What If The Board Issues A Default Notice or Judgment Against You?

If a defendant fails to answer a complaint filed with the Trademark Trial and Appeal Board (the “Board”), within the set time, the Board may issue a notice of default. The notice of default will inform the defaulting party that no answer was submitted, nor was a motion filed to extend the time to answer. Therefore, a notice of default will be entered in accordance with Fed. R. Civ. P. 55(a). The Failure to file a timely answer will toll all deadlines, until the default issue is resolved.

The defendant is allowed thirty days from the mailing date of the notice of default to show cause why default judgment should not be entered in the matter. Default judgment may be entered if the defendant does not respond to the notice of default or if the defendant responds, but does not show good cause. Typically, if the defendant does respond to the notice of default, the late answer should be submitted with the response. However, there are a couple of exceptions to this general rule. These exceptions include the circumstances where the defendant does not receive a copy of the complaint, the parties settle the matter, or if the parties agree to an extension of the defendant’s time to answer. If the default is resolved, the Board will reset the dates for the discovery conference as well as the other trial dates.

Good cause for failing to submit an answer is commonly found where the defendant shows: (1) the delay in filing an answer was not the result of willful conduct or gross neglect on the part of the defendant; (2) the plaintiff will not be substantially prejudiced by the delay; and (3) the defendant possesses a meritorious defense in the matter. Regarding the third showing, an evaluation of the merits of the case is not necessary, there need only be a plausible defense asserted in the response to notice of default. Whether a default judgment will be entered against the defendant is a matter left within the Board’s discretion. But generally, the Board will be reluctant to enter a default judgment and is quite willing to evaluate the defendant’s reasons for failing to submit an answer. Typically, the Board will resolve any doubt in favor of the defendant.

If a default judgment is entered, a motion to set aside the default judgment may be filed. However, the Board will not be as forgiving with regard to a motion to set aside a default judgment. The standards are more stringent because there is a policy that favors the finality of judgments. The Board when reviewing a motion to set aside a default judgment will do so in accordance with Fed. R. of Civ. P. 60(b).

The same three factors will be considered for a motion to set aside the default judgment, as stated above for motions to set aside the notice of default (willful conduct, prejudice to the plaintiff, and is there a meritorious defense), but the Board will not show the same leniency as it would with a notice of default. With this in mind, the party who defaulted is still encouraged to file a motion to set aside the default judgment. It is important to keep in mind that the law generally disfavors default judgments for failing to timely answer the complaint, and a motion of this type is still treated more liberally than other motions considered by the Board under Fed. R. of Civ. P. 60(b) for relief from other types of judgments.

If the default issue is resolved and the answer submitted, the matter will move forward to the discovery phase. See our web page entitled, An Overview Of Discovery In Board Proceedings, for more information on discovery proceedings and the time frame the Board utilizes for the exchange of information between the parties. If you have questions, regarding Board proceedings or general trademark related questions, please do not hesitate to contact our office for a courtesy consultation.