Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA Tracking number:
`ESTTA1091923
`10/28/2020
`
`Filing date:
`
`Proceeding
`Party
`
`Correspondence
`Address
`
`Submission
`Filer's Name
`Filer's email
`
`Signature
`Date
`Attachments
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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`92075254
`Defendant
`Lego Juris A/S
`ELIZABETH A. ALQUIST
`DAY PITNEY LLP
`242 TRUMBULL STREET
`242 TRUMBULL STREET, CT 06103
`UNITED STATES
`Primary Email: eaalquist@daypitney.com
`Secondary Email(s): cdoconnor@daypitney.com, jblackowicz@daypitney.com,
`trademarks@daypitney.com
`860-275-0137
`
`Other Motions/Papers
`Elizabeth A. Alquist
`eaalquist@daypitney.com, trademarks@daypitney.com, cdocon-
`nor@daypitney.com, jblackowicz@daypitney.com
`/Elizabeth A. Alquist/
`10/28/2020
`Motion and Memorandum of Law.pdf(324227 bytes )
`Segment 001 of Final Exhibits to TTAB Motion.pdf(5215242 bytes )
`Segment 002 of Final Exhibits to TTAB Motion.pdf(5241516 bytes )
`Segment 003 of Final Exhibits to TTAB Motion.pdf(5131971 bytes )
`Segment 004 of Final Exhibits to TTAB Motion.pdf(5168337 bytes )
`Segment 005 of Final Exhibits to TTAB Motion.pdf(5180802 bytes )
`Segment 006 of Final Exhibits to TTAB Motion.pdf(2295149 bytes )
`
`

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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
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`Zuru LLC and Zuru Inc.,
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`Petitioners,
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`
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`v.
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`LEGO Juris A/S,
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`
`
`Respondent.
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`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`Cancellation No.: 92075254
`Reg. Nos.: 1018875 and 2245652
`Mark: LEGO
`Class: 28
`
`RESPONDENT’S MOTION TO DISMISS, OR IN THE ALTERNATIVE, TO SUSPEND
`PETITIONER’S CANCELLATION PETITION AND MEMORANDUM OF LAW
`IN SUPPORT THEREOF
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`Respondent LEGO Juris A/S brings this motion to dismiss or, in the alternative, to
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`suspend the cancellation petition filed by Petitioners Zuru LLC and Zuru Inc. (collectively,
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`“ZURU”), which seeks to cancel the registrations for the word mark LEGO on the ground that it
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`is a generic term (the “Cancellation Petition”). Far from being a generic term, the 86-year-old
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`LEGO brand name for construction toys is one of the top 100 global brands, as ranked by
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`Interbrand. That being said, the ultimate merits of ZURU’s outlandish claim need not be reached
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`by the Board, because, as detailed below, the Cancellation Petition should be dismissed for two
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`independent reasons: judicial estoppel and ZURU’s sanctionable pattern of bad faith litigation
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`tactics.
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`Omitted from ZURU’s Cancellation Petition is the fact that it has been trying to evade the
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`jurisdiction of the United States District Court for the District of Connecticut, where LEGO filed
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`a lawsuit claiming that ZURU’s Max Build More and Mayka Toy Block Tape toys infringed the
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`LEGO Group’s trade dress, copyrights, and design patents, captioned LEGO A/S, LEGO Systems
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`Inc., and LEGO Juris A/S v. ZURU Inc., No. 3:18-CV-02045 (AWT) (D. Conn. filed Dec. 13,
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`2018) (the “Connecticut Action”). In the Connecticut Action, after a full hearing with live
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`witnesses, the district court preliminarily enjoined ZURU’s infringing manufacture and sale of
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`certain toys. This injunction was affirmed in part by the Federal Circuit (the “Federal Circuit
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`Appeal”). As discussed below, dismissal is warranted here because, in the Connecticut Action
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`and the Federal Circuit Appeal, ZURU took positions directly contrary to its latest claims of
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`genericness in the Cancellation Petition, and engaged in a pattern of seeking to evade the
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`jurisdiction of the District Court of Connecticut and the preliminary injunction order—of which
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`it has already found to be in contempt. At a minimum, in the alternative, this cancellation
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`proceeding should be suspended pending resolution of the Connecticut Action, which “has a
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`bearing” on this proceeding for the reasons stated below.
