The Elephant in the Dark

Knight's Armament Company and Optical Systems Technology, Inc. (OSTI) collaborated on the production of "clip-on in-line night vision devices" (CNVD), night scopes for use in low light conditions to be placed on a rifle immediately in front of the regular scope. Knight's Armament contracted to provide the scopes, which were manufactured by OSTI. The contracts referred to the scopes by different names, including KNIGHTSCOPE, UNIVERSAL NIGHT SIGHT and the initialism for the phrase, UNS.

There wouldn't be a lawsuit if there hadn't been a falling out. It started in 2003 when the parties disagreed over who owned the underlying technology and ended up in the instant lawsuit in 2007. By then, Knight's Armament had filed trademark applications for the the marks KNIGHTSCOPE, UNIVERSAL NIGHT SIGHT, UNIVERSAL NIGHT SCOPE (not mentioned in the case) and UNS, successfully registering KNIGHTSCOPE and UNS and abandoning the application for UNIVERSAL NIGHT SIGHT. OSTI eventually tumbled to the registration of UNS and filed a petition to cancel it; it also filed its own applications for not only UNIVERSAL NIGHT SIGHT and UNS, but also for UNIVERSAL NIGHT SCOPE, MAGNUM UNIVERSAL NIGHT SIGHT and its initialism MUNS, and DUALBAND UNIVERSAL NIGHT SIGHT and its initialism DUNS. Knight's Armament also had an attorney re-file a new application for UNIVERSAL NIGHT SIGHT.

Knight's Armament ultimately sued OSTI for trademark infringement, claiming that OSTI's use of UNS, UNIVERSAL NIGHT SIGHT, MUNS, MAGNUM UNIVERSAL NIGHT SIGHT, DUNS, DUALBAND UNIVERSAL NIGHT SIGHT and UNIVERSAL NIGHT SCOPE was infringing.*

The central issue was therefore who owned UNIVERSAL NIGHT SIGHT and UNS. The court used the Planetary Motion v. Techsplosion analysis to decide. Under Planetary Motion, the first question is whether a party can show it adopted a mark and the second is whether it demonstrated that the mark was used "in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark" under the totality of the circumstances.

While this test may be appropriate for deciding whether a mark has been sufficiently public to have enforceable rights, I'm skeptical that this is the correct analysis for the situation where two entities claim to own the same mark. In this case, both parties used the same evidence to support their respective claims to ownership. The first use was in 2000, after Knight's Armament and OSTI together pitched the Department of Defense Special Operations Command. OSTI subsequently wrote the spec for the night scopes using the terms "UNS" and "Universal Night Sight," which were then used by the Special Ops Command in the Statement of Work it sent to Knight's Armament. Knight's Armament relied on the SOW as evidence that the Special Ops Command had adopted Knight's Armament's marks; the court instead found this evidence of OSTI's ownership, since it was because of OSTI's earlier use in the spec.

Correctly analyzed or not, at the end of the day the court decided that UNS and UNIVERSAL NIGHT SCOPE were owned by OSTI. Therefore, any infringement claims based on Knight's Armament's ownership of those marks failed.

As I see it, the elephant in the room, for UNIVERAL NIGHT SCOPE at least, is genericism. Since both parties claimed to own the phrase, neither was motivated to challenge the distinctiveness of it. Thus the court never analyzed whether that or UNS were marks at all, despite some remarkable statements in the opinion showing that both parties didn't treat them that way.

For example, there was evidence that Knight's Armament would submit documents to the government using "Knightscope" and the government would return them saying "UNS" and "Universal Night Scope." The opinion said this: "Knight speculated that [the government contact] called it the Universal Night Sight because [Knight's Armament] was 'calling it Knightscope and [Special Ops Command] wanted it to be something generic'"; likewise "Knight testified that [Knight's Armament] persisted in calling the CNVD the KNIGHTSCOPE despite what he believed was the government's attempt to affix the 'generic' Universal Night Sight and UNS labels." Knight's Armament had this in a response to a Request For Quote: "Knights Armament Company can supply the (4) Universal Night Sights with the modifications described in Section C of your request . . . ." This was on documents written by OSTI: "The Universal Night Sight (UNS) has been developed entirely by [OSTI] funds and OSTI maintains all right, title, and interest in and to the UNS. Nothing in this proposal . . . shall convey, transfer, assign any right or interest, whatsoever, in the UNS . . . ", and "[Knight's Armament] is pleased to propose the Universal Night Sight . . . . The Universal Night Sight (Knightscope Model 007) . . . ." The court also blithely attributed statements about "Universal Night Sights" (including quotation marks) as evidence of use as a mark by OSTI.

