Case: 19-1526 Document: 71 Page: 1 Filed: 10/27/2020
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`CORCAMORE, LLC,
`Appellant
`
`v.
`
`SFM, LLC,
`Appellee
`______________________
`
`2019-1526
`______________________
`
`Appeal from the United States Patent and Trademark
`Office, Trademark Trial and Appeal Board in No.
`92060308.
`
`______________________
`
`Decided: October 27, 2020
`______________________
`
`CHARLES L. THOMASON, Thomason Law Office, Louis-
`ville, KY, argued for appellant.
`
` JOHANNA WILBERT, Quarles & Brady LLP, Milwaukee,
`WI, argued for appellee. Also represented by NICOLE
`MURRAY, CHRISTIAN G. STAHL, Chicago, IL.
` ______________________
`
`Before REYNA, CHEN, and HUGHES, Circuit Judges.
`
`

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`CORCAMORE, LLC v. SFM, LLC
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`REYNA, Circuit Judge.
`Corcamore LLC appeals an order of the United States
`Patent and Trademark Office, Trademark Trial and Ap-
`peal Board. The Board entered default judgment as a sanc-
`tion against Corcamore, which resulted in the cancellation
`of Corcamore’s trademark registration for SPROUT. On
`appeal, Corcamore contends that the Board erred in grant-
`ing default judgment, in particular because SFM LLC
`lacked standing to petition for cancellation of the trade-
`mark registration. We conclude that appellee SFM was en-
`titled to bring and maintain a petition under 15 U.S.C.
`§ 1064, the statutory cause of action for cancellation of
`trademark registrations, and that the Board did not other-
`wise abuse its discretion in imposing default judgment as
`a sanction. We affirm.
`BACKGROUND
`A. The Parties and Trademarks
`SFM LLC (“SFM”) owns the federal registration for
`SPROUTS and other SPROUTS nominative trademarks
`for use in connection with retail grocery store services.
`J.A. 121 ¶ 5. The SPROUTS mark was first used in com-
`merce at least as early as April 15, 2002. Id. The below
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`CORCAMORE, LLC v. SFM, LLC
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`3
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`image illustrates the use of the SPROUTS mark in a
`Sprouts Farmers Market grocery store.
`
`J.A. 822.
`Corcamore LLC (“Corcamore”) owns a federal trade-
`mark registration for SPROUT for use in connection with
`vending machine services. The registration claims a first
`use date of May 1, 2008. J.A. 121 ¶ 4. Corcamore’s
`SPROUT mark is used by its affiliate, Sprout Retail, Inc.,
`in combination with a cashless payment card, the “Sprout
`OneCard,” and an associated SPROUT-branded loyalty
`program for consumers that buy food and beverages at cer-
`tain vending machines. J.A. 1222–23 ¶¶ 3–5; J.A. 643–48.
`Corcamore’s SPROUT mark is also used on a SPROUT-
`branded website where users of the Sprout OneCard can
`monitor their food purchases and loyalty points and view
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`CORCAMORE, LLC v. SFM, LLC
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`promotions offered to holders of the Sprout OneCard (pic-
`tured below). See J.A. 423–24; J.A. 643; J.A. 645; J.A. 648.
`
`J.A. 424, 643.
`
`B. Procedural History
`SFM filed a petition with the United States Patent and
`Trademark Office’s Trademark Trial and Appeal Board
`(“TTAB” or “Board”) to cancel Corcamore’s registration for
`SPROUT. J.A. 98–104; J.A. 120–25 (First Amended Peti-
`tion for Cancellation). SFM claimed that its rights to the
`SPROUTS mark were superior to Corcamore’s rights be-
`cause the mark had been in use since “at least as early as
`2002,” and Corcamore “did not make use of the trademark
`SPROUT prior to May 1, 2008, the date of first use claimed
`in the registration.” J.A. 121–22 ¶¶ 3, 8. SFM alleged that
`it would be damaged by the continued registration of the
`SPROUT mark because use of the mark was “likely to
`cause confusion or mistake, or to deceive the purchasing
`public” with respect to the source of the goods it sold under
`its SPROUTS mark. J.A. 122–23 ¶¶ 9, 16.
