FLORIDA VIRTUAL SCHOOL

v.

K12, INC.

This cause came before the Court following a bifurcated bench trial conducted October 16-19, 2023. In Phase¹, the parties presented their cases on Defendants’ Counterclaim for Cancellation of Plaintiff’s federally registered trademarks for fraud on the U.S. Patent and Trademark Office.

I. Background

Plaintiff Florida Virtual School (“Plaintiff”) is an agency of the State of Florida which provides online educational services to kindergarten, elementary, middle, and high school students in Florida and around the world. Doc. 1, ¶ 2. Defendants K¹², Inc. and K¹² Florida, LLC (“Defendants”) are for-profit companies similarly engaged in the business of providing online educational services to kindergarten through twelfth grade students in Florida and globally. Id., ¶¶ 3-4. Plaintiff filed suit on December 22, 2020, alleging trademark infringement, false advertising, unfair competition, and breach of the parties’ agreement resolving related prior litigation¹ (the “Settlement Agreement”). Id., ¶¶ 74-143. After discovery yielded several factual revelations, and with leave of the Court, Defendants amended their

Answer on March¹³, 2023, to include a Counterclaim for Cancellation of Plaintiff’s trademarks on the basis of fraud on the U.S. Patent & Trademark Office (“PTO”). Doc. 155, ¶¶ 54-75; see also Docs. 133, 151, 153. Defendants allege that Plaintiff was not active in the primary education market in 2002, despite stating so in its applications to the PTO. Doc. 155, ¶¶ 69-70, 74-75. On cross motions for summary judgment, the Court determined that Defendants’ Counterclaim was precluded as to Plaintiff’s two 2010 trademark registrations2 by release clauses in the Settlement Agreement. Doc. 289 at 6-12. The Court additionally found that there was no basis for Defendants’ allegations as applied to two of Plaintiff’s other trademark registrations.3 Id. at 14-15. The Court concluded there were disputed questions of material fact as to the issues of falsity,

II. Findings of Fact4

The parties agree that Plaintiff is a public agency that began developing and delivering online and distance learning programs in 1997. Doc. 302 at 15. Plaintiff was initially named Florida Online High School before it was renamed Florida Virtual School in 2001. Id. Defendants operate several distinct online schools in

Florida, including the Digital Academy of Florida and the Florida Cyber Charter Academy. Id. at 16. Both parties presently offer kindergarten through twelfth grade (K-12) online educational services. Id. at 16. Plaintiff’s three federally registered trademarks in dispute were issued by the PTO on January 3, 2017: Registrations No. 5,113,225, No. 5,113,235, and No. 5,113,248. Id. at 16-17; see also Doc. 1-1 at 6-10, 15-

16.

Founded in 1997 as an online high school, Plaintiff had few, if any,

competitors at the time of its inception. Doc. 334 at 8:10-13. It did not operate in the kindergarten through fifth grade (K-5) market and did not have an interest in doing so at that time. Id. at 8:19-21, 9:22-24. However, during its early years, Plaintiff was

After seeing the rapid growth of its middle school (grades 6-8) program, Plaintiff began expanding into elementary (K-5) education services with the hiring of Sarah Sprinkel (“Sprinkel”) in 2008. See Doc. 334 at 37:6-10, 85:18-21; Doc. 331 at 109:4-8. Sprinkel began working with smaller groups of students to initially build out “specials” program areas like art, music, and physical education. Doc. 331 at 109:4-110:5; see also Doc. 334 at 47:3-6. One of the first such pilots was the Captain Cardio physical education program that Sprinkel piloted in 2009.6 Doc. 331 at

22.

