Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA350236
`ESTTA Tracking number:
`06/01/2010
`
`Filing date:
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`92051699
`Defendant
`Merz Pharma GmbH & Co. KGaA
`Paul Fields
`Leason Ellis
`81 Main Street, Suite 503
`White Plains, NY 10601
`UNITED STATES
`tmdocket@leasonellis.com, fields@leasonellis.com,
`Other Motions/Papers
`Paul Fields
`Fields@leasonellis.com, reuber@leasonellis.com, tmdocket@leasonellis.com
`/Paul Fields/
`06/01/2010
`00059664.PDF ( 82 pages )(793608 bytes )
`
`Proceeding
`Party
`
`Correspondence
`Address
`
`Submission
`Filer's Name
`Filer's e-mail
`Signature
`Date
`Attachments
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`

`

`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
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`
`
`
`
`
`
`
`
`
`
`
`
`Cancellation No. 92/051,699
`
`Reg. No. 3,052,554
`Mark: BOCOUTURE
`Filed: Sept. 14, 2004
`Issued: Jan. 31, 2006
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`
`
`
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`ALLERGAN, INC.,
`
`
`Petitioner/Counterclaim,
`Respondent,
`
`v.
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`MERZ PHARMA GMBH & CO. KGAA,
`
`
`Respondent/Counterclaimant.
`
`
`Respondent’s Opposition to Petitioner’s Motion to Dismiss
`Respondent’s Counterclaim and Motion to Strike Respondent’s Affirmative Defenses
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`Respondent, Merz Pharma GMBH & Co. KGAA (“Merz”), submits this response under
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`
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`Trademark Trial and Appeal Board Manual of Procedure (“TBMP”) § 502.02(b) and 37 C.F.R.
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`§ 2.127 in opposition to the Motion to Dismiss Counterclaim and Strike Affirmative Defenses served
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`by Petitioner Allergan, Inc. (“Allergan”) on May 10, 2010.1
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`Introduction and Procedural Background
`
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`Merz is faced with responding to yet another baseless motion to dismiss Counterclaims and
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`Affirmative Defenses filed by Petitioner. In its first motion, Allergan argued that Merz’s
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`Counterclaims should be dismissed for essentially the same reasons argued here. See Dkt. 12. The
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`Board denied Allergan’s first motion as moot on April 1, 2010 after allowing the First Amended
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`Answer and Counterclaims submitted with Merz’s opposition to the first motion to be filed. See Dkt.
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`16. On May 10, 2010, Allergan again moved to Dismiss Merz’s Counterclaims and Affirmative
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`Defenses on almost identical grounds as its first motion. See Dkt. 17.
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`1 Allergan’s Motion to Dismiss and Strike appears as docket entry #17 (hereinafter referred to “Dkt. 17”) for this
`proceeding which is available on the TTABvue database accessible online at http://ttabvue.uspto.gov.
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`{0372\6145-000\00058046.1}
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`1
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`Legal Principles Applicable To Rule 12(b)(6) Motions to Dismiss Fraud Claims
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`
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`Merz agrees with Allergan’s assertion that the Rule 12(b)(6) standards for a motion to dismiss
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`are well-known to the Board and undeserving of superfluous discussion here. See Dkt. 17 at 5.
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`However, the pleading standards established by the U.S. Supreme Court are not nearly as stringent as
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`Allegan’s motion alleges. Indeed, all that is necessary for Merz to survive the instant motion is a
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`simple, straight-forward recitation of sufficient factual matter (which the Board must accept as true)
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`that on its face states a plausible claim for relief. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)
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`(citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1960 (2007)). Moreover,
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`Merz’s claims must be found to be plausible if the factual content in its pleadings allows the Board to
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`draw a reasonable inference that Allergan is liable for the misconduct alleged. Id. If the Board can
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`so infer, Allergan’s motion fails as a matter of law. Id.
