IP Law Daily, TRADEMARK—TTAB: Correction of registration ownership allowed for inadvertent error made in good faith, (Apr 24, 2023)

By Linda Panszczyk, J.D.

An affidavit by an LLC's co-owner established that, while the entity named in the underlying application did not exist at the time of filing, chain of title in the same, single commercial enterprise did exist between the LLC and the cousins who co-owned it.

Where a company, Fatbear Scooters, LLC, did not exist as of the date it filed an application to register FAT BEAR for motor scooters, the Trademark Trial and Appeals Board, in a precedential decision, allowed the company to correct its misidentification where "the error was inadvertent, made in good faith, and has been formalized through the filing and issuance of the limited liability certificate." The Board found that Fatbear Scooters, LLC's co-owner Isaac Ashkenazie’s affidavit established that the entity named in the underlying application (Fatbear Scooters, LLC) did not exist at the time of filing, but that chain of title in the same, single commercial enterprise did exist between it and the Ashkenazie cousins (d/b/a Fatbear Scooters). Petitioner Phat Scooters, Inc's motion for partial summary judgment on its claim that the registration was void ab initio because the application was not filed by the rightful owner of the mark was provisionally granted by TTAB in Respondent Fatbears' favor and the claim was provisionally dismissed with prejudice. The dismissal of the Petitioner's claim was contingent upon (1) Respondents’ payment of the required fee and (2) the Ashkenazie cousins adopting the answer filed in the name of the now-existing LLC or otherwise filing a new answer to the petition to cancel (Phat Scooters, Inc. v. FatBear Scooters, LLC, April 21, 2023, By the Board).

Background. The underlying verified application for the now-registered standard character mark FAT BEAR was filed December 17, 2019, in the name of Fatbear Scooters, LLC denoted in the application as a New Jersey Limited Liability Company. There was no dispute that Fatbear Scooters, LLC did not exist as of that date. On March 1, 2022, one day after an answer was filed by Fatbear Scooters, LLC in this proceeding, the certificate of formation for Fatbear Scooters LLC was issued by the State of New Jersey.

In support of its motion for partial summary judgment, Petitioner argued that the application was filed in the name of an entity, namely Fatbear Scooters, LLC, that did not exist as of the filing of the motion for summary judgment and that no corrective action was taken to form that entity before the mark registered, or before the filing of the petition to cancel in this proceeding. The petitioner argued that because Fatbear Scooters, LLC did not exist prior to issuance of the registration, that entity could not have owned the mark at the time the application was filed, nor throughout the more than two years of registration. Petitioner also argued that the limited exception allowing an applicant to correct a mistake in the manner in which the name of an applicant is set out in the application applies only before any registration issues, so Respondent here cannot correct its error. Petitioner therefore argued it is entitled to summary judgment on its claim that the application is void ab initio as it was filed in the name of an entity that did not own the mark.

With its response to Petitioner’s motion, Fatbear Scooters, LLC submitted the affidavit of Isaac Ashkenazie who avers that he co-owns Fatbear Scooters, LLC together with his cousin of the same name and that, due to an oversight, Fatbear Scooters was not registered as an LLC until March 1, 2022, although it was intended by the co-owners to be created at the same time the application was filed. Further, the Ashkenazie cousins started Fatbear Scooters “business and company” about November 2019; and that, as of December 17, 2019, the date the application was filed, continuing to the present, the only entity that has owned and used the FAT BEAR mark is the one co-owned by the Ashkenazie cousins d/b/a Fatbear Scooters, now Fatbear Scooters, LLC.

Correcting the registration. TTAB construed Respondent’s response to the motion for partial summary judgment as a cross-motion to amend the involved registration due to a correctable owner’s mistake. The Board pointed out that, under Trademark Rule 2.133, an application or registration which is the subject of a Board inter partes proceeding may not be amended in substance, except with the consent of the other party or parties and the approval of the Board, or except upon motion granted by the Board. However, where an amendment that meets the standards for a correctable mistake is submitted to the Board, the consent of the adverse party is not required.

An application filed under Section 1(a) of the Trademark Act, and where the applicant for a use-based application was not the owner of the mark, the underlying application is void ab initio. However, where a use-based application is filed by the owner of the mark, the Trademark Act and Rules allow for correction of certain mistakes in the manner or form in which the owner’s name is set out in the application or resulting registration.

To correct such an error, the owner must explain how the error occurred and provide a showing that the error occurred in good faith. Corrections are not limited solely to allowing an applicant to correct the mistake during the pendency of the application, as argued by Petitioner, said TTAB. TTAB cited an example of a permissible correction to an applicant’s name if the named applicant did not exist as of the application filing date. Such a correction, TTAB noted, requires a showing that the applicant is the same, single commercial enterprise that filed and owned the mark at the time of filing the application.

