John Welch at the must-read site The TTABlog published a post about a recent ownership decision, Conolty v. Conolty O’Connor NYC LLC. The gist is that two women started a business without any formal business structure, one of the women, O’Connor, formed the defendant LLC as a single member limited liability company, and the LLC filed the trademark application for the mark FAIRWAY FOX. The TTAB held that the trademark was owned by the two women as partners and that there was no evidence that the partnership had transferred the trademark to the LLC, and so the application was void.
I like this decision, a precedential one, for a couple of reasons. First, it states clearly that ownership—well, nonownership, to be more accurate—is a claim that is distinct from likelihood of confusion. The Trademark Trial and Appeal Board Manual of Procedure says so, listing in § 309.03(c) the basis for opposition “That defendant is not (and was not, at the time of the filing of its application for registration) the rightful owner of the registered mark.” But, the online filing form doesn’t have a checkbox for it, so one has to enter it under the “Other” field. In this case the opposer made the same choice many would probably make in the same situation, that is, instead checked “Priority and likelihood of confusion” as the basis for the claim. Thereafter the opposer proceeded down the path of likelihood of confusion and priority, which, while similar to a claim of nonownership, isn’t quite the same. The Board nevertheless found enough statements about ownership in the Notice of Opposition it concluded nonownership had been pled, or alternatively that the nonownership basis was tried by implied consent. So, folks, you can plead nonownership per se as a legal theory before the TTAB.
I also like the simplicity of the decision—sometimes analytically it really is this easy. Two people started a business together as a partnership; an LLC is formed by one; the LLC provided no evidence that the partnership assets were or should have been transferred to the LLC;* therefore the LLC is not the owner of the trademark. QED.
The messy part was that the first use of the mark was after the LLC was formed, but the evidence showed that
Ms. Conolty and Ms. O’Connor were, by any practical measure, partners, who jointly controlled the quality of FAIRWAY FOX products and who were both, together, perceived as the source of FAIRWAY FOX products…. In short, Applicant [i.e., the LLC] is solely controlled by Ms. O’Connor, who has but a joint interest in the FAIRWAY FOX mark with Mr. Conolty. Because Applicant is not the sole owner of the mark, the application is void.
Conolty v. Conolty O’Connor NYC LLC, Opp. No. 91206045 (TTAB July 3, 2014).
*A couple of footnotes of note: “12. The evidence belies Applicant’s claim that ‘As of June 2011 the Founders [Ms. Conolty and Ms. O’Connor] ceased doing business under the mark and the business was taken over by the corporation,” and “13. The evidence reveals that applicant did not ‘take over’ the business in June 2011. Rather, following Applicant’s formation, the business continued as it had ….”
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