Jul
21

A REGISTERED TRADEMARK APPLICANT MUST BE THE OWNER OF THE MARK UNDER SECTION 5 OF THE LANHAM ACT.

On July 2, 2019, the Trademark Trial and Appeal Board (“TTAB”) sustained the opposition to the mark HOLLYWOOD HOTEL by finding that the mark was void ab initio because the Applicant was not the owner of the mark.   Hollywood Casino, LLC v. Chateau Celeste, Inc., Opposition No. 91203686.

An application is void if it is filed by a person or entity that is not the owner of the mark.  By definition, the owner of the mark is the one that controls the nature and quality of the goods and services under the mark.  This requirement is consistent with trademark law’s focus on preventing consumer confusion over who is providing the goods/services under the mark.

Here, the opposer had the burden to prove that the Applicant was not the owner at the time of filing of the opposed application.  HOLLYWOOD HOTEL was owned as a common law mark starting in 1994 by Zarco Hotels.   Applicant Chateau Celeste, Inc. filed the application for the HOLLYWOOD HOTEL mark in 2011.  The application was subsequently opposed by Hollywood Casino, LLC on likelihood of confusion grounds.  During the course of discovery, the opposer ascertained from the testimony of the Applicant’s president that Chateau Celeste was not the actual owner of the HOLLYWOOD HOTEL mark under the law.  The TTAB granted the opposer the right to amend the complaint to include a count that the mark was not registerable because the Applicant was not the true owner of the mark.

The opinion is instructive because it emphasizes the importance of ensuring that the applicant and the mark owner are one and the same.  First, as the Hollywood Casino decision establishes, an application filed by a non-owner is void from the start.  Second, even if the application somehow makes it through the registration process without an opposition proceeding, ownership issues may arise in any future trademark infringement litigation proceedings; it is the owner of the mark who generally has standing to bring such lawsuits.  Third, ownership issues may also arise in a later cancellation proceeding brought by another party before the TTAB.

The ownership in a mark, whether registered or common law, may pass to another through a formal assignment of rights.  The USPTO encourages recordation of “registered mark” assignments to establish a public chain of title.  Trademark assignments often arise when a business is purchased where registered or common law or state trademark rights are acquired as part of an asset purchase or stock purchase. Additionally, ownership may pass without a formal assignment if one company becomes the owner of mark by controlling its use by a related company, e.g., by a subsidiary.

Importantly, licensees are not the owners of trademarks.  Indeed, any licensor of trademarks has the obligation to ensure that the licensee is maintaining the nature and the quality of the goods and services associated with the licensed mark.

At the time the HOLLYWOOD HOTEL mark was filed, there were two separate companies in existence where one individual was an officer and controlling shareholder in both and both of the companies had the same address.  This is the same individual whose deposition resulted in the opposer’s amended complaint.   The TTAB deemed this commonality as being insufficient to make the companies related for ownership purposes under Section 5 of the Lanham Act.  The Applicant, Chateau Celeste, Inc., would have to establish that it, not the individual officer/shareholder, controlled the nature and quality of the services rendered by Zarco Hotels, the corporation actually using the mark.  Because Zarco Hotels and Chateau Celeste constituted separate legal entities and Zarco Hotels was the owner of the physical property itself, the TTAB concluded the application was filed by the wrong legal entity and hence void.

Take Home Points

  1. It is important to ensure that applicant in any trademark application is the owner of the mark – i.e., the one who is using or will be using the proposed mark in commerce.
  2. Assignments of marks should be memorialized in a formal writing. Assignments involving registered marks should be recorded with the USPTO.
  3. Assignment during the prosecution of a trademark application may be allowed but only under certain circumstances.
  4. Acquiring licensing rights in a trademark is not equal to ownership of the licensed mark.   A licensor has an on-going obligation to monitor the licensee’s usage of the mark.

 

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