109:22-24. After the “specials” were developed, Sprinkel’s team moved on to the core subjects of reading, math, science, and social studies. Id. at 110:25-111:2. On July 31, 2008, Plaintiff inked a partnership with Connections Academy, another online education services company, to provide it with a full online education program for kindergarten through eighth grades (K-8). Doc. 334 at 97:12- 18; see also Doc. 350-4. While Connections Academy provided much of the day-today instructional and operational oversight during this period, the students were enrolled with Plaintiff’s school and were considered by the state to be Plaintiff’s students. Doc. 334 at 96:5-98:10. During this partnership, Plaintiff deployed its Marks alongside Connections Academy’s to co-brand their K-8 educational program. Id. at 33:25-34:8, 102:18-104:4; see also, e.g., Doc. 351-33. Beginning in 2015,

Plaintiff tasked Clark Berry (“Berry”) and others to build off of Sprinkel’s work to develop its own full suite of elementary programs in order to bring all of its K-8 services in-house. Doc. 330 at 36:19-37:7; see also Doc. 352-23. Plaintiff ceased its partnership with Connections Academy following the 2017-2018 school year, after which it provided K-12 services fully in-house. Doc. 334 at 114:4-6; see also Doc. 302 at 16. On April 27, 2016, Plaintiff filed applications to register the Marks at issue in this litigation. See Docs. 352-1, 352-2, 352-3. Each application listed Allison R. Imber (“Imber”) as the corresponding attorney and each was signed by Melissa Wurzel (“Wurzel”), Plaintiff’s Senior Director of Marketing and Communications at the time. See id.; see also Doc. 327-9 at 30:22-31:7. In the description of services section, Plaintiff stated that it provided online educational services, conducted distance learning instruction, and developed curriculum—all at the primary and secondary level. See Doc. 350-1 at 1, Doc. 350-2 at 1, Doc. 350-3 at 2-3. The applications for Registrations No. 5,113,225 and No. 5,113,235 stated that the trademarks were first used in commerce “[a]t least as early as 00/00/2002,” and the application for

Registration No. 5,113,248 listed the date of first use in commerce as “[a]t least as early as 01/00/2008.” Id.

III. Legal Standard

“In any action involving a registered mark the court may…order the cancellation of registrations, in whole or in part” when such action is warranted. See 15 U.S.C. § 1119. “One ground on which a party may petition to cancel a registered service mark is that the registration was obtained fraudulently.” Select Export Corp. v. Richeson, No. 10-80526-CIV-DIMITROULEAS, 2011 WL 13135114, *9 (S.D. Fla. May⁵, 2011); see 15 U.S.C. § 1064(3). Fraud occurs when an applicant “knowingly makes false, material representations of fact in connection with an application for a registered mark.” Sovereign Mil. Hosp. Ord. of Saint John v. Florida Priory of the Knights

Hosp. of the Sovereign Ord. of Saint John, 702 F. 3d 1279, 1289 (11th Cir. 2012). Fraud must be proven “to the hilt” with clear and convincing evidence. In re Bose Corp., 580 F. 3d 1240, 1243 (Fed. Cir. 2009). “To carry this burden, a party alleging fraud must show: (1) the applicant made a false representation to the []PTO; (2) the false representation was material to the registrability of the mark; (3) the applicant had knowledge of the falsity of the representation; and (4) the applicant made the representation with intent to deceive the []PTO.” Flame & Wax, Inc. v. Laguna Candles, Cancellation No. 92072343, 2022 WL 3083070, *20-21 (T.T.A.B.

Aug.¹, 2022). “If fraud can be shown in the procurement of a registration, the entire resulting registration is void.” Nationstar Mortgage LLC v. Mujahid Ahmad, 112 U.S.P.Q.2d 1361, 2014 WL 6480655, *4 (P.T.O. T.T.A.B. 2014).

IV. Analysis

Fundamental to any successful claim for fraud on the PTO is the existence of an applicant’s false representation. See In re Bose Corp., 580 F. 3d at 1243. While there is no question here that the statements in its application were material,⁷ Plaintiff did not make any false representations to the PTO. Moreover, even if it did misrepresent the date of first use, that alone “cannot be a basis for invalidating the registration.” Angel Flight of Ga., Inc. v. Angel Flight Am., Inc., 522 F. 3d 1200, 1210

