Just as Tokyo fell to the fictional movie-monster Godzilla, the

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1 A Reminder To Pay Attention To IP Right In Corporate Tranaction or Oh No! There Go Your Trademark Right Go, Go Dogzilla! by Andrew L. Goldtein A FREEBORN & PETERS CLIENT ALERT SEPTEMBER 2013 ABOUT THIS CLIENT ALERT: Right to a name or no right to a name? That i the often the quetion aked of the court when two companie are competing over a name. Thi client alert take u through the detail of how to handle a filed trademark application during an inter-company aet tranfer o a not to loe ignificant naming right. Jut a Tokyo fell to the fictional movie-monter Godzilla, the owner of the trademark ZILLA recently lot it battle againt a competing trademark, DOGZILLA, becaue it did not handle it trademark application properly in an intercompany aet tranfer. Intra-company aignment of trademark and other IP frequently occur in corporate retructuring or reorganization, or in the management and reorganization of a company IP aet. A recent precedential deciion by the Trademark Trial and Appeal Board (TTAB) provide a reminder that care mut be taken to handle uch IP tranfer correctly or you could uffer a ignificant lo of IP right. The TTAB held that becaue a company improperly aigned a trademark regitration to it parent company during the application proce, the company lot it regitration and accompanying priority right, and, accordingly, lot an infringement claim againt a competitor. Central Garden & Pet Company v. Dokocil Manufacturing Company, Inc., Oppoition No and and Cancellation No (TTAB Augut 16, 2013). 1 A Freeborn & Peter Client Alert

2 In the United State, trademark right are baed on ue of the mark in commerce; and, in infringement cae, priority between the two partie i baed on which party firt ued the mark in commerce. However, a trademark application can be filed in the United State Patent and Trademark Office ( USPTO ) baed on an intent to ue the mark in commerce. Once the owner of an intent-to-ue application ue of the mark in commerce, the regitration will iue and the owner ha contructive ue priority right in the mark dating back to the filing date of the application. In other word, without the benefit of the contructive ue priority right, the trademark regitration owner would have to rely on it later date of actual ue of the mark in commerce to prove it priority in an infringement action, rather than relying on the earlier filing date provided by the intent-to-ue application. In thi cae, Central Garden & Pet Company ( Central ) owned a regitration for the mark ZILLA for pet food; pet treat and vivarium, terrarium,... aquarium, and related equipment, a well a pet food. Dokocil Manufacturing Company, Inc. ( Dokocil ) owned a regitration for the mark DOGZILLA and filed application in the USPTO for the mark PETZILLA and DOGZILLA, all for dog toy or pet toy. Central commenced an action in the TTAB to oppoe Dokocil application and to cancel it regitration. Dokocil filed a counterclaim eeking to cancel Central ZILLA regitration on the ground that Central improperly aigned the application for the mark. The US Trademark Act provide that the owner of a pending intent-to-ue application cannot aign the application before the applicant begin uing the mark in commerce and file a Statement of Ue in the USPTO. 15 U.S.C. 1060(a)(1). The only exception to thi rule i an aignment to a ucceor to the buine of the applicant, or portion thereof, to which the mark pertain, if that buine i ongoing and exiting. Thi exception allow, for example, one company to acquire another company trademark right (including intent-to-ue trademark application) provided that the acquiring company alo acquire all of the aet of the other company relating to the line of aigned trademark. Here, Central owned Pennington Seed, Inc., which in turn owned everal ubidiary corporation. In 2000 or 2001, Pennington Seed acquired All- Gla Aquarium Co., Inc. ( All-Gla ). On December 7, 2005, All-Gla filed an intent-to-ue application in the USPTO to regiter the trademark ZILLA. On June 26, 2007, prior to filing a Statement of Ue, All-Gla aigned it application to Central. The aignment document contained fairly tandard aignment language (for the ubtantive portion of the aignment, ee endnote 1.) On September 17, 2007, Central filed a Statement of Ue alleging that Central began ue of it ZILLA mark on September 25, 2006, and a regitration iued for the mark. 2 A Freeborn & Peter Client Alert

3 Apen Pet Product, Inc., which later merged with Dokocil, filed an intent-to-ue application to regiter DOGZILLA on April 4, On February 19, 2007, Apen filed a Statement of Ue alleging that it began actual ue of the mark in commerce on February 9, 2007, and the USPTO iued a regitration for DOGZILLA. On June 27, 2009, Apen merged with Dokocil, with Dokocil urviving. (See chart below howing the equence of the key date in thi cae.) When Central oppoed Dokocil application, Dokocil counterclaimed that Central regitration for ZILLA wa improperly aigned when All- Gla aigned the intent-to-ue application for the mark prior to filing a Statement of Ue. Therefore, Dokocil claimed Central regitration wa invalid. The TTAB agreed with Dokocil. The aignment agreement noted above wa the only agreement between All-Gla and Central. Central did not offer any evidence that the aignment document wa part of a larger tranaction between the companie, i.e., there wa no aignment to Central of the buine of All-Gla, or a portion thereof, that related to the ZILLA mark. The TTAB noted that: In particular, Central wa not the ucceor to All- Gla or any part of it; All-Gla continued in the exact ame buine after the tranfer a it had conducted previouly, including the production and SEQUENCE OF KEY DATES IN THIS CASE Dokocil DOGZILLA Typed app ( 965 Reg) Filed Dokocil alleged firt Ue of DOGZILLA Dokocil DOGZILLA and deign 444 App Filed Dokocil PETZILLA and deign 707 App Filed Nov 05 Feb 06 May 06 Aug 06 Nov 06 Feb 07 May 07 Aug 07 Nov 07 Feb 08 May 08 Aug 08 All-Gla ZILLA App Filed ( 521 Reg) All-Gla alleged firt Ue of ZILLA Central ZILLA App Filed ( 833 Reg) 521 Reg SOU filed Aignment from All-Gla to Central 3 A Freeborn & Peter Client Alert

