F.R. Lepage Bakery, Inc. v. Roush Bakery Products Co., Inc.

Citations: 851 F.2d 351; 7 U.S.P.Q. 2d (BNA) 1395; 1988 U.S. App. LEXIS 9183; 1988 WL 69047Docket: 88-1095

Court: Court of Appeals for the Federal Circuit; July 7, 1988; Federal Appellate Court

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The United States Court of Appeals for the Federal Circuit upheld the decision of the Trademark Trial and Appeal Board to cancel the collective mark "COUNTRY KITCHEN," originally registered to American Bakers Cooperative, Inc. and later assigned to F.R. Lepage Bakery, Inc. The case centered on the legal distinction between collective marks and trademarks as outlined in the Lanham Act (15 U.S.C. Sec. 1051 et seq.). The Act, specifically in Sec. 1054, allows for the registration of collective marks, which indicate that goods come from members of a group exercising control over the mark, rather than signifying a single source of goods as trademarks do. Although both types of marks can be registered, they are treated differently under the law, with collective marks having unique characteristics and a separate registration process. The court noted that despite some definitional overlap in Sec. 1127, the fundamental distinctions between collective marks and trademarks were clear and upheld the board's resolution of the case through summary judgment.

The definition of "trademark" includes any combination of words, names, symbols, or devices used by manufacturers or merchants to identify their goods, which highlights an inconsistency when defining "collective mark." Notably, users of a collective mark must belong to an "organization" such as a cooperative or association and cannot be individual makers or sellers, meaning an individual or corporation cannot register a collective mark solely based on their membership in a collective group. 

Section 1054 mandates that collective mark registration follows trademark registration rules, while Section 1051 states that only the "owner" of a trademark can register it. The central issue in this appeal is whether a bakery corporation, Lepage, which uses the trademark COUNTRY KITCHEN, can own and enforce a collective mark registration for that name obtained through assignment. The conclusion reached is that it cannot, as the collective mark was initially registered to ABC, a cooperative, and the attempt to assign it to Lepage placed it in a position of illegitimate ownership.

Despite the mark resembling a typical trademark in use, Lepage's effort to assert ownership of the COUNTRY KITCHEN collective mark, originally issued to ABC, is legally untenable. Additionally, Lepage's dual claims—acquiring both the collective mark registration and its associated goodwill from ABC while also licensing the mark back to ABC—create confusion regarding the ownership of goodwill tied to the mark. The registration cannot be treated as a standalone commodity, and the case illustrates a complex intersection of trademark law and property law principles.

A case of first impression requires a decision based on established trademark law principles. Ownership of a trademark in the U.S. is acquired through use in trade rather than registration, which can only occur after ownership is established. This principle also applies to collective marks, as defined in Section 1127, which can only be owned by organizations that meet statutory criteria. An assignment of a collective mark to an individual or non-organization would misrepresent the ownership in public records, rendering the registration invalid.

Cancellation of registrations can occur if they were obtained contrary to statute, including instances where ownership is transferred improperly. Section 1064(c) allows for cancellation if a registration was obtained fraudulently or contrary to Section 1054, which governs collective marks. The board found that the assignment from the collective ABC to Lepage constituted abandonment of the collective mark. However, the decision to cancel the registration is primarily based on the principle that only eligible organizations can own collective marks under the statute. Lepage's ownership is not permitted, necessitating the cancellation of the registration.

Lepage's argument against the assertion that only collective organizations can own such registrations was deemed without merit since the issue was previously addressed by the board. Consequently, the decision to grant the petition to cancel the registration is affirmed.

The provision for collective marks in the U.S. was introduced with an amendment to the Trademark Act on June 10, 1938. Under Section 1064(e), the "owner" of a collective mark may face cancellation if they use the mark themselves, a rule stemming from subsection (e)(2) which specifically addresses certification marks. This principle, known as the "anti-use by owner" rule, suggests that the same restrictions apply to collective marks due to their similarities and the language of Section 1054. However, there is a lack of consensus among courts regarding the validity of this rule, and the current situation is unique as the "owner" acquired ownership through assignment rather than use. According to evidence presented by Lepage, ABC, the original owner of the registration in question, is still functioning as a cooperative and licensing bakeries to use the collective mark. If ABC were to be reassigned the registration prior to its cancellation by the PTO, it may eliminate the need for cancellation. The document indicates a willingness to grant a reasonable stay to facilitate reassignment and review its implications.