A. False Representation

Defendants’ Counterclaim alleges that Plaintiff’s assertion in its applications that its Marks had been used in “primary” education markets since 2002 is false. See Doc. 359 at 4. Their contention, however, is dependent on restricting the definition of the term “primary” to only encompass kindergarten through fifth grade (“K-5”) education. See id. at 5. Indeed, Defendants admit that Plaintiff was serving middle school (grades 6-8) students at least as early as 2004. Id. at 6. And Plaintiff’s corporate representative credibly testified that it was developing middle school courses on a small scale in the 2002-2003 period, having launched its initial courses in 2002. Doc. 334 at 85:12-16; see also Doc. 351-34.8 Sprinkel’s testimony further showed that Plaintiff was developing and piloting elementary courses like “Captain

Cardio” as far back as 2009.9 Doc. 331 at 109:4-111:2, 129:11-130:3. Therefore,

include grades 6-8.10 Fla. Stat. § 1003.413(1) (eff. 2006-2012). However, this statute’s brief existence, together with the fact that it was not in effect when Plaintiff began using its marks or when it filed its applications to the PTO, affords it little weight. See id. Defendants similarly direct the Court to a provision of the Florida

Administrative Code which refers to “Primary Education” as “Age Three Through Grade Three.” Fla. Admin. Code r. 6A-4.0142 (2000). That too, however, is collateral at best. That reference is one example extrapolated from a complex chapter setting out qualifications for an exhaustive array of teaching and administrative certifications that only serves to further muddy any semblance of a concrete,

from 2008 onwards through Plaintiff’s contract with Connections Academy. See Doc. 350-4; Doc. 334 at 22:25-23:3, 33:25-34:8, 40:6-41-5. 10 The Court notes that Defendants’ proposition is undercut by their own reference to Plaintiff’s initial “secondary services” as “(grades 9-12)” in their post-trial brief. Doc. 359 at 6. consistent structure. See, e.g., id. at r. 6A-4.0151 (Specialization Requirements for Certification in Elementary Education (Grades K-6)) (emphasis added), id. at r. 6A- 4.0161 (Specialization Requirements for Certification in Middle Grades English (Grades 5-9)) (emphasis added).

Additionally, several witnesses at trial described their understanding of “primary” education. Sprinkel and Berry considered primary to refer to kindergarten through third grade (K-3), however Sprinkel remarked that “every school district is different.”¹¹ Doc. 330 at 51:14-19; Doc. 331 at 112:3-113:6. Sprinkel also observed that the definition of elementary school had changed over time, remarking that it was once first through sixth grade, then became kindergarten through sixth grade, and finally the present kindergarten through fifth grade. Doc.

331 at 112:16-20. She stated that “secondary school was always going to be in your high school.” Id. at 112:25-113:3. Kerrie DeMilio, a Senior Marketing Coordinator employed by Defendants, defined primary school as kindergarten through fifth grade, stating that secondary school means sixth through twelfth grade. Id. at 50:6- 15; see also id. at 42:10-13. Jason Schultz (“Schultz”), Plaintiff’s Senior Director of Instruction and corporate representative, described primary school as kindergarten through eighth grade. Doc. 334 at 83:6-7; see also id. at 74:11-13, 80:9-23.

however, who filed the applications, has testified through its corporate representative that it considered primary education to include kindergarten through eighth grade. Doc. 334 at 83:6-7. Though Defendants disagree with

Plaintiff’s definition, there is ample evidence in the record to suggest that—even apart from Schultz’s testimony—primary education is commonly understood to encompass at least up to sixth grade, and perhaps beyond. See, e.g., Doc. 331 at 112:16-113:3. This quibble over the definition of primary is not sufficient to constitute a false representation to the PTO. See Flame & Wax, 2022 WL 3083070 at *20-21. Even if the Court is wrong in its conclusion regarding the definition of “primary,” Defendants’ Counterclaim is foreclosed by Eleventh Circuit case law. See Angel Flight, 522 F. 3d at 1210. “A misstatement of the date of first use in the application is not fatal to the securing of a valid registration as long as there has been valid use of the mark prior to the filing date.” Id. at 1210 (citing Car Subx Serv. Sys., Inc. v. Exxon Corp., 215 U.S.P.Q. 345, 351 (P.T.O. T.T.A.B. 1982)). Defendants contend that this standard is inapplicable because Plaintiff did not make any valid use of its Marks in commerce for primary school programs or curriculum development. See Doc. 359 at 11. However, it is clear from the record that Plaintiff’s Marks were being used in commerce in the primary market— regardless of how that is defined—through its agreement with Connections

