Wednesday, December 2, 2009

The SOHMER piano trademark war - a new battle front opens in Illinois District Court

A long-running battle being waged between two companies over the trademark rights to the mark SOHMER in connection with the sale of pianos just got kicked up an additional notch.

On February 15, 2001, an Illinois man named Edward Richards filed an intent-to-use trademark application with the U.S. Patent and Trademark Office (“PTO”) to register the mark SOHMER in connection with pianos. Eight days later, on February 23, 2001, a company named Burgett, Inc. (“Burgett”) filed an intent-to-use trademark application to register the identical mark SOHMER in connection with pianos.

The PTO initially refused Richards’ application on the basis of Section 2(e)(4) that the mark was primarily a surname. In order to get around this refusal, Richards filed an Amendment to Allege Use on August 19, 2002, and then amended his application to seek registration of the mark on the Supplemental Register (in order to get around the surname refusal). However, for reasons discussed herein, the PTO did not move his application onto registration, but instead suspended prosecution of Richards’ application

The PTO also initially refused Burgett’s application on the basis of Section 2(e)(4). The PTO also cited the existing of Richards’ earlier filed application as possible grounds for a Section 2(d) likelihood of confusion rejection and suspended prosecution. However, when Richards converted his application to one on the Supplemental Register, the effective filing date of the application changed to the date he filed his Amendment to Allege Use which was after the effective filing date of Burgett’s application, and thus it no longer could serve as a basis for a possible Section 2(d) refusal.

Of course, there was still the little matter of the Section 2(e)(4) refusal. The PTO made its refusal to register based on Section 2(e)(4) final. Burgett filed a request for reconsideration, which was considered after an ex parte appeal was filed to the Trademark Trial and Appeal Board and the Board remanded the case back to the PTO for consideration of the request for reconsideration. The PTO denied the request for reconsideration on November 20, 2003, and ordered the case back to the Board.

Then a funny thing happened in early 2004. Burgett’s President, Gary Burgett, filed a declaration with the PTO in February 4, 2004, that Burgett was the owner of the rights and goodwill to the mark SOHMER in connection with pianos that had been developed since 1872 by the Sohmer & Company (later Mason & Hamlin) and that the mark had become distinctive for pianos through “the substantially exclusive and continuous use of the mark in commerce by the Applicant and related companies for at least five years” preceding February 4, 2004.

While not clear from this Declaration, the basis for Burgett’s claim of ownership of the SOHMER name was the fact that Burgett’s predecessor-in-interest, Burgett Brothers Incorporated, had acquired the assets of Mason & Hamlin out of bankruptcy in 1996, including the trademark registrations owned by the bankrupt company at the time. The PTO’s Assignments records (click here) reflect the chain of title for the SOHMER marks that were still registered at the time. At the same time, it was apparently well known in the piano industry that the SOHMER factory in Pennsylvania had closed down in 1994.

Nevertheless, reviewing the Declaration at face value, Burgett declared that the SOHMER mark had been used continuously since February 1999. Of course, of the four SOHMER marks that had been registered with the PTO (word mark, design mark, SOHMER & CO., and design mark), the SOHMER word mark was canceled on December 20, 2000, for failure to file a Section 8 Declaration of Use and the SOHMER design mark was cancelled on December 2, 2001 for failure to renew. Nonetheless, the Declaration was accepted at face value and apparently enough to convince the PTO to allow the mark to be registered on the Principal Register under Section 2(f) based on a claim of acquired distinctiveness.

After the mark was published for opposition, Richards, who had assigned his own application to his company Persis International, Inc. (“Persis”), filed an opposition on October 19, 2004. Persis International, Inc. v. Burgett, Inc., Opposition No. 91162715 (TTAB Oct. 19, 2004).

The opposition progressed along for several years with Richards showing Burgett and the world that you don’t need an attorney to make an effective legal argument. Because an officer of a company can represent the company before the TTAB, Richards served as the legal representative for Persis during the entire opposition.

During discovery (which became so evasive at one point that Persis obtained sanctions against Burgett), it was discovered that Burgett’s basis for claiming that the SOHMER mark had continued to be used was a single invoice of a sale of a single piano to who it turns out was an employee (who according to affidavit testimony from that employee, purchase the piano first and was then asked if they could change the name on the front of the piano to SOHMER). Burgett’s response was that this piano was an original work in progress from the old SOHMER piano company that had closed down in 1994 – despite other evidence that showed the particular piano sold was a KNABE brand piano built in China by the Young Chang Piano Company with specifications that did not match the types of pianos produced by the Sohmer Pennsylvania factory. Burgett also provided vague information about sales figures from the years 1996 – 2006 but did not produce specific sales records.

As the time for trial before the TTAB moved closer, several new developments occurred. On March 11, 2009, Burgett decided to assign its trademark application to Samick Music Corporation (“Samick”), supposedly Burgett’s exclusive licensee of the SOHMER mark based on a license agreement entered into sometime in 2002. A further development was that Burgett’s counsel filed a motion to withdraw as counsel on the basis that Burgett no longer had an interest in the opposition proceeding. While Burgett’s attorneys were allowed to withdraw, Persis was successful at keeping Burgett as a party to the proceeding since it was the declaration of Burgett’s president that provided Persis with its strongest evidence that Burgett had committed fraud on the PTO with its declaration of continuous five years use of the SOHMER mark.

