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June 30, 2021

Lit Alerts—June 2021

A Publication of the Litigation Practice Group

Intellectual Property: TTAB Affirms Denial of Trademark Registration to COOKINPELLETS.COM

In June, the Trademark Trial and Appeal Board (Board) affirmed the refusal to register COOKINPELLETS.COM. The case is one of the first to implement last year’s Supreme Court ruling in USPTO v. B.V., which rejected a per se rule that a generic term combined with a top level domain such as “.com” is always generic and therefore ineligible for registration. In refusing registration to COOKINPELLETS.COM, the Board’s ruling indicates that, even after, issues remain for companies seeking to register domain name trademarks.

The Board applied and reversed the Trademark Office’s ruling that COOKINPELLETS.COM was generic. The Board agreed that the term “Cooking Pellets” was generic for the goods covered by the application. But the Board also held that COOKINPELLETS.COM as a whole was not ineligible for registration because at least some consumers used COOKINPELLETS.COM as a brand name. However, it affirmed the refusal on descriptiveness grounds, finding COOKINPELLETS.COM was highly descriptive of the goods covered by the registration, and therefore the applicant had to meet a high standard to show “acquired distinctiveness”—i.e., that consumers recognized the term as a brand name. The applicant failed to meet that standard. While it submitted evidence of consumer recognition of COOKINPELLETS.COM, the evidence failed to identify the size of the market for the applicant’s goods, and therefore failed to show the relative proportion of potential customers who understood COOKINPELLETS.COM to refer to applicant and its goods. Without this context, the Board was unwilling to credit the applicant’s acquired distinctiveness argument.

The applicant, GJ & M, LLC, may appeal the ruling to the Federal Circuit or to district court.

Bankruptcy: Federal Rules of Bankruptcy Procedure Apply in Non-Core Cases Related to a Pending Bankruptcy Proceeding

As a matter of first impression, the US Court of Appeals for the First Circuit determined that the Federal Rules of Bankruptcy Procedure, rather than the Federal Rules of Civil Procedure, govern cases that come into a federal court’s jurisdiction because they are “related to” a pending bankruptcy proceeding. In re Lac-Megantic Train Derailment Litig., No. 17-1108, 2021 WL 2217454 (1st Cir. June 2, 2021). The First Circuit follows the Third, Fourth, and Seventh Circuits in so holding. In re Celotex Corp., 124 F.3d 619, 629 (4th Cir. 1997); Phar-Mor, Inc. v. Coopers & Lybrand, 22 F.3d 1228, 1238 (3d Cir. 1994); Diamond Mortg. Corp. of Ill. v. Sugar, 913 F.2d 1233, 1243 (7th Cir. 1990); cf. Double Eagle Energy Servs., L.L.C. v. MarkWest Utica EMG, L.L.C., 936 F.3d 260, 264 (5th Cir. 2019).

In Lac-Megantic, following a train derailment and explosion, the plaintiffs brought suit against Montreal, Maine and Atlantic Railway (MMA), which sought bankruptcy protection in the US Bankruptcy Court for the District of Maine. The plaintiffs later joined Canadian Pacific Railway Company (Canadian Pacific) as a defendant in the district court lawsuit.

Canadian Pacific moved to dismiss the lawsuit on jurisdictional grounds, which plaintiffs countered by moving to amend the complaint to add US-based subsidiaries. The district court granted the motion to dismiss and denied all other pending motions. Twenty-eight days after the court entered final judgment in favor of Canadian Pacific, the plaintiffs moved for reconsideration of their motion to amend. The district court denied the motion as untimely because the Bankruptcy Rules provide only a 14-day window for reconsideration motions. The First Circuit affirmed.

It held that while congressional intent and precedent both favored the application of the Bankruptcy Rules, the “sockdolager is found in the practicalities.” “‘Related to’ jurisdiction is designed to put everything in the same place and, thus, facilitates the efficient disposition of claims. . . [T]he best way to effectuate this goal is for both the bankruptcy judges and the district court judges to apply the same set of procedural rules in all proceedings having a nexus to a bankruptcy case.”

Insurance Coverage: Ninth Circuit Panel Finds Insurer Justified in Denying Coverage to School District for Dangerous Soccer Field

Earlier in June, the US Court of Appeals for the Ninth Circuit affirmed a decision that Philadelphia Indemnity Insurance Co. was justified in barring coverage to a California school district due to the applicable policy’s premises defect exclusion.

The lawsuit arose from a coverage dispute between Oak Park Unified School District and Philadelphia over policies Philadelphia issued to United States Club Soccer. The school district had agreed to let one of USCS' clubs, West Valley Soccer League, use its soccer facilities.

While watching his granddaughter play at an Oak Park field, Darrell Arendts fell down a steep embankment, sustaining serious injuries. Arendts filed a personal injury suit against the league and Oak Park, alleging the soccer field's dangerous condition created negligence liability. The underlying suit said Oak Park failed to warn and protect the public from the steep embankment.

Oak Park asked the soccer league to defend and indemnify it in the underlying suit, saying the parties' agreement dictated the obligation, and tendered the defense to the league's insurer, Philadelphia. Oak Park also claimed it was an additional insured under the policy.

Philadelphia defended the league and paid the limits of both its primary and excess policies as part of a settlement, but denied coverage to Oak Park. The school district sued Philadelphia, seeking reimbursement of its legal bills and damages.

The district court granted summary judgment for Philadelphia, finding the policy's premises defect exclusion clearly barred coverage for bodily injury arising out of a design defect or structural maintenance issue on a property. The suit specifically alleged the injury was caused by the dangerous setup of the soccer field.

The Ninth Circuit affirmed, rejecting Oak Park’s arguments that the district court erred by holding that Philadelphia correctly applied the exclusion, and that the insurer never thoroughly investigated the school district's insurance claim before it denied coverage as required by the policy. The court found that an investigation would not have changed the fact that the policy exclusion here provides no avenue for coverage. “Oak Park cites no authority suggesting that when an insurer denies coverage based on a reasonable interpretation of a policy exclusion, the insurer might nevertheless be liable for bad faith because it failed to conduct an adequate investigation," the court observed. Further, “even if the evidence permits an inference that Philadelphia conducted an inadequate investigation, it would be insufficient to overcome summary judgment here."

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.