In this case, Fatbear Scooters, LLC was a nonexistent entity at the time Respondent’s underlying application was filed and when its registration was issued. However, Isaac Ashkenazie avers that the true owners of the mark at all times were the Ashkenazie cousins d/b/a Fatbear Scooters, and who are now the co-owners of Fatbear Scooters, LLC, a New Jersey limited liability company. The same single commercial enterprise operated by the Ashkenazie cousins has owned the mark, the application, and the resulting registration the entire time, and the misidentification of the commercial business as a New Jersey limited liability company is a correctable mistake, TTAB ruled.

When the Board has jurisdiction over the registration, any request to correct the registration must be filed with the Board. To effect the amendment, a registrant in a Board proceeding is strongly encouraged to file a request to correct its registration via the Board’s Electronic System for Trademark Trials and Appeals (ESTTA) under “Discovery/Trial Motions” as a “Motion to Amend Registration (Requires a Fee and Declaration),” attach its motion, declaration or affidavit, and pay the required fee.

Respondent Fatbear Scooters did not do that here and did not otherwise pay the required fee, TTAB pointed out. Because a determination of Petitioner’s motion for partial summary judgment requires that TTAB consider Respondent’s explanation regarding ownership of the involved mark, the Board has exercised its discretion to consider the construed motion prior to payment of the required fee.

The Board found that Isaac Ashkenazie’s affidavit established that the entity named in the underlying application (Fatbear Scooters, LLC) did not exist at the time of filing, but that chain of title in the same, single commercial enterprise did exist between it and the Ashkenazie cousins (d/b/a Fatbear Scooters). This evidence, said TTAB, is sufficient to correct the misidentification Respondent made upon filing the underlying application, and to also demonstrate that the error was inadvertent, made in good faith, and has been formalized through the filing and issuance of the limited liability certificate. Further, the Board found the evidence sufficient to join the Ashkenazie cousins d/b/a Fatbear Scooters as party defendants and found this appropriate to facilitate discovery.

For the correction to be effective, the Board stressed, Respondents must submit the required fee; otherwise, the correction will not be entered, and Respondent’s registration may be considered void.

Failure to prove entitlement to a statutory cause of action. To establish entitlement to a statutory cause of action under Section 14 of the Trademark Act, a summary judgment movant must demonstrate the lack of a genuine dispute of material fact that it possesses (1) an interest falling within the zone of interests protected by the statute, and (2) a reasonable belief in damage proximately caused by the registration of the mark. Here, while Petitioner properly pleaded entitlement to a statutory cause of action through its claim of ownership of three registrations, Petitioner did not submit copies of those registrations, nor any evidence substantiating its claims of ownership. A plaintiff’s allegations alone do not establish its entitlement to a statutory cause of action; rather, a plaintiff must provide evidence to demonstrate its entitlement to a statutory cause of action.

In view of the foregoing, TTAB found that the Petitioner failed to meet its initial burden of establishing the absence of a genuine dispute of material fact as to its entitlement to a statutory cause of action. Therefore, Petitioner’s motion for summary judgment was denied. Although the Petitioner’s failure to establish its entitlement to a statutory cause of action is a sufficient basis for denying its motion for summary judgment, in the interest of completeness, TTAB addressed the motion as it pertains to Petitioner’s claim that Respondents are not the rightful owners of the mark.

TTAB found that Respondent is a single commercial enterprise misidentified as to entity type in the application, but that this is a correctable error. Although the request for the New Jersey limited liability company named in the application had not been filed under New Jersey law as of the application filing date, the misidentification has been corrected through the affidavit submitted by Isaac Ashkenazie, and will be entered upon payment of the proper fee. The underlying application was filed by the owner of the mark, and the registration issued in the name of the limited liability company as the owner of the mark as the same continuing commercial enterprise.

In view of the foregoing, partial summary judgment in Respondents’ favor on Petitioner’s claim that Fatbear Scooters, LLC is not the rightful owner of the mark was provisionally granted and the claim was provisionally dismissed with prejudice contingent upon (1) Respondents’ payment of the required fee and (2) the Ashkenazie cousins adopting the answer filed in the name of the now-existing LLC or otherwise filing a new answer to the petition to cancel. In the event these contingencies are met, this case will proceed solely on Petitioner’s pleaded likelihood of confusion claim.

The Case is Cancellation No. 92078878.

Attorneys: Maria Crimi Speth (Jaburg & Wilk, P.C.) for Phat Scooters, Inc. Gerry Grunsfeld (Lazar Grunsfeld Elnadav, LLP) for Fatbear Scooters, LLC d/b/a Fatbear Scooters, Isaac Ashkenazie and Isaac D. Ashkenazie.

Companies: Phat Scooters, Inc.; Fatbear Scooters, LLC d/b/a Fatbear Scooters

Cases: Trademark USPTO