But the biggest development came in the form of Samick’s decision to file a civil lawsuit in Nevada District Court against Persis on April 15, 2009. See Samick Music Corporation v. Persis International, Inc., Case No. 09-cv-00197 (D. Nev.). A copy of the complaint can be downloaded here.

The basis for the sudden filing of a district court complaint given the long running opposition proceeding that was close to the finish line can probably be best explained by the fact that in federal court, a company must be represented by an attorney. And while Richards may have been a vociferous advocate for his company before the TTAB, federal court rules prevent him from performing the same role in this lawsuit (until such time as he gets a law degree and passes a bar exam).

Despite the strategy behind the filing, Samick’s complaint reiterates its position as the rightful successor-in-interest to the SOHMER mark in connection with pianos and attempts to demonize the efforts of Richards to apply for registration of and use the SOHMER mark in connection with pianos. Samick’s causes of action against Persis are for federal trademark infringement and unfair competition, common law trademark infringement and unfair competition, and federal trademark dilution,

The most recent development occurred on November 30, 2009, when Persis and Richards filed a lawsuit in the U.S. District Court for the Northern District of Illinois against Burgett. See Persis International, Inc. et al v. Burgett, Inc., Case No. 09-cv-07451 (N.D. Ill.). A copy of the complaint can be downloaded here.

But where the Nevada complaint laid out the story in the light most favorable to Burgett & Samick, this Illinois complaint lays out the story from the perspective of Richards and Persis.

According to this complaint, at the time Burgett acquired the aforementioned trademark registrations out of bankruptcy from Mason & Hamlin in 1996, the company had not manufactured, sold or distributed any pianos bearing the SOHMER trademark since at least 1994 nor did Burgett have any intent to resume use of the marks. Moreover, Burgett allegedly did not use the SOHMER trademark in connection with the manufacture, sale or distribution of pianos between 1996 and 2003, and accordingly, abandoned its rights to the mark. One interesting fact from the complaint is that in 1999, Burgett supposedly authorized the destruction of five original SOHMER plate pattern that had been used to manufacture the cast iron piano plates that are essentially to manufacturing SOHMER brand pianos.

According to the complaint, Richards contacted Burgett in late 2000 to discuss the possibility of purchasing one of the piano brands that Burgett had publicly announced that it was discontinuing. At that time, Burgett supposedly told Richards that the names SOHMER and GEORGE STECK were available for purchase. Richards and Burgett agreed on the sale of the GEORGE STECK mark for $100,000, and in early 2001, Richards provided an initial deposit of $33,500. However, Burgett later refused to complete the sale or return the deposit unless Richards withdrew his application for the SOHMER trademark. Burgett supposedly offered to sell Richards its rights to the SOHMER trademark, but Richards refused on the basis that Burgett had not used the SOHMER mark, had destroyed the SOHMER plates, and had even let the trademark registrations expire. [Comment—not to mention the fact that Richards had already filed a trademark application to register the mark].

The complaint then turns its focus to the 2002 license agreement with Samick licensing Burgett’s rights in the SOHMER mark to Samick. From Richards’ and Persis’ perspective, Burgett was aware that Persis was using the SOHMER mark in connection with the sale of pianos and that it had not valid trademark rights to the SOHMER mark when it entered into this license agreement with Samick. Persis publicly exhibited its SOHMER pianos at a piano trade show in July 2002. In early 2003, Samick began selling pianos bearing the SOHMER mark which Persis claims infringes its superior rights. Moreover, Burgett’s actions induced Samick’s acts of infringement.

Persis’ first cause of action against Burgett is for contributory trademark infringement based on its license agreement with Samick for the SOHMER mark despite Burgett’s knowledge that it had abandoned any rights to the SOHMER mark with no bona fide intention to resume use as well as Burgett’s knowledge of Persis’ rights to the SOHMER mark. Additional causes of action are for unfair competition under federal, state and common law, violation of Illinois’ deceptive trade practices act, and unjust enrichment and promissory estoppel (based on the $33,500 deposit that Burgett did not return).

So should Samick be able to lay claim to the reputation and goodwill of the SOHMER mark despite the clear break in use of the mark in connection with pianos or did Persis acquire legitimate rights to an abandoned trademark that it should be allowed to assert against Samick? Of course, even if Persis can show that the mark was abandoned and thus the goodwill never properly transferred to Samick, the ability of Persis to assert trademark infringement against Burgett/Samick may still depend on whether or not (and the extent to which) Persis has established its own strong common law rights in the mark since Persis' acceptance of a registration of the mark on the Supplemental Register is tantamount to an acknowledgment that Persis' trademark rights are only as strong as its common law rights. Persis' case is made even more challenging by the fact that much of the time when Persis was trying to build up a reputation in the name was during the same time that Samick was also using the same mark in connection with the same goods albeit not to take advantage of the reputation and goodwill that Persis had established in the name but instead to take advantage of the reputation and goodwill that had been established in the SOHMER name long before (even though legally abandoned).

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