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` First, the Cancellation Petition should be dismissed under the doctrine of judicial
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`estoppel, which is designed to protect the judicial system from abuse by preventing a party from
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`taking a factual position that is contrary to a position that the party took in a prior legal
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`proceeding. Judicial estoppel is present here, as ZURU has made multiple representations in the
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`Connecticut Action and the Federal Circuit Appeal that directly contradict its allegation in the
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`Cancellation Petition that the LEGO trademark is generic. ZURU in fact argued the exact
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`opposite to the federal courts. In its opening brief in the Federal Circuit Appeal, ZURU called
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`LEGO the “world’s most powerful brand” in order to support its argument that its toy products
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`were not confusing because ZURU’s packaging does not use the LEGO word mark. (Ex. A.) In
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`addition, ZURU’s expert witness testified at the preliminary injunction hearing in the
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`Connecticut Action that the LEGO brand’s equity was “astonishing,” as well as “enormous.”
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`(Ex. B.) ZURU cited this testimony to argue that ZURU’s infringing products could not cause
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`irreparable harm, given the size and notoriety of the LEGO brand. Moreover, the Connecticut
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`district court, in a decision dated July 8, 2019, agreed that “the LEGO Group was way ahead [of]
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`all other toy companies in terms of brand equity.” LEGO A/S, et al. v. ZURU Inc., No. 3:18-CV-
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`2045(AWT), 2019 WL 4643718, at *16 (D. Conn. July 8, 2019), aff’d in part, vacated in part,
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`remanded, 799 F. App’x 823 (Fed. Cir. 2020); (Ex. C.) Yet now, in its Cancellation Petition,
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`ZURU is doing an about face by asserting that LEGO is a generic term, which directly
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`contradicts its repeated statements that LEGO is “the world’s most powerful brand.” ZURU is
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`abusing the judicial system by making contradictory arguments before two separate judicial
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`bodies in order to obtain different outcomes at each. Fortunately, the doctrine of judicial
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`estoppel was created to prevent precisely this type of gamesmanship in which a party takes
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`contrary positions in separate actions whenever it suits that party. The doctrine of judicial
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`estoppel is further intended to prevent the waste of judicial and party resources, which is just
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`what ZURU is attempting to do here. Thus, the Cancellation Petition should be dismissed for
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`this reason alone.
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`Second, ZURU’s Cancellation Petition should be dismissed under the Board’s inherent
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`power to sanction parties who act in bad faith and assert frivolous claims. As noted above,
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`ZURU’s claim that the LEGO trademark is generic is frivolous given its own recent admissions
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`in the Connecticut Action and Federal Circuit Appeal that LEGO is a powerful brand.
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`Moreover, ZURU’s bad faith is underscored by its pattern of vexatious and harassing behavior
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`against the LEGO Group during the Connecticut Action, which the Board may consider in
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`assessing sanctions. For example, on November 20, 2019, the district court in the Connecticut
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`Action found ZURU in willful contempt of its preliminary injunction order by rushing to market
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`toys that continued to infringe the LEGO Group’s intellectual property rights. (Ex. D.)
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`Moreover, sanctions are also appropriate because of bad faith litigation conduct, as this is the
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`third time that ZURU has attempted to evade the jurisdiction of the District of Connecticut by
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`filing proceedings like this one before other judicial bodies. First, after the Connecticut Action
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`was commenced, ZURU attempted to challenge the validity of the LEGO Group’s design patent
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`by filing a reexamination request before the United States Patent and Trademark Office
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`(“USPTO”). (Ex. E.) The USPTO declined to institute the reexamination, finding “[n]o
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`substantial new question of patentability is raised by the request for ex parte reexamination on
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`the single claim in U.S. Patent No. D771,200.” (Ex. F.) Second, despite the Connecticut
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`Action’s pendency, ZURU filed a separate suit against the LEGO Group in the U.S. District
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`Court for the Central District of California for, among other things, antitrust violations. ZURU
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`LLC v. LEGO Systems, Inc., LEGO A/S and LEGO Juris A/S, No. 2:19-cv-131-DSF (C.D. Cal.
