Trademark Trial and Appeal Board
Patent and Trademark Office (P.T.O.)
*1 ROUSH BAKERY PRODUCTS CO., INC.
F.R. LEPAGE BAKERY, INC.
Cancellation No. 15,106
August 8, 1989
Before Sams, Rice and Krugman
Opinion by Rice
This case now comes up on petitioner's motion, filed February 16, 1989, for summary judgment or, in the alternative, to set discovery and testimony periods, and respondent's cross-motion, filed March 10, 1989, to dismiss or for summary judgment. In addition, the Board's decision dated August 26, 1987, wherein petitioner's motion for summary judgment filed June 20, 1986 was granted, and respondent's cross-motion for summary judgment filed August 4, 1986 was by implication denied, was vacated by the Court of Appeals for the Federal Circuit in a decision dated December 13, 1988, and the case was remanded to the Board for further action in accordance therewith. We will start with a review of the history of this case.
The proceeding commenced when petitioner filed a petition to cancel respondent's registration of the collective mark "COUNTRY KITCHEN" for bread. [FN1] With respect to its standing, petitioner asserted use (by itself and licensees) and registration of various marks containing the word "COUNTRY" for bread and/or related bakery products, and that respondent has demonstrated a propensity to assert its registration in civil actions against petitioner and petitioner's licensees.
Petitioner also pleaded certain additional facts, namely, that on February 19, 1985, the collective mark registration sought to be cancelled was assigned by American Baker's Cooperative, Inc. (hereafter "ABC"), the original registrant, to respondent; that respondent is not a cooperative or other similar organization with members who meet its standards for admission but rather is a private corporation engaged in a bakery business; that prior to February 19, 1985, respondent used the mark "COUNTRY KITCHEN" on bread as a licensee and member of ABC's cooperative organization; and that since the assignment, respondent has used the mark as a trademark for its bread.
Based upon these facts, petitioner pleaded a number of different grounds for cancellation. First, petitioner asserted, on information and belief, that prior to the assignment, respondent's use of the registered mark was not subject to ABC's control, and that respondent's use of the mark with the consent and approval, but not control, of ABC constituted an abandonment of the mark. Second, petitioner asserted, with respect to respondent's use of the mark after the assignment as a trademark for its bread, that a collective mark is a trademark used by members of a cooperative or other such organization; that use of a collective mark by its owner is improper; that respondent's use falsely represented that respondent was a cooperative or other type of organization capable of owning a collective mark registration; that respondent's use of the mark was as a trademark, not as a collective mark; and that the fact that the mark was no longer being used as a collective mark indicated that the "registration" had been abandoned. Third, petitioner asserted that respondent, as purported owner of the registration after the assignment, was required to control use of the registered mark by all who used it with respondent's knowledge and consent; that on information and belief, respondent did not control the use of the mark by others; and that the failure to control use by others constituted abandonment.
*2 Respondent, in its answer to the petition, admitted, inter alia, that (it believes that) P & C Foods Markets, Inc. is presently marketing bread under the marks "COUNTRY HEARTH" and "COUNTRY FARMS" as a licensee of petitioner; that respondent has brought civil actions against two of petitioner's licensees for infringement of the mark "COUNTRY KITCHEN"; [FN2] that on February 19, 1985, ABC assigned the mark "COUNTRY KITCHEN" and the registration thereof (and, according to respondent, the good will associated with the mark) to respondent; that respondent is a private corporation engaged in the bakery business; [FN3] that since 1951, respondent has used the mark "COUNTRY KITCHEN" on bread and related bakery products; and that prior to February 19, 1985 (i.e. the registration assignment date), respondent's use of the mark on its bread was as a licensee and member of ABC's cooperative organization. However, respondent denied the remainder of the salient allegations contained in the petition for cancellation.