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`When ruling on Allergan’s motion (as determining plausibility is usually context-specific), the
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`Board is required to draw on its collective experience and common sense in evaluating the viability of
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`Merz’s claim. Id. If Merz’s pleading contains well-pleaded factual allegations (with all reasonable
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`inferences construed in its favor), then all that must be evaluated by the Board is whether the facts as
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`stated plausibly give rise to an entitlement of relief. Id. at 1950. As long as Merz pleaded factual
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`allegations premised upon some modicum of factual support, as opposed to being grounded in pure
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`speculation, Allergan’s motion to dismiss must be denied. Twombly, 127 S. Ct. 1955, 1965 (2007).
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`Indeed, a well-pleaded complaint may proceed even if it appears “that a recovery is very remote and
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`highly unlikely” Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974).
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`Where a claim is made for cancelling a trademark registration on the ground of fraud, a
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`petitioner must allege the elements of fraud with particularity in accordance with Fed. R. Civ. P. 9(b),
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`made applicable to Board proceedings by Trademark Rule 2.116(a). Under Rule 9(b), together with
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`Fed. R. Civ. P. 11 and USPTO Rule 11.18, “the pleadings [must] contain explicit rather than implied
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`2
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`expression of the circumstances constituting fraud.” King Automotive, Inc. v. Speedy Muffler King,
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`Inc., 212 U.S.P.Q. 801, 803 (C.C.P.A. 1981). The Federal Circuit’s decision in In re Bose Corp., 580
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`F.3d 1240, 91 U.S.P.Q.2d 1938 (Fed. Cir. 2009) recently modified the view regarding the sufficiency
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`of fraud pleadings. Previously, it was sufficient for a petitioner to plead that a party “knew or should
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`have known” its statement to be false or misleading. See Medinol v. Neuro Vasx, Inc., 67 USPQ2d
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`1205, 1209 (T.T.A.B.2003).
`
`Now, as stated by the TTAB in a post-In re Bose Corp. decision:
`
`“Pleadings of fraud made ‘on information and belief,’ when there is
`no allegation of ‘specific facts upon which the belief is reasonably
`based’ are insufficient. Additionally, under USPTO Rule 11.18, the
`factual basis for a pleading requires either that the pleader know of
`facts that support the pleading or that evidence showing the factual
`basis is ‘likely’ to be obtained after a reasonable opportunity for
`discovery or investigation. Allegations based solely on information
`and belief raise only the mere possibility that such evidence may be
`uncovered and do not constitute an adequate pleading of fraud with
`particularity. Thus, to satisfy Rule 9(b), any allegations based on
`‘information and belief’ must be accompanied by a statement of facts
`upon which the belief is founded.”
`
`
`Asian and Western Classics B.V. v. Selkow, 92 U.S.P.Q.2d 1478, 1479 (T.T.A.B. 2009) (citations
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`omitted).
`
`For the reasons set forth below, and as described in fuller detail in Merz’s pleadings, Merz’s
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`Counterclaims aver sufficient factual allegations that support a claim for fraud including, for the most
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`part, that at the time Allergan filed Application Serial No. 78/041,618 to register the BOTOX mark
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`(“the BOTOX Application”), Allergan willfully, and with an intent to mislead and to induce a
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`registration to issue, falsely represented to the United States Patent & Trademark Office (“PTO”) that
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`it was using the BOTOX mark as of January 3, 2001 on all 12 applied-for uses for the BOTOX
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`product. This allegation, as summarized above, is neither conclusory nor based purely on
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`speculation. Instead, as detailed below and in Merz’s pleadings at ¶ 26 of the First Amended Answer,
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`3
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`sufficient facts were pleaded to allow the Board to reasonably infer that, just as in the Klein-Becker
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`Action, Allergan will again fail to expressly state with any veracity, or demonstratively show for lack
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`of supporting evidence, that Allergan was using the BOTOX mark as of January 3, 2001 on all 12
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`applied-for uses for the BOTOX product. The facts derived and reasonably inferred from Allergan’s
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`conduct in the Klein-Becker Action support a reasonable inference that at least the same evidence
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`sought during the Klein-Becker Action will be obtained during discovery in this matter. Moreover,
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`Allergan failed during the Klein-Becker Action to take advantage of a prime opportunity to produce
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`evidence of use of its mark on all 12 of the listed items or to explain whether the Botox Application
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`contained any false representations as opposed to fraudulent ones. As such, Merz has satisfied the
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`pleading standards requiring disclosure of the factual matter upon which Merz’s belief in its fraud
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`claim is founded. Contrary to Allergan’s argument, the statements in ¶ 26 are not “conclusory”, but
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`factual. Having set forth more than sufficient and detailed facts that support its allegations, Merz
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`should not be deprived of discovery to prove the same. Accordingly, Allergan’s Second Motion to
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`Dismiss Merz’s Counterclaim should be denied.
