Improper Intracompany Assignment of Intent-to-Use Trademark Application Requires Cancellation of Registration: TTAB | Practical Law

Improper Intracompany Assignment of Intent-to-Use Trademark Application Requires Cancellation of Registration: TTAB | Practical Law

In Christiane E, LLC v. International Expeditions, Inc., the Trademark Trial and Appeal Board (TTAB) granted the respondent's counterclaims to cancel the petitioner's trademark registration, holding that the petitioner's intracompany assignment of the intent-to-use application underlying the registration before the filing of an allegation of use was an improper assignment.

Improper Intracompany Assignment of Intent-to-Use Trademark Application Requires Cancellation of Registration: TTAB

by PLC Intellectual Property & Technology
Published on 20 Aug 2013 • USA (National/Federal)
In Christiane E, LLC v. International Expeditions, Inc., the Trademark Trial and Appeal Board (TTAB) granted the respondent's counterclaims to cancel the petitioner's trademark registration, holding that the petitioner's intracompany assignment of the intent-to-use application underlying the registration before the filing of an allegation of use was an improper assignment.
On August 16, 2013, the USPTO Trademark Trial and Appeal Board (TTAB) issued a decision in Central Garden & Pet Company v. Doskocil Manufacturing Company, Inc., granting the respondent's counterclaim to cancel the registration on which the petitioner alleged a likelihood of confusion in its opposition and cancellation petitions, on the grounds that the application underlying the registration was improperly assigned.
The petitioner, Central Garden & Pet Company (Central), opposed Doskocil Manufacturing Company, Inc. (Doskocil) applications to register the marks PETZILLA and DOGZILLA and sought the cancellation of its registration for the mark DOGZILLA. Specifically, Central alleged a likelihood of confusion with its ZILLA mark, for which it owned two registrations.
Doskocil asserted counterclaims to cancel Central's ZILLA registrations on the grounds that the application underlying Central's initial ZILLA registration (the '521 registration) was improperly assigned before the filing of a statement of use.

Priority

The TTAB first analyzed the issue of priority of use, evaluating the multiple dates at issue and arguments of the parties.
Regarding constructive use, the TTAB found that Central would be entitled to a constructive use date of December 7, 2005, the filing date of its initial application for the ZILLA mark. This date was before any actual or constructive use date claimed by Doskocil. However, if Doskocil were to prevail on its counterclaim seeking to cancel the '521 registration arising from this application, the TTAB noted Central would not be entitled to this constructive use date. Instead, Doskocil would be entitled to the earliest constructive use date of April 4, 2005 arising from its earliest application.
The TTAB also discussed the issue of analogous use priority (non-technical use of a mark that is still sufficient to create an association between the goods and their source). This was because Central argued that it was entitled to priority based on its use of the ZILLA mark in a name validation study and in teaser advertisements, before either its application filing date or its date of first use on its goods. However, the TTAB found that Central's study targeting the public's perception of a mark did not itself demonstrate the public's association between the goods and their source. The TTAB found that Central's teaser ad may have been good marketing, but it could not demonstrate use because it failed to mention or depict any goods.

Assignment of the Application for the '521 Registration

Doskocil based its counterclaim to cancel Central's '521 registration on Section 10(a)(1) of the Lanham Act. This section provides that, before the filing of a statement alleging use, an intent-to-use trademark application may only be assigned to a successor to the assignor's business or part of the business to which the trademark pertains, where that business is "ongoing and existing." As the TTAB previously held in Clorox Co. v. Chem. Bank., while the statute does not address the consequences of an improper assignment, any resulting registration must be canceled.
In this instance, the intent-to-use application was initially filed by All-Glass Aquarium Co., a wholly-owned subsidiary of Pennington Seed. Pennington Seed was itself a wholly-owned subsidiary of Central. Before a statement alleging use was filed, the application was assigned by All-Glass to Central. The assignment solely transferred the application and was not part of a larger transaction between the companies. Specifically, Central was not the successor to All-Glass or any of its business. In fact, All-Glass continued to operate in the same manner after the transfer, even selling products bearing the ZILLA mark.
The TTAB found the transfer was a clear violation of Section 10 of the Lanham Act and therefore the '521 registration must be canceled. In particular, the TTAB:
  • Rejected Central's arguments that because the parties were closely related the assignment did not cause confusion or discontinuity in the use of the mark and therefore a cancellation would undermine Section 10's purpose. The TTAB noted that the general principles of continuity stemmed from cases evaluating the assignment of registrations and use-based applications, not intent-to-use applications, where the specific statutory requirements prevailed.
  • Rejected Central's argument that a party that takes on the goodwill associated with an assigned intent-to-use application qualifies as a successor to the assignor's business or part of the business to which the trademark pertains. The TTAB noted that Section 10 clearly requires more than merely the transfer of the goodwill associated with the mark, as is required in any trademark transfer.
  • Distinguished this case from its previous ruling in Amazon v. Wax, which was cited by Central. In that case, the parties jointly filed an intent-to-use application, but one party assigned its interests to the other party before the filing of a statement alleging use. The TTAB found the transfer was valid, because was no transfer to "another" party. The assignee was an original applicant and then became the sole applicant. The TTAB equated that scenario to a change in the type of entity, rather than the assignment between two distinct legal entities at issue here.
  • Found the result required by the statute's clear language was unaltered by:
    • Central's and All-Glass' close relationship as corporate affiliates, even where as a result of the corporate structure, Central was always the application's owner;
    • the parties' lack of bad intent; and
    • Section 10's legislative history and whether Congress' motivation was to prevent trafficking in intent-to-use applications.
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