The day after respondent's answer was filed, petitioner filed a motion for summary judgment. Specifically, petitioner asserted, as grounds for summary judgment, that (1) respondent's use of the registered collective mark as a trademark rather than as a collective mark had caused the mark to lose its significance as an indication of origin as a collective mark, and therefore that the mark had been abandoned; (2) the assignment of the mark and registration to respondent was void since respondent is not a cooperative or other similar entity and hence cannot be the owner of a collective mark; and (3) in petitioner's opinion, the "anti-use by owner" rule applies to collective marks as well as to certification marks, and respondent's violation of the rule warranted cancellation of the collective mark registration on the ground of abandonment pursuant to Section 14(c) of the Act. In support of its motion, petitioner submitted evidence (the declaration of its president and copies of its pleaded registrations) offered to show the lack of a genuine issue of material fact relating to its standing, as well as other evidence (the May 1, 1986 declaration of an employee of a Portland, Maine law firm and attached exhibits, namely, bread wrappers) offered to show the lack of a genuine issue of material fact as to respondent's then-current use of the mark "COUNTRY KITCHEN" for its bread.
Respondent, in turn, filed a brief opposing petitioner's motion for summary judgment and moving for summary judgment in its own behalf. Respondent's brief was supported by the affidavit of Mr. Albert Lepage, Chairman of the Board of respondent. What follows is a summary of some of the salient facts included in the affidavit. Respondent adopted the mark "COUNTRY KITCHEN" for its bread and related bakery products in 1951, and has used the mark to identify such products ever since. In the mid-1950's, respondent relinquished certain of its rights in the mark to ABC, but respondent retained an exclusive license to use the mark in certain parts of the State of Maine. In 1975, the area of respondent's exclusive license was expanded to include all of Maine and five other New England states. The 1975 agreement provided that all bakery products sold by respondent under the mark would meet or exceed the federal standards governing the quality of such products; that where ABC's standards exceeded the federal standards, respondent would comply with ABC's standards; and that ABC had the right to inspect and test respondent's products to ensure that such products met the appropriate quality controls. In 1977, the area of respondent's exclusive license was again expanded to include another five states. The 1977 agreement contained quality control provisions similar to those set forth in the 1975 agreement. During the period from 1951 to 1986 (the date of the Lepage affidavit), respondent's use of the mark in its area was quite extensive (as is evident from certain facts recited in the Lepage affidavit), with total sales for the period in excess of $275,000,000. Based thereon, Mr. Lepage stated his opinion that members of the trade and consuming public had come to associate and would continue to associate the origin of bakery products sold under the mark in the licensed area with respondent.
*3 The affidavit also indicated that as of the date thereof (July 28, 1986), ABC was a cooperative organization which licensed companies in "distinct sections of the country" to affix the mark to bakery products which met the quality standards established and monitored by ABC. Failure to meet the standards constituted sufficient grounds for cancellation of a license. In late 1984, respondent learned that ABC was seeking a purchaser for the "COUNTRY KITCHEN" mark. In 1985, a purchase agreement between the two was concluded. The agreement provided that respondent, as the new owner of the registration, concurrently granted ABC a license to use the mark on bakery products only through the existing members of the cooperative and only in those territories in which those existing members were using the mark at the time of the agreement. The purpose of this provision, according to the affidavit, was "to continue the status quo which existed prior to the agreement, to maintain consistent quality control, and to insure (sic) that no purchasers of COUNTRY KITCHEN products would be deceived or mistaken regarding the actual source or origin of such products." Paragraph 4(a) provided that ABC, at respondent's expense, would monitor the quality of the products manufactured by other members of the association. That portion of the agreement is quoted in its entirety below:
4. License Back To Seller ABC
LEPAGE hereby grants to ABC a right and license to use the COUNTRY KITCHEN trademark on bread and bakery products through members of its cooperative corporation listed in Exhibit A annexed to this Purchase Agreement and only to said listed members.
The right and license shall be exclusive to those members of the cooperative corporation listed in Exhibit A annexed to this agreement in the territories in which they now use the COUNTRY KITCHEN trademark, subject to the following conditions:
(a) ABC shall at LEPAGE'S expense inspect and control the quality of the bread and bakery goods manufactured and sold under the COUNTRY KITCHEN trademark by the current trademark licensees and members of the seller's cooperative corporation listed in annexed Exhibit A. In that connection, ABC shall inspect its sublicensees' plants and bread products regularly. This will include "scoring" of the bread or bakery products sold under the COUNTRY KITCHEN trademark. Such scoring involves and has involved in the past examining and/or testing the volume, crust color and break and shred characteristics of the product as well as observing and checking the slicing, grain, texture, aroma, taste and softness of the product to insure that it meets the quality acceptable to LEPAGE and ABC. ABC may have scoring done on its behalf by an acceptable laboratory.