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`ARGUMENT
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`I.
`
`Merz’s Counterclaim Sufficiently States and Supports
`Claims for Which Relief Can Be Granted
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`Allegan’s argument in § I -A of its motion relies entirely on Fed.R.Civ.P. 9(b). Specifically, it
`
`
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`argues that Merz failed to plead fraud with the requisite particularity and factual support required by
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`Rule 9(b). See Dkt. 17 at 6-8. In a nutshell, Allergan argues that Merz failed to plead: (a) “the who,
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`what, when, where, and how” of its fraud claim as well as (b) the requisite statement of facts upon
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`which its belief is founded. Id. at 7. In doing so, Allergan betrays surprisingly willful ignorance of
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`Merz’s plainly stated Counterclaim.
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`4
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`
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`It is well-settled that an applicant may not claim a Section 1(a) filing basis unless the mark
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`was in use in commerce on or in connection with all the goods covered by the Section 1(a) basis as of
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`the application’s filing date. Hachette Filipacchi Presse v. Elle Belle, LLC, 85 U.S.P.Q.2d 1090
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`(T.T.A.B. 2007) (emphasis in original). It is equally well-settled that fraud in procuring a trademark
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`registration occurs when an applicant for registration knowingly makes false, material representations
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`of fact in connection with an application to register with the intent to deceive. Accordingly, the
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`TTAB has held that an applicant commits fraud when, after having signed the oath at the conclusion
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`of the application attesting to the truth of the statements made in the application and recognizing that
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`false statements may jeopardize the validity of any resulting registration, the applicant was not in fact
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`using the mark on all the applied-for goods as of the filing date. Moreover, a finding of fraud with
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`respect to a particular class of goods renders any resulting registration void as to that class. G&W
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`Laboratories Inc. v. GW Pharma Ltd., 89 USPQ2d 1571, 1574 (TTAB 2009). Therefore, if Merz
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`proves its allegations of fraud, it will also establish that Allergan obtained registrations for uses to
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`which it was not otherwise entitled.
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`
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`Here, Merz’s Counterclaim expressly alleges, inter alia, that Allergan, during the prosecution
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`of the Botox Application, falsely represented to the PTO that it was using the BOTOX mark on all 12
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`applied-for uses for the BOTOX product prior to January 3, 2001 with an intent to mislead the
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`examiner and induce an invalid registration to issue as to all 12 applied-for uses to Allergan’s benefit.
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` Merz’s Counterclaim at ¶¶ 17-21. Further, Merz alleges that Allergan filed a signed declaration
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`attesting to the veracity of the Botox Application’s representations and recognizing that any false
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`statements may jeopardize the validity of the requested registration. Id. at ¶ 22. Accordingly, the
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`“who, what, when, where, and how” of Allergan’s fraud are well-pled and easily identifiable pursuant
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`to even a cursory reading of the document.
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`5
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`
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`The second prong of Allergan’s argument in § I-A is similarly meritless – and for the same
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`reason: selective observation. Despite a clear and unequivocal recitation of the facts concerning the
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`Klein-Becker Action, Allergan continues to ignore its significance as factual support for Merz’s
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`claims.
