Suzanne B. Conlon, United States District Judge.
Anat Baniel ("Baniel") brings this action for declaratory judgment and cancellation of trademark registrations against the Feldenkrais Guild ("the Guild"). In Count I of the complaint, Baniel alleges that the Guild made fraudulent representations to obtain trademark registrations for the terms "Peldenkrais" and "Feldenkrais Method." Baniel alleges in Count II that these terms are generic. In its counterclaim, the Guild seeks a declaration that its marks are valid and an order enjoining Baniel from infringing these marks. The Guild also asserts the following affirmative defenses: (1) unclean hands; (2) laches; (3) estoppel; (4) lack of standing; (5) statute of limitations; and (6) incontestable registration. Baniel and the Guild filed cross motions for summary judgment pursuant to Fed.R.Civ.P. 56 and Local Rule 56.1. Baniel moves for summary judgment on Count I of the complaint and the Guild's affirmative defenses and counterclaim. The Guild moves for summary judgment on Counts I and II of the complaint and its counterclaim.
BACKGROUND
Dr. Moshe Feldenkrais ("Dr. Feldenkrais") is the source of the terms "Feldenkrais" and "Feldenkrais Method." Guild's 56.1(b)(3) Response to Baniel's 56.1(a)(3) Statement of Facts ¶ 18 ("Guild 56.1(b)"). The terms refer to an exercise method he developed based on his studies of human movement and behavior. Id. ¶ 15-16. He used these terms to describe his work, and the students and graduates of his training programs also used the terms. Id. ¶ 19-20. The Feldenkrais Method improves agility through physical exercises that increase interaction between a person's muscles and central nervous system. Id. ¶ 16. The training and practice of the Feldenkrais Method has continued, even though Dr. Feldenkrais died in June 1984. Id. ¶ 77.
The Guild formed in 1977. Baniel's 56.1(a)(3) Reply to the Guild's 56.1(b)(3) Statement of Facts ¶ 103 ("Baniel 56.1(a)"). It serves as a membership organization of Feldenkrais practitioners and regulates the standards of practice for those who use the Feldenkrais Method. Guild 56.1(b) ¶¶ 7, 9. The Guild also trains people in the method. Baniel's 56.1(b)(3) Response to the Guild's 56.1(a)(3) Statement of Facts ("Baniel's 56.1(b)") ¶ 26.
The U.S. Patent and Trade Office ("PTO") issued service mark registrations to the Guild for the term "Feldenkrais" in December 1985 and for the terms "Feldenkrais Method" in April 1987. Id. ¶¶ 69-70. In 1993, the PTO canceled the "Feldenkrais Method registration," but in June 1996, the PTO reissued the mark to the Guild. Id. ¶¶ 75, 80.
Baniel studied the Fcldenkrais Method under Dr. Feldenkrais in the 1970s. Guild 56.1(b) ¶ 3. Since her graduation from his training program in 1977, Baniel has practiced and taught the Feldenkrais Method as a certified trainer. Id. ¶¶ 4, 6. Beginning in 1987 and continuing through the present, Baniel has conducted training programs that were accredited by the Guild. Baniel 56.1(b) ¶ 20. During this time, she has used the marks "Feldenkrais" and "Feldenkrais Method" with the permission of the Guild. Id.
The Guild claims the right as owner of the terms "Feldenkrais" and "Feldenkrais Method" to prohibit the use of the terms by any practitioner who has not satisfied the Guild's certification requirements and obtained permission to use the terms. Guild 56.1(b) ¶ 11. In 1998, Daniel announced her intentions to offer non-Guild accredited Feldenkrais training in Chicago and she used the terms "Feldenkrais" and "Feldenkrais Method" in connection with the advertising of the program and the training. Id. ¶ 13. The Guild threatened to sue Baniel and her students if she used these terms without the Guild's approval. Id. ¶ 14. Daniel claims that the Guild's trademark registrations are invalid because the terms are generic and the Guild obtained the registrations through fraudulent claims of ownership and exclusive use.
