Petzilla vs. the trademark registration: beware the improper assignment trap

Intent-to-use (ITU) trademark applications can give companies the Banzai Godzillaopportunity to reserve valuable trademark rights before actually using the mark in commerce. However, ITU applications do have certain limitations – including restrictions on assignment.

In many cases, U.S. trademark law imposes few conditions on assignment of trademark registrations and applications. However, in the case of ITU applications, Section 10(a)(1) of the Lanham Act states that ITU applications may not be assigned before the applicant files a statement of use, unless the assignment is “to a successor to the business of the applicant, or portion thereof, to which the mark pertains.” This means that ITU applications can be assigned only in those situations that also involve a “successor,” and not merely to any buyer.

A recent Trademark Trial and Appeals Board opinion in Central Garden & Pet Co. v. Doskocil Mfg. Co. illustrates the perils of improperly assigning ITU applications. In the case, Central Garden & Pet held two registrations for the ZILLA mark for pet treats, terrariums, aquariums and related products. Dosckocil’s predecessor filed an application to register the PETZILLA mark for various pet-related products pet toys. Central Garden & Pet opposed the PETZILLA application. Fighting back, Dosckocil filed a counterclaim seeking to cancel one of the ZILLA registrations on the basis that the registration’s chain of title included an improper assignment under Section 10 of the Lanham Act.

The history of the ZILLA registration is that it was originally filed by All-Glass Aquarium Co., Inc. While the application was still pending and in ITU status, All-Glass assigned the mark to Central Garden & Pet. Central Garden & Pet did not succeed the business of All-Glass. Instead, the two companies merely shared a common parent, and All-Glass continued in its business after the transaction.

The Board ruled that the assignment from All-Glass to Central Garden & Pet was prohibited by the Lanham Act, so it held that the registration must be canceled.

Companies often assign trademarks for a variety of reasons, some of which involve a business sale, while others find a basis in accounting or tax benefits. The Central Garden & Pet case illustrates risks for companies who assign ITU trademark applications should carefully consider the nature of the transaction before implementing the assignment. Failure to understand the Lanham Act’s requirements can lead to a loss of trademark rights.

[Photo courtesy of davidd via Flickr.]

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