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`Merz investigated the bases for its claims, as required by Fed.R.Civ.P. 11, prior to filing the
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`Counterclaim. The investigation included a review of the Klein-Becker Action. Id. at ¶ 26. Pursuant
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`to that investigation, Merz discovered that, inter alia, the U.S. Food & Drug Administration (“FDA”)
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`had only approved the use of the Botox product for 3 of the 12 applied-for uses as of January 3,
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`2001.2 Id. at ¶ 26(e). Merz further discovered that in that proceeding Allergan, despite having a
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`clear opportunity (and, arguably, an affirmative obligation) to do so, failed to expressly state or
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`demonstrably show to the Utah District Court that it was indeed using the BOTOX mark in commerce
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`on all 12 applied-for uses as of the filing date of the Botox Application. Moreover, if indeed Allergan
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`had not used the mark as affirmatively represented under oath, it failed to take advantage of a prime
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`opportunity to explain whether the Statement of Use in the Botox Application contained any “false”
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`representations as opposed to “fraudulent” ones.3 See In re Bose Corp., 580 F.3d at 1243.
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`Within this contextual framework, and in contrast to its original Counterclaim, Merz
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`specifically alleges that Allergan knowingly made false, material misrepresentations of fact in
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`procuring Registration No. 2,510,675 (“ the ‘675 Registration”) with the intent to defraud the PTO
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`thereby. Id. at ¶¶ 20-21, and 28. Under express TTAB precedent, these allegations are sufficiently
`
`
`2 Allergan decries Merz’s use of “information and belief” phraseology. However, as Merz was not a party to the Klein-
`Becker Action, the phrasing is entirely appropriate. Merz has no doubt that the representations made by the parties to that
`action are consistent with their duties of candor with the Utah District Court. Accordingly, while Merz does not
`necessarily have “first-hand” knowledge of the Klein-Becker Action, a diligent investigation of those proceedings has
`provided a reasonable belief and expectation that the facts and representations adduced in that matter will be subject to
`discovery in this one. See Kowal v. MCI Communications Corp., 16 F.3d 1271, 1279 n.3 (D.C. Cir. 1994) (pleadings on
`information and belief under Rule 9(b) require allegation that necessary information lies within defendant’s control and
`such allegations must be accompanied by statement of facts upon which allegations are based).
`3 Notwithstanding whether Allergan’s representations are more likely to be false than fraudulent, the Board must construe
`all reasonable inferences in Merz’s favor when adjudicating this motion. Twombly, 127 S.Ct. at 1980.
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`{0372\6145-000\00058046.1}
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`6
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`specific and particular to satisfy Fed. R. Civ. P. 9(b). Meckatzer Lowenbrau Benedikt Weib KG v.
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`White Gold, LLC, 2010 WL 1946273 (T.T.A.B. May 13, 2010). The Meckatzer case explicitly holds
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`in relevant part:
`
`“[W]e find that petitioner has sufficiently alleged fraud. Its
`allegations are not based solely on “information and belief,” but are
`also based on the results of an investigation which, petitioner alleges,
`revealed that respondent was not using its mark on all of the goods
`listed in its Statements of Use at the time the Statements of Use were
`filed. More specifically, petitioner alleges that its investigation
`revealed that respondent’s mark was not used on any of the goods
`listed in its Statements of Use, other than vodka. FAPC ¶ 6.
`Moreover, the FAPC, in contrast to the original petition for
`cancellation, specifically alleges that “Respondent knowingly made
`false, material misrepresentations of fact
`in procuring
`the
`Registrations with the intent to defraud the U.S.P.T.O.” Id. ¶ 8. These
`allegations are sufficiently specific and particular under Rule 9(b).”
`
`
`Id. at *3.4
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`
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`Allergan’s willful blindness aside, Merz’s has pleaded its Counterclaim with no less
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`specificity or factual support than the petitioner in Meckatzer. Indeed, the facts in Meckatzer are not
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`dissimilar to the facts in this case and should command the same result.
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`II. Merz’s Counterclaim Sufficiently Alleges Fraudulent Intent
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`
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`Allegan’s argument in § I-B of its motion also relies entirely on Fed.R.Civ.P. 9(b).
