Precedential No. 24: Claim for Violation of Section 10 "Anti-Assignment" Provision Is Time-Barred by Section 14

In this proceeding for cancellation of a registration for the mark SUBSCRIBE & THRIVE for "online ordering" featuring skin care products, supplements, and assorted other goods, Respondent Nature's Sunshine counterclaimed for cancellation of one of Petitioner's pleaded registrations for the mark THRIVE on two grounds: fraud and violation of the "anti-assignment" provision of Section 10(a)(1) of the Lanham Act. The Board dismissed the fraud claims due to the insufficiency of the pleading, and it dismissed the Section 10 claim as barred by the time limitation of Section 14(3). Thrive Natural Care Inc. v. Nature’s Sunshine Products, Inc., 2023 USPQ2d 953 (TTAB 2023) [precedential].

Fraud: Nature's Sunshine alleged that Petitioner Thrive twice falsely stated that it was using its mark THRIVE on all of the goods in its registration, when it had used the mark only on some of the goods. The Board found these allegations to be insufficiently specific to support the fraud claims.

For example, the counterclaims present no facts from which the Board could infer that Petitioner’s statements regarding use were false, i.e., that the products Petitioner was offering at the salient times would not also qualify as goods identified in the registration (such as a shave oil that is both a “pre-shaving preparation” and an “oil[s] for cosmetic use”). *** Additionally, Respondent fails to allege facts sufficient to support the conclusion that Petitioner’s officer, when signing the two declarations of use, acted with the requisite state of mind; that is, that he knew that the mark was not in use for certain goods and made the assertions to deceive the USPTO into issuing or maintaining a registration of the mark for those goods.

Section 10: Section 10(a)(1) prohibits the assignment of an intent-to-use application prior to the filing a statement of use, "except for an assignment to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing." Nature's Sunshine alleged that Thrive had violated this provision because (1) at the time of assignment of the underlying application, the THRIVE mark had not been put into use, and (2) the assignor "continued to act as the owner" of the mark "for many months afterwards." Thrive argued that this counterclaim was time-barred by Section 14(3) because the challenged registration issued in 2014 and was more than five years old when the petition for cancellation was filed, and in such a case violation of Section 10(a)(1) is not an available ground for cancellation.

The Board found "highly persuasive" the reasoning in its own nonprecedential decision in Bison Prods., LLC v. Red Bull GmbH, Cancellation No. 92076984 (TTAB Feb. 2, 2022). There, the Board observed that Section 14(3) "reflects Congress’s intent to protect registrations that are more than five years old from challenges in perpetuity, except on certain enumerated grounds." Violation of the anti-assignment provision of Section 10(a)(1) is not included in the list of permitted claims. Moreover, here the Board pointed out that "had Congress intended to include such claims in Section 14(3), it certainly could have done so."

This result also is consistent with the Board’s treatment of other types of “void ab initio” claims that have been found time-barred because they are not enumerated in Section 14(3). See, e.g., Maids to Order of Ohio Inc. v. Maid-to-Order Inc., 78 USPQ2d 1899, 1906 n.6 (TTAB 2006) (registration more than five years old may not be challenged on the basis of nonuse); Treadwell’s Drifters Inc. v. Marshak, 18 USPQ2d 1318, 1320 (TTAB 1990) (nonownership claim is not an available ground for cancellation of a registration over five years old); Pennwalt Corp., 219 USPQ at 550 (“[T]here is nothing in Section 14(c) which admits [nonuse] as a ground for cancellation of a registration after five years have elapsed, unless the misstatement was with fraudulent intent.”)

And so, the Board dismissed the Section 10 claim.

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TTABlogger comment: What about an abandonment counterclaim? Abandonment is an exception to the 5-year statute of limitations of Section 14(3). By the way, when does the five-year period under 14(3) begin to run? On the day the counterclaim was filed, or the day the original petition was filed by Thrive?

Text Copyright John L. Welch 2023.