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`filed Jan. 7, 2019) (the “California Action”). As a result, LEGO was forced to move to transfer
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`the California Action to the District of Connecticut, which motion was granted because the
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`issues in the California Action were substantially similar to those in the Connecticut Action.
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`Now, ZURU is making its third bad faith attempt to bring the parties’ dispute before another
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`judicial body while the Connecticut Action is ongoing, despite its numerous admissions of the
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`LEGO brand’s strength. In short, ZURU’s bad faith litigation behavior, coupled with its
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`admissions of the LEGO brand’s strength (contrary to ZURU’s new claim of genericness),
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`provide an independent basis of dismissal under the Board’s inherent power to sanction parties
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`for harassing and improper filings.
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`Lastly, in the alternative, the Board should stay this proceeding pending the outcome of
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`the Connecticut Action because it “may have a bearing on the Board case.” TBMP § 510.02(a).
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`The same parties are involved in this proceeding and the Connecticut Action: ZURU and LEGO.
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`ZURU has put the strength of the LEGO brand at issue relating to the LEGO Group’s irreparable
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`harm in the Connecticut Action. Further, in the Connecticut Action, ZURU seeks to avoid
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`liability by arguing the parties’ use of their respective house marks, i.e. LEGO and ZURU,
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`mitigates against confusion, thereby squarely putting the distinctiveness of the LEGO word mark
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`at issue.
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`Thus, for the reasons detailed below, LEGO respectfully requests that the Board dismiss
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`ZURU’s Cancellation Petition or, in the alternative, suspend this proceeding pending the final
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`outcome of the Connecticut Action.
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`FACTUAL BACKGROUND
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`In 1932, Ole Kirk Kristiansen started a business making and selling wooden toys out of
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`his workshop in Billund, Denmark. (Ex. G at ¶ 10.) He called the new company LEGO and
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`adopted as its founding principle the Danish phrase det bedste er ikke for godt—only the best is
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`good enough. Id. Now in its ninth decade, the LEGO Group’s enduring commitment to that
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`principle has made it the worldwide leader in the design and manufacture of construction toys
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`and play materials for children of all ages. Id. ¶ 11. Indeed, LEGO is “famous throughout the
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`world for its toy construction products.” Id. ¶ 44. “In 2015, the LEGO® brand was named the
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`world’s most powerful brand.” Id. ¶ 8. “[A]ccording to a 2014 survey by the Reputation
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`Institute, the LEGO Group is the number two most-admired brand in the United States and
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`number nine globally” and its products have been named “Toy of the Century” by both Fortune
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`magazine and the British Association of Toy Retailers. Id. ¶ 10.
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`ZURU agrees. ZURU argued in the Federal Circuit Appeal: “It is likely that the
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`‘LEGO’ name—the most powerful brand in the world—and
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`—the ‘world-famous
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`LEGO® logo’—which are prominently displayed on LEGO’s Minifigure packaging, are the
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`primary source identifiers for LEGO products.” (Ex. A at 62.) Indeed, over 16 times in its
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`appellate briefing alone,1 ZURU refers to the LEGO word mark, repeating: “In 2015,
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`LEGO’s registered word mark ‘LEGO’ was named the world’s most powerful brand,”
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`“LEGO exists in the stratosphere by itself in terms of toy brand equity,” “LEGO cites only to
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`the massive strength of its name and logo,” “that the LEGO brand name and logo is so well
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`known…,” “[t]he extraordinarily well known LEGO name and logo…,” “the world-famous
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`logo, what LEGO trumpets as the leading brand name in the industry…,” “displays the
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`world-famous LEGO brand name and logo…,” and “LEGO’s enormous brand equity….”
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`(See, e.g., Ex. A at 6, 24, 55-57, 62; Ex. H at 1, 3, 4, 5, 16, 20, 21, 23, 24, 25, 26.)
