IP Law Daily, TRADEMARK—S.D. Ohio: Pleadings could be amended to include additional ground for cancellation of INTELLIJET mark, (Oct 18, 2013)

By Mark Engstrom, J.D.

In a proposed amended counterclaim, IntelliJet Group LLC, the owner of the Internet domain name “www.intellijet.com,” stated a valid claim for the cancellation of the registration for INTELLIJET, a trademark owned by NetJets Inc., the federal district court in Columbus, Ohio, has ruled (NetJets, Inc. v. IntelliJet Group, LLC, October 17, 2013, Frost, G.). Because the ground for cancellation—i.e., the registration was void ab initio because NetJets failed to use the mark in interstate commerce at the time of its application or for five consecutive years preceding its declaration of use and incontestability—was sufficient to challenge the mark’s incontestablility under 15 U.S.C. §1065, the court granted IntelliJet’s motion to reconsider a magistrate’s order that denied its motion to amend. In addition, the court construed IntelliJet’s amended counterclaim as alleging that NetJets had fraudulently obtained its registration or incontestable status, which raised a statutory challenge to incontestability that was recognized by 15 U.S.C. §1115(b).

Incontestability under §1065. According to the court, the magistrate’s order proceeded from the premise that the INTELLIJET mark was incontestable under §1065, which left the grounds identified in §1115(b) as IntelliJet’s only bases for challenging incontestability. The magistrate, however, “place[d] the cart before the horse.” In Park’n Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189 (1985), the United States Supreme Court expressly stated that Section 1115(b) “provides that registration is conclusive evidence of the registrant’s exclusive right to use the mark, subject to the conditions of [Section 1065] and the seven defenses enumerated in [Section 1115(b)] itself” (emphasis added). In other words, a registrant had to meet the requirements of incontestability in 15 U.S.C. §1065; failure to do so meant that “the registrant ha[d] not obtained incontestability status over [the] mark in the first place.”

In light of Park’n Fly’s description of the statutory interplay between §1065 and §1115(b), the court concluded that the magistrate judge should not have denied IntelliJet’s motion to amend it counterclaim. IntelliJet’s proposed amendment sought cancellation of the INTELLIJET registration on the additional ground that it was void ab initio because NetJets did not, in fact, use “INTELLIJET” in interstate commerce, either at the time of its application or for five consecutive years preceding NetJets’ declaration of use and incontestability. IntelliJet thus alleged that NetJets had never obtained incontestability status under §1065, and that allegation stated a valid claim for the cancellation of the INTELLIJET mark, the court decided.

Incontestability under §1115(b). Even if the “INTELLIJET” registration obtained incontestability status under §1065, the court determined that an additional ground for reconsideration existed because the proposed amended counterclaim also alleged incontestability under §1115(b).

The magistrate determined that §1115(b) did not include “void ab initio” as one of the grounds for challenging incontestability, and thus concluded that §1115(b) precluded the defense that IntelliJet sought to assert in its amended counterclaim.

Section 1115(b)(1) provided that incontestability could be challenged on the basis that “the registration or the incontestable right to use the mark was obtained fraudulently,” and IntelliJet was arguing, in essence, that NetJets had obtained its registration fraudulently, the court explained. IntelliJet theorized that NetJets had made a false statement in its registration application when it stated that its mark was used in interstate commerce. IntelliJet thus alleged that the INTELLIJET registration could not have become incontestable because it was based on a false statement.

In the court’s view, the magistrate judge placed undue emphasis on IntelliJet’s use of the phrase “void ab initio” as the linchpin to the argument that IntelliJet’s proposed amendment to its counterclaim was futile. To determine whether an amendment would be futile, courts had to determine whether the amendment could survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

In this case, IntelliJet’s proposed amended counterclaim was sufficient withstand a 12(b)(6) challenge. In substance, IntelliJet was alleging that NetJets had obtained its original registration fraudulently and thus could not acquire incontestability status for INTELLIJET. According to IntelliJet, NetJets obtained its registration and incontestability status by falsely stating that INTELLIJET had been used in interstate commerce since 1995. If IntelliJet proved that assertion, it could prevail on its incontestability challenge. The “void ab initio” language was not fatal to IntelliJet’s claim because the substance of the proposed amendment was that NetJets had obtained its registration and incontestability status through a false (i.e., fraudulent) statement.

Conclusion. In light of those facts and findings, the court concluded that IntelliJet’s proposed amended counterclaim stated a valid cancellation claim based on its allegation that the INTELLIJET registration was “void ab initio” and thus failed to acquire incontestable status under 15 U.S.C. §1065. In addition, the court construed the amended counterclaim as alleging that NetJets had obtained its registration or incontestable status fraudulently, which raised a statutory challenge to incontestability that was recognized under §1115(b). The court thus granted IntelliJet’s motion for reconsideration of the magistrate’s order, which denied IntelliJet’s motion to amend, and granted IntelliJet leave to file its amended counterclaim.

The case is No. 2:12-cv-00059.

Attorneys: Jeffrey S. Standley (Standley Law Group LLP) for NetJets. Mary R. True (Dreitler True LLC) for IntelliJet Group, LLC.

Companies: NetJets, Inc.; IntelliJet Group, LLC

Cases: Trademark OhioNews