The Lepage affidavit concluded with statements that "as shown by the agreement," respondent and ABC thereafter jointly monitored and controlled the quality of "COUNTRY KITCHEN" products; that respondent continued to market its products under the mark in the same states in which it had marketed those products prior to the agreement; that other members of the association continued to market "COUNTRY KITCHEN" products in the "distinct areas" in which they had previously marketed such products; and that no customer had been or could be confused, mistaken, or deceived as to the actual origin or source of the "COUNTRY KITCHEN" products which he or she purchased.
*4 Respondent maintained, in its brief in opposition to petitioner's motion for summary judgment and in support of its own cross-motion for summary judgment, that Section 14(c) of the Act (which provides for the cancellation of a certification mark at any time on the ground, inter alia, that the registrant engages in the production or marketing of any goods or services to which the certification mark is applied i.e., the "anti-use by owner rule"), is specifically limited to certification marks and thus could not serve as the basis for cancellation of respondent's collective mark registration; that the "COUNTRY KITCHEN" mark had not been abandoned since respondent and other organizations associated with ABC had continued to use the mark pursuant to a stringent quality control agreement; that respondent's use of the mark after the 1985 agreement was based, in part, on its pre-existing common law rights such that the mark had not lost its significance as an indication of origin; that the only prohibition under Section 4 of the Act (which governs the registration of collective and certification marks) was that a collective or certification mark was not entitled to registration if the mark was used so as to represent falsely that the owner or a user thereof made or sold the goods or performed the services on or in connection with which such mark was used; that respondent was not using the mark in such a manner; and that even if the assignment of the registration to respondent were found to be void, a void assignment does not necessarily constitute an abandonment of the mark in question.
In a decision dated August 26, 1987, the Board granted petitioner's motion for summary judgment (thus implicitly denying respondent's cross-motion for summary judgment). In so doing, the board first stated that a collective trade or service mark is a mark adopted by a collective group for use only by its members, who in turn use the mark to identify their goods or services and distinguish them from the goods or services of nonmembers. Next, the Board quoted the following passage from Huber Baking Co. v. Stroehmann Bros. Co., 252 F.2d 945, 116 USPQ 348 (CA 2 1958), cert. den. 358 US 829, 119 USPQ 502 (1958):
A collective mark is owned, and may be registered, by the group or association of which it is a symbol but not by a user thereof [emphasis added], and it indicates to the public that members of the association produced the merchandise bearing the mark. The association which owns the mark may not use it on merchandise, if it produces any, as may its members.
In the instant case, it is clear that respondent is not a cooperative or similar organization, but rather a company which uses the "COUNTRY KITCHEN" mark to identify its own goods.
While it is true that Section 14(e) of the Lanham Act is not specifically applicable to collective marks, the anti-use by owner rule pertaining to certification marks has been attributed to collective marks. See McCarthy, supra and cases cited therein. [FN4]
*5 In view thereof, the Board finds that as a result of respondent's use of "COUNTRY KITCHEN" as a trademark, said mark no longer serves as an indication to the public that only the members of a collective group or organization produce the goods sold thereunder. We agree with petitioner that this constitutes an abandonment of the collective mark.
Respondent appealed the decision of the Board to the Court of Appeals for the Federal Circuit. On July 7, 1988, in an opinion reported at 851 F.2d 351, 7 USPQ2d 1395, the Court affirmed the decision of the Board. However, the Court did not rest its decision on an application of the anti-use-by-owner rule to collective marks, as did the Board. Rather, the Court expressly declined to pass on the applicability of that rule to collective marks, and instead based its decision on the rationale that a collective mark registration cannot be owned by one who would not be entitled to obtain it under the statute, that is, by one who is not a cooperative, an association or other group or organization. Portions of the Court's opinion are quoted below (except as otherwise indicated, the emphasis is ours):
The sole issue which this appeals presents is whether a corporation in the bakery business, making and selling its wares under the trademark COUNTRY KITCHEN, is entitled to own and assert against others, in the courts or otherwise, a collective mark registration [emphasis in original] of COUNTRY KITCHEN for bread which it acquired by assignment. We think not.
