Last August, the US Patent and Trademark Office’s (USPTO’s) Trademark Trial and Appeal Board (TTAB) issued a precedential decision in Central Garden & Pet Company v. Doskocil Manufacturing Company, Inc. The TTAB cancelled a trademark registration for the mark Zilla because the assignment of the underlying applica- tion was improper. The decision highlights the need for parties to give special consideration to the manner in which the assign- ment of intent-to-use-based trademark applications are treated when structuring corporate transactions.
The application for the Zilla mark had been filed on an intent-to- use basis by an entity called All-Glass Aquarium Co., a wholly owned subsidiary of Pennington Seed, Inc., and assigned—prior to the filing of an allegation of use—to Central Garden & Pet Co., of which Pennington Seed, Inc. was a wholly owned sub- sidiary. A simple form of assignment document was recorded with the USPTO to memorialize the assignment but, notably, such document represented the entire agreement regarding the transfer of the application.
Based on its ownership of the Zilla mark, Central Garden initiated opposition and cancellation proceedings against trademark filings owned by Doskocil for the marks Dogzilla and Petzilla. In response, Doskocil made a counterclaim seeking cancellation of Central Garden’s Zilla mark, claiming that the assignment of the application to Central Garden violated Section 10(a)(1) of the Trademark Act.
The provision at issue provides, in pertinent part, that a trademark application filed on an intent- to-use basis may not be assigned prior to the filing of an allegation of use, except where the assignee acquires at least that part of the applicant’s business to which the mark pertains.
The TTAB found that Central Garden was not a successor to the assignor of the Zilla application and that the assignor continued to operate its business in the exact same manner after the transfer had been memorialized as it had beforehand. In doing so, the TTAB applied a very strict reading of the statute and deter- mined that it was not appropriate to look at Congress’s intention when enacting the statute. Despite the legislative history under- lying the statute, which indicates that the provision was enacted to prohibit parties from trafficking in intent-to-use applications (something that there was no evidence of in the case at hand), and even though there was no evidence of bad intent on behalf of either Central Garden or All-Glass, the TTAB decided that the statute was clear and that the assignment of the Zilla mark con- stituted a violation of the statute. The fact that the parties were related did not, similarly, trump the language of the statute.
Although the statute does not explicitly state the consequence of a prohibited transfer, the TTAB held in Central Garden that an improper assignment of an intent-to-use-based applica- tion renders the application void and, therefore, the registra- tion that issues for such application is subject to cancellation. Because the TTAB cancelled the registration based on the assignment issue, it did not need to evaluate the likelihood of confusion issue.
This case highlights the need to not simply group the assign- ment of an intent-to-use-based application with all other trademarks owned by an entity when structuring corporate transactions. If All-Glass and Central Garden had structured the assignment differently, the registration for the Zilla mark might not have been cancelled and the case could have been decided otherwise.
The case also highlights the importance of ensuring that a company’s trademark registrations are not vulnerable to can- cellation when commencing an opposition or cancellation proceeding against a third party. On the other hand, the can- cellation of a registration based on an invalid assignment does not extinguish common law rights and, as such, does not, itself, invalidate the enforceability of a mark.