Trademark Licensing Needs Quality Control

When an owner allows another (known as a licensee) to use the owner’s trademark, it is important that the owner control the quality of the goods and services provided by that Licensee under the owner’s trademark.

A trademark owner can lose rights in that trademark through uncontrolled licensing, also known as “naked licensing.” “If a trademark owner allows licensees to depart from its quality standards, the public will be misled, and the trademark will cease to have utility as an informational device,” resulting in its abandonment. TMT N. Am., Inc. v. Magic Touch GmbH, 124 F.3d 876, 885 (7th Cir. 1997)(a case involving THE MAGIC TOUCH trademark).

Reasoning for the requirement of quality control, includes that “The economic function of a trademark is to provide the consuming public with a concise and unequivocal signal of the trademarked product’s source and character … and that function is thwarted if the quality and uniformity of the trademarked product are allowed to vary significantly without notice to the consumer.” Draeger Oil Co. v. Uno-Ven Co., 314 F.3d 299, 301 (7th Cir. 2002).

How much control and inspection is necessary to satisfy the quality control requirement depends on the circumstances. What may be sufficient control for a mark used on writing pens may be insufficient for a mark used on pharmaceuticals. McCarthy says, “The goal is that there must be control sufficient to meet the reasonable expectations of the customers when they see the licensed mark appear in the marketplace.” McCarthy on Trademarks 18:55.

Also, a written trademark license should provide the owner with a contractual right to control the nature and quality of the goods and services provided by the licensee under the mark. The written license should include the right to inspect the relevant goods/services and the corresponding operations of the licensee so the owner can insure conformance with the owner’s standards. Without a right to inspect, the owner may be hampered in exercising control. The written license may require the licensee to submit specimens/examples to owner of the goods and services to be offered by the licensee under the mark so that the owner can review, instruct modifications to conform to owner’s standards, and approve or disapprove such goods/services before sale by licensee. The owner should effectively exercise these rights.

Further, the written trademark license should provide the owner with the contractual right to control the nature and manner that the trademark is presented in the use by the licensee, such as on or in connection with the goods and services and related advertising. The owner may have a separate brand guide that specifies how the trademark should be used and presented. The brand guide may specify the particular font, style, color, placement, and/or other features of the use of the mark that the owner requires.

The result of abandonment by naked licensing is drastic–the forfeiture of the trademark. To better avoid a naked license challenge to the validity of its licensed mark, the owner should have a contractual right of control over the nature and quality of the goods/services and should effectively exercise that right.

Record Trademark Assignments or Risk Loss of Rights

The case of C21FC LLC v. NYC Vision Capital Inc., No. CV-22-00736-PHX-SPL, shows ownership of registered trademark rights can be lost by not recording the relevant trademark ownership transfer document with the U.S. Patent and Trademark Office (USPTO).

In that case, plaintiff C21FC entered into a franchise agreement with NYC Vision Cap. Inc. (NYCVC) for a franchise under the mark The Eye Man. Two weeks later, on July 13, 2021, co-plaintiff C21VX executed an asset purchase agreement (APA) to buy another optical service business named The Eye Man. On the same day, the Eye Man’s sellers and Mr. Singer, C21FC’s principal member, also executed a Trademark Assignment (Assignment) to assign all rights and interests in The Eye Man trademark, goodwill, and business to Mr. Singer.

But a bank that provided financing to NYCVC for the franchise transaction requested that the assets purchased under the APA be owned by NYCVC so that there would be sufficient collateral. So an Amendment to the APA was executed later on the day the APA was executed, substituting NYCVC as the “Buyer” in the APA in place of C21VX.

A dispute arose over who owned The Eye Man trademark, among other matters. The Plaintiffs asserted the Amendment inadvertently failed to differentiate between the physical assets, which were to be transferred to NYCVC, and the trademarks, which were to be owned by C21VX. But NYCVC argued that the Amendment effected the sale of all The Eye Man’s assets to NYCVC.

The court found that the Amendment did “what it says it does: to substitute NYCVC as the Buyer in the APA in all respects, including as the buyer of The Eye Man’s intangible assets.” The court found that the Trademark Assignment, which appears to have been executed before the Amendment, did not change the outcome. The court found that the Trademark Assignment was likely void as against NYCVC under 15 U.S.C. § 1060(a)(4). That statute provides that “an assignment shall be void against any subsequent purchaser for valuable consideration without notice, unless the prescribed information reporting the assignment is recorded in the United States Patent and Trademark Office within 3 months after the date of the assignment or prior to the subsequent purchase.”

