Property, intangible

a blog about ownership of intellectual property rights and its licensing

Isn’t It the Corporate Secretary’s Job …

Isn’t it the Corporate Secretary’s job (and in this case, the same person was also the General Counsel) to make sure that documents are signed by the right entity? In East West Bank Co. v. The Plubell Firm LLC, not once, but twice the Corporate Secretary, Douglas Krause, executed trademark maintenance documents for the wrong entity, then doubled-down by stating that it was only a name change when it wasn’t. And that’s how you lose a registration that you are asserting in a cancellation action.

It was a registration for EAST WEST BANK, applied for in 1993 in the name of East-West Federal Bank FSB and registered in 1996. In July 1995, East-West Federal Bank converted from a federal savings bank to a California state commercial bank. Nevertheless, the Section 8 & 15 was signed in 2002 in the name of East-West Federal Bank and a Section 8 & 9 was signed in 2006, also in the name of East-West Federal Bank.

Perhaps finally realizing there was an error, East West Bank filed a second Section 8 and 9, changing the name of the owner from East-West Federal Bank to East West Bank. Upon receiving an office action because East West Bank had not shown its chain of title, East West Bank recorded a Change of Name with the PTO. Rather than filing any government document showing the change (as would exist if there truly was a name change), East West Bank relied on an affidavit signed by the Mr. Krause that "The Corporation’s name has been changed and is now called East West Bank."1 The PTO accepted the new Section 8 and 9.

There is no doubt that a document filed in the name of the wrong entity is void:

Only the current owner of a registration can file an affidavit or declaration of use or excusable nonuse, and the law is clear that a predecessor in interest is not eligible to make such filings…. Hence, if the party who filed the affidavit or declaration was not the owner of the registration at the time of filing, and if there is no time remaining in the grace period, the registration will be cancelled…. Moreover, even if it is assumed that the person who signed declaration had authority to sign for the true owner, that fact is irrelevant if the declaration is filed by an entity that does not own registration [sic].

East West Bank argued that East West Bank’s ownership was by operation of law and therefore East West Bank could act in the name of East-West Federal Bank. As explained by the Board:

Petitioner counters that contrary to Respondent’s assertions, the post-conversion entity East West Bank is the same legal entity as the pre-conversion entity East-West Federal Bank but simply under a different name. Relying on both federal and California state banking law, Petitioner contends that following the conversion from a federal savings to a state commercial bank in July 1995, East West Bank automatically succeeded to all rights and property of East-West Federal Bank by operation of law, effectively dispensing with the requirement of conveying or changing the name and title of any assets and documents, including trademarks registered with the USPTO. Petitioner maintains that any reference in writing to East-West Federal Bank, even after the conversion, is deemed a reference to Petitioner without any further action; hence, Mr. Krause’s signature on any post-registration maintenance documents under the designation East-West Federal Bank essentially constitutes a signature on behalf of East West Bank. As a consequence, Petitioner asserts that it did not need to file any assignment or conveying documents for Registration No. 2025824 with the USPTO following the conversion.

The TTAB didn’t see it the same way:

Despite his critical role as signatory of the post registration maintenance documents, Mr. Krause was not called as a witness at trial. Rather, portions of his discovery deposition are of record. His statements regarding the charter conversion are not a model of clarity, although ultimately he took the position that Petitioner underwent a name change. Thus, in the absence of any corroborating written documentation, Mr. Krause’s discovery deposition is not, standing alone, sufficient to support Petitioner’s position. We therefore look to the initial and subsequent articles of incorporation for East West Bank authenticated by Petitioner’s witness Ms. Woo, Legal and Executive Assistant of East West Bank. Article I of the initial Articles of Incorporation or East-West Bank dated July 24, 1995 states "[t]he name of this Corporation is East-West Bank." The only reference to East-West Federal Bank in the initial articles of incorporation appears in Paragraph IV ("Capital Stock"):

Upon the effective date hereof, each of the 100,000 outstanding shares of East-West Federal Bank, f.s.b. stock is hereby reclassified and reconstituted as 1,100 shares of common stock of the corporation.

Hence, it appears that as of July 24, 1995, East-West Federal Bank ceased to exist as a separate legal entity. This is confirmed by the provisions set forth in the California Financial Code stating that "[w]hen a conversion becomes effective: The converting depository corporation shall cease to exist." Thus, despite statements in Mr. Krause’s discovery deposition of a mere name change and continuation of the same legal entity, the articles of incorporation show otherwise — that as of July 1995 East-West Federal Bank ceased to exist because there was a change in legal entity. This is consistent with the statutory  provisions governing California banking conversions.

The Section 8 Declaration of Use was therefore considered not filed and the registration cancelled.

I think the argument can be rejected in another way. As described by the Board, East West Bank has a flawed syllogism. Whether the legal rights are transferred is not the same thing as who is performing a legally binding act. No one challenged the premise that East West Bank was the successor to East-West Federal Bank trademarks, whether by operation of law or otherwise. But that wasn’t the issue, the issue was whether a particular document was signed by the owner of the trademark. East West Bank argued that under a conversion, "reference to such national banking association in any contract, will, or document shall be considered a reference to the State bank [. . .]" (p. 27). But saying that the successor has the same rights as the predecessor doesn’t mean that one gets to perform new legal acts in the name of the former owner (whether it still exists or not). When the bank repossesses my car, I surely hope that the buyer at auction isn’t allowed to take a loan out in my name because the DMV still has me listed as the owner. Trustees for bankrupt estates sign as trustee even though they are exercising control over the estate’s assets, same with the administrator of a deceased person’s estate, same with power of attorney. It strikes me as odd, and unlikely, that the banking statute would permit it without any nod to the fact that it’s a new entity acting on behalf of another.

There also is an interesting discussion of use in commerce of a service mark. The target of East West Bank’s petition to cancel didn’t fare so well either; she failed to prove use of her mark. From the description it looks like a lot of evidence, but in the Board’s view not showing use, just advertising. The Board cited to a number of places in the respondent’s deposition where she talked about using it in “marketing,” which the Board distinguished from use. The Board noted that the respondent gave opaque answers at her deposition and with better evidence it might have found use, but didn’t on the evidence it had.

East West Bank Co. v. The Plubell Firm LLC, Cancellation No. 92053712 (TTAB Sept. 8, 2016)

  1. I’m not sure why they bothered with the affidavit; recording a name change with the PTO only requires the cover sheet. TMEP 503.03(b) (4th edition).

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