The Trademark Act Section 10(a)(1) clearly states that an intent-to-use application cannot be assigned “except for an assignment to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing.”
In the recent Trademark Trial and Appeal Board case, Cent. Garden & Pet Co. v. Doskocil Mfg. Co, No. 91188816 (TTAB August 16, 2013), All-Glass Aquarium Co., a wholly-owned subsidiary of Pennington Seed, filed a trademark application which eventually matured into a cancelled registration. Pennington Seed was a wholly-owned subsidiary of Central Garden & Pet Company. While the All-Glass application was pending and before proof of use was filed, All-Glass assigned the application to Central Garden. The assignment was not part of any larger transaction between the companies, Central was not a successor to All-Glass or any part of it, and All-Glass continued to conduct business in the same manner as it had before the transfer under the assigned mark. The only thing that was exchanged in the transaction between these two companies was the mark and the goodwill associated with the mark. Neither all nor a portion of the Applicant All-Glass was transferred to Central.
In defending against the counterclaim to cancel the registration for an invalid assignment, Central argued that because All-Glass and Central were “closely related companies” and because the assignment did not cause any “confusion or discontinuity” in the use of the mark, that there was no violation of the statute. The Board disagreed completely. It stated that because Central wholly owned Pennington Seed, and Pennington Seed owned all of the stock in All-Glass, the application belonged to Central all along. However, the Board made clear that since Central chose to structure its business using multiple and separate subsidiaries, each of which counts as a “person” under Section 45 of the Trademark Act, it must live with the fallout from that decision.
Moreover, the Board held that regardless of the fact that Central was not trafficking an intent-to-use applications and did not engage in any other type of bad faith conduct, both entities involved in the assignment are subject to the restrictions of the statute.
The Board’s decision demonstrates that related companies are not free to assign intent-to-use applications between them unless they meet the strict language of the statute for doing so. Common ownership or control alone is not sufficient to meet the standards for a valid assignment. It is crucial that trademark applicants pay special attention when filing an intent-to-use application to ensure that the named applicant remains the applicant until such time as proof of use can be filed. Also, applicants must make sure that the title to their issued registrations are valid before asserting it against a third party and risking cancellation.