Here, Mr. Singer did not record the Assignment at the USPTO. And, there was no evidence that defendants became aware of the Assignment between the execution of the Assignment and the execution of the Amendment. Therefore, the later Amendment gave NYCVC ownership of the trademark and the earlier unfiled Assignment was void as against the defendants.

Trademark Registration Ownership Recording System

15 U.S.C. § 1060(a)(4) provides that if an assignment is not recorded at the USPTO within three months of the date of the assignment, it will not be superior to rights obtained by a third party subsequent for value if that third party did not have knowledge of the unrecorded assignment.

This provision is similar to many state-based systems of recording ownership of real estate.

Section 1060(a)(4) encourages trademark owners to file (record) evidence of their ownership of a trademark with the USTPO. This allows parties who enter into transactions regarding those trademarks to look to the public record to determine whether the party they’re dealing with is the actual owner or not.

The recording system discourages a seller from selling rights to a first party and then selling the same rights to a second party . The first party will have an incentive to record that transfer with the USPTO because of the protections provided by section 1060(a)(4).


Therefore, when purchasing registered trademark rights (or rights in a mark with an associated pending trademark application) it is important to record at the USPTO the assignment (or other transfer document) transferring those trademark rights. Otherwise the purchaser could lose rights in the trademark(s) to someone who purchases rights in the trademark later without knowledge of the prior ownership/assignment.

First Amendment Defense to Trademark Infringement Claim: MTV Floribama Shore Does Not Infringe FLORA-BAMA Trademark

The First Amendment can be a defense to a trademark infringement claim when the accused work is an artistic work. There, in many cases, trademark rights must yield to the public interest in free expression protected by the First Amendment.

This is demonstrated in the case of MGFB Properties Inc. V. 495 Productions Holdings LLC, No. 21-13458 (11th Cir. 2022). In that case MGFB and its related entities sued 495 Productions and Viacom alleging that the title of the MTV Floribama Shore reality TV show infringed its FLORI-BAMA trademark.

The Plaintiffs operate the Flora-bama Lounge, Package and Oyster Bar on the Florida-Alabama boarder, and have done so since 1964. MGFB owns federal trademark registration no. 4,272,440, for FLORA-BAMA for bar and restaurant services as well as several entertainment services including hosting social entertainment events, live musical performances, and competitions for fish throwing.

The defendants produced and aired a reality TV show titled MTV Floribama Shore. It was modeled on its prior reality show, Jersey Shore. With the MTV Floribama Shore show, the defendants wanted to highlight “young [S]outhern folks” who go to “shore houses” or “spend summers” on the Gulf of Mexico, extending from the Florida panhandle into Alabama and Mississippi.

1. The First Amendment Roger’s Test Applied

The Second Circuit’s Rogers test balances the trademark owner’s rights against the rights under the First Amendment in connection with artistic works. Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). It provides that the title of an artistic work does not violate the trademark act, “[(1)] unless the title has no artistic relevance to the underlying work whatsoever, or, [(2)] if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.”

In the MGFB case, the court applied the Roger’s test finding that MTV’s use of Floribama was artistically relevant to the show. The court said:

“‘Floribama’ describes the subculture profiled in the series and the geographic area exemplified by the subculture. To break it down even further, the former part of ‘Floribama,’ i.e., ‘Flori,’ refers to Florida and the beach culture the series sought to capture, while the latter part, i.e., ‘bama,’ refers to Alabama and the Southern culture the series sought to capture. … ‘Floribama’ gave viewers ‘a very distinct sense of what part of the country and subculture the series was about.”

On the second part of the Rogers test, the court found that title of MTV’s show was not explicitly misleading. The court said that the relevant question under this part is “whether (1) the secondary user overtly ‘marketed’ the protected work as ‘endorsed’ or ‘sponsored’ by the primary user or (2) ‘otherwise explicitly stated’ that the protected work was ‘affiliated’ with the primary user. ” And the court found no evidence of this. On the contrary, Viacom “chose a title that includes its own house mark (MTV) and the name of one of its iconic franchises (Shore).”

Therefore, Defendants’ use of Floribama in its television series title—MTV Floribama Shore—did not infringe the FLORA-BAMA trademark .