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`Specifically it argues that Merz failed to plead any underlying facts from which the Board may
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`reasonably infer that Allergan filed the Botox Application with the intent to defraud the PTO. See
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`Dkt. 17 at 8-9. Allergan relies on Fed.R.Civ.P. 9(b) as interpreted by Exergen Corp. v. Wal-Mart
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`Stores Inc., 91 U.S.P.Q.2d 1656, 1667 (Fed. Cir. 2009). This reliance, however, is misplaced as that
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`case is incongruous with the subject matter the Board is dealing with here. The Exergen decision
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`follows a long line of patent jurisprudence concerning a patentee’s duty of disclosure.5 A patentee’s
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`4 A copy of the Meckatzer case is attached as Exhibit 1.
`5 In any event, the Federal Circuit recently issued an order in Therasense, Inc. v. Becton, Dickinson and Co., 2010 WL
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`{0372\6145-000\00058046.1}
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`7
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`affirmative obligation to disclose information is intellectually and legally distinct from a trademark
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`registrant’s attestation of use under oath. Extending the scope of the Exergen case into trademark
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`jurisprudence serves no sapient purpose when more apropos precedent is readily available for
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`review and consideration.
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`The TTAB’s recent decision in Daimler Chrysler v. AMC, for instance, is a clearly more
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`felicitous precedent by which the Board can evaluate the sufficiency of Merz’s pleadings concerning
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`Allegan’s intent to deceive. See Daimler Chrysler Corp. v. American Motors Corp., 2010 TTAB
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`LEXIS 14 (T.T.A.B January 14, 2010).6 In Daimler, the TTAB holds that:
`
`“[P]etitioner has sufficiently pled a fraud claim, including that
`respondent had the requisite intent to deceive the [PTO] in the
`procurement of its registration. More specifically, petitioner asserts
`that respondent knowingly made material misrepresentations to the
`[PTO] in order to procure the registration. The allegations preceding
`and following this assertion state with particularity numerous,
`specific representations of fact that petitioner alleges were false and
`were known to be false, were material, and were relied upon by the
`[PTO] Office. Further, we find the [Petitioner’s assertions]
`“material misrepresentations”
`combining
`the
`references
`“knowingly made” and “to procure” a registration, to constitute an
`allegation of respondent’s intent. That is, where a pleading asserts
`that a known misrepresentation, on a material matter, is made to
`procure a registration, the element of intent, indispensable to a fraud
`claim, has been sufficiently pled. Notwithstanding that we find this
`petition to meet the particularity requirements for pleading fraud and
`to meet the requirement for generally pleading intent, in light of the
`Bose decision, we note that the preferred practice for a party alleging
`fraud in a [TTAB] opposition or cancellation proceeding is to
`specifically allege the adverse party’s intent to deceive the [PTO], so
`that there is no question that this indispensable element has been
`pled.”
`
`
`
`
`1655391 (Fed. Cir. April 26, 2010) granting a petition for rehearing en banc. A copy of the order is attached as Exhibit 2.
`All of the six issues to be addressed during en banc review relate to the scope of the Exergen jurisprudence cited by
`Allergan. Accordingly, its prospective precedential value in this matter is questionable at best.
`6 A copy of the Daimler case is attached as Exhibit 3.
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`8
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`Exhibit 3 at 6. (emphasis added)(citations omitted); see also In re Bose, 580 F.3d 1240, 1243, 1244
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`(Fed. Cir. 2009) (absent requisite intent to mislead PTO, even a material misrepresentation would not
`
`qualify as fraud) (citations therein).
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`As shown below, Merz’s Counterclaim satisfies the standard for pleading intent to deceive the
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`PTO as set forth above in both Daimler and Bose. Indeed, it is plainly evident that Merz’s
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`Counterclaim recites the key language (identical to the highlighted phraseology in Daimler)
`
`necessary to sufficiently plead intent to defraud the PTO:
`
`20. Upon information and belief, Allergan knowingly
`made, with the intent to deceive and mislead the PTO and to induce it
`to issue a registration, the false statement that it had used and was
`using, as of January 3, 2001, the BOTOX mark on all twelve of the
`applied-for uses set forth in the BOTOX Application.
`
`
`21. Upon information and belief, Allergan knowingly
`made the above material false statements and representations in the
`BOTOX Application regarding its use of the BOTOX mark in
`connection with the uses identified in the application with the intent
`to mislead the PTO and to procure a registration to which Allergan
`was not entitled. […]
`
`
`24. Upon information and belief, Allergan knew that its
`representations with regard to the use of the BOTOX mark on all
`twelve uses were false.
