BUSINESS-OWNED TRADEMARKS: BREAKING UP IS HARD TO DO

INTRODUCTION

In the opposition proceeding of CPR Certification, LLC v. CPR, LLC (Opposition No. 91276058) before the Trademark Trial and Appeal Board (“the Board”), the opposer attempted to rely on an LLC dissolution agreement to prevent registration of the applied-for trademark.  The principals of the two parties to the opposition proceeding were former business partners. On Feb. 25, 2025, the Board dismissed the opposition on grounds involving both the wording of the parties’ Dissolution Agreement and the Lanham Act’s definition of commerce.   

The opinion serves as a reminder that IP rights are an important consideration whenever companies are dissolved, sold, or merged.  Operating and shareholders agreements should address IP ownership considerations in the event of a breakup.  Breakup agreements need to carefully spell out IP ownership issues under the new scenario(s) to avoid any ambiguity and hopefully costly litigation.  Attorneys should be sure to carefully explain their client’s obligations under the terms of the finalized “split” agreement.

THE PARTIES

The principals’ former business was Fit Industries (“Fit”) which performed services related to providing training and certification in CPR and First Aid.  It was dissolved under the terms of a Dissolution Agreement.  The Dissolution Agreement provided that Fit’s current logo as seen on its current websites was to become the sole property of Joos, the later owner of CPR, LLC (“CPR”). Halabi, the owner of CPR Certification, LLC (“CPR Certification”) retained the right to use the words “CPR” and “Certification” in a new logo. 

BACKGROUND

Joos’s new company filed a trademark application for the logo in September 2021. Halabi’s new company, as the Opposer, argued that registration of the logo was not proper for two reasons.  First, the Dissolution Agreement included a restriction on Joos’ usage of the logo starting from Feb. 8, 2021 for one year.  Second, the dissolution agreement stated that Joos would not use the logo and otherwise compete with Halabi in eleven (11) counties within the US.  This was not a situation where the Applicant was being restricted to usage in, say, one state.  Even so, any such restriction would have terminated within one year.

To sustain an opposition proceeding, the opposer must first establish that it has standing to bring the proceeding.  The opposer must have a reasonable belief that it would be damaged by registration of the mark for the opposition proceeding to proceed.  Here, standing was established because: 1) the Opposer (Halabi’s company) received a cease-and-desist letter from the Applicant (Joos’ company) demanding that the Opposer cease use of Opposer’s new logo; and 2) the two companies are competitors.

The Opposer argued against registration on the following two grounds: 1) the Applicant had filed its Application during the Dissolution Agreement’s one year restrictive period; 2) the Applicant was seeking an unrestricted registration (throughout the US) when it could not lawfully use the mark in commerce nationwide at the time of application.  That is, the Applicant was not in compliance with trademark law when the application was filed.

WHY DID THE OPPOSER LOSE?

Because of the Dissolution Agreement’s terms.  First, under the terms of the Dissolution Agreement, the Opposer was barred from using the logo mark; the mark belonged solely to the Applicant. Slip opinion @ 9.  There was no question as to the ownership of the applied-for mark. 

Second, the Board concluded that the Dissolution Agreement was so narrowly tailored that it did not prevent the former owners from competing in geographic markets other than the geographic markets that comprised the Agreement’s Restricted Territories [the 11 counties] even during the  one year restrictive period.    The Agreement also did not include any other competitive restrictions, e.g., restricting one of the former member’s usage of a particular supplier or consultant that had been associated with Fit Industries.  Slip opinion @ 8.   

Third, the Trademark Act provides that “an owner of a trademark used in commerce may request registration of its trademark on the principal register.”  The Board quoting 15 U.S.C. § 1051(a).  For the purposes of trademark law, “commerce” means that the services are rendered in more than one State or in the US and a foreign country.  A person rendering such services is engaged in commerce in connection with the services.  Note that the statute never has required a mark to be used in all of the fifty states to be eligible for federal trademark protection.  Slip opinion @ 9.

The Board opined that the absence of any other geographic restriction other than the 11 counties established that the Applicant was free to use the mark (which the Applicant owned as a result of the Dissolution Agreement) throughout the US at the time the application was filed.  Accordingly, the Applicant was “in commerce” for the sake of registration of the mark. 

The opposition was thus dismissed meaning that the Applicant’s mark will proceed to registration.  The registration date will be about three years after the restrictive covenant’s term ended. 

ANALYSIS

In Susan’s opinion, this opposition proceeding was a waste of money and never should have been brought for the unsurprising reasons cited by the Board.   The opinion is nevertheless noteworthy because it does provide some food for thought for negotiating business breakups particularly when the parties anticipate that they will remain competitors or could compete in the future.   For example, the above Dissolution Agreement stated that the words “CPR” and “Certification” could still be used by Halabi, but the logo could not.  The opinion itself did not include a copy of the Opposer’s logo. 

According to its website, the Opposer’s logo is very similar to the logo acquired by the Applicant in the Dissolution Agreement.  The Opposer’s legal fees could have been put to better use in establishing its own competing brand with a dissimilar logo; the Dissolution Agreement provided for such a possibility.  Slip Opinion @ 8.   This usage of a similar logo may have prompted the respondent to seek federal trademark registration to bolster its legal rights in the logo.

As for any future USPTO registration by the Opposer of even a dissimilar logo which includes only the words “Certification” and “CPR”, it is conceivable that a USPTO examining attorney may reject the Opposer’s mark if the mark includes the words “Certification” and “CPR.”    Also, the specified services would also likely be very similar.   Slip opinion @ 1. 

Thus, the Opposer’s ongoing right to use the words “CPR” and “Certification” as per the Dissolution Agreement may well have a limited benefit as a future registered logo with just these two words because the Applicant’s registered logo includes these two words.  The Opposer may thus well be foreclosed from acquiring valuable registered trademark rights unless it completely rebrands.  This is so even though the Applicant’s (CPR, LLC) prosecution history for the logo mark at issue in the opposition proceeding showed that the words “CPR Certification” were disclaimed.  Disclaimed words in a registered mark can still form the basis of rejection of an applied-for mark on likelihood of confusion grounds.

Interestingly, CPR also had filed an application for the words CPR CERTFICATION only.  Not surprisingly, registration was denied on generic grounds. The fact that CPR even attempted to obtain a word mark on words that Halabi was allowed to use under the terms of the Dissolution Agreement seems disingenuous.  Had the mark been granted, Halabi would have been in a better position to oppose since the Dissolution Agreement had granted him the right to continue using the words alone, absent the logo. 

One factor that might have been considered during Joos and Halabi’s dissolution negotiations is whether the parties would agree to execute a co-existence agreement for trademark rights purposes in the future in the event Halabi’s new logo was indeed different from the logo acquired by Joos but the mark is still rejected by the examining attorney.    As with any “future consideration” in a contract, whether a specific term will be found to be enforceable will likely depend on whether there are sufficient criteria to allow the contract provision in question to be isolated and to stand on its own unambiguously, so as to constitute an act that can be performed.

The bottom line: IP rights need to be carefully addressed in any dissolution agreement in an unambiguous manner.  All parties need to understand their respective IP rights and obligations.

THANK YOU FOR YOUR INTEREST IN THIS ARTICLE.  THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

 © 2025 by Troy & Schwartz, LLC