Our Survey Said: "It's No Shell Game"
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Might the Supreme Court's signally important 2015 ruling in B&B Hardware v. Hargis with respect to preclusive effect of rulings at the USPTO's Trademark Trial and Appeal Board on litigation in federal district court be having a knock-on effect on how the Board is conducting cases? Perhaps so.
During a trial, a surrebuttal is a response to a defendant's rebuttal—in effect, a rebuttal of a rebuttal. Typically, and for good reason, trial courts disallow the introduction of new evidence in either a rebuttal or a surrebuttal. But there are exceptions, and a notable one recently occurred in an opposition proceeding at the TTAB.
In Newegg Inc. v. Schoolhouse Outfitters, LLC, Opposition No. 91214178 (March 30, 2016) online computer supplies retailer Newegg opposed applicant Schoolhouse Outfitters' registration of the mark Egghead, citing its prior registration for the Newegg mark. When Schoolhouse introduced its motion for summary judgment, Newegg asked the court to allow it to present an expert report on likelihood of confusion by trademark survey expert Leon Kaplan, of Princeton Research and Consulting Center, Inc.
The Board declined to consider Kaplan's report on behalf of Newegg with respect to Schoolhouse's motion, suggesting the report be reserved for use in the trial. In that trial—during its rebuttal of Newegg's claims—applicant Schoolhouse Outfitters, an online retailer specializing in school supplies, introduced as expert testimony the findings of its own expert, Eugene Erickson of NERA Economic Consulting.
Erickson had conducted a likelihood of confusion survey employing a different methodology than the one used by Kaplan. After Schoolhouse's rebuttal, Newegg filed a motion for leave to prepare and serve a surrebuttal report to be prepared by Kaplan. Predictably, perhaps, Schoolhouse countered with a claim that Newegg's request was a ploy—a delaying tactic with further financial impact on Schoolhouse.
Lesson learned for Schoolhouse. In a precedential decision in March of this year, the TTAB granted Newegg's motion. In its analysis, the Board declined to read Federal Rule of Civil Procedure 26(a)(2)(D) as prohibiting surrebuttal reports.
This rule provides that absent a stipulation or court order, expert disclosures must be made if the evidence is intended solely to contradict or rebut evidence on the same subject matter identified in another party's expert report, within 30 days after the other party's disclosure.
Many courts have ruled that this rule does not contemplate or permit surrebuttal expert disclosures. The Board disagreed, finding that under appropriate circumstances, a surrebuttal expert would be proper as long as the request for one is made promptly, which the Board felt that Newegg had done.
Since Erickson's rebuttal expert report included new evidence in the form of a different survey conducted with a different methodology than Newegg's, the Board felt that a surrebuttal report was proper, and would help it to make a fair determination on the merits of the case.
The Board did rule that Kaplan's surrebuttal expert report must be limited to rebuttal and/or critique of the methodology of the survey conducted by Erickson, as well as the analysis of the data resulting from the latter's survey. In addition, the Board allowed Schoolhouse to depose Kaplan again, but limited to the subject matter of the surrebuttal expert report.
On its face, of course, the Board's ruling clarifies its stance on surrebuttal expert reports. But one has to wonder whether this is a sign from the Board of something more important than that: specifically, it encourages future litigants to employ expert testimony more frequently.
Might this be because of the Supreme Court's holding in B&B Hardware v. Hargis Industries, (135 S. Ct. 1293, 575 US __, 191 L. Ed. 2d 222)? In that ruling, the Court ruled that Board proceedings were to be given preclusive effect in some subsequent district court litigations. As I've said before, consumer-based surveys with respect to likelihood of confusion claims seem increasingly important in trademark litigation, and parties should be aware of the opportunities such expert reports can offer in supporting their case—and in rebutting others'.
Lesson learned, indeed.
Reprinted with permission from the August 21, 2016 edition of Inside Counsel© 2016 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or firstname.lastname@example.org.