Today I’m going to be talking about trademark assignments and in particular the doctrine of assignments in gross or what is sometimes called a naked trademark assignment.
What this relates to is the requirement that if you have a trademark assignment you need to also have in conjunction with that trademark assignment an assignment of the underlying goodwill of the business that is making the assignment.
The rationale for this is that a trademark is intended to reflect, show or demonstrate the source and identity of goods and services. So if you have a trademark assignment that does not include the underlying goodwill of the business that’s making the assignment, you might end up with a product–a good or service–being introduced into commerce that is different in quality or type than the good or service that has been in commerce under the trademark prior to the assignment.
For example, what if you have a company that has a registered trademark for a restaurant that sells strictly fried chicken and it assigns its trademark to another company and that new company uses that trademark to have a cafe that sells only croissants and coffee.
Well, you now have a very confusing situation where consumers don’t know what that trademark really relates to anymore.
Does it relate to fried chicken?
Does it relate to coffee and croissants?
By not having that similarity of goods and services after the supposed trademark assignment, you have basically caused damage to the trademark so that the trademark assignment itself is treated as invalid. In this case, it’s called an assignment in gross. You’ve assigned the trademark, but you haven’t assigned the underlying business goodwill. That is shown by the fact that there is not a similarity in services or goods after the assignment.
There was a recent case a couple of weeks ago that came out of a federal court in Washington state, and it involved a purported trademark assignment for a restaurant.
There was a restaurant company in Washington state that has about three restaurants in the Seattle area that sells fried chicken, macaroni and cheese, biscuits, and tacos. It’s a fast food restaurant. And it operates under the trademark “Bok a Bok” with the words intended to approximate the sound that a chicken makes. It also has a little stylized logo with the name Bok a Bok that looks like a chicken head in different colors.
it became aware of another restaurant company in Nevada that was using the trademark Bok Bok.
So the company in Washington state, Bok a Bok, sent a cease and desist letter to the company in Nevada and the company in Nevada responded and then ultimately the company in Nevada filed a lawsuit against the company in Seattle.
Prior to having filed that suit, the company in Nevada acquired a trademark assignment from a restaurant company in New York state that operates a business called, Bok Bok Chicken Delicious. And it also has a registered trademark.
Now let’s talk about what these different restaurants do. The one in Seattle, Bok a Bok, sells fried chicken, macaroni and cheese biscuits, and tacos. It’s a fast food restaurant, but it’s restaurants are stand alone restaurants.
The restaurant company in Nevada, Bok Bok, is basically a restaurant that sell a variety of Mediterranean food.
And then the company in New York, Bok Bok Chicken Delicious, is a company that sells Korean-style fried chicken food courts in malls.
And so once the company in Nevada acquired a trademark license from the company in New York for Bok Bok Chicken Delicious.
The main issue was whether the trademark assignment that the Nevada company got from the New York company was a valid trademark assignment.
And here’s how the Court looked at that particular issue. It essentially looked at what was the company in New York selling with its registered trademark, Bok bok Chicken Delicious. What were the goods and services that it was selling under that trademark and answer is that it was selling Korean-style fried chicken in mall food court locations. It was essentially a restaurant company with locations in mall food courts selling Korean-style fried chicken.
So when the company in Nevada got that Bok Bok Chicken Delicious trademark assignment, what was it doing with that trademark? Well, it was selling essentially Mediterranean food.
So, the court basically determined that there was not a substantial similarity in the goods sold by the recipient of the trademark assignment from the goods or services sold by the seller of the trademark assignment. And so the trademark assignment was invalid as an assignment in gross or a naked assignment or a naked trademark assignment.
That meant that the Nevada company lost and the company in Seattle won. The Nevada company did not have a valid registered trademark because the assignment was an assignment in gross, while the company in Seattle had a valid registered trademark.
One can see that just by getting a trademark assignment, unless you get the underlying goodwill and unless you continue providing the same quality and same kind of goods and services that had been provided under the trademark prior to this assignment, it can be determined that the trademark assignment is invalid and of no benefit and of no use.
Here is a link to this interesting trademark case: BBC Group NV LLC v. Island Life Restaurant Group LLC.