The events relating to the Guild's acquisition and maintenance of the marks began in the early 1980s. In 1981, Dr. Feldenkrais returned to Israel after becoming seriously ill. Guild 56.1(b) ¶ 32. On November 18, 1982, Dr. Feldenkrais signed an application requesting "that said mark be registered" in the PTO. Guild Dep. Ex. 4. Guild member and former President Jerry Karzen ("Karzen") filled out the application for Dr. Feldenkrais. Id. ¶ 35. The Guild hired Attorney Fred Goldberg ("Goldberg") to register the marks. Guild 56.1(b) ¶ 45. A second document signed by Dr. Feldenkrais on November 18 authorized the Guild to represent "my registered mark "Feldenkrais' for all notices or processes in proceedings affecting the mark in the United States." Id. ¶ 39; Guild Dep. Ex. 4.
On June 2, 1983, Goldberg submitted to the PTO a service mark application for the terms. Id. ¶ 51. When the Guild filed its registration materials, it did not include Dr. Feldenkrais' 1982 application. It is not clear, however, whether the Guild possessed the application at this time. Id. ¶ 49. The registration materials included the sworn statement of David Bersin ("Bersin"), who was then vice president of the Guild. In this statement, he expressed his belief that the Guild was the owner of the service mark sought to be registered and that no other person or entity had the right to use the mark in commerce. Id. ¶ 52. In 1985 and 1986, the Guild's president executed and swore to affidavits for the purpose of registering the marks. The affidavits stated "that the mark had become distinctive, as applied to the applicant's services by reason of substantially exclusive and continuous use thereof." Id. ¶¶ 80-81, 88-89.
In 1985, Bersin swore to the affidavit for the purpose of registering "Feldenkrais." In 1986, Bonnie Humiston swore to the affidavit for the purpose of registering "Feldenkrais Method."
DISCUSSION
I. SUMMARY JUDGMENT STANDARD
A movant is entitled to summary judgment under Rule 56 when the moving papers and affidavits show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); King v. National Human Resource Committee, Inc., 218 F.3d 719, 723 (7th Cir. 2000). Once a moving party has met its burden, the non-moving party must go beyond the pleadings and set forth specific facts showing there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Silk v. City of Chicago, 194 F.3d 788, 798 (7th Cir. 1999). The court considers the record as a whole and draws all reasonable inferences in the light most favorable to the party opposing the motion. Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Insolia v. Phillip Morris Inc., 216 F.3d 596, 599 (7th Cir. 2000).
II. Count I: Fraud
Both parties move for summary judgment on Baniel's claim that the registrations of "Feldenkrais" and "Feldenkrais Method" were fraudulently obtained. In support of her claim, Baniel argues that the Guild intentionally misrepresented material information when applying for the trademark registrations with the PTO. The Guild claims that the representations it made to the PTO were immaterial as a matter of law.
The Guild also argues lack of standing and the statute of limitations are grounds for summary judgment on Count I. These claims are discussed in the affirmative defenses section of this opinion.
The parties disagree about numerous factual issues, which have a bearing on each element of Baniel's fraud claim. In regard to whether the Guild made a material misrepresentation to the PTO about the ownership of the marks, major facts in contention include: (1) whether Dr. Feldenkrais was the owner of the terms; (2) whether Dr. Feldenkrais intended for the Guild to register the marks for itself or on his behalf; (3) whether Dr. Feldenkrais believed that the Guild had registered the marks on his behalf (4) whether Dr. Feldenkrais abandoned whatever ownership rights he might have possessed; and (5) whether the PTO would have registered the marks regardless of the Guild's representations.
In regard to whether the Guild made material misrepresentations about its exclusive use of the marks, major facts in contention include: (1) whether Dr. Feldenkrais continuously used the marks; (2) whether the Guild correctly represented to the PTO its status as the substantially exclusive user of the marks; (3) whether the Feldenkrais foundation used the marks between 1978 and 1989; (4) whether Dr. Feldenkrais gave the Humanistic Psychology Institute and the Feldenkrais Foundation permission to use the marks; and (5) whether other people were using the terms in commerce.
