Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
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`ESTTA Tracking number:
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`ESTTA1095779
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`Filing date:
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`11/16/2020
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`Proceeding
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`92075406
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`Party
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`Correspondence
`Address
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`Submission
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`Filer's Name
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`Filer's email
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`Signature
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`Date
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`Attachments
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`Defendant
`PEM Management, Inc.
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`PEM MANAGEMENT, INC.
`103 FOULK ROAD
`WILMINGTON, DE 19803
`UNITED STATES
`No email provided.
`No phone number provided.
`
`Motion to Dismiss - Rule 12(b)
`
`Joseph M Konieczny
`
`jkonieczny@ryderlu.com
`
`/joseph m. konieczny/
`
`11/16/2020
`
`DS2 Motion - Dismiss - Final.pdf(8415 bytes )
`DS2 Brief - Dismiss - Final.pdf(59005 bytes )
`DS2 Proposed Order - Dismiss - Final.pdf(20900 bytes )
`Exhibit 1 Redacted.pdf(134104 bytes )
`Exhibit 2 - Amended Complaint.pdf(81189 bytes )
`Exhibit 3 - Amended Answer.pdf(316420 bytes )
`
`

`

`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
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`Peninsula Components, Inc.,
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`Petitioner,
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`v.
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`PEM Management, Inc.,
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`Registrant.
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`:
`:
`: In Re: Registration No. 3,404,061
`:
`: Cancellation Proceeding No.: 92075406
`:
`:
`:
`:
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`MOTION TO DISMISS CANCELLATION PETITION FOR FAILURE TO
`STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
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`For the reasons set forth in the accompanying brief and supporting exhibits, Registrant,
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`
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`PEM Management, Inc., moves the Board to dismiss Petitioner, Peninsula Components, Inc.’s,
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`above-captioned cancellation proceeding with prejudice.
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`
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`Dated: November 16, 2020
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`Respectfully submitted,
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`Ryder, Mazzeo & Konieczny LLC
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` By: /joseph m. konieczny, sr./
`Joseph M. Konieczny, Sr. (Pa. 59,724)
`P.T.O. Reg. No. 35,806
`P.O. Box 670
`Plymouth Meeting, PA 19462
`610-940-1962(voice)
`610-940-1963 (fax)
`jkonieczny@ryderlu.com
`
`Attorneys for Registrant
`
`

`

`CERTIFICATE OF SERVICE
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`
`
`I hereby certify that on the date set forth below, the undersigned counsel served a true
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`and correct copy of foregoing Motion To Dismiss For Failure To State A Claim Upon Which
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`Relief Can Be Granted and supporting brief and exhibits on Petitioner’s attorney of record by
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`email to:
`
`Richard A. Nebb
`Dergosits & Noah LLP
`One Embarcadero Center, Suite 350
`San Francisco, CA 94111
`rnebb@dergnoah.com
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`
`
`
`
`Dated: November 16, 2020
`
`
`
`
`
`/Joseph M. Konieczny, Sr./
`
`
`
`
`
`
`

`

`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`
`Peninsula Components, Inc.,
`
`
`
`
`
`
`Petitioner,
`
`
`
`
`
`
`
`v.
`
`
`
`
`
`
`
`
`
`PEM Management, Inc.,
`
`
`
`
`
`
`
`Registrant.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`:
`:
`: In Re: Registration No. 3,404,061
`:
`: Cancellation Proceeding No.: 92075406
`:
`:
`:
`:
`
`BRIEF IN SUPPORT OF MOTION TO DISMISS FOR FAILURE
`TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
`
`
`I.
`
`Introduction
`
`Penn Engineering & Manufacturing Corp. is the exclusive licensee from the registrant,
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`PEM Management, Inc. (collectively “PennEngineering”), of the subject registration, U.S. Reg.
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`No. 3,404,061 (“the ‘061 Registration”), which issued more than 12 years ago. PennEngineering
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`has been using the mark shown in the ‘061 Registration since at least as early as 1962.
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`Petitioner, Peninsula Components, Inc. (“Pencom”), has had actual knowledge of the ‘061
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`Registration since at least as early as May 21, 2008, when PennEngineering filed its amended
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`complaint against Pencom alleging, inter alia, infringement of the ‘061 Registration in a Federal
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`lawsuit (“2007 Litigation”), which litigation concluded with a settlement agreement in 2008
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`(“2008 Settlement Agreement”). Now, more than 12 years after registration, and 12 years after
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`the 2008 Settlement Agreement, Pencom seeks to cancel the ‘061 Registration on the grounds of
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`functionality. Because of this unreasonable delay and because Pencom knowingly waived its
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`right to do so in the 2008 Settlement Agreement, Pencom is estopped by laches and contractually
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`