`Corcamore moved to dismiss SFM’s petition for lack of
`standing under Rule 12(b)(6) of the Federal Rules of Civil
`Procedure. See J.A. 136–40. Corcamore argued that SFM
`lacked standing to bring a petition for cancellation of a reg-
`istered trademark, citing the analytical framework estab-
`lished by the Supreme Court in Lexmark International,
`Inc. v. Static Control Components, Inc., 572 U.S. 118
`
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`CORCAMORE, LLC v. SFM, LLC
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`(2014), for determining whether the requirements for
`maintaining a statutory cause of action have been satisfied.
`See J.A. 136–40. The Board determined that Lexmark was
`not applicable in this case, and denied Corcamore’s motion
`to dismiss for lack of standing and motion for reconsidera-
`tion. J.A. 11–12, 30–32. The Board reasoned that
`Lexmark was limited to civil actions involving false desig-
`nation of origin (referred to as false advertising) under 15
`U.S.C. § 1125(a) and does not extend to cancellation of reg-
`istered marks under 15 U.S.C. § 1064. J.A. 11–12. The
`Board instead relied on the analysis adopted by this court
`in Empresa Cubana del Tabaco v. General Cigar Co., 753
`F.3d 1270 (Fed. Cir. 2014), and concluded that SFM had
`standing because it sufficiently alleged a real interest in
`the cancellation proceeding and a reasonable belief of dam-
`age, as required under 15 U.S.C. § 1064. J.A. 11. As a re-
`sult, the Board found that SFM had standing to bring a
`petition to cancel Corcamore’s trademark registration.
`J.A. 11.
`After the Board denied its motion to dismiss, Corca-
`more sent a letter to SFM’s counsel indicating that it would
`bring “procedural maneuvers” against SFM and delay dis-
`covery. J.A. 891, ¶ 2; J.A. 894. Corcamore then embarked
`on a path of conduct that resulted in two separate sanctions
`and entry of default judgment in favor of SFM. First, Cor-
`camore filed four motions requesting affirmative relief, in-
`cluding a motion for reconsideration of the Board’s denial
`of its motion to dismiss, a motion for Rule 11 sanctions, a
`motion for summary judgment on the ground of collateral
`estoppel or issue preclusion, and a motion to strike. See
`J.A. 93. The Board deferred action on the motion for recon-
`sideration but denied the motions for summary judgment,
`Rule 11 sanctions, and to strike. J.A. 16–26. Second, the
`Board determined that Corcamore had filed an “inordinate
`number of motions (all of which were denied) at a very
`early stage in this proceeding.” J.A. 23. Accordingly, the
`Board sanctioned Corcamore, prohibiting it from filing any
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`CORCAMORE, LLC v. SFM, LLC
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`additional unconsented motions without first obtaining
`Board permission (the “First Sanction”). J.A. 23–25.
`At the opening of discovery, the Board stayed the First
`Sanction and SFM filed a motion to compel responses to its
`written discovery requests. See J.A. 40, 94. The Board or-
`dered the parties to suspend filing papers not related to
`SFM’s motion to compel. See J.A. 82–83. Despite this in-
`struction, Corcamore filed numerous motions unrelated to
`SFM’s motion to compel, including its own motion to com-
`pel discovery, a motion for a protective order to halt SFM’s
`Rule 30(b)(6) deposition of a Corcamore representative, a
`motion to reconsider the denial of its motion for a protective
`order, and a motion to consolidate the proceeding with an-
`other proceeding. See J.A. 94.
`The Board denied Corcamore’s motion for a protective
`order to halt the deposition, which was filed on the eve of
`the deposition, and ordered Corcamore’s witness to appear
`the following day as noticed. The Board cautioned that
`should Corcamore fail to comply, “the Board may entertain
`an appropriate motion for relief.” J.A. 87. Corcamore
`failed to appear and did not alert SFM or the Board that
`the witness would not appear at the deposition. See
`J.A. 901, ¶¶ 16–17, 20. When SFM attempted to resched-
`ule the deposition, Corcamore served objections and again
`refused to appear.
