Terra Sul Corp. a/k/a Churrascaria Boi Na Brasa v. Boi Na Braza, Inc. is one of those “uh oh” cases. It’s a fairly routine examination of a petitioner’s first use date to determine who is senior user of the mark. The “uh oh” is a theory that the mark, when transferred from the sole proprietor to a corporate entity he formed, wasn’t properly transferred under state trademark law:
Respondent argues that both petitioner and the prior user Churrascaria Boi Na Brasa Corporation (CBNBC) are New Jersey corporations and under “New Jersey law, any mark, registration or application for registration is assignable with the goodwill of the business in which the mark is used. The statute very clearly requires, however, that any such assignment ‘shall be by instruments in writing duly executed and shall be recorded with the Secretary of State upon payment of the recording fee payable to the Secretary of State.'” Br. p. 7.
The New Jersey statute provides:
Any mark and its registration or application for registration 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. Assignment shall be by instruments in writing duly executed and shall be recorded with the Secretary of State upon the payment of the recording fee payable to the Secretary of State. An assignment of any registration under this act shall be void as against any subsequent purchaser for valuable consideration without notice, unless it is filed for recording with the Secretary of State within 20 days after the date of the assignment or prior to the subsequent purchase or transfer.
Petitioner argues that the statute only pertains to trademark registrations and not common law rights and points to another section of the statute which provides:
Nothing herein shall adversely affect the rights or the enforcement of rights in marks acquired in good faith at any time at common law.
The TTAB wisely punted:
It is not clear if the New Jersey statutory code requires that the transfer of common law trademark rights between two corporations related by ownership in a few family members must be in writing. The wording “any mark and its registration or application for registration” (emphasis added) combined with the wording that “any assignment of any registration under this act shall be void” suggests this section pertains specifically to registrations or applications.
The record shows that it was the intent of Mr. Saleh, the owner and president of CBNBC and petitioner and the creator and operator of the restaurant BOI NA BRASA, to transfer the trademark rights residing in CBNBC from 1996 to 1999 to petitioner, the new corporation operating the restaurant, since 1999. We find that under the totality of the circumstances presented that petitioner acquired the trademark rights in BOI NA BRASA in 1999 and may rely on the use, beginning in 1996, of the prior holder CBNBC. However, we also find, in the alternative, that petitioner’s own use of the mark BOI NA BRASA began during the spring or at the latest June, 1999, which predates respondent’s July 1, 1999 first use date.
The New Jersey statute is based on the Model State Trademark Bill:
Section 7: Assignments, Changes of Name and Other Instruments
(a) Any mark and its registration hereunder 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. Assignment shall be by instruments in writing duly executed. . . .
It looks like similar language is in at least 37 state trademark laws.
It’s an “uh oh” moment because another court less knowledgeable about trademarks may not understand the full implications of holding that the assignment of common law marks has to be in writing. As noted by the TTAB, the language is not entirely clear. Those unsophisticated about trademarks often think of them narrowly, as only logos, or registered trademarks, or with some other sort of formality of recognition. They don’t realize that unregistered marks are everywhere – taking the situation in the case, how many restaurant names are unregistered marks? Watch the havoc ensue.
Terra Sul Corp. a/k/a Churrascaria Boi Na Brasa v. Boi Na Braza, Inc., Cancellation No. 92047056 (TTAB June 12, 2009).
© 2009 Pamela Chestek