`

`estopped from challenging the validity of the ‘061 Registration.1 This confluence of facts creates
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`the perfect storm of grounds for dismissing this Petition.2
`
`II.
`
`Statement of Facts
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`Registrant, PEM Management, Inc., is a holding company for intellectual property that is
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`licensed exclusively to PennEngineering. PennEngineering is one of the leading designers and
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`manufacturers of industrial fastening solutions in the U.S. PennEngineering has a robust and
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`diverse IP portfolio, which contains trademarks, trade dress, design patents and utility patents,
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`inter alia, and goes to great lengths to protect its valuable intellectual property.
`
`A.
`
`The 2007 Litigation
`
`In the 2007 Lawsuit, PennEngineering sued Pencom in federal court for multiple counts
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`of infringement including, inter alia, infringement of the ‘061 Registration. Ex. 2.3 The 2007
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`Lawsuit was settled when the parties executed the 2008 Settlement Agreement on September 24,
`
`2008. Ex. 1.4 The 2008 Settlement Agreement contains several provisions that are highly
`
`relevant to this cancellation proceeding because they vitiate Pencom’s standing in this
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`cancellation proceeding.
`
`
`
`
`
`
`
`
`
`                                                            
`1 Moreover, PennEngineering and Pencom are parties in a current Federal intellectual property litigation involving
`dozens of trademarks including the ‘061 Registration. Penn Engineering & Manufacturing Corp. v. Peninsula
`Components, Inc., No.: 2:19-CV-00513-GEKP (ED Pa.) (“Current Litigation”). In the Current Litigation, Pencom
`has alleged as an affirmative defense invalidity of the ‘061 Registration based on functionality, and is thus litigating
`the exact same issue in a Federal lawsuit that was filed more than 19 months ago. Accordingly, PennEngineering
`has filed concurrently herewith a motion to suspend this cancellation proceeding if the TTAB does not grant
`PennEngineering’s motion to dismiss this Petition.
`2 Petition to Cancel, Cancellation Proceeding No.: 92075406 filed October 6, 2020 (“Petition”)
`3 Amended complaint, Penn Engineering and Manufacturing Corp. and PEM Management, Inc. v. Peninsula
`Components, Inc., No. C07-04231 JL (N.D. CA).
`4 A copy of the 2008 Settlement Agreement is filed under seal as Exhibit 1. Leave of Court to file the
`2008 Settlement Agreement under seal was granted in the co-pending Current Litigation. Order November 6, 2019
`(Dkt. 34). A redacted brief is not being filed herewith because the paragraphs of the 2008 Settlement Agreement
`discussed herein have been included in unredacted pleadings in the co-pending Current Litigation.
`
` 
`
`2 
`
`

