.Y.

City Shoes, Inc., 84 B.R. 947, 955 (Bankr. E.D. Pa. 1988). Under the Lanham Act, the relevant

time period for construing ownership of a trademark is the date of filing an application. 15

U.S.C. §1052(d); Wonderbread 5, 115 U.S.P.Q.2d 1296 (T.T.A.B. June 30, 2015).

42. When a party lacks an ownership interest in a disputed mark, that party lacks

standing to oppose registration of that mark. See e.g., Stephen Slesinger Inc. v. Disney

Enterprises Inc., 98 U.S.P.Q.2d 1890, 1895 n.15 (T.T.A.B. 2011) (no standing in in Board

proceeding where district court decided plaintiff lacked actual ownership interest in the

marks), aff’d, 702 F.3d 640, 105 U.S.P.Q.2d 1472 (Fed. Cir. 2012), cert den. 134 S. Ct. 125

(2013); TBMP 309.03(b). The purpose of the standing requirement is to prevent intermeddlers

from initiating proceedings. See Lipton Indus., Inc. v. Ralston Purina Co., 670 F.2d 1024, 1028,

213 U.S.P.Q. 185, 189 (C.C.P.A.1982). As a result, an opposer is obligated to demonstrate

“direct and personal stake in the outcome of the opposition” by affirmatively showing a “direct

injury” to the opposer. Ritchie v. Simpson, 170 F.3d 1092, 1096 (Fed. Cir. 1999).

43. Even if the allegations of the Opposition are assumed to be true, the Ownership

Claim and the Section 2(d) Claim fail because Opposer does not allege facts which would

establish an ownership interest in Opposer. Namely, to the extent that Opposer does assert an

ownership interest in the Mark, it is merely based on the allegation that Opposer is a “General

Manager and equity member of WNH” and that Opposer “greatly contributed to the good-will

https://1.next.westlaw.com/Link/Document/FullText?findType=Y&serNum=1982107542&pubNum=350&originatingDoc=Ibca0b33c949011d9bdd1cfdd544ca3a4&refType=RP&fi=co_pp_sp_350_1028&originationContext=document&transitionType=DocumentItem&contextData=(sc.DocLink)#co_pp_sp_350_1028

https://1.next.westlaw.com/Link/Document/FullText?findType=Y&serNum=1982107542&pubNum=350&originatingDoc=Ibca0b33c949011d9bdd1cfdd544ca3a4&refType=RP&fi=co_pp_sp_350_1028&originationContext=document&transitionType=DocumentItem&contextData=(sc.DocLink)#co_pp_sp_350_1028

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and brand recognition of the Mark through the marketing and sale of products and services

bearing the Mark.” Opposition ¶¶ 1, 9.

44. However, under well-established trademark ownership principles, trademark

rights resulting from employees or agents of a business entity inure to the benefit of the business

entity rather than to the individuals themselves. Kristin Marie Conolty d/b/a Fairway Fox Golf,

111 U.S.P.Q.2d 1302 (T.T.A.B. July 3, 2014).

45. Thus, even if Opposer’s allegations that Opposer “greatly contributed to the good-

will and brand recognition” of the Mark are assumed to be true, such actions do not establish

Opposer’s alleged ownership interest in the Mark or otherwise raise an inference that consumers

would consider Opposer to be the source of products bearing the Mark.

46. Because the Opposition does not contain allegations which would establish

Opposer’s ownership interest in the Mark, Opposer lacks standing to oppose registration of the

Mark.

47. Further, as an equity member of WNH, Opposer lacks standing because Opposer

does not allege a real and direct injury. Namely, Opposer alleges “if Applicant registers the

Mark, Applicant will attempt to enforce the rights granted by registration of the Mark against

WNH.” Opposition ¶ 11. Thus, Opposer merely alleges a highly speculative, indirect, and

derivative injury. The Opposition should therefore be dismissed.

CONCLUSION

WHEREFORE, Applicant, TJ Food Service LLC respectfully requests the Board to:

1. Grant TJ Food Service LLC’s Motion to Dismiss Opposer’s Notice of Opposition with

prejudice;

2. Register SN 86921973 on the Principal Register; and

In the Matter of Trademark Application Serial No. 86921973: Opposition No. 91230600

TJ Food Service LLC's Motion to Dismiss

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Documents

ESTTA Tracking number: ESTTA784639 Filing date: 11/22/2016