New Procedural Rules Dramatically Alter Practice Before the Trademark Trial and Appeal Board

By Scott Johnston and Greg Golla of Merchant & Gould

Scott Johnston and Greg Golla are partners in the Minneapolis office of Merchant & Gould P.C. and focus their practices on trademark litigation and prosecution. They may be reached at sjohnston@merchantgould.com and ggolla@merchantgould.com.

On August 1, 2007, the Trademark Trial and Appeal Board (TTAB) substantially changed the procedural rules for trademark oppositions and cancellation actions. The new rules generally track those published for comment in 2006, with some key clarifications that were made in response to comments from the trademark community. The changes are likely to facilitate early settlements as intended, particularly in those cases where the parties would not otherwise communicate about settlement at the beginning of the proceeding. In addition, the new rules are likely to reduce incidents of unfair surprise, another objective of the Board. However, in order to achieve that objective, the Board has added a number of new steps to the process, which creates more opportunity for error and is likely to drive up costs for cases that do not settle early. Practitioners should note that most of the new rules go into effect November 1, 2007, with some specific rules going into effect August 31, 2007, and others applying immediately to pending cases. They will also want to be aware of the many new docket dates necessitated by the rule changes.

The twenty-two page final rule announcement includes a number of significant changes, most notably the following:

Service of Complaint: The party in position of plaintiff will need to serve a copy of the initial pleading on the party in position of defendant at the time of filing, and submit a certificate of service to the Board before it will grant a filing date. This may trip up plaintiffs who are unaware of the change given that the Board historically served oppositions and petitions for cancellation on applicants and registrants. To the extent an opposition is filed near the deadline to oppose, failure to serve or file a certificate of service may cause the plaintiff to miss the deadline and be unable to oppose the mark.
Early Settlement/Discovery Conference: The parties will be obligated to participate in an early discovery and settlement conference, and can have an Interlocutory Attorney from the Board participate, if desired and requested 10 days before the deadline to have the conference. Discovery does not begin until after this conference or concurrently with this conference. The TTAB will likely not suspend cases for settlement discussions after the answer is filed unless this conference has been held. While most parties already communicate regarding settlement early in the process, this change is likely to be very helpful in cases where one side refuses to discuss the matter. Involvement of a Board attorney in the early conference may also be helpful in those cases where a party is unfamiliar with the scope, purpose or procedure of Board proceedings, even though the attorney will not comment on the merits or pressure a party into settlement as is common in mediated settlement conferences in district court. Note that the conference deadline is after the answer deadline, so cases that are in default should not be impacted.
Initial Disclosures: Before either side can serve written discovery or file a motion for summary judgment, the new rules require that they exchange initial disclosures similar to those required in Federal Court litigation. Specifically, the parties must identify witnesses who are likely to have discoverable information that the party may use in support of its claims and defenses, and identify or produce documents that the parties may use to support its claims or defenses. When the Board initially proposed requiring initial disclosures, there was a ground swell of opposition by the trademark community. The major concern stemmed from the fact that the background to the proposed rules suggested that the initial disclosure obligations would be satisfied if a party disclosed information about origin of the mark, dates of first use, past, current or future use, evidence of actual confusion, third-party use or registration, class of customers, channels of trade, methods of marketing or promoting, surveys or market research, and information regarding related proceedings. The comments almost uniformly opposed such an extensive initial disclosure requirement as excessive, costly and burdensome. However, the Board took those concerns to heart and significantly scaled back the initial disclosure obligation so that the final rule mirrors that used in Federal Court. It is anticipated that the new initial disclosures rule will force parties to more thoroughly evaluate their case early in the process. This may increase the front-end costs, but will also promote settlement and may reduce the number of discovery disputes.
Expert Disclosures: Another change that will increase costs while reducing unfair surprise is that parties must now serve expert disclosures in accordance with Fed. R. Civ. P. 26(a)(2) upon the opposing side and file said disclosure with the Board. Rebuttal expert disclosures can be used solely to contradict or rebut the adverse expert and are due 30 days after the initial disclosure date. The final rule makes clear that expert disclosures are only required for testifying experts. Once disclosure is made, the TTAB may suspend proceedings to allow discovery related to expert disclosures. The practical impact of this change is that parties will be required to consider whether expert testimony will be used early in the proceedings, increasing the up-front cost and decreasing flexibility if expert testimony is desired later in the proceedings. In addition, any suspension issued to facilitate expert discovery is likely to delay final resolution of the matter.
Pre-Trial Disclosures: Again, in an effort to reduce unfair surprise while increasing costs, parties must now serve pre-trial disclosures 15 days prior to the opening of testimony or rebuttal periods. Disclosure must include witness list, testimony topics and witness exhibit categories. Fortunately, all exhibits do not need to be disclosed since the rule makes clear that materials submitted in a notice of reliance do not need to be disclosed. This change will increase the current costs of proceedings, create a potential for disclosure of testimony strategy, and require additional advanced planning for the testimony stage of the proceedings.
Board Protective Order: The final rules also make the Board standard protective order applicable in all pending inter partes cases before the Board, except those that already have a protective order in place. Parties can seek modifications to the standard order only by stipulation and motion or by motion. This change is likely to minimize the wrangling that occurs between parties when requesting confidential information in discovery or trying to finalize a protective order, and therefore should actually decrease the costs in some cases.

A proposed rule change that was not adopted was the reduction of the number of Interrogatories from 75 to 25 (while keeping the TTAB’s unique method of counting all subparts to Interrogatories). Comments submitted on the proposed rule suggested that if the TTAB reduced the number of Interrogatories, it should also adopt the method of counting Interrogatories used by Federal Courts, not specifically counting each subpart. The TTAB chose to keep 75 Interrogatories and its method of counting all subparts.

While the trademark community is generally applauding the work done by the Board in evaluating the comments received and modifying the rules accordingly, the new rules are likely to significantly complicate the process for cases that do not settle early, lengthen the time between institution and decision, and increase the costs of trademark enforcement and defense. As can be seen from the timeline below, parties to Board proceedings are going to have many new docket dates to keep track of, which necessarily increases costs and the opportunity for error. As a result, the Board may see a higher percentage of litigants choosing to enforce their trademark rights in Federal Courts, rather than before the Board where it will probably take a minimum of two and a half years between institution and final decision.