`

`
`
`1.
`
`Agreement to Cease and Desist
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`First, the 2008 Settlement Agreement includes an agreement by Pencom to refrain from
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`commercializing in any way any products that contain the same or any equivalents of the
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`trademarks shown in the ‘061 Registration and U.S. Reg. No. 1,400,893. Both of the marks in
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`these two registrations are collectively referred to as the “Square-in-Square” marks, which is the
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`terminology used in the 2008 Settlement Agreement. The 2008 Agreement states in relevant
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`part:
`
`3. Cease and Desist. Pencom agrees globally to cease and desist importing,
`manufacturing, selling, or offering for sale, directly or indirectly, the following
`products (collectively, the “Agreed Products”):
`
`a. Any equivalents of PEM’s square-in-square trademarks (i.e., the ‘893 and ‘061
`marks) such as are embodied in PEM’s AC, LAC, AS, LAS, F10, A4 and LA4
`products. Pencom agrees that this includes (but is not limited to) any NA or NAL
`products that include a “square-in-square” feature, regardless of whether those
`products contain a scalloped edge or not.
`
`Ex. 1; 2008 Settlement Agreement ¶3a.
`
`2. Mutual Release Provision
`
`The 2008 Settlement Agreement also contained a mutual, general release in which the
`
`parties released each other from all claims, demands, damages, liabilities, costs, attorneys’ fees,
`
`expenses and causes of action known or unknown occurring prior to September 24, 2008
`
`(“Settlement Effective Date”). The 2008 Settlement Agreement states in relevant part:
`
`The Parties acknowledge and agree that this release applies to all claims
`for injuries, damages, or losses to person and property, real or personal (whether
`those injuries, damages, or losses are known or unknown, foreseen or unforeseen,
`or patent or latent) that the parties may have against each other as of the Effective
`Date and hereby waive application of California Civil Code Section 1542, which
`the parties have read and which provides as follows:
`
` A
`
` GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
`THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
`HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
`KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS
`
` 
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`3 
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`

`

`OR HER SETTLEMENT WITH THE DEBTOR.
`
`In connection with such waiver and relinquishment, the Parties hereby
`acknowledge that they or their attorneys may hereafter discover claims or facts in
`addition to, or different from, those which they now know or believe to exist, but
`that they expressly agree to fully and finally settle and release any and all claims,
`known or unknown, suspected or unsuspected, that exist or may exist on their
`behalf against each other at the time of the Effective Date. The parties further
`acknowledge, understand, and agree that this representation and commitment is
`essential to each Party and that this Agreement would not have been entered into
`were it not for this representation and commitment.
`
`Ex. 1; 2008 Settlement Agreement ¶¶10-11 (emphasis (all caps) in original). In other words, if a
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`party could have brought a claim of any kind before the Settlement Effective Date, that claim
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`was waived. The waiver applied to claims “known or unknown, foreseen or unforeseen.” Id.
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`C.
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`The Current, Ongoing Litigation
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`Similar to the 2007 Litigation, the parties are currently engaged in Federal intellectual
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`property litigation. On February 5, 2019, PennEngineering sued Pencom for trademark
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`infringement, false designation of origin, false advertising, and counterfeiting relating to dozens
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`of trademarks including infringement of the ‘061 Registration. Ex. 2; Amended Complaint
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`PennEngineering & Manufacturing Corp. v. Peninsula Components, Inc., No.: 2:19-CV-00513-
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`GEKP (E.D. Pa.). The Current Litigation has been pending and actively litigated for the past 21
`
`months. Recently, at a time shortly after settlement talks in the Current Litigation were
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`suspended, Pencom filed this cancellation petition, and two additional petitions against
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`PennEngineering’s federally-registered trademarks, two of which are being litigated in the
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`Current Litigation. The timing of these filings relative to settlement suspension gives the
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`appearance of a retaliatory motive. Moreover, the timing of these filings, more than 58 years
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`after PennEngineering first sold the Square-in-Square fasteners, and more than 12 years after
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`issuance of the ‘061 Registration, gives rise to estoppel by laches.
`
`
`
` 
`
`
`
`4 
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`