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`ZURU’s History of Infringing the LEGO Group’s Intellectual Property
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`On August 17, 2017, LEGO sent a cease & desist letter to ZURU putting it on notice
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`of LEGO word marks and other intellectual property, and demanding it cease using the phrase
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`“Mayka Lego Tape” in connection with one of its products now at issue in the Connecticut
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`Action. (Ex. G at ¶ 32; I.) ZURU complied, changing its description to “Mayka Toy Block
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`Tape.” (Ex. J.)
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`1 ZURU argued that LEGO is the world’s most powerful brand with enormous brand
`equity in other papers filed in the Connecticut Action and Federal Circuit Appeal as well. The
`citations here are exemplary, but by no means exhaustive.
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`Thereafter, in early October 2018, ZURU launched, exclusively at Walmart, its Max
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`Build More product line of building bricks, described as “Max Bricks,” which infringe several of
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`the LEGO Group’s trademarks, copyrights and patents.
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`The products included figurines strikingly and confusingly similar to the LEGO Group’s
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`Minifigure figurine, protected by registered copyrights and trademarks.
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`Once it became aware of ZURU’s conduct, LEGO moved quickly to stop ZURU’s
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`infringement. On November 12, 2018, LEGO demanded by letter that ZURU cease and desist
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`from the sale of products that infringe the LEGO Group’s patents, trademarks, and copyrights.
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`(Ex. L.) The letter requested compliance by November 26, 2018. Id. When no substantive
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`answer was received, LEGO sent a second demand letter to ZURU on December 3. (Ex. M.)
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`Later, on December 5, ZURU finally provided a substantive response stating that it would not
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`cease sale of the infringing Max Build More products and would not comply with the LEGO
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`Group’s demands. (Ex. N.)
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`Faced with this ongoing infringement during the height of the holiday shopping season,
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`LEGO informed ZURU that it would be filing suit and seeking a temporary restraining order.
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`(Ex. O.) ZURU again sought further delay through the holiday buying season. Id. But then, on
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`December 13, ZURU sent another email claiming it was suddenly willing to have all of the
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`infringing products removed from its website and that it would “recall product currently with
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`Walmart,” which ZURU had purportedly “started to action . . . today.” Id. Notwithstanding this
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`assurance, ZURU’s product remained up on the Walmart website for sale, and LEGO was forced
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`to seek relief from the court by filing the Connecticut Action. LEGO did not allege trademark
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`infringement of the LEGO word mark in the Connecticut Action because, , after making the
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`change referred to above, to Petitioners’ knowledge, ZURU has not and does not use the LEGO
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`word mark to refer to its products in the United States.2
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`TRO and Preliminary Injunction Granted against ZURU after Evidentiary
`Hearings
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`The district court heard the evidence and argument of the parties, and then promptly
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`granted a temporary restraining order at a December 14, 2018 hearing. (Ex. P.) The court then
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`considered a full round of briefing and considered the parties’ evidence at a two-day preliminary-
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`injunction hearing on February 14-15, 2019. During the hearing, ZURU introduced evidence
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`relating to the LEGO brand’s equity. ZURU’s own proffered toy industry expert, Richard
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`Gottlieb, testified on direct examination:
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`Q. What about LEGO?
`A. Well, LEGO is a very dominating part of the construction toy industry….
`*
`*
`*
`A. ZURU is a substantial company, but in comparison to LEGO, no offense, ZURU, but
`you’re fairly insignificant. LEGO is the largest toy company in the world by revenue. It
`may move into first or second place, but it’s a substantial company. … And then the
`LEGO brand equity is just astonishing. It’s over $7 billion. I believe the second
`largest brand in the toy industry was maybe a billion. So it’s a very substantial company.
`And then when I—
`THE COURT: Sorry. I don’t know what the concept of brand equity is.
`A. It means that if LEGO was to decide to sell their brand—
`THE COURT: Fine.
`A. They could get that much money for it.
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`(Ex. B, Tr. at 139:17-40:7; 161:16-62:11 (emphasis added).)
