[00:00:00] Speaker 03:
The argument is 23-1375 Dollar Financial Group versus British Financial Group.

[00:01:42] Speaker 01:
Good morning, Your Honors.

[00:01:45] Speaker 01:
Please proceed.

[00:01:45] Speaker 01:
I'd like to reserve five minutes for rebuttal.

[00:01:49] Speaker 01:
We're here today because the Trademark Trial and Appeal Board aired when it held as a matter of law that Dollar Financial Group, which I'll refer to as DFG, was not entitled to rely upon the zone of natural expansion doctrine to challenge Britax's claim of priority, an element for which Britax fares the burden of proof.

[00:02:05] Speaker 01:
The Board's determination that the zone of natural expansion is only available when seeking to prevent another's registration... You need to slow down and talk a little slower.

[00:02:12] Speaker 01:
Sorry, Your Honor.

[00:02:13] Speaker 01:
The Board's determination that the zone of natural expansion is only available when seeking to prevent another party's registration, and not when seeking to register one's own mark in connection with services closely related to those in its prior registration, is contrary to the way they've established precedent, the goals of the Lanham Act, and the Board's own prior decisions in this case.

[00:02:33] Speaker 01:
It would also establish two different ways of determining priority, depending upon whether the party claiming priority is in the position of plaintiff or defendant, which does not make any sense.

[00:02:42] Speaker 01:
The board's decision was based upon its erroneous interpretation.

[00:02:45] Speaker 00:
If we determine that payday financing and palm shop services are not sufficiently similar, do we even have to decide the issue of whether you can use this offensive

[00:02:59] Speaker 01:
version of the zone of natural whatever you're calling it Well, I think that's the problem you honor the board the board never gave us the opportunity to the board never made that factual determination That's clearly question the fact I think there's substantial evidence in the record that supports a finding that those services are within the zone of natural expansion But the board never even reached that reached that question because it held as a matter of law that

[00:03:24] Speaker 01:
that the Jax Evans case established a bright line rule that a party can never rely upon the Zone of Natural Expansion to defend its registration against a cancellation by an intervening common law user.

[00:03:35] Speaker 02:
Can I just follow up for a minute on your assertion about substantial evidence, substantial evidence, that it would be of being within the Zone of Natural Expansion?

[00:03:49] Speaker 02:
And there is not just pause to frame it more.

[00:03:53] Speaker 02:
generally is that if I look at, you have this bullet point list, I think at 40 to 41 of your blue brief, and it seems to me there is a apparent asymmetry in the following sense.

[00:04:09] Speaker 02:
If not every item, virtually every item, is about a pawn shop moving into the payday financing.

[00:04:19] Speaker 02:
Because actually, it's doing a bunch of handing out money and then collecting.

[00:04:28] Speaker 02:
There's essentially nothing, or hardly anything, in the other direction where a payday lending company

[00:04:38] Speaker 02:
moves into the pawn shop business, which has a whole component that the payday lending has never been doing, namely figuring out what to do with physical items and how to price them and all of that.

[00:04:55] Speaker 02:
Just address this asymmetry in the evidence for me.

[00:04:59] Speaker 01:
That's an interesting point, Your Honor.

[00:05:02] Speaker 01:
I think, really, the question of its own natural expansion is whether consumers will expect both types of services to come from the same source.

[00:05:13] Speaker 02:
I'm not sure that's the only question.

[00:05:15] Speaker 01:
I think that's the primary question.

[00:05:16] Speaker 02:
I mean, if you look at the... But you included this material to show that a lot of companies have expanded in this way, and it seems to me, I guess, to put it most

[00:05:29] Speaker 02:
confrontationally is not so.

[00:05:33] Speaker 02:
Maybe a lot of pawnbrokers have expanded into the payday lending, but you don't have any real evidence in the other direction.

[00:05:43] Speaker 01:
I understand your question.

[00:05:45] Speaker 01:
I respect your question.