`

`III. Legal Standard
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`A motion to dismiss for failure to state a claim upon which relief can be granted is a test
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`solely of the legal sufficiency of a complaint. T.B.M.P. 503.02. In order to withstand such a
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`motion, a complaint must allege such facts as would, if proved, establish that the plaintiff is
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`entitled to the relief sought, that is, that (1) the plaintiff has standing to maintain the proceeding,
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`and (2) a valid ground exists for denying the registration sought (in the case of an opposition), or
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`for canceling the subject registration (in the case of a cancellation proceeding). Id. Whenever
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`the sufficiency of any complaint has been challenged by a motion to dismiss, it is the duty of the
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`Board to examine the complaint in its entirety, construing the allegations therein so as to do
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`justice, as required by Fed. R. Civ. P. 8(e), to determine whether it contains any allegations,
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`which, if proved, would entitle the plaintiff to the relief sought. Id.
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`Courts generally consider only the allegations contained in the complaint, exhibits
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`attached to the complaint and matters of public record when deciding a Rule 12(b)(6) motion to
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`dismiss. Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir.2014) (quoting Pension Benefit Guar.
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`Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993)) (internal quotation
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`marks omitted). An exception to this rule, however, is that “a ‘document integral to or explicitly
`
`relied upon in the complaint’ may be considered ‘without converting the motion [to dismiss] into
`
`one for summary judgment.’” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426
`
`(3d Cir.1997) (emphasis and alteration in original) (citation and internal quotation marks
`
`omitted). “[W]hat is critical is whether the claims in the complaint are ‘based’ on an extrinsic
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`document and not merely whether the extrinsic document was explicitly cited.” Schmidt, 770
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`F.3d at 249.
`
`
`
` 
`
`
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`5 
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`

`

`IV. Arguments
`
`
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`The Petition should be dismissed for several reasons. Pencom lacks standing because it
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`has not and cannot allege any damage based on continued registration of the ‘061 Registration.
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`Moreover, Pencom also lacks standing because it waived its right to challenge the validity of the
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`‘061 Registration or sell any products bearing the mark of the ‘061 Registration in the 2008
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`Settlement Agreement. Finally, Pencom knew of but waited far too long to challenge the
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`validity of the ‘061 Registration.
`
`A.
`
`Pencom Has Not Adequately Pled Facts Sufficient to Establish Standing
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`The general public cannot file a petition to cancel. Only a person who believes it is or
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`will be damaged by registration of a mark has standing to file a petition to cancel. T.B.M.P.
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`309.03. In Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118, 129-34
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`(2014), the Supreme Court established two requirements for determining whether a party is
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`entitled to bring or maintain a statutory cause of action: a party must demonstrate (i) an interest
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`falling within the zone of interests protected by the statute and (ii) proximate causation. The
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`direct connection between the belief of damage and the registered mark suffices to demonstrate
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`proximate causation. Id. This standard was later applied by the Federal Circuit to trademark
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`cancellation actions under 15 U.S.C. § 1064. See Corcamore, LLC v. SFM, LLC, Case No. 2019-
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`1526 (Fed. Cir. Oct. 27, 2020).
`
`In order to bring a claim for trademark cancellation, the petitioner must plead and prove
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`facts showing a “real interest” in the proceedings in order to establish standing. Rosso and
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`Mastracco, Inc. v. Giant Food, Inc., 720 F.2d 1263, 1265 (Fed.Cir.1983). A cancellation
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`petitioner must show that he is “more than an intermeddler” but rather has a personal interest,
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`and that “there is a real controversy between the parties.” Star–Kist Foods, Inc. v. P.J. Rhodes &
`
` 
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`6 
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`

`

`Co., 735 F.2d 346, 349 (9th Cir.1984); Hokto Kinoko Co. v. Concord Farms, Inc., 810 F.
`
`Supp.2d 1013, 1034 (C.D. Cal. 2011), aff'd, 738 F.3d 1085 (9th Cir. 2013). While the “notice
`
`pleading” standard of the Federal Rules of Civil Procedure applies to cancellation proceedings,
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`the petition “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief
`
`that is plausible on its face.’” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
`
`(2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory
`
`statements, do not suffice” and are not accepted as true. Iqbal, 556 U.S. 662, 129 S. Ct. 1937,
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`1949 (2009) (quoting Twombly, 550 U.S. at 555).
`
`Contrary to this pleadings requirement, Pencom has not recited with particularity how it
`
`has standing, and how it will be damaged. The only statements in the Petition that relate to
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`damage are as follows:
`
`1) “Peninsula Components, Inc. . . . believes that it will be damaged, as will the
`general public and other similarly situated competitors, by the continued
`registration of U.S. Registration No. 1,400,061 (“the ‘061 Registration”).”
`Introductory paragraph p. 1; and
`
`2) Registrant has twice asserted the ’061 Registration and the ‘061 Registration
`against Petitioner, including in currently pending litigation, in attempts to bar
`petitioner from making and selling floating fastener products having the
`configuration shown in either the ‘061 Registration or the ‘061 Registration
`thereby harming Petitioner’s business. Paragraph 9.
`
`
`Pencom does not state that it has commercialized or intends to commercialize any products using
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`the Square-in-Square mark or any similar mark. This sparse and nebulous claim that it has been
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`harmed without reference to any specific facts whatsoever does not satisfy the notice pleading
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`requirements. For this reason alone, the Petition should be dismissed for failure to sufficiently
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`plead standing.
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`
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` 
`
`
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`7 
`
`