`On October 25, 2017, SFM filed a motion to compel sup-
`plemental responses to certain document requests and in-
`terrogatories. On February 27, 2018, the Board granted-
`in-part SFM’s motion and ordered Corcamore to comply
`with several enumerated instructions. J.A. 69–70. The
`Board instructed Corcamore that an evasive or incomplete
`response would be equivalent to a failure to disclose and
`advised SFM that the Board would entertain a motion for
`appropriate sanctions if Corcamore failed to comply with
`the order. J.A. 70. In the same order, the Board imposed
`another sanction (the “Second Sanction”), prohibiting
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`CORCAMORE, LLC v. SFM, LLC
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`Corcamore from “filing any additional unconsented or un-
`stipulated motions without first obtaining prior Board per-
`mission.” Id. at 71. Corcamore did not comply with the
`written-discovery order by, among other reasons, failing to
`serve timely supplemental responses, maintaining frivo-
`lous objections, and filing nonresponsive answers. See J.A.
`87–88.
`Unperturbed by the Second Sanction, Corcamore filed
`an “objection” to the Board’s February 27, 2018 order and
`made several requests to file a variety of different proce-
`durally impermissible motions. The Board denied Corca-
`more’s unapproved filings for failure to comply with the
`Second Sanction.
`At the close of discovery, SFM moved for default judg-
`ment as a sanction for Corcamore’s litigation misconduct.
`J.A. 95. The Board granted the order on two grounds.
`First, the Board pointed to its express authority to award
`judgment as a sanction under 37 C.F.R. § 2.120(h) and Fed.
`R. Civ. P. 37(b)(2). Relying on its express authority, the
`Board granted default judgment as a sanction against Cor-
`camore for its violations of the deposition order and numer-
`ous provisions of the written discovery order. J.A. 84–85;
`J.A. 87–88. Second, pointing to its inherent authority to
`control its cases and docket, the Board entered judgment
`as a sanction against Corcamore for litigation misconduct,
`including its refusal to cooperate with SFM’s counsel to re-
`solve discovery issues, violation of Board orders not to file
`non-germane papers, and violation of Board orders to
`properly serve documents. J.A. 85–86; J.A. 89–91.
`The Board concluded that a lesser sanction would be
`inappropriate because Corcamore had on numerous occa-
`sions already violated the First and Second Sanctions. J.A.
`89–90. The Board recognized that Corcamore engaged in
`willful, bad-faith tactics, consistent with its “procedural
`maneuvers” letter, frustrated SFM’s ability to advance its
`case, and taxed Board resources. J.A. 91. Consequently,
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`CORCAMORE, LLC v. SFM, LLC
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`the Board entered default judgment against Corcamore
`and ordered that Corcamore’s registration “be cancelled in
`due course.” Id. Corcamore timely filed this appeal. We
`have jurisdiction under 28 U.S.C. § 1295 (a)(4)(B).
`DISCUSSION
`Corcamore makes two arguments on appeal. First,
`
`Corcamore contends that SFM lacks standing to bring a pe-
`tition for cancellation of a registered trademark. Corca-
`more contends that the Board erred as a matter of law
`when it applied this court’s analysis in Empresa Cubana
`instead of the analytical framework established by the Su-
`preme Court in Lexmark. Second, Corcamore argues that
`the Board abused its discretion in granting default judg-
`ment as a sanction. We first address the standing issue.
`Whether a party is entitled to bring or maintain a stat-
`utory cause of action is a legal question that we review de
`novo. Empresa Cubana, 753 F.3d at 1274 (citing Lexmark,
`572 U.S. at 129). In this appeal, we review de novo whether
`SFM pleaded sufficient facts to establish entitlement to
`challenge Corcamore’s registered trademark under § 1064.