2. Some Confusion Is Allowed When First Amendment Applies

The court found MTV’s show title did not infringe even though MGFB presented some evidence that the title of the show caused confusion. MGFB conducted a survey that found that 34% of those surveyed had heard of the term “Flora-bama,” and half of that 34% identifying it as the Lounge. However, this was irrelevant because the evidence must relate to the nature of the defendant’s behavior under part 2 of the Rogers test, not the impact of the defendant’s use. Further, MGFB “submitted emails, letters, and declarations from their bartenders and regular musical acts stating that there have been multiple instances of confusion between the series and the Lounge.” Yet, this did not lead to a different result.

Injunction Limiting Use of Trademarks On Webpage Did Not Apply to Use in HTML Source Code

CDMPUsually, if you are ordered not to use a mark more than a certain number of times on a webpage, you’d be conservative and count uses of the mark that are visible on the webpage and the uses that are not visible but are in the HTML source code. Do you want to argue whether use of the mark in the HTML source code is not a use of the mark on the webpage because it’s not visible?

Seems better to avoid testing this distinction and prompting your opponent to move for sanctions. It is arguable that use of a mark in a HTML source keyword meta tag should not be infringement, since search engines probably ignore it and customers can’t normally see it, but sometimes a court says it is.

Enterprise Warehousing Solutions, Inc. (EWS), a test prep company, proceeded to test this distinction, whether intentionally or not.

Data Management Association International (“DAMA-I”), an exam and certification provider, sued EWS for trademark infringement. One of the certifications DAMA-I provides is the Certified Data Management Professional (“CDMP”) certification. To obtain the certification, a person must pass the Data Management Fundamentals Exam.

DAMA-I alleged that EWS was inappropriately using DAMA-I’s trademarks on EWS’s website and social media accounts when promoting its test prep course. The court entered a preliminary injunction against EWS. However, the court recognized the need, under nominative fair use, for EWS to use certain DAMA-I marks in a limited matter to describe EWS’s exam preparation course. Therefore the injunction allowed EWS to use certain of DAMA-I’s mark up to five times on any web page.

DAMA-I found that EWS was using DAMA-I marks in EWS’s website source code, which was not visible on the rendered web pages. By counting the use of the marks in the source code, DAMA-I assert EWS exceeded the prohibition on using DAMA-I’s marks more than five time on any web page.

But earlier in briefing on the preliminary injunction motion the parties did not address use of marks in HTML source code or metatags. Instead they focused on the content on EWS’s web pages. The court found that “Nowhere in the preliminary injunction order did the Court mention marks invisible to the consumer.” So the court found that the use of marks in HTML source code (which was not visible when the webpage was normally displayed) fell outside of the scope of the preliminary injunction.

This could have gone the other way. So, check for any source code use of third marks that are not visible on the rendered webpage. And the conservative route is to remove those uses.

Cite: Data Mgmt. Ass’n Int’l v. Enter. Warehousing Sols., Inc, No. 20 C 04711, 2022 U.S. Dist. LEXIS 204942 (N.D. Ill. Nov. 10, 2022).

Overcoming Trademark Registration Refusal: The Refusal Lacks Supporting Evidence

EPIGENEWhen a trademark application is refused registration based on a likelihood of confusion with a prior registration, the examining attorney of the USPTO must support that refusal with evidence. If it is not, the refusal can be reversed by the Trademark Trial and Appeals Board (Board) as demonstrated in the following case.

Genebook LLC applied to register EPIGENE for the goods of “electronic database in the field of genes recorded on computer media.” The application was refused based on two prior registrations for the same mark EPIGENE. The goods listed in the prior registrations for EPIGENE where (1) Diagnostic preparations for medical purposes, and (2) Apparatus for medical diagnostic testing in the fields of cancer or other tissue-based diagnostic testing, cytology and cell-based testing.

The examining attorney needed to support the refusal with evidence that the goods in the registrations and the goods in Genebook’s application were related in some manner and/or that the circumstances surrounding their marketing are such that they could give rise to the mistaken belief that they emanate from the same source. But the Board found the evidence was lacking and reversed the refusal.

1. Similarity of the Goods

The examining attorney cited website evidence from numerous DNA testing companies to try to show that the goods where related. However, the Board said there was “no evidence in the record that any of these companies offer an ‘electronic database in the field of genes recorded on computer media’ with search and retrieval capability to their customers.” The DNA testing companies offered printed reports . Yet, the Board said, “While these printed reports ‘may’ be created via access to an electronic database, we have no basis for finding that these reports are themselves ‘databases’ as that term is defined and understood in this field.” Further, the sellers of genetic testing equipment did not offer gene databases or information from gene databases in connection with their products.