`

`B.
`
`Pencom Lacks Standing To Seek Cancellation of the ‘061 Registration Since
`It Is Contractually Estopped from Selling Any Products That Incorporate
`the Square-in-Square Configuration
`
`
`
`Leave to amend the Petition to add facts to more particularly plead Pencom’s damage
`
`should not be granted since Pencom is contractually estopped from making any fasteners that
`
`incorporate the Square-in-Square marks. Therefore, any amendment would be futile.
`
`As stated supra, the 2008 Settlement Agreement prohibits Pencom from commercializing
`
`any fasteners that incorporate the Square-in-Square marks. The 2008 Settlement Agreement
`
`provides in relevant part:
`
`3. Cease and Desist. Pencom agrees globally to cease and desist importing,
`manufacturing, selling, or offering for sale, directly or indirectly, the following
`products (collectively, the “Agreed Products”):
`
`a. Any equivalents of PEM’s square-in-square trademarks (i.e., the ‘061 and ‘061
`marks) such as are embodied in PEM’s AC, LAC, AS, LAS, F10, A4 and LA4
`products. Pencom agrees that this includes (but is not limited to) any NA or NAL
`products that include a “square-in-square” feature, regardless of whether those
`products contain a scalloped edge or not.
`
`Ex. 1; 2008 Settlement Agreement ¶3a.5
`
`Pencom voluntarily agreed to cease and desist use of any marks similar to the Square-in-
`
`Square trademarks including the mark of the ‘061 Registration. There is no term or time
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`limitation within the 2008 Settlement Agreement that would end this restriction. There is no
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`provision that enables Pencom to use the Square-in-Square marks if the ‘061 Registration is
`
`                                                            
`5 The Board should consider exhibits 1-3 relating to the 2007 Litigation without converting this motion into a
`summary judgment motion since Pencom referred to and relied upon the 2007 Litigation in paragraph 9 of its
`Petition. A document that is integral to or explicitly relied upon in the complaint may be considered without
`converting the motion to dismiss into one for summary judgment. In re Burlington Coat Factory Sec. Litig., 114
`F.3d 1410, 1426 (3d Cir.1997). Documents or other material that are referred to in the pleadings, are indisputably
`authentic, and are essential to the claims or defenses presented may be considered in resolving the motion, even if
`the materials are not formally attached to the pleadings. Moore’s Federal Rules Pamphlet §12.6[2]. The 2008
`Settlement Agreement terminated the 2007 Litigation referred to in paragraph 9 of the Cancellation Petition, and is
`essential to several of PennEngineering’s defenses. Pencom cannot not dispute the existence of 2008 Settlement
`Agreement or the clauses identified herein. Pencom relied on the 2007 Litigation in paragraph 9 to try to prove
`damage.
`
` 
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`8 
`
`