[00:05:46] Speaker 01:
But we would argue that the question is whether, for the purposes of the zone of natural expansion, is whether consumers would expect both types of services to come from the same source.

[00:05:54] Speaker 01:
And for purposes of that question, we think it's not really relevant whether it's pawnshop expanding into

[00:05:59] Speaker 01:
check cashing and payday loan services or check cashing and payday loan shops expanding into pawn services.

[00:06:04] Speaker 01:
Consumers are still likely to see these both types of services offered by the same stores using the same mark and they're therefore likely to assume when they see a company offering they're likely to associate the mark with the same types of services.

[00:06:21] Speaker 01:
I don't think it really makes a difference whether it's going from A to B or B to A.

[00:06:26] Speaker 01:
But getting back to the Jax Evans case, the board in that case, the board interpreted that case in our decision as establishing a bright line rule that a party seeking to register its mark or defend its registration can never rely upon the zone of natural expansion.

[00:06:43] Speaker 01:
And that's not what the court said in Jax Evans.

[00:06:46] Speaker 01:
In Jax's evidence, first of all, the priority was not in dispute in that case, because the opposer was relying on prior registrations at which the applicant did not seek to cancel.

[00:06:55] Speaker 01:
And that's different, much different than our case, where the petitioner, Bridex, is relying upon common law rights.

[00:07:00] Speaker 01:
And therefore, Bridex has a burden of proving priority.

[00:07:04] Speaker 01:
Furthermore, in the Jax Evans case, the court found that the products in the applicant's later application were suspicious.

[00:07:11] Speaker 03:
And that's the case that said it's purely defensive.

[00:07:13] Speaker 03:
Correct.

[00:07:14] Speaker 01:
Correct.

[00:07:15] Speaker 01:
They didn't really explain what was meant by defensive versus offensive.

[00:07:19] Speaker 01:
We would argue that in this case we are using the mark, we are using the doctrine defensively, because as I said, Bridex has the burden of proof for proving priority, and we're using the doctrine to defend it against an element for which Bridex has the burden of proof.

[00:07:30] Speaker 01:
But furthermore, in the Jacks-Evans case, the court found that the products in the later application were substantially different from those in the prior registration, which is why the doctrine did not apply there.

[00:07:42] Speaker 01:
The court correctly, excuse me, the board correctly interpreted Jacks-Evans in the Mason Engineering case, which is the case in which they established the four-factor test for determining the zone of natural expansion.

[00:07:53] Speaker 01:
In the Mason Engineering involved the exact same situation here.

[00:07:57] Speaker 01:
The applicant was seeking to register the identical mark in connection with services which are claimed were within the zone of natural expansion of the services in its prior registration, and the application was opposed by an intervening common law user.

[00:08:09] Speaker 01:
And the board, in that case, cited Jack's evidence showing that they were well aware of the case, but they correctly interpreted it as stating that the prior user cannot rely upon the zone of natural expansion for distinctly different goods.

[00:08:22] Speaker 01:
The board, in that case, did not interpret Jack's evidence as holding that an applicant can never rely upon the doctrine to defend its later application or registration against an intervening common law user.

[00:08:32] Speaker 02:
Would that version trigger what Judge Hughes was asking about?

[00:08:40] Speaker 02:
before, which is that if we conclude that it is clear these are distinctly different, then in fact in that circumstance, no natural expansion.

[00:08:51] Speaker 01:
Well, I think in that case the board would have to apply the four factor test to determine whether the products were within the zone of natural expansion.

[00:08:59] Speaker 01:
I think the zone of natural expansion is kind of a refinement of that question of whether or not the products are distinctly different.

[00:09:05] Speaker 01:
And it's kind of a framework that the board came up with to analyze that question.

[00:09:10] Speaker 01:
And it really looks at the consumer perception based upon these four factors.

[00:09:16] Speaker 01:
You know, whether there are other companies that have established from, expanded from one area to the other, whether they involve the same area of know-how, technological capabilities, whether the channels of trade and the target consumers are identical and so on.