A most confusing aspect of this case is that Lepage is making two inconsistent claims. (1) It claims to have acquired by assignment from ABC in 1985 not only the collective mark registration but also the good will associated therewith which would normally mean ABC's good will associated with licensing the use of COUNTRY KITCHEN to other members. (2) At the same time Lepage says it has licensed the use of COUNTRY KITCHEN back to ABC so it could license the other existing members, the purpose being, to quote Lepage's affidavit, "to continue the status quo which existed prior to the agreement." We will not attempt to decide where this leaves the good will associated with the collective mark or its registration. Of course, a registration is not a chattel which can be bought or sold "in gross" apart from the mark and the good will associated with it, [citation omitted], nor is it like a patent which is inherently and by statute endowed with "the attributes of personal property." [citation omitted]. This case exudes the odor of trademark law polluted with property law principles.
Petitioner Roush propounded to the board and propounds to us a theory of abandonment predicated on the assignment to Lepage by the collective ABC. In sustaining the petition to cancel, the board agreed with petitioner that there has been "abandonment of the collective mark." In doing so, however, it applied a legal theory based on the wording of § 1064(e) which has been the subject of much argument and which we find it unnecessary to pass on. "Abandonment" may be as good a term as any to describe the net result in law of the dealings between ABC and Lepage. The original owner of the collective mark registration, properly issued to it, by a purported assignment gave up (abandoned) its rights to the registration and the good will in the registered mark as a collective mark. However, we prefer to rest our decision that the registration must be cancelled on the fundamental proposition that a collective mark registration cannot be owned by one who would not be entitled to obtain it under the statute. What the statute does not permit cannot be finagled by agreements between private parties. Lepage has no right to own a collective mark registration and the registration, being in its ownership, must be cancelled.
*6 The Court's opinion included, however, a very significant footnote to the last sentence quoted above. That footnote read as follows:
While it is not our province to give advice to parties, it would seem, according to Lepage's evidence, that ABC, the original and proper owner of the registration sought to be cancelled is still in operation as a cooperative and still licensing bakeries in collaboration with Lepage to use the collective mark. If the registration were to be reassigned to ABC, its apparent proper owner, before the PTO actually cancelled it, there would seem to be no need to cancel. If asked for a stay of our mandate to enable a reassignment and consideration of its effect, we would willingly grant a reasonable one.
Thereafter, the Court denied a petition for rehearing filed by petitioner, and, upon request by respondent, stayed its mandate to give respondent time to reassign the collective mark registration to ABC. Respondent subsequently filed with the Court purported copies of a reassignment agreement and of a reassignment document. In response thereto, the Court, on December 13, 1988, issued an order wherein it withdrew its earlier decision; replaced that decision with a decision vacating the decision of the Board (the Court specifically stated, however, that its original opinion "stands otherwise unchanged"); and remanded the case to the Patent and Trademark Office ("PTO") so that the PTO might "consider the now-existing factual situation respecting ownership" of the collective mark registration "and such evidence as the parties may present pertaining thereto." In so doing, the Court stated:
The sole basis of our original opinion was that the Collective Mark Registration had been assigned by ABC to LePage [sic], which had no right to own such a registration. It now appears that the facts have probably been changed and that ABC, the original registrant, is repossessed of the registration. This appellate court, however, is not a fact-finding body, does not receive evidence, and the determination of presently existing facts affecting the registration sought to be cancelled is initially for the PTO, as is the legal effect of the facts on the petition to cancel. Our final footnote was merely a suggestion and in no sense a decision on what legal effect it would have if adopted.
Under the somewhat unusual circumstances of this case, we modify our original decision of July 7, 1988 to afford the PTO the opportunity to reconsider the petition in light of the changed facts and afford the parties the opportunity to present to the PTO such factual evidence as they may have.