`

`cancelled. This voluntary restriction on Pencom negates any claim that it will be damaged.
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`Even within the Petition itself, Pencom does not state that it has commercialized or intends to
`
`commercialize any products using the Square-in-Square mark or any similar mark. For this
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`additional reason, Pencom does not have standing to file this Petition.
`
`C.
`
`Pencom Lacks Standing To Seek Cancellation of the ‘061 Registration Since
`It Is Contractually Estopped from Challenging the Validity of the ‘061
`Registration
`
`Leave to amend the Petition to more particularly plead Pencom’s damage should not be
`
`granted for another reason. Pencom is also contractually estopped from asserting any claim,
`
`including invalidity of the Square-in-Square marks, which it could have asserted prior to the
`
`2008 Settlement Agreement. Therefore, any amendment would be futile.
`
`
`
`The 2008 Settlement Agreement includes a mutual release that now prohibits Pencom
`
`(and PennEngineering) from asserting any claim it could have asserted prior to the Settlement
`
`Effective Date. The 2008 Settlement Agreement states in relevant part:
`
`10. Mutual Release. Upon receipt by Plaintiff Penn Engineering of the last payment
`of the Total Settlement Payment as described in Paragraph 2 above (the “Release
`Effective Time”), the Parties . . . hereby fully and forever release and discharge the other
`parties . . . from all claims, demands, damages, liabilities, costs, attorneys’ fees, expenses
`and causes of action known or unknown occurring prior to the Effective Date; provided,
`however, that this release does not apply to claims arising from acts, statements,
`omissions, matters, events, transactions, or occurrences subsequent to the Effective Date.
`
`11. Claims Known and Unknown. The Parties acknowledge and agree that this
`release applies to all claims for injuries, damages, or losses to person and
`property, real or personal (whether those injuries, damages, or losses are known
`or unknown, foreseen or unforeseen, or patent or latent) that the parties may have
`against each other as of the Effective Date . . . .
`
`Ex. 1; 2008 Settlement Agreement ¶¶10, 11 (“Mutual Release”). The Mutual Release applies to
`
`any claim, “known or unknown, foreseen or unforeseen, or patent or latent.”
`
`
`
`The Board may take judicial notice of the fact that PennEngineering alleged infringement
`
`of the Square-in-Square marks in the 2007 Lawsuit. See ex. 2 ¶¶65-74. PennEngineering’s sixth
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` 
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`9 
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`

`

`claim for relief in the 2007 Litigation complaint alleges “Infringement of U.S. Trademark Nos.
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`1,400,061 and 3,404,061.” Id. Counts 65 through 74 spell out the details of infringement. Id.
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`This court may also take judicial notice of the fact that Pencom asserted functionality as an
`
`affirmative defense to the allegations of infringement of the Square-in-Square mark. Ex. 3 ¶103.
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`Pencom’s “Ninth Affirmative Defense” recites: “Plaintiff’s claims for relief for infringement of
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`U.S. Reg. No. 1,400,061 and U.S. Reg. No. 3,404,061 are barred since the marks recited in these
`
`registrations are functional and therefore the registrations are invalid under Section 1115 of Title
`
`15 of the United States Code.” Id. Since Pencom’s functionality defense of the Square-in-Square
`
`mark was known, and actually asserted, at the time of executing the 2008 Settlement, Pencom’s
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`functionality defense falls squarely within the scope of the Mutual Release.
`
`Section 10 of the 2008 Settlement Agreement states that “the parties . . . hereby fully and
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`forever release and discharge the other parties . . . from all claims, demands, damages, liabilities,
`
`costs, attorneys’ fees, expenses and causes of action known or unknown occurring prior to the
`
`Effective Date.” Exh. 1, p. 4 (emphasis added). While Section 10 does not specifically identify
`
`“affirmative defenses” within the types of waived activity, affirmative defense were not excluded
`
`from the Mutual Release anywhere else in the 2008 Settlement Agreement.
`
`
`
`Furthermore, Section 10 includes “causes of actions”, which is “the right which a party
`
`has to institute a judicial proceeding.” Ballentine’s Law Dictionary (LEXIS 2010). It is well-
`
`established that defendant could have asserted functionality as an affirmative defense (which it
`
`did), or in the form of a counterclaim for a declaration of invalidity under the Declaratory
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`Judgment Act of 1934. 28 U.S.C. §§2201-2201; See e.g. Ontel Prods. Corp. v. Mindscope
`
`Prods., 220 F. Supp. 3d 555, 558 (D.N.J. 2016) (Though ultimately denied, defendant was able
`
`to request a declaratory judgment regarding, among other things, functionality of a
`
` 
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`10 
`
`