[00:09:33] Speaker 01:
And we believe that the evidence of record clearly establishes that all four of those factors would favor us, would favor our DFG if the board would apply those factors.

[00:09:45] Speaker 01:
Another problem with the board's decision is that it's contrary to the policies underlying the Lanham Act, which is intended to encourage and reward federal registration.

[00:09:53] Speaker 01:
The board's reasoning in our case would have the opposite effect, because it essentially places a party claiming common law rights, Britax, over the interests of a party claiming registration.

[00:10:05] Speaker 01:
For example, to take a hypothetical situation, if Redux had sought to register its money mark pawn mark for pawn services, Dollar Financial Group would have been able to petition for cancellation of the registration and would have been able to rely upon the zone of natural expansion doctrine in that case.

[00:10:22] Speaker 01:
And assuming, again, assuming for purposes of argument that the board found that the zone of natural expansion did apply,

[00:10:27] Speaker 01:
dollar financial group would then be successful in petitioning for cancellation of that registration.

[00:10:35] Speaker 01:
But dollar financial group may not be able to register its own mark for pawn services because it would not be able to rely upon that zone of natural expansion doctrine to defend its own right to registration.

[00:10:46] Speaker 01:
So in that case, neither party would be able to have a registration for its mark for pawn services, which doesn't really make any sense.

[00:10:54] Speaker 02:
Can I just ask this question?

[00:10:58] Speaker 02:
A registration provides rights across the country, right?

[00:11:03] Speaker 01:
Correct.

[00:11:04] Speaker 02:
A common law trademark?

[00:11:07] Speaker 01:
A common law only provides rights in the geographic area in which they are.

[00:11:11] Speaker 02:
And one of the things that's striking about this case is that the dollar

[00:11:18] Speaker 02:
I forget.

[00:11:20] Speaker 02:
So the pawn shop company.

[00:11:22] Speaker 02:
Oh, Rodex, yeah.

[00:11:23] Speaker 02:
Rodex, yeah, is at least, if I remember right, local.

[00:11:28] Speaker 01:
Oh, you're talking about Houston and San Antonio.

[00:11:30] Speaker 02:
And Dollar is national.

[00:11:33] Speaker 02:
Why would that not just, the geographic disparity between what our registration does and what common law does, why doesn't that actually

[00:11:45] Speaker 02:
make sense in a circumstance, in some circumstances, of which this one might be an illustration for exactly the reason that you don't want to do registrations because that applies nationally and it might do a bad thing to a local company that in fact has priority.

[00:12:05] Speaker 01:
So you're saying that it would be a bad thing for Bridex to obtain?

[00:12:08] Speaker 02:
You said there's a policy of registration.

[00:12:11] Speaker 02:
And I want to push back, I guess, a little bit to say, well, maybe, and you said we're leaving it to common law.

[00:12:17] Speaker 02:
And why would you do that?

[00:12:19] Speaker 02:
Well, I was just suggesting maybe there's a reason for saying common law, trademark rights,

[00:12:27] Speaker 02:
would be a better fit for a circumstance like this than a registration scheme precisely because it allows for different effects in different geographies.

[00:12:38] Speaker 01:
Well, I would respectfully argue that even if it's within a limited geographic area, there's benefits that flow from federal registration.

[00:12:48] Speaker 01:
And there's lots of examples.

[00:12:50] Speaker 01:
Lots of clients of ours, for example, only have stores within a particular state or within a particular geographic area.

[00:12:55] Speaker 01:
And we still encourage them to register their marks, because that provides many benefits, provides certain presumptions in litigation, and so on.

[00:13:06] Speaker 01:
To the extent that you're arguing that common law rights are maybe a better fit for a smaller company or a company that's limited to a geographic area, I know I would respectfully disagree with that.

[00:13:20] Speaker 01:
I think the presumptions afforded by a federal registration outweigh the interest that you mentioned.

[00:13:25] Speaker 01:
And I will mention also that the Lanham Act does provide for protections for companies that are using the mark within a geographic area, specifically the right to seek a concurrent use registration, which products did not do here.

