Opinion ID: 161830
Heading Depth: 2
Heading Rank: 2

Heading: Transfer of Vittoria Trademark to VNA

Text: 14 We next consider EAI's contention that VNA is not entitled to gray market protection under the Act. In order to prove entitlement to protection under the Act, VNA must show that it is a corporation or association created or organized within the United States, that it owns the Vittoria trademark in the United States, that the trademark is registered in the Patent and Trademark Office of the United States Customs Service, and that EAI is, without VNA's consent, importing Vittoria-branded goods of foreign manufacture. 19 U.S.C. § 1526(a). The district court found that undisputed evidence sufficiently established each of these points. 15 EAI contests whether the evidence demonstrates that VNA owns the Vittoria trademark in the United States. First, EAI asserts that the transfer was invalid for purposes of establishing any rights to gray market protection because the transaction was not at arm's-length and because VNA did not pay dearly for the assignment. EAI relies on K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988) to support its argument that the Act does not extend protection under such circumstances. Cartier, however, does not purport to establish requirements for a valid transfer of a trademark. Rather, it considers an exception to the Act exempting U.S. trademark holders from its protections who are owned by or under common control with a foreign manufacturer of trademarked goods. Cartier, 486 U.S. at 285, 108 S.Ct. 1811 (noting that the issue in the case turned on interpretation of 19 C.F.R. § 133.21 (1987)). Although we consider Cartier 's interpretation of this exception in detail further in this opinion, Cartier provides no assistance to EAI's challenge to whether an actual transfer of a trademark occurred to the putative U.S. owner in the first place. 3 16 EAI next asserts that the transfer was invalid because the Assignment Agreement failed to transfer the goodwill associated with the trademark along with the trademark itself. Courts have consistently held that a valid assignment of a trademark or service mark requires the transfer of the goodwill associated with the mark. See, e.g., Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 956 (7th Cir.1992) ([T]he transfer of a trademark apart from the goodwill of the business which it represents is an invalid `naked' or `in gross' assignment, which passes no rights to the assignee. (citation and quotations omitted)); Berni v. Int'l Gourmet Rests. of Am., Inc., 838 F.2d 642, 646 (2d Cir.1988) (same); Premier Dental Prods., 794 F.2d at 853 (transfer of goodwill is necessary to transfer ownership of a trademark). A trademark symbolizes the public's confidence or `goodwill' in a particular product. However, it is no more than that, and is insignificant if separated from that confidence. Therefore, a trademark `is not the subject of property except in connection with an existing business.' Id. at 853 (quoting United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97, 39 S.Ct. 48, 63 L.Ed. 141 (1918)) (footnote omitted). 17 EAI points to several perceived distinctions between Premier Dental Prods. and the facts of this case to suggest that goodwill did not transfer under the Assignment Agreement. EAI notes that the assignee in Premier Dental Prods. was not created expressly for the purpose of marketing goods bearing the trademark at issue, and that the assignee was the exclusive distributor of such goods in the United States, whereas here VNA was created pursuant to the 1992 Agreement, and VNA competed with EAI prior to the Assignment Agreement. Moreover, EAI points out that it has been distributing Vittoria-branded bicycle tires in the United States for a longer period of time than VNA, and that EAI never obtained its products directly from VNA. 18 The purpose for requiring transfer of goodwill along with the transfer of the trade or service mark is to ensure that consumers receive accurate information about the product or service associated with the mark. Sugar Busters LLC v. Brennan, 177 F.3d 258, 265 (5th Cir.1999) (The purpose of the rule prohibiting the sale or assignment of a trademark in gross is to prevent a consumer from being misled or confused as to the source and nature of the goods or service that he or she acquires.); E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1289 (9th Cir. 1992); Patterson Labs., Inc. v. Roman Cleanser Co. (In re Roman Cleanser Co.), 802 F.2d 207, 208-09 (6th Cir.1986); Marshak v. Green, 746 F.2d 927, 929 (2d Cir. 1984). 19 Transfer of assets is not a sine qua non for transferring the goodwill associated with a trademark. See Sands, Taylor & Wood Co., 978 F.2d at 956 (stating that the transfer of a mark need not be accompanied by the transfer of any physical or tangible assets in order to be valid). The Restatement (Third) of Unfair Competition explains: 20 [C]ourts now evaluate each assignment in light of the circumstances of the particular case, including both the terms of the transfer and the nature of the assignee's subsequent use. Recent decisions recognize that the central enquiry is whether the use of the mark by the assignee is likely to confuse prospective purchasers by departing from the expectations created by the presence of the trademark. The traditional requirement of accompanying transfer of goodwill can thus be understood as requiring that the assignment not disrupt the existing significance of the mark to consumers. 21 Restatement (Third) of Unfair Competition § 34, cmt. b (1995); see also J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 18:24 (4th ed.1997). The courts have upheld such assignments if they find that the assignee is producing a product or performing a service substantially similar to that of the assignor and that the consumers would not be deceived or harmed. Marshak, 746 F.2d at 930 (citations omitted); see also Sugar Busters, 177 F.3d at 266; Defiance Button Mach. Co. v. C & C Metal Prods. Corp., 759 F.2d 1053, 1059 (2d Cir.1985) ([A] trademark may be validly transferred without the simultaneous transfer of any tangible assets, as long as the recipient continues to produce goods of the same quality and nature previously associated with the mark. (citation omitted)); Visa, U.S.A., Inc. v. Birmingham Trust Nat'l Bank, 696 F.2d 1371, 1376 (Fed.Cir.1982) ([T]ransfer of goodwill requires only that the service be sufficiently similar to prevent consumers of the service offered under the mark from being misled from established associations with the mark. (quotations omitted)). 22 In this case, VNA's actions both prior and subsequent to the transfer of the Vittoria trademark were calculated to maintain continuity in the use of the mark and the public's perceptions of the products associated with it. The record shows that VNA took significant steps throughout its use of the trademark to ensure that the mark continued to signify high-end racing tires for bicycles. VNA placed advertisements, sponsored professional athletes, attended trade shows, and developed a marketing network consisting of 25 to 30 sales representatives who promoted these tires to approximately 6,000 bicycle dealers. Significantly, EAI has never alleged any sort of disruption in the kind or quality of the products associated with the Vittoria trademark, and we could find no evidence of any such break upon our independent review of the record. We therefore hold the Assignment Agreement constitutes a valid transfer of the rights to use the Vittoria trademark in the United States.