Property, intangible

a blog about ownership of intellectual property rights and its licensing

Assigned from One’s Self to One’s Self

The patent, copyright and trademark statutes are not paragons of clarity when it comes to assignment. They all require that assignments be in writing, which is fine as far as it goes. What seems to befuddle lawyers is what to do when the transfer is by operation of law. The Copyright Act acknowledges implicitly that there is such a thing as a transfer by operation of law (“A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing …”). A decision by the Court of Appeals for the Federal Circuit has construed the statutory section regarding assignment as simply silent on a transfer by operation of law, blessing a sale as the result of a security interest. But in United Tactical Systems, LLC v. Real Action Paintball, Inc. the Northern District of California was just stumped by the registered trademark PEPPERBALL for irritant projectiles used by military and law enforcement.

PepperBall Technologies, Inc. was the owner of the mark but had money trouble and defaulted on loans. A new company, Advanced Tactical Ordnance Systems, LLC (“ATO”) also doing business as Phoenix International, Inc., was formed. ATO transitioned PepperBall Technologies by retaining most of the employees, trainers and suppliers of PepperBall Technologies as well as the telephone numbers, email and website. On January 9, 2012 Phoenix International purchased all of PepperBall Technologies’ tangible and intangible property at a UCC foreclosure sale, as memorialized in a transcript.

ATO sued defendant Real Action Paintball, Inc. in Indiana and obtained a preliminary injunction for trademark infringement and false advertising, but the case was then dismissed for lack of personal jurisdiction. ATO, now known as United Tactical Systems, Inc. (“UTS”), sued Real Action Paintball again in the Northern District of California and asked for a new preliminary injunction. Shortly after the action was filed in Indiana, ATO filed this curious assignment with the PTO:

ATO to ATO assignment

If you can’t read it, it is an assignment from Advanced Tactical Ordnance Systems, LLC to Advanced Tactical Ordnance Systems, LLC—yeah, from itself to itself.

Real Action Paintball claimed, successfully at least for purposes of a preliminary injunction, that UTS had not proved that it was the owner of the registered trademark. Only a “registrant,” which includes its successors and assigns, may sued for infringement under § 32 of the Lanham Act. The court held that UTS had not proven all the links in its chain of title, namely the one from PepperBall Technologies to ATO:

Some courts have held that a business trade name and its marks are presumed to pass to its buyer, absent contrary evidence. However, other courts have stressed the importance of the “writing requirement” in determining the validity of trademark assignments. UTS provided no case law supporting the validity of transfer of the PepperBall mark. … [A]t this point there are too many unresolved issues and factual disputes for the Court to find that UTS has demonstrated a likelihood of success that it is the “registrant” within the meaning Lanham Act.

But what about “by operation of law”? The trademark statute says this: “Assignments shall be by instruments in writing duly executed.” Like the Patent Act it makes no reference to “by operation of law.” Indeed, if there is an assignment of the mark, it has to be in writing. But there is the concept of transfer “by operation of law” separate and apart from an assignment: “It is doubtless the law, as in that case it is held, that ‘the property in a trade-mark will pass by assignment, or by operation of law, to any one who takes at the same time the right to manufacture or sell the particular merchandise to which the trade-mark has been attached….” Horton Mfg. Co. v. Horton Mfg. Co., 18 F. 816, 819 (C.C.D. Ind. 1883). And “Where the trademark involved is not a personal one and the transfer is made by operation of law through bankruptcy or a general assignment for the benefit of creditors, most courts have held that a trustee in bankruptcy has the power to sell the goodwill of a company and its symbolic trademarks with other assets of the bankrupt.” EH Yacht, LLC v. Egg Harbor, LLC, 84 F. Supp. 2d 556, 567 (D.N.J. 2000).

I have no idea whether the way the foreclosure sale was done was lawful, but no one suggested it wasn’t. This trademark was transferred, the only problem was the plaintiff didn’t know how to document it.

United Tactical Systems, LLC v. Real Action Paintball, Inc., No. 14-cv-04050-MEJ (N.D. Cal. Dec. 2, 2014).

Share Button

Leave a Reply

Your email address will not be published. Required fields are marked *