But Knight's Armament's second application successfully traversed a descriptiveness refusal by disclaiming NIGHT SIGHT and explaining the night sights aren't "universal":

(click to enlarge)

The mark was subsequently published for the Principal Register without a Section 2(f) claim, now opposed.

Knight's Armament Co. v. Optical Sys. Tech., Inc., NO. 6:07-cv-1323-Or1-2DAB, 2009 WL 2137163 (M.D. Fla. July 7, 2009).

* There were also allegations of infringement by OSTI's use of KNIGHTSCOPE, UNIVERSAL KNIGHTSCOPE and UKS, but the ownership of KNIGHTSCOPE was not disputed.

© 2009 Pamela Chestek

It Wasn't the Royal "We"

Third Education Group, Inc. v. Phelps is a short, clean, decision on trademark ownership. Richard Phelps wanted to create a web-based journal and asked Thompson to join him in the endeavor. Phelps thought of the name "Third Education Group" and registered the trademark in his own name. The parties had a falling out and ownership of the trademark was disputed.

Without any tedious multi-factor tests or legal standard cited, the court distilled it down quickly:

Although it is undisputed that the name Third Education Group was Phelps' creation, it is similarly undisputed that Phelps created this name not to be his own property but as the name of the voluntary association he entered into with Thompson. (See Docket No. 67-5. ("I think we should call ourselves 'Third Education Group,' or something like it....").) And it is further undisputed that, at least prior to the registration, the mark had never been used by Phelps individually but only on behalf of TEG. (See, e.g., Emails from Phelps to Thompson, Docket No. 73-2 at 26 ("I already got us a trademark and domain."); Docket No. 73-2 at 190 ("I got a card from the U.S. Patent Office a few weeks ago notifying us that they would post our name for a month (July) to give any other potential claimants to the name or complainants in general the opportunity to challenge our right to the name."); Docket No. 73-2 at 219 ("I haven't heard about our trademark.") (emphasis added in each)). Thus, the name belonged to the association and not to Phelps personally.

Phelps therefore didn't own the mark, so the application wasn't filed in the name of the owner of the mark and the registration was void. In the court's opinion, the registration should have been made in the name of the two as joint owners. Multiple claims fall as a result.

Here's a practice tip: a voluntary association can register a trademark only if its existence is in a state where this type of entity has the capacity to sue and be sued. Lanham Act § 45, 15 U.S.C. § 1127 ("The term 'juristic person' includes a firm, corporation, union, association, or other organization capable of suing and being sued in a court of law.") Wisconsin isn't one:

Prior to its incorporation, TEG existed under Wisconsin law as a voluntary association between Phelps and Thompson. A voluntary association "is a name applied to a group of individuals who have joined together for a certain object and who are called, for convenience, by a common name." Herman v. United Auto., etc., Implement Workers, 264 Wis. 562, 567, 59 N.W.2d 475, 477 (1953). As a voluntary association, TEG lacked the capacity to sue or to be sued, Elections Bd. v. Ward, 105 Wis.2d 543, 546, 314 N.W.2d 120, 123 (1982) (citing Crawley v. American Society of Equity, 153 Wis. 13, 17, 139 N.W. 734 (1913)); but see Teubert v. Wisconsin Interscholastic Athletic Asso., 8 Wis.2d 373, 99 N.W.2d 100 (1959), and thus, contrary to the assertion of TEG, Inc./Thompson, TEG was not a juristic person, see 15 U.S.C. § 1127, capable of registering the trademark, see 15 U.S.C. § 1051. Rather, a voluntary association acts through its individual members.