`We first observe that there exists confusion in the law
`stirred by the inconsistent use of the term “standing.” As
`Justice Scalia observed, certain issues often discussed in
`terms of “standing” are more appropriately viewed as re-
`quirements for establishing a statutory cause of action.
`Lexmark, 572 U.S. at 128 n.4. That is the case here. To be
`clear, this appeal does not involve the traditional legal no-
`tions of Article III standing. This appeal focuses instead
`on the requirements that a party must satisfy to bring or
`maintain a statutory cause of action, such as a petition to
`cancel a registered trademark under 15 U.S.C. § 1064.
`A. Lexmark
`Corcamore contends that we should reverse the Board’s
`ruling because it applied the standard articulated by this
`court in Empresa Cubana instead of the analytical
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`CORCAMORE, LLC v. SFM, LLC
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`9
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`framework established in Lexmark. We hold that the
`Lexmark analytical framework is the applicable standard
`for determining whether a person is eligible under § 1064
`to bring a petition for the cancellation of a trademark reg-
`istration. However, because we discern no meaningful,
`substantive difference between the analytical frameworks
`expressed in Lexmark and Empresa Cubana, we do not
`agree that the Board reached the wrong result in this case.
`In Lexmark, the Supreme Court established two re-
`quirements for determining whether a party is entitled to
`bring or maintain a statutory cause of action: a party must
`demonstrate (i) an interest falling within the zone of inter-
`ests protected by the statute and (ii) proximate causation.
`572 U.S. at 129–34. The Court explained that those two
`requirements “suppl[y] the relevant limits on who may
`sue” under a statutory cause of action. Id. at 134. The
`Court made clear that the zone-of-interests requirement
`applies to all statutory causes of action, and that proximate
`causation generally applies to all statutory causes of ac-
`tion. Id. at 129, 133.
`In Lexmark, the Court addressed the cause of action for
`false advertising provided in 15 U.S.C. § 1125(a). Id. at
`129–37. The Court held that in order for a person to “come
`within a zone of interests in a suit for false advertising un-
`der § 1125(a), a plaintiff must allege an injury to a commer-
`cial interest in reputation or sales.” Id. at 131–32. The
`Court explained that the zone-of-interests test is “not espe-
`cially demanding,” and that “the benefit of any doubt goes
`to the plaintiff.” Id. at 130 (citation and internal quotation
`marks omitted). The Court further explained that the pur-
`pose of the zone-of-interests test is to “foreclose[] suit only
`when a plaintiff's interests are so marginally related to or
`inconsistent with the purposes implicit in the statute that
`it cannot reasonably be assumed that Congress authorized
`that plaintiff to sue.” Id. (citation and internal quotation
`marks omitted).
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`CORCAMORE, LLC v. SFM, LLC
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`As to the second requirement, proximate causation, the
`Court noted that it is “generally presume[d]” that “a statu-
`tory cause of action is limited to plaintiffs whose injuries
`are proximately caused by violations of the statute.” Id. at
`132. The Court explained that “the proximate-cause re-
`quirement generally bars suits for alleged harm that is ‘too
`remote’ from the defendant’s unlawful conduct.” Id. at 133
`(citation omitted). Regarding false advertising, the Court
`held that “a plaintiff suing under § 1125(a) ordinarily must
`show economic or reputational injury flowing directly from
`the [alleged false advertising].” Id. The Court explained,
`however, that the proximate-causation requirement “is not
`easy to define,” has “taken various forms,” and “is con-
`trolled by the nature of the statutory cause of action.” Id.
`The relevant question, the Court explained, is “whether the
`harm alleged has a sufficiently close connection to the con-
`duct the statute prohibits.” Id.