Therefore, there was a gap in evidence between the goods of the prior registrations and the applicant’s goods.

Further, the examining attorney can show the goods are related by showing they “have complementary uses, that they are often used together or that they are otherwise bought by the same purchasers for the same or related purposes, such that confusion would be likely if the goods were marketed under the same mark.” Yet, the Board found that there was little evidence of this.

2. Channels of Trade

The Board acknowledged the principle that “In the absence of meaningful limitations in either the application or the cited registrations, [we] properly presume[] that the [respective] goods travel through all usual channels of trade and are offered to all normal potential purchasers.” However the Board found that this presumption is “not a substitute for proof, which is absent here.”

As a result of the lack of evidence showing similarity of the goods or overlapping channels of trade, the Board reversed the refusal and allowed the application to proceed toward registration.

Identifying a lack of evidence supporting a trademark registration refusal is one possible path to overcoming a refusal and achieving registration.

Case: In re Genebook LLC, Serial No. 90269018 (TTAB Oct. 26, 2022).

Model Numbers and Designations as Trademarks

A product model, style, or grade designation can be protected as a trademark. But, as with other trademarks, the designation must be used as a trademark. To illustrate this point, let’s look at the Trademark Trial and Appeal Board (TTAB) decision in In Re Hydro-Gear Limited Partnership, No. 87641657 (TTAB 2020).

In that case, Hydro-Gear applied to register ZT-1800 for land vehicle parts, namely, transaxles. Hydr-Gear submitted specimens showing use of ZT-1800, including the following:

The problem is that ZT-1800 at the right of the highlighted portion in the image above does not stand out like a trademark. Can you tell its a trademark on that label? No. It blends in with the surrounding text.

The TTAB said, the mark, ZT-1800, in the specimens appeared “in nondescript block lettering, which is displayed on the same line and in the same size, font style, and boldness as the other wording or lettering in that part of the specimen.” Further, the TTAB noted that the mark “appears in a font size much smaller than most of the other elements on the shipping label….in a manner more befitting information matter, such as in this case a model number, rather than an indicator of source.”

The TTAB said that “It is well settled that terms used merely as model, style, or grade designations are not registrable as a trademark because they do not serve to identify and distinguish one party’s goods from similar goods manufactured and/or sold by others.” The key word in that sentence is merely.

This is because in another case, the TTAB said, “Depending upon the nature and manner of use, it is possible for an alphanumeric designation, which functions only in part to designate model or grade, to be inherently distinctive, and hence not require a showing of secondary meaning in order to be protected as a trademark.” Neapco Inc v. Dana Corp., 12 U.S.P.Q.2D (BNA) 1746, 1748 (TTAB 1989). Therefore, the manner that the model or grade is used and presented impacts whether it will be deemed a protectable trademark or merely a model, style, or grade designation.

The mark at issue in the Neapco case was “5-280X” for “Couplings, Specifically Universal Joint Couplings for Use in Drive Lines for Vehicles.” We don’t have the example uses from that case, but a later renewal filing included the following specimen portion:

In this example, you can see that the mark “5-280X” is the largest text on the right-side label (apart from the “Spicer” on the box to the left). The 5-280X mark is featured at the top of the label. When you compare the 5-280X mark on this label to the use of ZT-1800 on the label in the Hydro-Gear case, 5-280X is more prominent.

While the specimen showing the 5-280X mark above was accepted by the USPTO, more could be done to better position the 5-280X mark as a trademark. It could be presented in a different font and/or color from the surrounding text. It could be provided with a color or other emphasis like the red line under “Spicer” on the box. It’s orientation could be altered, like the angled appearance of “Spicer.” No particular mode of emphasis is required, but the key is to make the mark stand out.

Ask this: When I look at the use of the model, style, or grade designation, does it standout like a trademark? Also, would a customer recognize this as a trademark? If not, or if in doubt, add more emphasis.

Protecting Unregistered Descriptive Trademarks in the Seventh Circuit: Acquired Distinctiveness

When attempting to enforce or assert an unregistered descriptive mark, a trademark owner generally needs to show acquired distinctiveness (a.k.a. secondary meaning). Why?