As an aside, hat's off to the court for struggling through less than clear legal argument. You know it was tough going when the court had to figure out whether a theory of "estoppel" mean promissory estoppel or equitable estoppel.

Third Education Group, Inc. v. Phelps, Nos. 07-C-1094, 07-C-1095, 2009 WL 2150686 (E.D. Wis. May 15, 2009).

© 2009 Pamela Chestek

Get a License

Ryan Gile, the Las Vegas Trademark Attorney, reports on an interesting and complicated new lawsuit revolving around the ownership of the mark TROPICANA - for casinos and hotels, not orange juice.

"The Tropicana's famous roadside sign, a Las Vegas landmark dominating the Strip and welcoming arriving guests for a half-century." (from the complaint).

The complaint tells the story of the famous Tropicana hotel in Las Vegas, which opened in 1957. In 1979, Ramada became the owner of the hotel and named the operating company Hotel Ramada of Nevada, Inc. In 1989, the Ramada chain sold the stock of the Hotel Ramada of Nevada to Aztar Corporation. Part of the acquisition included the assignment of a pending trademark application for TROPICANA filed by Ramada, Inc. In 2006, Aztar Corporation's stock was purchased by an entity now known as Tropicana Entertainment LLC, a defendant in the suit. According to the USPTO assignment database, the mark was thereafter assigned to Tropicana Entertainment LLC on September 12, 2007.

On May 4, 2008, Tropicana Entertainment LLC (the parent of Aztar Corporation) and most of its subsidiaries filed for bankruptcy in Delaware under Chapter 11. As part of the reorganization, the lenders converted their claim in bankruptcy to equity ownership of the new entities formed to operate the Tropicana Las Vegas, the plaintiffs in the lawsuit. The trademark, though, would still be owned by Tropicana Entertainment LLC.

Part of the original bankruptcy plan was for the Las Vegas hotel company to pay $10 million over five years to Tropicana Entertainment LLC for a license to the trademark. The former lenders objected to this provision, so, according to this motion filed in bankruptcy court, the plan was confirmed but with a reservation of the right to dispute the trademark issues until post-bankruptcy.

Tropicana Entertainment then filed trademark applications for THE TROP LAS VEGAS EST. 1957, which could only mean the Tropicana Las Vegas. The new Las Vegas hotel owners took this as an opportunity to file a declaratory judgment action, asking the court to declare that the Las Vegas hotel be allowed to continue to use the name TROPICANA without a payment.

What an interesting question about trademark ownership. The complaint tells a good yarn about the fame of the Tropicana Las Vegas:

Clark County honored itself and the Tropicana by naming one of its major boulevards - Tropicana Avenue - after the storied property whose name is the subject of this lawsuit. The Tropicana name thus is not only an integral part of the hotel/casino itself and an integral part of Las Vegas history and legend, it is a name stamped indelibly on Las Vegas' very geography.

and its previously uncontested use of the mark:

the Tropicana has enjoyed the use of its own name, without any demand for royalty or any attempt at interference by any of the entities that purported to register the name Tropicana as their own without any consideration to Hotel Ramada of Nevada.

But while the Tropicana Las Vegas was the first casino to use the name, it concedes there are now other hotels that have the right to use the Tropicana mark. It therefore does not appear that there was necessarily anything untoward when a Ramada entity filed the original trademark application, when the application was then transferred to the new owner Aztar, or when Aztar assigned the registration up to its new corporate parent. Perhaps what went wrong is that it does not appear there was any formal license for the Tropicana Las Vegas to use the mark. That's all well and good when everything stays in the family, but it's the nature of the corporate enterprise that parts get split off voluntarily or, as in this case, involuntarily. So while the complaint spins a story of a stolen trademark, what it looks more like is a question of when and how the terms of an implied license can be changed. But there's plenty of other fodder; the plaintiff hasn't conceded that the original registration or any of the subsequent assignments were valid. This will be really interesting to watch.