`
`Empresa Cubana was this court’s first post-Lexmark
`appeal to address the requirements to bring a cancellation
`proceeding under § 1064. 753 F.3d at 1274–76.1 We recog-
`nized Lexmark’s impact on the false advertising cause of
`action under § 1125(a), but we addressed Lexmark only in
`passing and, in particular, did not address whether the
`Lexmark framework applies to § 1064. Instead, we relied
`on our precedents in Ritchie v. Simpson, 170 F.3d 1092
`(Fed. Cir. 1999) and Lipton Indus., Inc. v. Ralston Purina
`Co., 670 F.2d 1024, 1029 (CCPA 1982), and concluded that
`petitioner had a cause of action under § 1064 because it
`
`
`In Australian Therapeutic Supplies Pty. Ltd. v. Na-
`1
`ked TM, LLC, we addressed § 1064 eligibility criteria and
`affirmed the Board’s reliance on the Empresa Cubana “real
`interest in the proceeding” and “reasonable belief in dam-
`age” approach. 965 F.3d 1370, 1376 (2020). In Australian
`Therapeutic Supplies, however, neither the parties nor the
`Board addressed the applicability of Lexmark.
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`CORCAMORE, LLC v. SFM, LLC
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`demonstrated “a real interest in cancelling the [registered
`trademarks at issue] and a reasonable belief that the [reg-
`istered trademarks] are causing it damage.” Id. at 1274.
` Here, the Board determined that the Lexmark frame-
`work does not apply to § 1064 because Lexmark addresses
`§ 1125(a), a different statutory provision. See J.A. 11–12
`(explaining that “Lexmark involved a case of false advertis-
`ing in a civil action arising under § 43(a) of the Lanham
`Act, 15 U.S.C. § 1125(a); that is not the statutory provi-
`sion(s) at issue in this Board cancellation”). The Board’s
`interpretation of Lexmark is unduly narrow.
`To be clear, § 1064, like § 1125(a), is a statutory cause
`of action provided in the Lanham Act. See Empresa
`Cubana, 753 F.3d at 1275–76 (holding that appellant
`demonstrated entitlement to a “statutory cause of action”
`under the Lanham Act). A “cause of action” consists of two
`elements: operative facts and the right or power to seek and
`obtain redress for infringement of a legal right which those
`facts show. See 1A C.J.S. Actions § 53; see also Cause of
`Action, Black’s Law Dictionary (11th ed. 2019) (“A group of
`operative facts giving rise to one or more bases for suing.”).
`Congress created in § 1064 a group of operative facts
`that grant to “any person” the right to petition for cancel-
`lation of a registered mark if that person “believes that he
`is or will be damaged . . . by the registration of a mark on
`the principal register.” 15 U.S.C. § 1064. Whether a spe-
`cific person alleging a specific injury meets these operative
`facts requires us to interpret § 1064. See Lexmark, 572
`U.S. at 128. To that end, we apply the “traditional princi-
`ples of statutory interpretation” articulated in Lexmark:
`zone of interests and proximate causation. Id.
`The Lexmark analytical framework applies to § 1064
`and § 1125(a) because both are statutory causes of action.
`As Justice Scalia exhorted, the zone-of-interests require-
`ment “applies to all statutorily created causes of action”
`and it “applies unless it is expressly negated.” Lexmark,
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`CORCAMORE, LLC v. SFM, LLC
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`572 U.S. at 129. The proximate-causation requirement
`generally applies to all statutory causes of action, even
`where a statute does not expressly recite a proximate-cau-
`sation requirement. See id. at 132 (“generally presum[ing]”
`that the proximate-causation requirement applies to all
`statutory causes of action); see also id. (identifying three
`exemplary federal causes of action where the Supreme
`Court “incorporate[d] a requirement of proximate causa-
`tion”). In view of the Supreme Court’s instructions, we see
`no principled reason why the analytical framework articu-
`lated by the Court in Lexmark should not apply to § 1064.