First, the default position is that merely descriptive terms are not likely to be seen as a source indicator (i.e. the function of a trademark) to consumers. Courts have described this in a number of ways including that descriptive terms “are a poor means of distinguishing one source of services from another.” M.B.H. Enters. v. Woky, Inc., 633 F.2d 50, 54 (7th Cir. 1980).

Second, when a merely descriptive term is not seen as a source indicator by customers, such terms should be available for use by competitors to describe their goods or services. Id.

However, a merely descriptive term can become protectable when the relevant purchasing public comes to recognize the term as a source indicator rather than merely descriptive. Therefore, a term has acquired distinctiveness (or secondary meaning) were consumers think of the term not as descriptive, but as the name of the product or service. Packman v. Chi. Tribune Co., 267 F.3d 628, 638 (7th Cir. 2001).

Stated another way, acquired distinctiveness is found where there is “a mental association in the buyers’ minds between the alleged mark and a single source of the product [or service].” Echo Travel, Inc. v. Travel Assocs., 870 F.2d 1264, 1266 (7th Cir. 1989).

How do we know when this mental association exists? Courts in the Seventh Circuit consider a number of acquired distinctiveness factors, including:

  • (a) direct consumer testimony;
  • (b) consumer surveys;
  • (c) exclusivity, length, and manner of use;
  • (d) amount and manner of advertising;
  • (e) amount of sales and number of customers;
  • (f) established place in the market; and,
  • (g) proof of intentional copying.

[Echo Travel, Inc. v. Travel Assocs., 870 F.2d 1264, 1267 (7th Cir. 1989); Baig v. Coca-Cola Co., 607 F. App’x 557, 560 (7th Cir. 2015).]

Factors (a) and (b) are considered direct evidence while the remaining factors are circumstantial evidence. Direct evidence involves asking customers whether they recognize the term at issue as a source of a product and recording the results.

The factors concerning circumstantial evidence consider facts that could indicate the customers recognize the term as a source indicator. For example, long, exclusive and consistent use of a mark, under factor (c), weighs in favor of finding recognition. Further, a lot of advertising, sales, customers, and a prominent place in the market leans, under factors (d), (e), and (f), weights in favor of finding recognition.

For example, in the Echo Travel case, the court found that the plaintiff Echo Travel did not show acquired distinctiveness in a picture-mark, comprising a beach scene. Echo provided no admissible direct consumer evidence and no survey. The length of use of the picture-mark was one season comprising the fall of 1985 to the winter 1986, which did not weigh in favor of Echo. Echo’s advertising of 25,000 posters at 200 campuses was some evidence, but not enough where the court characterized it as providing “little probative light.”

Regarding sales, Echo ran 10,000 trips in Daytona Beach in the spring of 1986 resulting in about $2 million in sales. But the court criticized Echo for not providing its sales volumes prior to and after the 1985-86 season, and thus, “there is no way to measure whether the beach scene poster [mark] impacted its sales volume.” The court also found there was a lack of evidence that Echo has an establish place in the market and there was no proof of intentional copying.

In contrast, in Int’l Kennel Club of Chi., Inc. v. Mighty Star, Inc., 846 F.2d 1079, 1086-87 (7th Cir. 1988) the court found the plaintiff had shown a better than negligible chance of establishing secondary meaning in “International Kennel Club” sufficient for a preliminary injunction. While the plaintiff did not provide a survey, the court found that the amount and manner of advertising and the length and manner of use of the mark was sufficient. The plaintiff advertised in publications of interest to dog fanciers. It advertised in Chicago newspapers and magazines where its dogs shows are held. It mailed out mailings to its mailing list of 15,000 prior to each of its shows.

The plaintiff spent $60,000 in advertising and public relations expenses in its most recent fiscal year, representing 42 percent of the club’s expenses. Further it gained extensive free publicity. Moreover, it received letters and phone calls asking about defendant’s accused product, indicating that when dog fanciers see the “International Kennel Club” name, they think of the plaintiff. Last the plaintiff operated and used the International Kennel Club mark for over 50 years.

The requirement to show secondary meaning (acquired distinctiveness) for an unregistered descriptive mark is an additional burden (and expense) for a trademark owner. Consider the effort required put on evidence for each of the acquired distinctiveness factors above.

If the trademark owner is heavily invested in proceeding with a unregistered descriptive mark, it may need to bear that burden. But when choosing a mark, consider choosing a stronger mark to avoid the need to show acquired distinctiveness.