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`Gottlieb went on during cross-examination to admit:
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`2 Indeed, ZURU has not used the LEGO word mark in a purportedly generic sense, nor
`pointed to any other competitor doing so in the U.S. Instead, ZURU, competitors and the
`marketplace alike refer to generic construction toys, construction bricks, building bricks,
`interlocking blocks, and a myriad of other generic terms. See, e.g., Ex. K, ZURU’s Answer and
`Countercl. ¶¶ 3 (“construction toy”), 22 (“Competitor Bricks”), 46 (“In 2018, ZURU also
`developed its own distinctive line of figurines to be compatible with its own MAX Build More
`construction bricks and other generic bricks, including LEGO bricks and Competitor Bricks”),
`56 (describing its own product line without using the term “Lego” or “Legos”); Ex. A and K,
`ZURU’s Federal Circuit briefs and pleadings in the Connecticut Action, passim
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`Q. You were talking about how LEGO is way ahead in brand equity; is that fair to say?
`A. Yes.
`Q. And it’s actually quite a bit of a difference even between the first place and the second
`place; isn’t that right?
`A. Correct.
`Q. That means that LEGO has the largest amount of brand equity to lose; isn’t that right?
`A. Yeah. They have an enormous amount of brand equity.
`Q. And they built that up based on their reputation?
`A. And a lot of hard work.
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`(Ex. B, Tr. at 178:2-14 (emphasis added).)
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`In order to support its arguments that there was no irreparable harm, ZURU argued to the
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`district court: “In sum, it is inconceivable that a company—like LEGO—that appears as number
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`one on the top ten brand equity toy companies could be harmed by a new entrant into the market,
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`especially considering the construction toy industry contains multiple players.” (See, e.g., Ex. S,
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`at 38-40.)
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`Citing in part ZURU’s expert’s testimony, the court granted the LEGO Group’s motion
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`for preliminary injunctive relief, issuing its written Ruling on July 8, 2019. (Ex. C at 40-41.) The
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`court also relied in part on evidence of actual confusion, “including evidence that ZURU Inc.
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`customers have used the LEGO name in connection with ZURU Products.” (Ex. C at 22.)
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`Indeed, the court cites to the testimony of Anna Mowbray, ZURU’s Chief Operating Officer, on
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`direct examination:
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`Q. Ms. Mowbray, are you aware of any consumer confusion between ZURU
`products and LEGO products?
`A. I am aware of I think I’d say maybe three comments online that refer to MAX
`as being LEGO. So our customers put in the wrong brand name.
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`(Ex. B, Tr. at 62:11-15(emphasis added).)3
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`3 Despite this clear admission, ZURU attempted weakly to argue on appeal that “two of
`the commenters appear to use the term ‘legos’ (not the actual ‘LEGO’ brand) as a short hand,
`generic term for toy construction bricks.” (Ex. A at 53.) Thus, while touting over 16 times that
`the LEGO word mark is famous, well-known, and the most powerful brand in the world, and in
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`The court further found that LEGO is likely to demonstrate ZURU’s bad faith in light of
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`ZURU’s failure to correct that confusion on its own social media pages, coupled with
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`circumstantial evidence, “e.g. the number of infringing products, and the fact that ZURU Inc.
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`continues to use the word ‘LEGO’ on its packaging outside the United States, see Def.’s Ex.
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`HHH, notwithstanding the discussions between the parties in 2017 concerning the ‘ZURU
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`Mayka Lego Tape.’” (Ex. C at 23.)4 Moreover, the Court found
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`there is a more than reasonable possibility that ZURU Inc. had access to the
`Minifigure figurine because the figurine has been sold in large quantities since
`1978 and the LEGO Group has engaged in substantial promotional advertising
`and marketing efforts related to the Minifigure figurine for over 40 years. It [is]
`implausible that a competing toy company in the figurine business could not have
`known of the Minifigure figurine.
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`Id. at 8. Similarly,
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`the Friends figurine has been sold in numerous varieties of LEGO® brand toy sets
`since 2012, and the LEGO Group has undertaken substantial promotional,
`advertising, and marketing efforts with respect to the Friends figurine during that
`period. In addition, the Friends line of products has been widely-recognized in
`the international toy community, winning “Toy of the Year” for the best overall at
`the 2013 International Toy Fair in New York City, in addition to winning or being
`nominated for a number of additional awards. All of this would be common
`knowledge for toy companies in the figurine business.