In regard to whether the alleged misrepresentations of ownership and exclusive use were intentional, major facts in contention include: (1) whether an older version of the Guild's Articles of Incorporation establishes that the Guild considered Dr. Feldenkrais the owner of the marks; (2) whether Goldberg thought that Dr. Feldenkrais was the owner of the marks when he submitted the application material to the PTO in 1983; (3) whether Goldberg discussed with Bersin the need for producing evidence of Dr. Feldenkrais' assignment of ownership rights; (4) whether Bersin and Bonnie Humiston ("Humiston") signed affidavits suggesting the Guild was the exclusive user of the marks when they knew this was not true; (5) whether the Guild sought more than one legal opinion in regard to ownership of the marks; (6) whether Karzen gave Feldenkrais' 1982 application to the Guild; (7) whether a memo by Humiston establishes her belief that Feldenkrais was the owner of the marks; and (8) whether Humiston's 1986 application to the PTO included Feldenkrais' 1982 application. Due to the fact that there are material factual disputes over each element of Baniel's fraudulent misrepresentation claim, the parties' motions for summary judgment on Count I must be denied.
Other factual disputes that might have a bearing on Baniel's fraudulent misrepresentation claim, along with other claims in this case, include: (1) the date Baniel first began training others in the Fcldenkrais method; (2) who formed the Guild; (3) the Guild's role in the regulation of the marks; (4) whether a PTO examiner wrote to Goldberg seeking proof that the Guild was authorized to use the mark; (5) whether a meeting occurred in which the Foundation's attorney met with Baniel and Humiston, who were acting on behalf of the Guild; (6) whether Humiston had a close relationship with Baniel in the 1980s; (7) the purpose of the Guild and (8) whether the book Bodywork Basics teaches the reader how to perform Feldenkrais.
III. Count II: Generic terms
The Guild moves for summary judgement on Baniel's claim that the terms "Feldenkrais" and "Feldenkrais Method" are generic. Relying on consumer surveys and various publications, the Guild argues that no reasonable trier of fact could find that the terms are generic.
The Guild's claim fails for several reasons. First, Baniel disputes the quality of the methods used to conduct the consumer surveys and accuracy of the Guild's survey conclusions. Second, Baniel has produced publications and writings, including some authored by representatives of the Guild, to use as evidence that the terms are generic and to dispute the meaning of the publications on which the Guild relies. The meaning of the publications on which the parties rely and the value of the surveys conducted on behalf of the Guild are the types of questions that can only be answered by the trier of fact after hearing all of the evidence. Accordingly the Guild's motion for summary judgment on Count II of Baniel's claim must be denied.
IV. Affirmative Defenses
The Guild has asserted several affirmative defenses to Baniel's claims, and Baniel moves for summary judgment on all of them. The defenses pertaining to the statute of limitations, Baniel's standing to sue, and incontestable registrations cannot be resolved as a matter of law. The Guild's defenses of unclean hands, laches, and estoppel. however, may be resolved.
A. Statute of Limitations
Both parties move for summary judgment on the Guild's claim that Baniel is time barred from bringing her fraud claim. The parties disagree over whether there is an applicable statute of limitations. Baniel cites 15 U.S.C. § 1064 ("§ 1064") for the proposition that a person alleging fraud in the registration of trademarks can bring a claim any time. The Guild argues that courts adopt the most relevant state law's limitation period in fraud claims brought under the Lanham Act.
There is an applicable statute of limitations for fraud cases brought under the Lanham Act. Although § 1064 states that an action for a cancellation of a trademark procured by fraud can be brought any time, it does not address whether any person can bring an action at any time. Therefore, precedent and legal authorities more precisely address the issue in dispute. This court uses the most applicable state law in setting limitation periods for cases arising under the Lanham Act. See Hot Wax, Inc. v. Warsaw Chemical Co., 45 F. Supp.2d 635, 647 (N.D. Ill. 1999) (the Illinois Consumer Fraud Act's statute of limitations, which is three years, applies in Lanham Act cases involving false advertising).See also J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 31:85 (the closest state statute should be used since the Lanham Act has no statute of limitations).
The practice of adopting the applicable state statute of limitations in cases brought under the Lanham Act also applies to claims of fraud on the PTO. See Beauty Time, Inc. v. Vu Skin Systems, Inc., 118 F.3d 140, 143 (3rd Cir. 1997) (when fraud is used as a basis for challenging the validity of incontestable registration, the claim must be asserted within the applicable statute of limitations); Official Airline Guides, Inc. v. Gross, 6 F.3d 1385, 1395, 96 (9th Cir. 1993) (same); CalzaturificioRangoni v. U.S. Shoe Corporation, 868 F. Supp.1414, 1420-21 (S.D.N.Y. 1994) (same); J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 31:59 (same).