`
`
`25. Upon information and belief, Allergan knowingly
`made these material misrepresentations to the PTO to procure
`Registration No. 2,510,675.
`
`Merz’s Counterclaim at ¶¶ 20-21, & 24-25 (emphasis added).
`
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`Although alleged “upon information and belief,” Merz’s express allegations of Allergan’s
`
`deceptive intent are immediately followed by a specific recital of factual support for its allegations.
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`Id. at ¶ 26, subparagraphs a through l; see also Asian and Western Classics B. V. v. Selkow, 92
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`U.S.P.Q.2d 1478 (T.T.A.B. 2009) (pleadings on information and belief pursuant to Rule 9(b) must be
`
`accompanied by statements of fact upon which allegations are based). It is this recital, which
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`9
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`primarily concerns Merz’s investigation into the Klein-Becker Action, that gives rise to the
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`reasonable inference that Allergan was not using the BOTOX mark as of January 3, 2001 on all 12
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`applied-for uses for the Botox product. See id. at ¶ 27. Allegan is correct in arguing that “documents
`
`filed in the Klein-Becker Action … at best support the notion that the Botox mark “may not have
`
`been” in use for all of the indications identified in the [Botox Application].” See Dkt. 17 at 8
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`(citation omitted). However, as established supra, all reasonable inferences must be drawn in favor
`
`of Merz when supported, as here, by non-speculative statements of fact.
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`In any event, subparagraph e of Counterclaim ¶ 26 specifically alleges, inter alia, that at the
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`time Allegan filed the Botox application it was aware, by virtue of communications with the FDA,
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`that lawful use of the Botox product was only available for 3 of the 12 applied-for uses (and,
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`therefore, could not legally be used on the other 9 items). This allegation alone, if true, sufficiently
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`demonstrates that Allergan knew their representations concerning the other 9 applied-for uses were
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`false and misleading when made. Thus, Allergen’s contention that Merz failed to support its
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`allegation of intentional misrepresentation with intent to deceive is simply meritless. Id.
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`Moreover, subjective intent to deceive is already difficult enough to prove during discovery
`
`“because direct evidence of deceptive intent is rarely available.” In re Bose, 580 F.3d at 1245. As
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`such, “[subjective] intent can be inferred from indirect and circumstantial evidence.” Id. Indirect
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`and circumstantial evidence is precisely what Merz has provided here – and in such quantity that the
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`“flexible plausibility standard” set out in Twombly is easily satisfied. Twombly, at 157-158.
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`In view of the above, it is apparent that Allergan’s contention that Merz has not sufficiently
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`pled fraudulent intent is misguided as it is not based on a fair and complete reading of Merz’s
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`Counterclaim nor the applicable law. It should accordingly be disregarded by the Board.
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`
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`{0372\6145-000\00058046.1}
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`10
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`
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`III. Merz’s Non-Use Counterclaim is Viable Pursuant to 15 U.S.C. § 1064(c)
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`Allegan’s argument in § I-C of its motion relies on the Lanham Act § 14(a), 15 U.S.C.
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`1064(a) and its statutory prohibition limiting the time when petitions for cancellation can be filed.
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`See Dkt. 17 at 9-10. The gist of Allergan’s argument is that Merz’s Second Counterclaim is time-
`
`barred that because (a) five years have passed and (b) the Allergan conduct alleged in the pleading is
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`not one of the specified grounds for which a mark may be canceled at any time. Id.
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`The five-year window in which to file a petition pursuant to § 14 is well-settled and not
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`disputed here. Merz does dispute, however, that Allergan’s fraudulent conduct regarding 9 of the 12
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`applied-for uses for the BOTOX product fails to qualify as an exception under § 14.