`

`trademark); Mech. Plastics Corp. v. Titan Techs., Inc., 823 F. Supp. 1137, 1151 (S.D.N.Y. 1993)
`
`(Declaratory judgment entered on the issue of trademark functionality pursuant to Fed. R. Civ. P.
`
`54(b)). A declaratory judgment action is clearly a cause of action. See Camico Mut. Ins. Co. v.
`
`Heffler, Radetich & Saitta LLP, 587 F. App'x 726, 728 (3d Cir. 2014) ("[Plaintiff] later filed suit
`
`against [defendant] with four causes of action: first, a declaratory judgment..."); Alli v. Decker,
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`650 F.3d 1007, 1013 (3d Cir. 2011) ("A suit for declaratory judgment is essentially an equitable
`
`cause of action") (internal citations omitted). Such actions are common in intellectual property
`
`cases. So even if defendant’s functionality defense was not a “claim”, it was clearly a “cause of
`
`action”, which was waived by the plain language of the Mutual Release.
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`The law permits an individual to waive important rights notwithstanding the strong public
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`interest in preserving the right(s). United States v. Mezzanatto, 513 U.S. 196, 200-01, 115 S. Ct.
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`797, 130 L. Ed. 2d 697 (1995). This broad principle has been applied in cases where one party
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`waives, through a settlement agreement, their right to challenge the validity of another’s
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`trademark. See Beer Nuts, Inc. v. King Nut Co., 477 F.2d 326, 328-29 (6th Cir. 1973) (upholding
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`a written agreement not to, among other things, challenge the validity of a trademark); see also
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`MWS Wire Indus., Inc. v. California Fine Wire Co., 797 F.2d 799, 803 (9th Cir. 1986) (relying
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`on Beer Nuts and holding that "to permit [defendant] to reopen the question of the validity of the
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`trademark at this juncture would severely undercut the policy favoring the amicable resolution of
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`trademark disputes without resort to the courts"). Therefore, Pencom is contractually estopped
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`from challenging the validity of the ‘061 Registration.
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`D.
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`Laches Bars Pencom’s Cancellation Petition
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`Laches is an equitable doctrine, operating as an affirmative defense that precludes relief
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`when there is an unexplained and inexcusable delay in exercising a right, which results in
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` 
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`11 
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`

`

`prejudice to another party. See Covertech Fabricating, Inc. v. TVM Building Prods., Inc., 855
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`F.3d 163, 175 (3d Cir. 2017). In this case, Pencom knew of the ’061 Registration at least as
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`early as May 2008 when PennEngineering filed its amended complaint and accused Pencom of
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`infringing the ‘061 Registration. Ex. 2. The ‘061 Registration was registered on April 1, 2008.
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`Now, more than 12 years after registration, and 12 years after the 2008 Settlement Agreement,
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`Pencom seeks to cancel the ‘061 Registration on the grounds of functionality. Pencom offers no
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`excuse or explanation for its unreasonably-long delay in seeking to cancel the ‘061 Registration.
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`There has been no change of circumstances that suddenly enabled Pencom to file its Petition.
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`Even if it is not barred by contractual estoppel, Pencom’s allegation of invalidity based on
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`functionality should have been raised long ago, not 12 years later!
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`PennEngineering has been prejudiced by this undue and inexcusable delay. Since its first
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`use in 1962 and continuing to this day, PennEngineering has invested significant resources into
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`the Square-in-Square marks to ensure that consumers associate products bearing the Square-in-
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`Square marks with PennEngineering. This significant investment would have discontinued long
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`ago had Pencom raised and succeeded in its cancellation proceeding against the ‘061
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`Registration years ago. It would be inequitable for PennEngineering to be forced to defend the
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`‘061 Registration now, after marketing and selling its products with the Square-In-Square marks
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`for decades, and after continuing efforts to protect its exclusive rights in those marks. Therefore,
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`Pencom’s belated Petition is barred by the doctrine of laches.
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`
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` 
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`12 
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`