Don’t Bother Speculating in Trademarks: COVID-19 VAX and CORONAVAX Trademark Apps Likely To Fail

A company named And Still, LLC filed trademark applications to register COVID-19 VAX and CORONAVAX for vaccines.

The Boston Business Journal reported that the trademark applicant planned to sell the the trademarks to a company that makes a coronavirus vaccine.

If this is true, it is very unlikely to work.

There is No Market For Speculating in Unused Trademarks

First, there is no market for unused trademarks. As I’ve written before, it is a common misconception that filing a trademark application grants rights in a trademark without actually using the trademark.

Trademark rights are acquired by using the trademark in conjunction with the sale/providing of goods or services. An intent-to-use trademark application can be filed before a trademark is used with products or services, but only if there is a demonstrated bona fide intent—at the time the application is filed—to use the trademark with the goods/services described in the application.  M.Z. Berger & Co., Inc. v. Swatch AG, No. 2014-1219 (Fed. Cir. June 4, 2015).

Here, if And Still, LLC didn’t have an intent sell vaccines itself (or in some cases through an affiliated/controlled company) under the marks at the time the trademark applications were filed, the trademark applications are likely subject attack on this basis. Intent to sell the marks, without use, won’t work.

Descriptive Marks Require Acquired Distinctiveness

Second, a mark that is merely descriptive of the goods/services and has not acquired distinctness in the marketplace will be refused registration the primary register.

In 2019, the TTAB affirmed the refusal to register ZIKAVAX and ZICAVAC for vaccine formulations because each mark was descriptive.

Bharat Biotech International Limited applied to register these marks in 2017 following the epidemic caused by the Zika virus.

The TTAB found that misspelling of zika as ZICA did nothing to make ZICA non-descriptive. It also found that evidence showed that the VAX and VAC were common abbreviations for vaccine.

The TTAB concluded that “the proposed marks immediately describe the goods as Zika vaccines, because [t]he question is not whether someone presented with only the mark could guess what the goods or services are. Rather, the question is whether someone who knows what the goods or services are will understand the mark to convey information about them.”

Here, the COVID-19 VAX and CORONAVAX is likely to meet the same fate at the ZIKAVAX trademark application, a refusal as descriptive.

Descriptiveness refusals can be overcome by showing the mark at issue has become associated with a single source in the market place. This market recognition is known as acquired distinctiveness or secondary meaning. But that is unlikely here at this stage because the applications are intent-to-use applications. Intent-to-use applications tend to indicate that applicant has not yet used the mark. And without use, there is unlikely to be a marketplace association.

There’s also the option to place a descriptive mark on the supplemental register. But that’s if the marks are not generic. Also, a registration on the supplemental register does not provide a presumption that the registrant owns the mark.

Further, even if the marks where registered on the supplemental register, the marks would still need acquired distinctness for enforcement, which appears unlikely at this time.

Cite: In re Bharat Biotech International Limited, Serial Nos. 87570858 and 87570862 (TTAB 2019) (Refusing ZIKAVAX and ZICAVAC as descriptive of vaccine formulations).

Trademark Due Diligence in Corporate Transactions

At least one trademark is often involved in a sale, merger, asset purchase, or similar corporate transaction of a business. Below are some of the steps that a buyer might undertake to investigate a seller’s rights in trademarks involved in corporate transactions.

1. Proper Original Owner

A trademark application, and the resulting trademark registration, filed in the name of the wrong owner may be void and invalid. See TMEP § 803.06. Some errors in the manner the applicant was listed in the original application can be corrected, but some cannot. See TMEP 1201.02(c). Therefore, it is important to check whether the original applicant of the trademark registration was correct and properly identified on the application.

For many applications, a copy of the original trademark application can be found in the USPTO’s Trademark Status & Document Retrieval (TSDR) system.

If the trademark registration is void for being filed in the name of an uncorrectably wrong entity, then the trademark registration’s value may be discounted, and consideration should be made of filing a new trademark application.

2. Proper Chain of Title

Once it is established that the trademark registration arose from an application naming the correct owner, then the next item to review is the chain of ownership from the original applicant to the current owner. Each assignment and transfer of the registration of the underlying trademark should be reviewed to ensure a proper chain of title to the current owner of the trademark registration.

Ideally all of the assignments and transfers should have been recorded (but sometimes they are not) at the USPTO so that a search of title can be made at the USPTO’s Electronic Trademark Assignment System (ETAS). If gaps, errors, or unreleased security interests in the chain of title exist, they can be remedied before closing.