`Id. at 9.
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`After the preliminary injunction hearing, ZURU replaced its lawyers.
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`The Federal Circuit Court of Appeals Upholds the Injunction
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`ZURU appealed the preliminary injunction ruling to the Federal Circuit Court of
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`Appeals. In support of its arguments that LEGO would not suffer irreparable harm and there
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`the face of its own COO’s admission that the social media posts refer to the LEGO brand,
`ZURU’s claim of generic usage lacks good faith.
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`4 Defendant’s Ex. HHH cited by the court is a physical exhibit—a ZURU Max Build
`More set, which states “LEGO® BRICK COMPATIBLE” in the upper right-hand corner. Before
`launching in the U.S., ZURU changed its packaging to read “Compatible with Major Brands” in
`the same location. See, e.g., supra, photos at page 7.
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`would be no confusion with ZURU’s infringing products, ZURU argued repeatedly in its
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`briefing “It is likely that the ‘LEGO’ name—the most powerful brand in the world—and
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`—the ‘world-famous LEGO® logo’—which are prominently displayed on LEGO’s
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`Minifigure packaging, are the primary source identifiers for LEGO products.” (Ex. A, at 62.)
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`Over 16 times in its appellate briefing alone, ZURU refers to the LEGO word mark,
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`repeating: “LEGO’s registered word mark ‘LEGO’ [as] the world’s most powerful brand,”
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`“LEGO exists in the stratosphere by itself in terms of toy brand equity,” “LEGO cites only to
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`the massive strength of its name and logo,” “that the LEGO brand name and logo is so well
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`known…,” “[t]he extraordinarily well known LEGO name and logo…,” “the world-famous
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`logo, what LEGO trumpets as the leading brand name in the industry…,” “displays the
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`world-famous LEGO brand name and logo…,” and “LEGO’s enormous brand equity….”
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`(See, e.g., Ex. A at 6, 24, 55-57, 62; Ex. H at 1, 3, 4, 5, 16, 20, 21, 23, 24, 25, 26.)
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`The Federal Circuit upheld the injunction with respect to the figurines. (Ex. Q.) The
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`Federal Circuit’s ruling begins: “LEGO is an industry leader in designing and manufacturing
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`toys and play materials for children of all ages worldwide, including toy building elements,
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`figurines and toy sets in the construction toy category.” Id. at 2. The Federal Circuit further
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`upheld the district court’s finding of irreparable harm with respect to the copyright claim, in part,
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`because “LEGO would likely suffer lost goodwill and damaged reputation absent an injunction.
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`With respect to the latter finding, the district court relied on a social media post noting that while
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`ZURU Action Figures were ‘[a]wesome,’ a problem is that ‘the bod[ies] come[] apart extremely
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`easily.’ The risk of consumers associating defective products with the LEGO brand-name is
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`apparent.” Id. at 13.
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`ZURU Willfully Violates the Preliminary Injunction and is Held in Contempt
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`Undaunted by a preliminary injunction issued by a federal district court, in October 2019
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`ZURU launched exclusively at Walmart.com what it called “re-designed” figurines, which were
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`nearly indistinguishable from the enjoined figurines. The LEGO Group moved for a contempt
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`order and, after full briefing and an evidentiary hearing, the court held ZURU in contempt,
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`finding that ZURU’s sole fact witness lacked credibility and that ZURU’s counsel had made
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`inaccurate statements to the LEGO Group’s counsel. (Ex. D at 19-20 (“…the court cannot credit
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`the testimony by [Sherrie] Hargus about the Redesigned Figurines being reviewed again in light
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`of the number of occasions during her testimony when she made statements that were
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`subsequently revealed to be inaccurate or misleading.”); 25 (“Hargus’s testimony shows that this
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`representation by ZURU Inc.’s counsel was incorrect.”). Finding a willful violation of the
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`preliminary injunction, the Court awarded LEGO all attorneys’ fees and costs related to the
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`motion for contempt. (Ex. D at 29.)