[00:13:36] Speaker 01:
I'm running low on time, so I think I've kind of explained our... Yeah, you are into your rebuttals.

[00:13:42] Speaker 01:
Oh, I am?

[00:13:42] Speaker 01:
Okay, excuse me.

[00:13:46] Speaker 01:
But before I go, I would just like to also note that we would argue that even in the event that the court determines that the board correctly applied the zone of natural expansion and refusing to allow the zone of natural expansion, that the court should still remand to the board to consider tacking in light of the court's recent decision in the Apple v. Bertini case.

[00:14:09] Speaker 01:
So thank you.

[00:14:15] Speaker 03:
May I please record?

[00:14:16] Speaker 03:
I think I'd like to start off with the standard for the Zone of Natural Expansion and how we believe DFG is misapplying it.

[00:14:27] Speaker 03:
The Zone of Natural Expansion and Trademark Law typically is and to my knowledge is solely used to compare the goods sought or services sought by the applicant in the application and the goods and services of the opposer.

[00:14:43] Speaker 03:
What the extension that DFG is suggesting to the zone of natural expansion is, no, no, no.

[00:14:51] Speaker 03:
Let's look at the goods that we applied for in these registrations and look at our own prior registration and those goods to get the data priority.

[00:15:00] Speaker 03:
That is not the relevant inquiry.

[00:15:02] Speaker 03:
The relevant inquiry is the goods applied for in the application compared to the goods of the opposer.

[00:15:10] Speaker 03:
The reason that

[00:15:13] Speaker 02:
I think I'm not quite following.

[00:15:16] Speaker 02:
So there's a pond broking, pond services are one of the good services in the current application.

[00:15:24] Speaker 02:
Correct.

[00:15:24] Speaker 02:
You don't need to do a lot of comparison to ask if the opposers services, pond broking, are within the zone of natural expansion.

[00:15:34] Speaker 03:
No, what I'm saying is they're using the zone of natural expansion between their own loan financing

[00:15:41] Speaker 03:
and pawn services to try to obtain priority back to 1984.

[00:15:46] Speaker 03:
And that's not the relevant inquiry.

[00:15:48] Speaker 03:
It's not a comparison of their later registrations to their earlier.

[00:15:53] Speaker 03:
The reason for that is... So what is the correct comparison?

[00:15:57] Speaker 03:
The correct comparison, if the zone of natural expansion were to apply here, would be to compare the goods in their current registrations, their services, including pawn services, to our pawn services.

[00:16:10] Speaker 03:
OK.

[00:16:11] Speaker 02:
And they're the same.

[00:16:12] Speaker 03:
And they're the same.

[00:16:13] Speaker 03:
But the problem with that.

[00:16:14] Speaker 02:
So just to understand, that's why you say this circumstance can't involve the zone of natural expansion test.

[00:16:23] Speaker 03:
That's correct.

[00:16:24] Speaker 03:
That's why I believe it's not applicable.

[00:16:27] Speaker 03:
And the reason behind this is that if you allow a registrant to obtain a later registration,

[00:16:38] Speaker 03:
for unrelated goods and services based on the earlier registration.

[00:16:43] Speaker 03:
And they haven't built up a lot of goodwill in that new area.

[00:16:47] Speaker 03:
You're essentially granting that registered trademark rights and gross with no goodwill.

[00:16:53] Speaker 03:
And it ignores the situation that we have here, where Britax has over 30 years of commonwealth use.

[00:16:59] Speaker 03:
You would essentially be cutting off

[00:17:02] Speaker 03:
the use by Britax.

[00:17:03] Speaker 03:
And in the trademark system in the United States, we base our trademark rights, common law or registered, based off use.

[00:17:11] Speaker 03:
And so cutting off that intervening use is not really what the zone of natural expansion was designed to do.

[00:17:18] Speaker 03:
And that's why we don't believe that it applies.