4 ale of product under the ZILLA mark. In fact, Central admitted that the only aet tranferred from All-Gla to Central were the ZILLA mark and the related goodwill. Central argued that Dokocil counterclaim wa a hypertechnical reading of the Trademark Act which run counter to the purpoe of the ban on aignment of intent-to-ue application becaue at the time of the aignment, Central... and All-Gla were cloely related companie, and the aignment did not caue any confuion or dicontinuity in the ue of the ZILLA mark. The TTAB acknowledged the cloe relationhip between the companie, but nonethele tated: We have not forgotten that Central owned all of the tock in Pennington Seed, and that Pennington Seed owned all of the tock in All-Gla, which in turn owned the ZILLA application. In one ene, it could be aid that Central owned the application all along. But the application wa neither filed by Central nor by Pennington, Central ubidiary; the application wa filed by All-Gla, which wa Pennington ubidiary. Central choe to tructure it buine uing multiple and eparate corporate ubidiarie, each of which count a a peron under the Trademark Act. Such a buine tructure may offer ome advantage, but it alo come with ome tricture, and the exitence of a corporation cannot be turned on or off at will to uit the occaion. Thi reult i merely the flip ide of the principle that a parent corporation i not liable for the wrong of it ubidiary abent diregard of corporate eparatene, uch a an alter ego relationhip. Central purchaed and maintained All-Gla a a eparate corporation, and All-Gla, not Central, filed the ZILLA application, aerting that it had a bona fide intention to ue the mark in commerce. We cannot ignore the fact that the intent-to-ue application wa tranferred from one entity to another in a tranaction that did not atify the requirement of the tatute. Central alo argued that Congre did not intend the ban on aignment of intent-to-ue application to apply to thee type of intra-corporate aignment. Rather, a Central accurately noted, the legilative hitory how Congre intended to prevent the trafficking of intent-to-ue application. The TTAB, however, declined to econd gue Congre, and held that All-Gla aignment of the intent-to-ue application to regiter ZILLA prior to filing a Statement of Ue for the mark wa a clear and literal violation of the Trademark Act. Accordingly, the TTAB cancelled Central regitration for ZILLA. Therefore, Central did not have the benefit of it earlier contructive ue priority and, becaue Central date of actual ue wa ubequent to the filing date of Dokocil DOGZILLA application, the TTAB ruled in favor of Dokocil. 4 A Freeborn & Peter Client Alert

5 Thi i yet another cae where not handling IP right correctly in an intracorporate reorganization created ignificant problem for a company (ee company_reorganization_make_your_company_a_copyright_infringer. pdf) for my previou article concerning the improper tranfer of licene right to copyrighted oftware in an intra-corporate reorganization). When tructuring intra-corporate reorganization, you need to take need care to enure your company IP aet are handled properly in order to avoid potentially diatrou reult. 1 NOW THEREFORE, in conideration of the um of Ten Dollar ($10.00) and other good and valuable conideration, the receipt and ufficiency of which i hereby acknowledged; ASSIGNOR agree to ell, aign, tranfer and convey, and by thi intrument hereby ell, aign, tranfer and convey to ASSIGNEE, it ucceor, legal repreentative and aign, ASSIGNORS [ic] entire right, title and interet in and to the Mark and the goodwill of the buine appurtenant to and connected with the Mark, all right at common law in the Mark, and ASSIGNOR further aign, tranfer, ell and convey to ASSIGNEE, it ucceor, legal repreentative and aign, the right to renew, protect, defend and enforce any and all right to the Mark including the right to ue for pat infringement, the right to enforce any and all trademark right of ASSIGNOR and caue of action therefor, preently known or unknown and inuring to ASSIGNEE, and the right to recover all claim for damage or for compenation for pat infringement ariing out of any caue of action, whether preently known, unknown, accrued or to accrue. 5 A Freeborn & Peter Client Alert

6 ABOUT THE AUTHOR Andrew L. Goldtein Partner, Corporate Practice Group Chicago Office (312) Andy focue hi practice in the area of Intellectual Property and Information Technology. Hi experience in the area of intellectual property law include trademark, trade dre and copyright law; internet, webite, cloud computing, technology, outourcing and computer law in general. In addition, Andy ha been couneling food companie in intellectual property law, including copyright and trademark law, a well a advertiing, marketing and promotion, including weeptake. 6 A Freeborn & Peter Client Alert

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