In view thereof, the Board, upon remand, allowed respondent time in which to submit to the Board copies of the reassignment agreement and of the reassignment document, which respondent did. On the day before respondent filed these copies, petitioner filed its new motion for summary judgment or, in the alternative, to set discovery and testimony periods.
*7 As grounds therefor, petitioner asserts that the Board and the Federal Circuit Court have already held that the mark "COUNTRY KITCHEN" has lost its collective mark significance and that the registration has been abandoned; that the parties are estopped from relitigating that issue; and that the abandoned registration cannot be resurrected or "unabandoned" by the purported agreement and reassignment between ABC and respondent. Petitioner concludes that there is no genuine issue of material fact as to the abandonment of the collective mark registration by respondent and thus that summary judgment should be entered in favor of petitioner. Petitioner adds, however, that if the Board finds that there are, as a matter of law, facts which could be proven to "unabandon" the abandoned collective mark registration, "such will require discovery and testimony into the details of the purported reassignment and agreement between ABC and respondent as well as complete briefing on why such could possibly have an effect on an already abandoned collective mark registration."
Respondent, in turn, filed its cross-motion to dismiss or, in the alternative, for summary judgment. Respondent maintains, inter alia, that its reassignment of the subject registration to ABC cured the purported problem with the ownership thereof, thereby eliminating the sole basis for the Court's affirmance of the Board's cancellation decision; that the arguments now raised by petitioner were considered and rejected by the Court in connection with petitioner's petition to the Court for rehearing and respondent's motions to stay the mandate of the Court until the reassignment could be completed; that proper use of the collective mark continued after the attempted assignment thereof from ABC to respondent; that various cases hold that even when an assignment is invalid, an abandonment of the trademark does not necessarily result, particularly where, as here, the assignor continues to use the mark in a proper manner after the attempted assignment; and that given the reassignment and ABC's proper ownership of the mark and registration, the petition for cancellation fails to state a cause of action and should be dismissed, or, alternatively, summary judgment should be entered in favor of respondent since, as a matter of law, cancellation is unnecessary and inappropriate. Respondent also notes that one month after the Board's decision, the United States Trademark Association Trademark Review Commission Report and Recommendations on the United States Trademark System and the Lanham Act was published in the Trademark Reporter, at 77 TMR 424 (September-October 1987). The report stated the Commission's belief that the anti-use-by-owner rule was intended to apply only to certification marks; termed "mistaken" the belief that the owner of a collective mark cannot use the mark in connection with the owner's goods or services; and recommended that Section 4 of the Act be amended in order to eliminate the confusion. Respondent further notes that on November 16, 1988, the Trademark Law Revision Act, which included the recommended amendment to Section 4 of the Statute, was signed into law. Finally, respondent submitted the January 29, 1988 declaration of Professor McCarthy, stating his opinion that "the Trademark Review Commission's conclusion that the Lanham Act's proscription against use by owner applies only to owners of certification marks and not to owners of collective marks, is correct."
*8 We start by reiterating that the Board's finding of abandonment was based upon an application of the anti-use-by-owner rule to collective marks; that the Court declined to pass on the correctness of the Board's theory or to rest its own decision on any other theory of abandonment, choosing instead to base its original decision solely upon its finding that respondent had no right to own a collective mark registration; that the Court's original decision affirming the Board's decision to cancel has been withdrawn (although the Court's opinion stands otherwise unchanged) and replaced by a decision vacating the decision of the Board; and that the Court has remanded the case to the Board to afford the Board "the opportunity to reconsider the petition in light of the changed facts and afford the parties the opportunity to present to the PTO such factual evidence as they may have." Under the circumstances, it cannot be said that the issue of abandonment has been determined.
Moreover, in view of the Trademark Review Commission's report stating its belief that the anti-use-by-owner rule was intended to apply only to certification marks, not to collective marks; Professor McCarthy's declaration expressing his agreement therewith; and the subsequent amendment of Section 4 of the Lanham Act as recommended by the Trademark Review Commission, we no longer believe that the anti-use-by-owner rule is applicable to collective marks.