[00:17:23] Speaker 02:
And do you think that what you just articulated is what is kind of

[00:17:29] Speaker 02:
underlying the, what's the name of the case, Jack something?

[00:17:33] Speaker 03:
Jack's Evans, yes.

[00:17:35] Speaker 03:
As a matter of fact, the board of Jack's Evans mentioned that this problem of granting trademark rights and gross when a prior registrant ceases to enter a new area and there's an intervening user in between.

[00:17:53] Speaker 00:
What would happen in this case if

[00:17:57] Speaker 00:
RedX did come in and try to actually register its mark rather than just rely on its common law mark.

[00:18:04] Speaker 00:
And then DSG then used its prior payday lending mark registration to argue the zone of natural expansion.

[00:18:14] Speaker 00:
That would be

[00:18:16] Speaker 00:
That sounds more or less reliant on what the proper use would be, is they're relying on their mark and saying the later filed registration is within the zone of natural expansion.

[00:18:28] Speaker 00:
How, even though you have a prior common law mark, how do you think that would play out?

[00:18:34] Speaker 03:
today, because we started in 1993, I think there's been coexistence for so long that I don't know that that zone of natural expansion would outweigh the fact that we've coexisted for so long.

[00:18:49] Speaker 03:
So I think that there are certainly arguments that we could make to overcome the argument on the zone of natural expansion, but it would be available for DFG to argue.

[00:19:01] Speaker 00:
And I think the other point that I wanted to bring... So there's a bit... Sorry, I'm trademarked wrong.

[00:19:07] Speaker 00:
We don't see a lot of you, so I'm not as nimble.

[00:19:10] Speaker 00:
But so even if legally it was available, there are still arguments to be had that you shouldn't use it in this instance.

[00:19:19] Speaker 00:
Even if you assume that

[00:19:21] Speaker 00:
the payday lending when naturally extended to Pond Services.

[00:19:26] Speaker 00:
Is there still some basis for you to still get a registration even if they could show a natural?

[00:19:35] Speaker 00:
What's the legal basis for that?

[00:19:38] Speaker 03:
Well, I think that there are certain elements of the DuPont factors and the main one coming to mind is

[00:19:45] Speaker 03:
the coexistence in the marketplace for so long.

[00:19:48] Speaker 00:
So no likelihood of confusion.

[00:19:49] Speaker 00:
Right.

[00:19:50] Speaker 00:
OK.

[00:19:50] Speaker 03:
Yeah.

[00:19:51] Speaker 03:
That would be the basis.

[00:19:54] Speaker 03:
The other argument of VFG that Brotex kind of finds a little bit troubling is this velocity.

[00:20:03] Speaker 02:
So just to be clear, that kind of argument might be in some tension with likelihood of confusion finding here.

[00:20:15] Speaker 03:
I didn't.

[00:20:17] Speaker 02:
You have and are defending the board's finding that if the other side got into this business with their mark, there would be a likely of confusion with you being in this business with that.

[00:20:35] Speaker 03:
Right.

[00:20:36] Speaker 03:
Well, in this case, the

[00:20:38] Speaker 03:
The board granted the Section 18 defense of DFT, which means all that was canceled out of those registrations was the pawn services.

[00:20:47] Speaker 03:
When that happened, I think the reality is the likelihood of confusion analysis is pawn services to pawn services.

[00:20:54] Speaker 03:
Okay.

[00:20:56] Speaker 03:
Using the doctrine to relate back in the scenario that Red Text files for a registration, NDFG argues that the zone of natural expansion with regard to their loan financing, that's where the defense that we, the arguments that we may have on likelihood of confusion and coexisting in the marketplace with regard to their loan financing versus our pawn services comes in.

[00:21:26] Speaker 03:
The other argument of DFGs that we find somewhat troubling is this philosophical argument that the Lanham Act encourages registration and favors registration over common law.

[00:21:45] Speaker 03:
From a practical standpoint, the argument

[00:21:49] Speaker 03:
is troubling in that, again, we base trademark rights, whether registered or not, based on use.