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`ZURU initiated an appeal of the ruling of contempt, but later withdrew that appeal prior
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`to briefing. ZURU also filed an Emergency Motion to Stay the Preliminary Injunction after the
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`district court indicated it was granting the motion for contempt but before the court could issue
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`its Ruling. ZURU’s Emergency Motion was supported by a Declaration of its COO, Anna
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`Mowbray, in which ZURU claimed “Walmart has informed ZURU, if the redesigned 15 Pack of
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`figurines are recalled, Walmart will likely discontinue the entire MAX BUILD MORE™ line,
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`including toy building brick sets that are not accused." (Ex. X at ¶ 14.) “ZURU will struggle to
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`find another partner for the MAX BUILD MORE™ line….” Id. at ¶ 15.5
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`5 Indeed, ZURU’s website currently states that its Max Build More line is “NOT
`AVAILABLE FOR SALE IN THE USA.” https://zuru.com/brands/max-build-more (last
`accessed October 28, 2020)(Ex. Z.)
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`After the contempt ruling, ZURU replaced its lawyers again.
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`ZURU’s Antitrust Counterclaims in the Connecticut Action are Dismissed
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`On April 22, 2020, the district court dismissed Counts I, II and XV of ZURU’s
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`Counterclaims in the Connecticut Action, which were directed to antitrust allegations, for failure
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`to state a claim upon which relief could be granted.6 (Ex. R.) ZURU’s dismissed counterclaims
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`mirror some of the defenses it attempted to pursue at the preliminary injunction stage and
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`continues to pursue in the Connecticut Action. For example, ZURU alleges: LEGO “is the
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`largest construction toy company in the world, generating billions of dollars a year in revenue
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`that is many times larger than the second largest construction toy company. LEGO also
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`commands a much higher retail price for its construction toy products than competing
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`companies.” (Ex. K, Countercl. at ¶ 3.) ZURU alleges that LEGO attempted to monopolize the
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`“construction toy” market in the United States, which it defined as “collections of individual
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`pieces with interlocking features that can be connected or taken apart in a number of ways.” Id.
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`¶ 122. It tried to claim that LEGO routinely obtains intellectual property rights and asserts those
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`rights against competitors to extend its monopoly in the construction toy market. ZURU alleges:
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`“There are substantial barriers which make successful entry by new brands into the construction
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`toy market unlikely. For example, successful entry requires a high initial investment in
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`specialized production and tooling equipment and facilities, as well as a substantial continuing
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`investment in product development. Additional barriers to entry included entrenched buyer
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`preferences and brand loyalty to LEGO, as well as limited retail shelf space already dominated
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`6 Despite arguing in the California Action that the claims there were not substantially
`similar to the claims in the Connecticut Action, ZURU’s Counterclaims filed in the Connecticut
`Action mirror the allegations of the California Action. (Compare Ex. V, Amended Compl., CA
`Action with Ex. K, Counterclaims, Connecticut Action.)
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`by LEGO.” Id. ¶ 124 (emphasis added). Although the Court dismissed ZURU’s unfounded
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`antitrust claims, the factual paragraphs remain incorporated into all remaining Counterclaims.
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`ZURU’s Defenses and Discovery Requests Put the LEGO word Mark at Issue
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`Now on its third set of lawyers, ZURU continues to raise several defenses and
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`Counterclaims in the Connecticut Action that put the LEGO word mark at issue. For example,
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`ZURU states in its Counterclaim: “ZURU’s packaging is also not confusingly similar to that of
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`LEGO, because, among other reasons, the ZURU house mark and logo are displayed
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`prominently throughout ZURU’s packaging on ZURU products. It is immediately clear to any
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`consumer that these products come from ZURU, not LEGO.” (Ex. K, Countercl. ¶ 59). ZURU
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`similarly argued in its Closing Argument brief at the preliminary injunction stage:
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`(Ex. S at 19.)