`
`Lanham Act § 14(c) specifically allows “cancellation of an incontestable mark at any time if it
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`has been abandoned, if it is being used to misrepresent the source of the goods or services in
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`connection with which it is used, or if it was obtained fraudulently or contrary to the provisions of §
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`4, 15 U.S.C. § 1054, or §§ 2(a)-(c), 15 U.S.C. §§ 1052(a)-(c).” Park ‘N Fly, Inc. v. Dollar Park and
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`Fly, Inc., 469 U.S. 189, 105 S.Ct. 658 (1985) (emphasis supplied). As shown above, Merz’s plainly
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`pleaded that Allergan obtained the ‘675 Registration through fraud by knowingly deceiving the PTO
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`as to the non-use of the BOTOX mark on at least 9 of the 12 applied-for uses as of January 3, 2001.
`
`As such, Allergan’s argument has no merit as Merz’s Second Counterclaim clearly falls within the
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`fraud exception to § 14(c).
`
`Indeed, generally speaking, Allergan is correct to argue that non-use is not a viable basis by
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`which to seek cancellation of an incontestable mark. However, when a registrant’s non-use is the
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`basis of a willful misrepresentation used to obtain a registration that later becomes incontestable, the
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`fraud exception clearly applies. Surely a rule that operates to reward and protect bona fide registrants
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`who use a mark for 5 years cannot be cited as a shield for those who were only permitted to obtain
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`incontestability through deceit and fraud when obtaining a registration in the first place.
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`{0372\6145-000\00058046.1}
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`11
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`In view of the above, it is apparent that Merz’s Second Counterclaim is not time-barred.
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`Accordingly, Allergan’s arguments to the contrary should be disregarded by the Board.
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`
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`IV. Merz’s Affirmative Defenses Are Sufficiently Pleaded and Entirely Viable
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`Allegan’s argument in § II of its motion relies on the pleading sufficiency requirements of
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`TBMP § 506.01, Fed. R. Civ. P. 12(f), and Fed. R. Civ. P. 9(b) and basically seeks to strike Merz’s
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`Second and Third Affirmative Defenses for unclean hands and trademark misuse, respectively. See
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`Dkt. 17 at 10-11. “As a general rule, the Board disfavors motions to strike, and will not strike matter
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`unless it clearly has no bearing on the issues involved.” Impact Rests. L.L.C. v. Sizzling Platter, Inc.,
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`Cancel. No. 92041064, 2003 WL 22586449, at *2 (T.T.A.B. Nov. 6, 2003) (non-precedential).7
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`As explained below, Allergan proffers no compelling reason why that rule should not apply to its
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`motion.
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`Allergan’s attack on Merz’s Second Defense is predictably identical to its attack on Merz’s
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`First Counterclaim. Indeed, Allergan concedes this point by arguing that “[Merz’s] unclean hands
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`defense must fall together with the [fraud] counterclaim.” Id. at 11. As such, the merits of Allergan’s
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`collateral attack need not be parsed again here. Indeed, by Allergan’s own implied admission, if the
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`Board deems Merz’s First Counterclaim sufficiently pleaded then its Second Defense must logically
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`receive similar treatment.
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`Allergan’s attack on Merz’s Third Defense is similarly far from novel. Basically, Allergan’s
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`challenges Merz’s trademark misuse defense for lack of “any cited authority for its application in a
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`cancellation proceeding.” Id. at 11. Allergan further argues that even if such a defense is available, it
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`is defective under Twombly for lack of any factual support. Neither argument has merit. Indeed, both
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`suffer from the same flaw – selective observation – as the rest of Allergan’s motion.
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`{0372\6145-000\00058046.1}
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`12
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`Contrary to Allergan’s argument, the “misuse” doctrine has been expanded to cover
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`trademarks. See Lasercomb America, Inc. v. Reynolds, 911 F.2d 970 (4th Cir.1990). Indeed, while
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`“[t]he Supreme Court has not expressly recognized … trademark misuse, [it] has strongly suggested
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`[its] validity as [a] defense.” Van Well Nursery, Inc. v. Mony Life Ins. Co., WL 716042 (E.D.Wash.
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`2007) (citing United States v. Loew’s, Inc., 371 U.S. 38 (1962) and Broadcast Music, Inc. v.