At this point, it is unnecessary to address whether the three-year statute of limitations under the Illinois Consumer Fraud Act or the five-year statute of limitations under Illinois common law fraud is the applicable state statute. There are factual disputes that call into question whether Baniel would be time barred under either statute of limitations. The parties dispute the time when the alleged misrepresentations actually occurred and whether they are still are occurring. Baniel 56.1(b) ¶ 86. Accordingly, the parties' motions for summary judgment on the defense of lack of standing must be denied.
B. Standing
The parties move for summary judgment on the Guild's claim that Daniel lacks standing to sue for fraud. The Guild argues that Daniel cannot seek cancellation of the registered marks since her business did not exist when the Guild allegedly made fraudulent representations. However, the parties disagree about the time at when Daniel's business actually began and, as discussed above, when various allegedly fraudulent representations were made. In regard to the business, Baniel claims that she has been teaching the Feldenkrais Method since 1977, but the Guild claims that she started training students in 1987. Daniel 56.1(b) ¶ 15. These factual issues must be resolved before Daniel's standing can be considered. Accordingly, the parties' motions for summary judgment on the Guild's lack of standing claim must be denied.
C. Incontestable registrations
Daniel moves for summary judgment on the Guild's affirmative defense of incontestable registration under 15 U.S.C. § 1065. She argues that under § 1064 an incontestable trademark can be canceled at any time if the registration was obtained by fraud or if the mark has become generic. As discussed above, there are genuine issues of material fact as to whether the Guild obtained its registration of the marks by fraud and whether the terms are generic. Accordingly, Daniel's motion for summary judgment on the Guild's incontestable registration defense must be denied.
D. Unclean hands, laches, and estoppel
Daniel moves for summary judgment on the Guild's affirmative defenses of unclean hands, laches, and estoppel. The PTO has ruled in cancellation hearings that equitable defenses are not available against the claim of fraud in trademark registration cases. Treadwell's Drifters Inc. v. Marshak, 18 U.S.P.Q.2d 1318, 1320 (1990). They are not available mainly because it is in the public interest to prevent or remove trademark registrations obtained by fraud. Id. That same reasoning should be applied to this case. See Shakespeare Company v. Silstar Corporation of America, Inc., 9 F.3d 1091, 1098 (4th Cir. 1993) ("There is some dispute as to whether the limits placed on Patent and Trademark Office cancellation proceedings also apply to court proceedings. A coherent reading of the statute suggests that the grounds for cancellation should be the same in both forums") (citing Siegrun D. Kane, Trademark Law, 281 (2d Ed. 1991)). If the Guild obtained the trademarks "Feldenkrais" and "Feldenkrais Method" by fraud, it would not be in the public's interest to preclude Baniel from pursuing the cancellation of the Guild's registration based on these equitable defenses. Accordingly, Baniel's motion for summary judgment is granted for the Guild's affirmative defenses of unclean hands, laches, and estoppel.
First, the Guild contends that Daniel is guilty of unclean hands because she improperly used the marks in violation of its published guidelines. Next, the Guild argues that Daniel has been a member of the Guild since 1978 and waited too long to initiate this action. Finally, the Guild claims that it relied upon her inaction and considered it to be a recognition of the validity of the marks.
V. Counterclaim:
The parties move for summary judgment on the Guild's counterclaim of trademark infringement. In support of this counterclaim, the Guild argues that it owns valid marks and Baniel's use of them is likely to cause confusion, mistake, or deception. As discussed above, there are material factual disputes over whether the Guild used fraud to obtain registration of the marks and whether the marks are generic. If either of Baniel's claims is established, the marks cannot be considered valid. Accordingly, the parties' cross motions for summary judgment on the Guild's counterclaim must be denied.
CONCLUSION
Daniel's motion for summary judgment on Count I of the complaint and the Guild's counterclaim is denied, but the motion is granted in part on the Guild's affirmative defenses. The Guild's motion for summary judgment on Counts I and II of the complaint and its counterclaim is denied.