`The Board’s conclusion to the contrary fails to recog-
`nize that Lexmark binds all lower courts not only regarding
`§ 1125(a) but also with respect to the analytical framework
`the Court used to reach its decision. See, e.g., Seminole
`Tribe of Florida v. Florida, 517 U.S. 44, 67 (1996) (“When
`an opinion issues for the Court, it is not only the result but
`also those portions of the opinion necessary to that result
`by which we are bound.”); County of Allegheny v. Am. Civil
`Liberties Union, Greater Pittsburgh Chapter, 492 U.S. 573,
`668 (1989) (Kennedy, J., concurring in the judgment in part
`and dissenting in part) (“As a general rule, the principle of
`stare decisis directs us to adhere not only to the holdings of
`our prior cases, but also to their explications of the govern-
`ing rules of law.”). Once the Supreme Court adopts “a rule,
`test, standard, or interpretation . . . that same rule, test,
`standard, or interpretation must be used by lower courts in
`later cases.” United States v. Duvall, 740 F.3d 604, 609
`(D.C. Cir. 2013) (Kavanaugh, J., concurring in the denial of
`rehearing en banc). Lexmark established the analytical
`framework to be used for determining eligibility require-
`ments for all statutory causes of action, including under
`§ 1064, absent contrary Congressional intent. Like all
`lower tribunals, we are obligated to apply that framework
`where applicable. We thus hold that the Lexmark zone-of-
`interests and proximate-causation requirements control
`the statutory cause of action analysis under § 1064.
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`B. Empresa Cubana
`The Board failed to apply the Lexmark analytical
`framework, but it reached the correct result. As noted
`above, we see no meaningful, substantive difference in the
`analysis used in Lexmark and Empresa Cubana.
`The zone-of-interests requirement and the real-inter-
`est requirement share a similar purpose and application.
`The purpose of the zone-of-interests test is to “foreclose[]
`suit only when a plaintiff’s interests are so marginally re-
`lated to or inconsistent with the purposes implicit in the
`statute that it cannot reasonably be assumed that Con-
`gress authorized that plaintiff to sue.” Lexmark, 572 U.S.
`at 130 (citation and quotation marks omitted). Likewise, a
`purpose of the real-interest test is to “distinguish [parties
`demonstrating a real interest] from mere intermeddlers
`or . . . meddlesome parties acting as self-appointed guardi-
`ans of the purity of the Register.” Selva & Sons, Inc. v.
`Nina Footwear, Inc., 705 F.2d 1316, 1325–26 (Fed. Cir.
`1983) (citation and internal quotation marks omitted).
`Also like the zone-of-interests test, a petitioner can satisfy
`the real-interest test by demonstrating a commercial inter-
`est. Compare Lexmark, 572 U.S. 131–32 (“[T]o come within
`a zone of interests in a suit for false advertising under
`§ 1125(a), a plaintiff must allege an injury to a commercial
`interest in reputation or sales.” (emphasis added)), with
`Empresa Cubana, 753 F.3d at 1275 (“[T]he desire for a reg-
`istration with its attendant statutory advantages is a legit-
`imate commercial interest, so to satisfy the requirements
`for bringing a cancellation proceeding.” (emphasis added)).
`Given those similarities in purpose and application, a party
`that demonstrates a real interest in cancelling a trademark
`under § 1064 has demonstrated an interest falling within
`the zone of interests protected by § 1064.
`Similarly, a party that demonstrates a reasonable be-
`lief of damage by the registration of a trademark demon-
`strates proximate causation within the context of § 1064.