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`In addition, the LEGO word mark is a focus of discovery in the Connecticut Action. For
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`example, ZURU questions whether the Minifigure figurine is ever sold or used without the
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`LEGO word mark. (Ex. T, e.g., “Request for Admission No. 65: Admit that LEGO has never
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`sold any Minifigures in the U.S. in packaging that does not display the word ‘LEGO’ on it.”
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`“Request for Admission No. 66: Admit that LEGO has never sold any bricks in the U.S. in
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`packaging that does not display the word ‘LEGO’ on it.” “Request for Admission No. 67: Admit
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`that LEGO has never placed a print, television or Internet advertisement in the U.S. for a
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`Minifigure in which the word ‘LEGO’ is not displayed or spoken.” “Request for Admission No.
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`68: Admit that LEGO has never placed a print, television or Internet advertisement in the U.S.
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`for a LEGO brick in which the word ‘LEGO’ is not displayed or spoken.”)
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`The LEGO Group’s on-line policing efforts have also become part of the discovery
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`discussions, including ZURU’s request for a “high level summary” of the LEGO Group’s
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`policing efforts, including of its LEGO word mark. The LEGO Group has engaged in significant
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`policing and enforcement of its LEGO word mark, which will certainly also be at issue in the
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`Cancellation Petition.
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`ARGUMENT
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`A. The Board should Dismiss the Cancellation Proceeding under the
`Doctrine of Judicial Estoppel
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`“Unlike equitable estoppel, which is designed ‘to ensure fairness in the relationship
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`between parties,’ judicial estoppel protects the sanctity of the oath and the integrity of the
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`judicial process.” Bates v. Long Island Railroad Co., 997 F.2d 1028, 1037–38 (2d Cir. 1993)
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`(quoting Konstantinidis v. Chen, 626 F.2d 933, 937 (D.C.Cir.1980)). As courts and legal
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`commentators have explained:
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`[T]here are two distinct objectives behind judicial estoppel, both of which seek
`to protect the judicial system. First, the doctrine seeks to preserve the sanctity
`of the oath by demanding absolute truth and consistency in all sworn positions.
`Preserving the sanctity of the oath prevents the perpetuation of untruths which
`damage public confidence in the integrity of the judicial system. Second, the
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`doctrine seeks to protect judicial integrity by avoiding the risk of inconsistent
`results in two proceedings.
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`Id. at 1038 (citing Rand B. Boyers, Comment, Precluding Inconsistent Statements:
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`The Doctrine of Judicial Estoppel, 80 Nw.U.L.Rev. 1244, 1250–58 (Spring 1986)
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`(discussing various rationales behind doctrine)).
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`“The Court of Appeals for the Federal Circuit views judicial estoppel as an equitable
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`principle that holds a party to a position on which it prevailed, as against later litigation
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`arising from the same facts.” Boston Chicken Inc. v. Boston Pizza Int’l Inc., 53 U.S.P.Q.2d
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`1053, 1055 (TTAB 1999) (citing Data Gen. Corp. v. GSA, 78 F.3d 1556 (Fed. Cir. 1996));
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`see U.S. Phillips Corp. v. Sears Roebuck & Co., 55 F.3d 592, 34 U.S.P.Q.2d 1699 (Fed. Cir.
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`1995).) “The doctrine is intended to protect the courts and the integrity of judicial
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`proceedings against litigants who ‘play fast and loose with the courts.’” Id. (citing Data
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`Gen. Corp., 78 F.3d at 1565; 18 Charles A. Wright, Arthur R. Miller & Edward H. Cooper,
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`Federal Practice and Procedure, § 4477, at 779 (1981). “Application of the doctrine lies
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`within the discretion of the court.” Id. (citing Data Gen. Corp., 78 F.3d 1556).
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`“Although the Trademark Trial and Appeal Board is not a court, the Board has
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`authority to apply the doctrine of judicial estoppel in appropriate cases.” Boston Chicken, 53
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`U.S.P.Q.2d at 1055 (citing Vitaline Corp. v. General Mills, Inc., 891 F.2d 273, 13
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`U.S.P.Q.2d 1172 (Fed. Cir. 1989) (affirming application of another judicially-developed
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`equitable doctrine, that of claim preclusion, by the Board)).
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`