Key Takeaway: The Trademark Trial and Appeal Board (“TTAB” or “the Board”) afforded no weight to a bare-bones trademark consent agreement that contained no provisions for the parties to avoid confusion, even though the same agreement had been accepted in a previous case involving the same parties and the same marks. This case emphasizes the importance of careful drafting of intellectual property agreements, as skeletal agreements containing only basic terms may not stand up to judicial scrutiny.
In May 2021, Cook Capital LLC’s (“CCL”) registration for the mark COLORS covering behavioral self-improvement services was cancelled for failure to file a required maintenance declaration. Later that same year, CCL applied for a new registration for the COLORS mark covering identical services to replace the lapsed registration.
CCL’s new application was refused registration because of an alleged likelihood of confusion with an earlier registration for related services owned by Delsie Howey (“Howey”). CCL’s first registration had also been initially refused because of Howey’s prior registration, but CCL had overcome this rejection by obtaining a letter of consent from Howey. CCL supplied the same letter of consent to overcome the rejection of its second application. However, the Examining Attorney for the second application refused to accept the letter of consent and denied registration of CCL’s new application. CCL appealed this refusal to the TTAB.
The TTAB upheld the Examining Attorney’s refusal to register CCL’s mark. Although the Board did not question that Howey had signed the consent agreement, and the Board acknowledged that the agreement had already been accepted by the USPTO in a previous prosecution involving the same two marks, the Board found that the agreement was insufficient.
In the U.S., consent agreements are only accepted when their terms make consumer confusion between the marks unlikely. Here, the USPTO found that the consent agreement was designed solely to allow both parties to continue using their respective marks, regardless of consumer confusion. The consent agreement didn’t require CCL to amend or limit its services to avoid confusion, obligate either party to take any efforts to avoid or remedy confusion, or even to notify the other party if they became aware of confusion.
The TTAB noted that CCL was apparently not able to obtain a new letter of consent from Howey with provisions to avoid confusion. This led to speculation that the only reason Howey signed the first consent agreement was to avoid having its registration challenged by CCL. Now that Howey’s registration was incontestable and immune to challenge by CCL, Howey appeared unwilling to provide a new consent agreement. Because of this, the TTAB found that Howey had only signed the initial agreement to avoid cancellation of its registration, and that the parties did not intend to take any steps to avoid confusion. The TTAB further found that the terms of the consent agreement failed to adequately prevent consumer confusion in practice, and declined to accept it as evidence that there was no likelihood of confusion between the two marks. The TTAB affirmed the PTO’s refusal to register CCL’s application.
This case emphasizes the importance of careful drafting of legal agreements involving intellectual property rights. While it may appear to be relatively simple to produce an agreement containing the basic terms for the transfers and agreements involving intellectual property, such bare-bones agreements may not stand up to judicial scrutiny. This can leave you involved in precarious legal situations, sometimes years after signing, where you lose whatever intellectual property rights you thought you owned or had a license to use. To avoid this problem, always ensure you retain experienced intellectual property counsel with a proven track record of success to create your intellectual property agreements.
The TTAB’s full decision can be found here – https://ttabvue.uspto.gov/ttabvue/ttabvue-97627407-EXA-12.pdf
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