P.S. TROPICANA is an example of how not to use and license a trademark. While the court documents state that there are several legitimate licensees of the Tropicana mark and I could find a number of hotels using the name "Tropicana," there is no consistency in logos or appearance whatsoever. Some appeared to be entirely unrelated, making one wonder about the exclusivity of use of the Tropicana mark by the parties. I couldn't even tell if this was the legitimate site of the parent entity.

© 2009 Pamela Chestek

Was It a License or an Assignment?

Steve Saleen's SMS 460

Steve Saleen makes high performance cars. He sold Saleen, Inc. in 2003 and left the company altogether in 2007. In 2008 Steve Saleen started a new company, Steve Saleen's SMS Supercars. Saleen, Inc's assets, including the right to use "Saleen" for superchargers, aftermarket parts and high-performance vehicles, was sold to MJ Acquistions earlier this year and Saleen, Inc. ceased operations.

SMS Supercars and MJ Acquisitions are both showing cars at Mustang Week in Myrtle Beach, going on now. SMS Supercars will have the SMS 460 Mustang and MJ Acquisitions d/b/a Saleen Performance Vehicles will be there with an as-yet unnamed car. As you could have predicted, on July 17, Steve Saleen reportedly sued MJ Acquisitions in Superior Court in California, claiming that, while Saleen, Inc. may have had the right to use the name, successor MJ Acquisitions does not.

The SMS Supercars press release on the suit is quoted here. MJ Acquisitions response quoted here. For what it's worth, the trademark assignment database shows an assignment of the registrations. Assignment with reversion?

© 2009 Pamela Chestek

Senior User to One's Self

When a case is captioned Protech Diamond Tools, Incorporation v. Protech Diamond Tool Inc., you know that there's a fight about who owns a mark. Protech Diamond Tool is actually the second named defendant, but you get the idea.

There are at least three different "Protech" entities mentioned in the suit.* The first is non-party Protech Diamond, Inc., an Oregon corporation (Protech Oregon). It markets and sells professional diamond-tip cutting tools designed by defendant David Liao. After starting Protech Oregon, Liao then moved to Canada and started defendant Protech Diamond Tools, Inc. (Protech Canada).


Protech Canada marketed its products in the United States. Liao then created another company, plaintiff Protech Diamond Tools Incorporation (Protech San Leandro), that he jointly owned with Dennies Chung - Chung was 70% owner and Liao 30% owner.

Protech San Leadro began distributing saw blades from Protech Canada using the Protech mark. Chung then filed an application with the U.S. Patent and Trademark Office in the name of Protech San Leandro for a logo form of the mark.

Protech San Leandro later learned that Protech Canada had unsuccessfully tried to register the Protech Diamond mark in the U.S. several years earlier, so sent Protech Canada a cease and desist letter demanding that Protech Canada not use the Protech mark in the United States. Protech Canada responded by filing a petition to cancel the Protech San Leandro registration in August, 2006. Protech San Leandro filed the instant infringement suit in August, 2008.

The ownership issue was raised defensively on a motion for preliminary injunction. Protech San Leandro had an incontestable registration - conclusive evidence of its ownership - so to avoid an injunction Protech Canada had to argue that it was entitled to the senior user defense of Section 15 of the Lanham Act: "Except . . . to the extent, if any, to which the use of a mark registered on the principal register infringes a valid right acquired under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration under this chapter of such registered mark, the right of the registrant to use such registered mark . . . shall be incontestable . . . ."

Under the totality of the circumstances standard described in Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151 (9th Cir. 2001), the court found that Protech Canada had made a prima facie showing of first use. Thus, Protech San Leandro's had only a possible, not strong, likelihood of success on the merits. Protech San Leandro's claim of immediate, irreparable harm was also undercut by its two-year delay in filing suit, so the motion for preliminary injunction was denied.

Plaintiff's web site here.

Defendant's web site here.

Protech Diamond Tools, Incorporation v. Liao, No. C 08-3684 SBA, 2009 WL 1626587 (N.D. Cal. June 8, 2009).

* A fourth entity, "Protech Diamand USA, Inc.," is also listed as a defendant but plays no part in this decision.

© 2009 Pamela Chestek