`

`V.
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`Conclusion
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`For the foregoing reasons, PennEngineering respectfully requests that the Board GRANT
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`PennEngineering’s Motion to Dismiss Pencom’s Petition.
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`Dated: November 16, 2020
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`Respectfully submitted,
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`Ryder, Mazzeo & Konieczny LLC
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`
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`By: /joseph m. konieczny, sr./
`Joseph M. Konieczny, Sr. (Pa. 59,724)
`P.T.O. Reg. No. 35,806
`Frank A. Mazzeo (Pa. 65,537)
`P.T.O. Reg. No. 46,259
`P.O. Box 670
`Plymouth Meeting, PA 19462
`610-940-1962(voice)
`610-940-1963 (fax)
`jkonieczny@ryderlu.com
`Attorneys for Registrant
`
`
`
` 
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`13 
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`

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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
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`Peninsula Components, Inc.,
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`Petitioner,
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`v.
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`PEM Management, Inc.,
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`Registrant.
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`:
`:
`: In Re: Registration No. 3,404,061
`:
`: Cancellation Proceeding No.: 92075406
`:
`:
`:
`:
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`ORDER
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` AND NOW, this ___ day of _______, 2020, upon consideration of PEM Management,
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`
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`Inc.’s Motion to Dismiss, and any responses thereto, it is hereby ORDERED and DECREED that
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`the Motion to Dismiss is GRANTED. Peninsula Components, Inc.’ s Petition for Cancellation is
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`DISMISSED WITH PREJUDICE.
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` 
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`By the Trademark Trial and Appeal Board:
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`
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` 
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`

`

`Exhibit 1
`Exhibit 1
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`
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`

`

`Execution Copy
`
`CONFIDENTIAL SETTLEMENT AGREEMENT AND MUTUAL RELEASE
`
`m
`
`9W
`
`

`

`Execution Copy
`
`

`

`Execution Copy
`
`

`

`Execution Copy
`
`10. . Mutual Release. Upon receipt by Plaintiff Penn Engineering of the last payment
`of the Total Settlement Payment as described in Paragraph 2 above (the “Release Effective
`Time”), the Parties and their past, present. and future affiliates, parents, successors, subsidiaries,
`related entities, divisions, and distributors, hereby fully and forever release and discharge the
`other parties and their past, present, and future affiliates, parents, successors, subsidiaries, related
`entities, divisions, and distributors and their respective current and former officers, directors,
`employees, representatives, agents, successors and assigns (the “Released Parties, Entities, and
`Individuals”) from all claims, demands, damages, liabilities, costs, attorneys‘ fees, expenses, and
`causes of action known or unknown occurring prior to the Effective Date; provided, however,
`that this release does not apply to cl aims arising from acts, statements, omissions, matters,
`events, transactions, or occurrences subsequent to the Effective Date.
`
`Claims Known and Unknown. The Parties acknowledge and agree that this
`11.
`release applies to all claims for injuries, damages, or losses to person and property, real or
`personal (whether these injuries, damages, or losses are known or unknown, foreseen or
`unforeseen, or patent or latent) that the parties may have against each other as of the Efi‘ective
`Date and hereby waive application of California Civil Code Section 1542, which the parties have
`read and which provides as follows:
`
`A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
`CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
`
`FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
`
`

`

`Execution Copy
`
`KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS
`OR HER SETTLEMENT WITH THE DEBTOR.
`
`In connection with such waiver and relinquishment, the Parties hereby acknowledge that they or
`their attorneys may hereafter discover claims or facts in addition to, or different from, those
`which they now know or believe to exist, but that they expressly agree to fully and finally settle
`and release any and all claims, known or unknown, suspected or unsuspected, that exist or may
`exist on their behalf against each other at the time of the Effective Date. The Parties filrther
`acknowledge, understand, and agree that this representation and commitment is essential to each
`Party and that this Agreement would not have