Further, as noted by respondent, the Court of Customs and Patent Appeals, predecessor of the Court of Appeals for the Federal Circuit, was once asked to hold "abandoned," because of an assertedly invalid assignment, a trademark which had never been out of use. See: Hy-Cross Hatchery, Inc. v. Osborne, 303 F.2d 947, 133 USPQ 687 (CCPA 1962). The Court refused to do so, stating (at page 689): [FN5]
Nothing quoted tends to show that an invalid assignment is, ipso facto, an abandonment of a mark.
We do not find, therefore, any authority in support of the contention that Osborne's assignment, even if it did not effect a valid transfer, necessarily resulted in an abandonment of the mark within the intent of section 14(c).
But even if ... the reassignment [were] treated as an invalid assignment in gross, that fact alone would not compel a finding of abandonment. Defendant contends that assignment in gross constitutes abandonment per se; but in every case cited in support of that proposition, the assignor stopped using his mark after attempting to assign it and had no intention of resuming. In other words, the statutory elements of abandonment were present. Here, however, the evidence is clear that LRB continued using the mark after the reassignment. Under those circumstances, no matter how the reassignment is characterized, it could not have constituted abandonment.
*9 We think it is clear from the foregoing that the issue of whether the invalid assignment in this case constituted an abandonment of the collective mark "COUNTRY KITCHEN" hinges upon the facts concerning such matters as the nature of the use of the mark by respondent and the other members of the collective prior to and after the 1985 assignment of the registration to respondent, and the extent to which (and by whom) control over the use of the mark was actually exercised. The Lepage affidavit is insufficient to show the lack of a genuine issue of material fact as to these matters.
Moreover, there can be no doubt that the petition for cancellation, which alleges abandonment not only because of the invalid assignment but also because of failure to exercise proper control, states a claim upon which relief may be granted.
For the foregoing reasons, petitioner's motion for summary judgment filed June 20, 1986 is granted only to the extent that summary judgment is entered in petitioner's behalf on the issue of its standing (the evidence submitted with the motion being sufficient to show prima facie that there is no genuine issue of material fact relating to petitioner's standing, i.e., its real interest in this proceeding, and that petitioner is entitled to judgment on this issue as a matter of law). This motion for summary judgment is otherwise denied, as are petitioner's motion for summary judgment filed February 16, 1989; respondent's cross-motion for summary judgment filed August 4, 1986; and respondent's cross-motion to dismiss or for summary judgment filed March 10, 1989. Petitioner's alternative motion to set discovery and testimony periods is granted; and trial dates, beginning with the time for discovery, are set as indicated in the accompanying trial order.
Members, Trademark Trial and Appeal Board
FN2. Respondent asserted that the first of the two actions, filed in 1982, was based solely on respondent's Maine registration for the "COUNTRY KITCHEN" mark and respondent's common law rights in the mark; and that the second action, filed on April 19, 1985 (after assignment of the involved collective mark registration to respondent), included a claim "based on the infringement of respondent's federal registration."
FN3. Respondent added, however, that commencing with the assignment of the mark and registration to itself, respondent, in concert with ABC, functioned as a "cooperative" or "similar organization" and fulfilled the duties which are exercised by a cooperative or similar organization.
FN4. The McCarthy cite, given earlier in the Board's decision, was to J. Thomas McCarthy, Trademarks and Unfair Competition, § 19:34 (2nd edition, 1984). Specifically, at page 953 of that section, Professor McCarthy reported that because of the close relationship between collective trade and service marks and certification marks, "the courts have imported from certification mark law the anti-use-by-owner rule. That is, if the owner of a collective trade or service mark uses the mark to identify its own similar goods or services, the mark is not a 'collective' mark, but a trademark or service mark." This statement was followed by the passage from the Huber case, supra, quoted above, and by a citation to other cases in accord. The author did not express his own opinion on the applicability of the anti-use-by-owner rule to collective marks.
FN5. The opinion of the Court in the Hy-Cross case was written by Judge Rich, who also wrote the opinion (and the December 13, 1988 order) of the Court of Appeals for the Federal Circuit in this case.