3. Assignments Include Associated Goodwill of the Business

A trademark cannot be assigned/sold alone (known as a “naked assignment” or a “assignment in gross”) without the goodwill of the business associated with the mark. U.S. Trademark law provides, “A registered mark or a mark for which an application to register has been filed shall be assignable with the good will of the business in which the mark is used, or with that part of the good will of the business connected with the use of and symbolized by the mark.” 15 USC 1060.

A naked assignment is invalid. See Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 956 (7th Cir. 1992) (“the transfer of a trademark apart from the good will of the business which it represents is an invalid ‘naked’ or ‘in gross’ assignment, which passes no rights to the assignee”).

Therefore, each assignment in the chain of title from the original trademark registration owner should be reviewed to ensure that it contains a recitation that the goodwill of the business associated with the mark was transferred with the trademark to the assignee.

4. Currently Accurate Description of Goods/Services in Registration

Overtime businesses can add and/or drop products and services. It is ideal for the description of goods and services in a trademark registration to accurately and completely cover the goods and services that are now offered under the corresponding trademark. The older the trademark registration is, the more chance that change in conditions have arisen so that the description of goods and/or services in trademark registration(s) is out of alignment with the current goods and services.

If the registration(s) do not cover some of the currently offered goods or services, a new trademark application can be filed on the same mark covering the goods/services not covered by the current registration(s) (since a trademark registration cannot be amended to add goods or services).

If the current registration list goods/services not currently offered and not planned to be offered in the future, at the time for renewal of the registration, the description can be changed to remove goods/services no longer offered.

5. Unregistered Trademarks Specifically Listed

While the above points are directed to trademarks that are registered, unregistered trademarks should also be considered. Trademark rights can arise from use of a trademark in connection with goods/services, without any registration. For example, the Lanham Act protects unregistered distinctive trademarks used in commerce. 15 USC 1125(a).

Therefore, a trademark transfer document should identify unregistered trademarks that are being transferred, in addition to registered marks. Further, the goods and services corresponding to each unregistered mark should ideally also be identified in the transfer document.

These are some steps that a buyer can perform in a corporate transaction involving trademark registrations.

Note: reference to trademarks in this post also includes service marks.

Trademark Office Likelihood of Confusion Factors: The DuPont Factors

The trademark office (USPTO) will review a trademark application to determine whether the mark in that application is likely to cause confusion with another registered mark. And, if so, it will refuse registration of the application.

In particular, the relevant statute provides that an applied-for mark will be refused registration when it “consists of or comprises a mark which so resembles a mark registered in the Patent and Trademark Office… as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. §1052(d).

The USPTO uses the factors provided in In re E. I. Du Pont de Nemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973) to evaluate whether there is a likelihood of confusion, which are:

(1) The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation and commercial impression. 
(2) The similarity or dissimilarity and nature of the goods or services as described in an application or registration or in connection with which a prior mark is in use. 
(3) The similarity or dissimilarity of established, likely-to-continue trade channels. 
(4) The conditions under which and buyers to whom sales are made, i.e. “impulse” vs. careful, sophisticated purchasing. 
(5) The fame of the prior mark (sales, advertising, length of use). 
(6) The number and nature of similar marks in use on similar goods. 
(7) The nature and extent of any actual confusion. 
(8) The length of time during and conditions under which there has been concurrent use without evidence of actual confusion. 
(9) The variety of goods on which a mark is or is not used (house mark, “family” mark, product mark). 
(10) The market interface between applicant and the owner of a prior mark: 
(a) a mere “consent” to register or use. 
(b) agreement provisions designed to preclude confusion, i.e. limitations on continued use of the marks by each party. 
(c) assignment of mark, application, registration and good will of the related business. 
(d) laches and estoppel attributable to owner of prior mark and indicative of lack of confusion.
(11) The extent to which applicant has a right to exclude others from use of its mark on its goods. 
(12) The extent of potential confusion, i.e., whether de minimis or substantial. 
(13) Any other established fact probative of the effect of use.”

The weight given to these factors may vary in individual cases and all factors may not be relevant in every case. The USPTO sees the first and second factors as key when evaluating a trademark application, i.e. the similarities between the marks and the similarities between the goods.

Citations: In re E. I. Du Pont de Nemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973); TMEP 1207.01; 15 U.S.C.S §1052(d); In re Thor Tech, Inc., 113 USPQ2d 1546 (TTAB 2015).