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`Columbia Broadcasting System, Inc., 441 U.S. 1 (1979)).8 Thereafter, the lower courts permitted
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`parties to assert the defense. See e.g., 1-800Contacts, Inc. v. Memorial Eye, 2010 WL 988524, at *7
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`(D.Utah 2010) (permitting defendants to assert trademark misuse defense in regard to unclean hands);
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`Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 298 F.Supp. 1309 (S.D.N.Y.1969) (declining to accept
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`the view that the misuse defense should be unavailable as a matter of law); and Northwestern Corp. v.
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`Gabriel Mfg. Co., 1998 WL 525431, at *7 (N.D.Ill. 1998) (“when a trademark infringement plaintiff
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`violates the public policy it is based upon… then the trademark misuse defense will permit the court
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`to exercise its equitable powers and deny enforcement of the trademark.”).9 Moreover, its application
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`in a cancellation proceeding is not a particularly new or novel endeavor either. See e.g., Impact, at 1;
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`and Chaim Lowenstein v. Morrison Distribution & Marketing, Inc., 2008 WL 1963602 Cancel.
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`92045446, at *10, n. 3 (T.T.A.B. May 02, 2008) (non-precedential).10
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`As for the Twombly argument, Merz pleaded that on January 3, 2001 Allergan fraudulently
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`applied to register the BOTOX mark based on 12 prior uses of the Botox product in commerce when,
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`as of that date, only 3 of those applied-for uses had been approved for lawful use by the FDA. Merz’s
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`Counterclaim at ¶ 26, subpar. e. This factual recitation adequately supports Merz’s trademark use
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`defense under Twombly’s “flexible plausibility standard” as it sets out and factually supports Merz’s
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`contention that Allergan intentionally misrepresented prior use for at least 9 applied-for uses with the
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`7 A copy of the Impact case is attached as Exhibit 4.
`8 A copy of the Van Well Nursery case is attached as Exhibit 5.
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`{0372\6145-000\00058046.1}
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`
`13
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`clear intent to monopolize the market for the Botox product's uses using the fraudulently obtained
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`m5 registration. As Merz plainly pleaded that Allergan violated public policy by seeking to
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`influence the market for at least those 9 applied-for uses using the fraudulently obtained '675
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`registration, then Merz‘s trademark misuse defense it entirely plausible and sufficiently supported to
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`pass muster under Twombiv. Consequently, no viable basis exists in law or fact for the Board to grant
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`Allergen its requested relief.
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`In light of the above, Allergan‘s Motion to Strike Merz‘s Second and Third Affirmative
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`Defenses should not be well-taken and, instead, denied for lack of merit.
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`CONCLUSION
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`Merz respectfully requests that Allergan’s Motion to Dismiss and Motion to Strike be
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`denied in their entireties.
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`Dated:
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`June 1, 2010
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`White Plains, New York
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`Respectfially submitted,
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`/
`
`/
`
`fl /
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`>7 -'
`
`.
`Paul Fields _
`LEASON ELLIS/LL?
`81 Main Street, Suite 503
`White Plains, New York 10601
`T.914.821.90?7
`F.914.288.0023
`
`Fields@LeasonEllis.com
`
`Attorneysfor Mere Phamm GMBH 62 C0. KGAA
`
`
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`q A copy of the l—800C‘ouracrs and Northwestern cases are attached as Exhibits 6 and 7. respectively.
`m A copy oflhe Lot-vensreiu case is attached as Exhibits 8.
`
`{03 72' a HS-OUO‘UUOSSIMb.l ,'
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`14
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`CERTIFICATE OF SERVICE
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`It
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`is hereby certified that a copy of the foregoing Respondent’s Opposition to
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`Petitioner’s Motion to Dismiss Respondent’s Counterelaim and Motion to Strike Respondent’s
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`Affirmative Defenses was served upon counsel for Allergan. [no this lst day ofJune, 2010, by First-
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`Class mail. postage prepaid. addressed as follows:
`
`Kenneth L. Wilton
`
`Seyfan‘h Shaw LLP
`
`2029 Century Park East, Suite 3500
`Los Angeles. CA 90067-3021
`
`"j
`z
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`,/