[00:21:57] Speaker 03:
And in order for DFG to prevail in that argument, the effect of that essentially is that it would grant trademark rights based on registration and cut off rights based on use, based on our use.

[00:22:14] Speaker 03:
And that's not really what the trademark system was designed to do.

[00:22:18] Speaker 03:
We're not going to decide that here in the context of this case, right?

[00:22:22] Speaker 03:
I mean, we don't do policy.

[00:22:24] Speaker 03:
No, I don't believe we do.

[00:22:26] Speaker 03:
I thought it was worth pointing out as a philosophical matter.

[00:22:30] Speaker 03:
It's scary, I guess, is the point that I'm making here.

[00:22:37] Speaker 03:
So, that's really the arguments I had for today.

[00:22:41] Speaker 03:
Are there any other questions that you have?

[00:22:46] Speaker 03:
There's not.

[00:22:47] Speaker 03:
Okay.

[00:22:48] Speaker 03:
Thank you.

[00:23:02] Speaker 01:
We would just respectfully disagree with Mr. McRae's explanation of the zone of natural expansion test.

[00:23:11] Speaker 01:
I think as the board pointed out, as the court pointed out, it doesn't really make any sense to compare the

[00:23:20] Speaker 01:
the services in the registrant's registration to the services in the opposer's registration.

[00:23:28] Speaker 01:
That's the purpose of the likely confusion test, not the zone of natural expansion test.

[00:23:32] Speaker 01:
The whole purpose of the zone of natural expansion test is to allow an applicant or registrant to rely upon its prior registration or its prior common law use over an intervening user when the later services are within the zone of natural expansion of the original services.

[00:23:50] Speaker 01:
And that's based on the principle that the first use, I'm going to quote from the Mason engineering test, the principle that the first use of a mark in connection with particular goods or services possesses superior rights in the mark not only in connection with those goods or services, but also against subsequent users of the same or similar mark for any goods or services which purchases might reasonably expect to emanate from it in the normal expansion of its business under the mark.

[00:24:13] Speaker 01:
And that's the rationale underlying the natural expansion test.

[00:24:19] Speaker 01:
And it's also the rationale underlying this court's recent opinion in the Apple v. Bertini case, which was decided after the board's decision in this case.

[00:24:28] Speaker 01:
In the Apple v. Bertini case, the court said that

[00:24:31] Speaker 01:
The owner of a mark could apply tacking to tack on its earlier mark in early registration in connection with services that might be slightly different from those in the later application registration when those services are within the normal course of evolution of the original services such that consumers would expect them to emanate from the same source.

[00:24:50] Speaker 01:
So that's quite similar.

[00:24:51] Speaker 02:
I don't think we said that

[00:24:53] Speaker 02:
That is a sufficient condition, only that it sometimes is a circumstance in which tacking would be permitted.

[00:25:02] Speaker 01:
That's true, Your Honor, but we believe this is one of those cases where it should be permitted.

[00:25:08] Speaker 02:
And Apple lost that case.

[00:25:10] Speaker 01:
Apple did lose that case, but I think they were trying to jump from goods to services, from jazz records to music services, and that's quite a bit different than our case where we're jumping from one type of financial services offered to a specific type of consumer to another type of services offered to that type of consumer.

[00:25:29] Speaker 01:
I'd just like to point out one final matter in connection with the question you asked earlier about expanding from A to B or B to A. The portion you cited of our appellate brief was just kind of a summary of our evidence.

[00:25:43] Speaker 01:
We do have a lot more evidence that was not cited in there, some of which shows, I would agree that the majority shows,

[00:25:49] Speaker 01:
pawn services expanding to check cashing and payday loan.

[00:25:53] Speaker 01:
We do have some examples also of payday loan stores expanding into pawn services.

[00:25:58] Speaker 01:
And I think that's another reason why this court needs to remand to the board for a full consideration of the factual record.

[00:26:04] Speaker 03:
Thank you very much, Your Honor.