CAFC Again Remands GALPERTI Case To TTAB Due To Legal Errors In Assessing Falsity Of Claim Of Acquired Distinctiveness

The CAFC has again remanded the GALPERTI case to the TTAB, concluding for the second time that the Board erred in dismissing Petitioner Galperti, Inc.'s (Galperti-USA) claim of fraud. Respondent Galperti S.R.L. (Galperti-Italy), in seeking registration based on acquired distinctiveness under Section 2(f), averred that its use of the mark had been "substantially exclusive" for the five preceding years. Gaoperti-USA alleged that this averment was false and fraudulent. In the first appeal [TTABlogged here], the court held that the Board erred in failing to consider, on the question of falsity, whether use of GALPERTI by others was substantial or inconsequential. On remand, the Board again dismissed the fraud claim, but the CAFC found that the Board had committed legal error when it ruled that (1) in order for Galperti-USA's own use of the mark to count, it had to show that it had acquired rights in the GALPERTI mark via secondary meaning, and (2) Galperti-USA could not rely on third-party use of GALPERTI because there was no proof of privity between Galperti-USA and the third-party users. Galperti, Inc. v. Galperti S.R.L., Appeal No. 2021-1011 (Fed. Cir. November 4, 2021) [precedential].

There was no dispute that GALPERTI is primarily merely a surname, and so Galperti-Italy had to prove acquired distinctiveness in order to obtain its registration. Section 2(f) of the Lanham Act allows the USPTO to accept as prima facie evidence of acquired distinctiveness, "proof of substantially exclusive and continuous" use of the mark in commerce for the five years preceding the claim of distinctiveness. In evaluating whether an applicant has had "substantially exclusive" use of a mark, one must consider whether "any use by a third party was 'significant,' or whether it was merely 'inconsequential or infringing.'" (quoting L.D. Kichler Co. v. Davoil, 192 F.3d 1349, 1352 (Fed. Cir. 1999)). On the first remand, the Board found that the third-party uses were inconsequential, not substantial, but it declined to consider uses by Galperti-USA or by certain third-parties affiliated with Galperti-USA in determining the falsity of Galperti-Italy's Section 2(f) claim. That was error.

The CAFC pointed out that "even marketplace users of a term lacking secondary meaning for the users are among the uses" that must be counted in assessing whether a mark has been in "substantially exclusive" use. See, e.g., De Walt, Inc. v. Magna Power Tool Corp., 289 F.2d 656, 661 (CCPA 1961); In re Boston Beer Co., 198 F.3d 1370, 1373 (Fed. Cir. 1999). In short, "Galperti-USA does not need to establish secondary meaning of its own uses of GALPERTI in order for those uses to be counted in determining the falsity of Galperti-Italy's claim of substantially exclusive use."
The Board's ruling regarding privity between Galperti-USA and third-party users was also contrary to the court's precedent. See Otto Roth & Co. v. Universal Foods Corp., 640 F.2d 1317, 1320 (CCPA 1981); Converse, Inc. v. Int'l Trade Comm'n, 909 F.3 (Fed. Cir. 2018).
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And so the CAFC vacated the decision and remanded the case to the Board. "Further analysis of the falsity issue must proceed in the absence of the legal errors we have identified. We do not address the intent aspect of the charge of fraud, which the Board has not addressed."

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