Academy from 2008 onwards.¹² See, e.g., Doc. 330 at 59:22-60:3, 84:9-24, Doc. 331 at 124:3-16, Doc. 334 at 24:12-18, 26:2-13, 27:23-28:4, 39:22-41:5, Doc. 350-4, Doc. 350-6, ¶¶ 6.2, 7.4, Doc. 351-33, Doc. 351-77, Doc. 351-79. Moreover, beginning in 2009,

Plaintiff was launching pilot programs and developing its own in-house elementary curriculum branded with its Marks. See Doc. 331 at 109:14-111:2. Because Plaintiff’s Marks were plainly used in commerce in the primary market for years prior to the

B. Knowledge & Intent

Finally, even if the Court has misinterpreted Angel Flight, there is simply no evidence in the record that Plaintiff knowingly intended to deceive the PTO. Relying on a Trademark Trial and Appeal Board (“T.T.A.B.”) opinion,

Defendants contend that “reckless disregard” is sufficient to constitute subjective intent. See Doc. 359 at 12-13 (citing Chutter, Inc. v. Great Management Grp., LLC Chutter, Inc. v. Great Concepts, LLC, 2021 WL 4494251 (P.T.O. T.T.A.B. Sept. 30, 2021) rev’d on other grounds, Great Concepts, LLC v. Chutter, Inc., 84 F. 4th 1014, 1034 n.2 (Fed

Cir. 2023)). However, T.T.A.B. decisions—though capable of carrying preclusive effect in certain circumstances—are not binding on this Court. See B&B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138, 147-60 (2015) (holding that issue preclusion can attach to some T.T.A.B. decisions); see also Bonner v. City of Prichard, Ala., 661 F. 3d 1206, 1209 (11th Cir. 1981). Contrary to the Chutter court’s “reckless disregard” standard, in the Eleventh Circuit, fraud “requires a purpose or intent to deceive the PTO in the application for the mark.” Sovereign Mil. Hosps. Ord. of Saint John of Jerusalem of Rhodes and of Malta v. Florida Priory of Knights Hosps. of Sovereign Ord. of Saint John of Jerusalem, Knights of Malta, Ecumenical Ord., 702 F. 3d 1279, 1289 (11th Cir. 2012). More pointedly, the “declarant-focused text of the application oath requires the signatory’s good-faith, subjective belief in the truth of its contents.” Id. at 1290 (emphasis added). “If the declarant subjectively believes the applicant has a superior right to use the mark, there is no fraud, even if the declarant was mistaken.” Id. at 1292. “Subjective intent to deceive, however difficult it may be to prove, is an indispensable element in the analysis.” In re Bose Corp., 580 F. 3d 1240,

1245 (Fed. Cir. 2009). The Court cannot sidestep this body of binding precedent in favor of the T.T.A.B.’s holding in Chutter.¹³ It is true that, “because direct evidence of deceptive intent is rarely available, such intent can be inferred from indirect and circumstantial evidence.” In re Bose

Corp., 580 F. 3d at 1245. Here, however, there is no evidence that Plaintiff, or its agents, had a subjective intent to deceive the PTO. Defendants contend that Wurzel, who signed the PTO applications, was not even aware of the Marks’ first use dates or that actual use was required. Doc. 359 at 13. Upon review of her deposition transcript, however, Wurzel merely admitted that she did not precisely recall the

DONE and ORDERED in Orlando, Florida on December¹, 2023.

hee GREGORY A. PRESNELL

UNITED STATES DISTRICT JUDGE

Copies furnished to: Counsel of Record Unrepresented Parties