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`CORCAMORE, LLC v. SFM, LLC
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`Congress incorporated a causation requirement in § 1064,
`which provides a right to bring a cause of action “by any
`person who believes that he is or will be damaged . . . by
`the registration of a mark on the principal register.” § 1064
`(emphasis added). While our precedent does not describe
`the causation requirement as one of “proximate causation,”
`it nonetheless requires petitioner’s belief of damage to have
`“a sufficiently close connection,” Lexmark, 572 U.S. at 133,
`to the registered trademark at issue. For example, in
`Ritchie v. Simpson, 170 F.3d 1092, 1098 (Fed. Cir. 1999),
`we explained that possession of “a trait or characteristic
`that is clearly and directly implicated in the proposed
`mark” demonstrates a reasonable belief of damage. In
`Jewelers Vigilance Comm., Inc. v. Ullenberg Corp., 823
`F.2d 490, 493 (Fed. Cir. 1987), we explained that a peti-
`tioner can demonstrate “standing” by asserting “some di-
`rect injury to its own established trade identity if an
`applicant’s mark is registered.”2 The direct connection be-
`tween the belief of damage and the registered mark suffices
`to demonstrate proximate causation. Cf. Lexmark, 572
`U.S. at 133 (holding that “a plaintiff suing under § 1125(a)
`ordinarily must show economic or reputational injury flow-
`ing directly from the deception wrought by the defendant’s
`advertising.” (emphasis added)). This direct connection
`also satisfies the purpose of the proximate-causation re-
`quirement—barring suits for alleged harm that is “too re-
`mote” from the unlawful conduct. Id. at 133. Given these
`similarities, a party that can demonstrate a reasonable
`
`
`2 While both Ritchie and Jewelers discussed opposi-
`tion proceedings under 15 U.S.C. § 1063, “[t]he statutory
`requirements to cancel registration of a mark under § 1064
`are substantively equal to the statutory requirements to
`oppose the registration of a mark under § 1063.” Austral-
`ian Therapeutic Supplies, 965 F.3d at 1373.
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`CORCAMORE, LLC v. SFM, LLC
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`belief of damage by the registration of a mark also demon-
`strates damage proximately caused by the registered mark.
`C. SFM
`Applying Lexmark’s analytical framework to the cir-
`cumstances of the underlying case, we reach the same con-
`clusion as the Board—that SFM pleaded allegations
`sufficient to demonstrate a right to challenge Corcamore’s
`registered mark under § 1064. J.A. 11–12. SFM alleges
`that because the goods sold under SFM’s SPROUTS trade-
`marks and Corcamore’s SPROUT trademark are substan-
`tially similar, purchasers will believe that Corcamore’s use
`of SPROUT is sponsored by SFM. J.A. 122, ¶ 9. This alle-
`gation is well-pleaded3 and is sufficient to establish a real
`interest in the cancellation proceeding. See Selva, 705 F.2d
`at 1326 (“[Petitioner] has demonstrated its real interest in
`the proceeding through its reasonable allegation that its
`trademark . . . and the trademark [sought to be canceled]
`are confusingly similar.” (citation and internal quotation
`marks omitted)). SFM’s allegation, therefore, identifies an
`interest falling within the zone of interests protected by
`§ 1064.
`SFM also alleges that “[b]ecause the goods sold under
`SFM’s trademark and [Corcamore’s] trademark are sub-
`stantially similar, purchasers will be led to the mistaken
`belief that SFM’s goods and [Corcamore’s] goods originate
`from the same source, or that [Corcamore’s] use of
`SPROUT has been sponsored, authorized, or warranted by
`SFM, all to SFM’s detriment.” J.A. 122 ¶ 9. This allegation
`is well-pleaded and is sufficient to establish proximate
`
`
`In a Rule 12(b)(6) motion to dismiss, all well-
`3
`pleaded allegations in a petition must be accepted as true
`and the claims must be construed in the light most favora-
`ble to the non-moving party. TBMP § 503.02 (2020); Young
`v. AGB Corp., 152 F.3d 1377, 1379 (Fed. Cir. 1998).
`
`

`

`Case: 19-1526 Document: 71 Page: 16 Filed: 10/27/2020
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`16
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`CORCAMORE, LLC v. SFM, LLC
`
`causation because it demonstrates SFM’s reasonable belief
`of damage resulting from a likelihood of confusion between
`SFM’s SPROUTS mark and Corcamore’s SPROUT mark.
`See Lipton, 670 F.2d at 1029 (“To establish a reasonable
`basis for a belief that one is damaged by the registration
`sought to be cancelled, a petition may assert a likelihood of
`confusion which is not wholly without merit.”).
