IP Law Daily, TRADEMARK—S.D. Fla.: Former LINEAR band member must respond to fraud and infringement counterclaims, (Sep 21, 2022)

By Brian Craig, J.D.

The group’s co-founder can assert registration counterclaims based on purported fraud committed upon the USPTO.

In a feud involving competing claims to the mark LINEAR between a former member and co-founder of the musical group with the same name, the federal district court in Miami, Florida, has concluded that the former band member must respond to claims alleging fraudulent trademark registration and trademark infringement. In largely denying a motion to dismiss counterclaims, the group’s co-founder can assert registration counterclaims based on purported fraud committed upon the USPTO because the Trademark Trial and Appeal Board did not decide the allegations in a previous decision. The court also held that the former band member must respond to trademark infringement claims and rejected arguments based on laches, issue preclusion, and preemption (Restivo v. Pennachio, September 20, 2022, Martinez, J.).

The case involves a dispute to the LINEAR mark between a former member of the Linear band and the co-founder of the band. Charles Pennachio is a career singer, musician, and entertainer who co-founded the musical group LINEAR in 1989. Joseph Restivo was a member of the musical group from 1989 until 1994. In 2008, Restivo and another former band member started performing under the name LINEAR LINEAR. The co-founder of the musical group, Pennachio, asserts that Pennachio and Restivo entered into an oral argument in 2008 where Restivo promised to limit his use of LINEAR to factual references to his prior membership in the band and agreed not to use LINEAR as a trademark. In 2012, Restivo filed an application to register the LINEAR mark with the USPTO. Pennachio filed an opposition. In 2013, the Trademark Trial and Appeal Board granted Restivo’s motion for summary judgment and dismissed Pennachio’s cancellation petition with prejudice.

In 2018, Restivo filed a declaration of use in connection with the 2013 registration and he submitted three specimens purporting to show his continued use in commerce of LINEAR. In 2019, Restivo filed a new application with the USPTO for the LINEAR mark in connection with clothing and endorsement services. Pennachio filed a notice of opposition to this application, which is currently pending before the Board. In the present litigation in the federal district court in Florida, Pennachio, the musical group’s co-founder, asserted counterclaims against Restivo alleging fraudulent registration before the UPSTO, trademark infringement, and breach of oral contract. Restivod file a motion to dismiss the counterclaims.

Fraudulent registration. The court held that Restivo must respond to allegations relating to the fraud before the USPTO in connection with the 2018 and 2019 but not allegations of fraud committed in 2013. The court found that Pennachio is attempting to relitigate the validity of the 2013 registration, which has already been decided by the Board. The Board’s findings denying cancellation of the 2013 registration are accorded preclusive effect. Under claim preclusion, Pennachio is barred from relitigating the registration of the LINEAR mark in 2013. The group’s co-founder cannot premise his counterclaims on the purported fraud committed prior to or in relation to the 2013 registration itself. But the group’s co-founder can assert registration counterclaims based on the purported fraud committed upon the USPTO in 2018 and 2019 because the Board did not decide these allegations in its 2013 decision. Therefore, the fraudulent registration claims survived, in part.

Infringement. The court also held that the former band member must respond to trademark infringement claims. The court rejected the former band member’s arguments based on laches, issue preclusion, and preemption. The court could not determine at this stage of litigation whether the group’s co-founder delayed in bringing the infringement claims to dismiss the case based on laches. As to the issue preclusion, the Board’s decision in 2013 did not address priority. In the order dismissing the cancellation proceedings, the Board did not address the issue. The court does not have full record of the prior litigation, including the documents submitted by Pennachio in the cancellation proceeding and the arguments made. Restivo’s argument that the infringement claims are preempted by the Federal Trademark Dilution Act inherently fails because the validity of his ownership in the LINEAR mark is still at issue in this case. Thus, the court denied the motion to dismiss the infringement counterclaims.

Breach of contract. Finally, the court decided that the former band member must respond to the breach of oral contract claim. While the former band member argued that the statute of frauds bars the breach of contract claim, there is nothing in the counterclaim to suggest that the oral agreement could not be performed within one year. At this stage, the court is unable to determine from the pleadings whether the parties intended the contract to be performed within one year.

Accordingly, the court granted in part and denied in part the motion to dismiss the counterclaims.

The Case is No. 1:21-cv-23388-JEM.

Attorneys: Amanda Groover Hyland (Taylor English Duma LLP) for Joseph Restivo. David Kenneth Friedland (Friedland Vining, P.A.) for Charles Pennachio. Richard Charles Wolfe (Wolfe Law Miami, P.A.) for Restored' Dreams, LLC.

Companies: Restored' Dreams, LLC

Cases: Trademark FloridaNews