`We therefore hold that the Board correctly determined
`that SFM falls within the class of parties whom Congress
`has authorized to sue under the statutory cause of action
`of § 1064. Cf. Lexmark, 572 U.S. at 137–40. We are not
`persuaded that we should disturb the result reached by the
`Board. In other words, SFM is entitled under § 1064 to
`petition for cancellation of the trademark registration to
`SPROUT.
`
`D. Sanctions
`We next review the Board’s grant of default judgment
`as a discovery sanction. J.A. 79–91. We review a grant of
`default judgment as a sanction for abuse of discretion. See
`Benedict v. Super Bakery, Inc., 665 F.3d 1263, 1268 (Fed.
`Cir. 2011). An abuse of discretion occurs if the decision
`(1) is clearly unreasonable, arbitrary, or fanciful; (2) is
`based on an erroneous conclusion of law; (3) rests on clearly
`erroneous fact findings; or (4) involves a record that con-
`tains no evidence on which the Board could rationally base
`its decision. Abrutyn v. Giovanniello, 15 F.3d 1048, 1050–
`51 (Fed. Cir. 1994).
`In its Order, the Board analyzed its express and inher-
`ent authority to sanction and found that both supported its
`decision to grant default judgment as a sanction. J.A. 87–
`91. Corcamore does not challenge the Board’s express au-
`thority to grant default judgment as a sanction under 37
`C.F.R. § 2.120(h) and Fed. R. Civ. P. 37(b)(2). Instead, Cor-
`camore argues that the Court had no factual and legal ba-
`sis to enter default judgment in the first place.
`
`

`

`Case: 19-1526 Document: 71 Page: 17 Filed: 10/27/2020
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`CORCAMORE, LLC v. SFM, LLC
`
`17
`
`First, Corcamore contends that the Board abused its
`discretion by entering default judgment without ever hav-
`ing addressed Corcamore’s motion to compel discovery.
`Second, Corcamore argues that the Board abused its dis-
`cretion by conducting an ex parte teleconference with SFM
`and, thereafter, denying Corcamore’s motion for a protec-
`tive order to delay a Rule 30(b)(6) deposition. Third, Cor-
`camore argues that the Board abused its discretion by
`finding that SFM did not receive Corcamore’s discovery re-
`sponses mandated by the Board’s February 27, 2018 order.
`We are not persuaded.
`Corcamore’s argument regarding its motion to compel
`is immaterial because, even if true, discovery misconduct
`by one party does not excuse the discovery misconduct of
`another party. See TBMP § 408.01 (“A party is not relieved
`of its discovery obligations, including its duty to cooperate,
`in spite of the fact that an adverse party wrongfully may
`have failed to fulfill its own obligations.”). The record does
`not support Corcamore’s allegation regarding ex parte com-
`munications because the Board explained that it “termi-
`nated the telephone conference” when Corcamore failed to
`appear and that it denied Corcamore’s motion because
`“[Corcamore] failed to include a statement in support of its
`good faith effort . . . to resolve the [discovery] dispute.”
`J.A. 45 (Order denying Corcamore’s motion for a protective
`order). Finally, Corcamore failed to follow Rule 2.119 and
`provided no written explanation for why it failed to effect
`email service, as required by the Board4 and under
`37 C.F.R. § 2.119(b)(4). Under these circumstances, we see
`no abuse of discretion by the Board. Accordingly, we con-
`clude that the Board’s entry of default judgment as a sanc-
`tion was not an abuse of discretion.
`
`
`4 May 31, 2017, Board Order, 36 TTBVUE 3, SFM,
`LLC v. Corcamore, LLC, Cancellation No. 92060308 (2019).
`
`

`

`Case: 19-1526 Document: 71 Page: 18 Filed: 10/27/2020
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`18
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`CORCAMORE, LLC v. SFM, LLC
`
`CONCLUSION
`We have considered the parties’ remaining arguments
`and find them unpersuasive. Because SFM meets the stat-
`utory requirements to challenge Corcamore’s registered
`mark and because the Board did not abuse its discretion in
`imposing sanctions, we affirm.
`AFFIRMED
`COSTS
`
`Costs to SFM LLC.
`
`