TMR, LLC conceived of and ran the day-to-day business operations for the Chenoa Fund, a mortgage financing business implemented and operated by CBC Mortgage Agency, Inc. Despite this, the Trademark Trial and Appeal Board (TTAB) issued a precedential decision canceling TMR’s trademark registration for CHENOA FUND & Design covering inter alia mortgage financing services on the grounds that CBC, rather than TMR, owns the mark due to its ultimate control of the business and brand.

Background

In 2012, TMR developed a program whereby a federally-recognized Indian tribe would offer down payment assistance for homes financed through Federal Housing Administration-insured loans. TMR dubbed this program the “CHENOA FUND” – being a reference to the Sioux word “chenoa,” meaning “white dove” – and subsequently registered the domain names “chenoafund.org” and “chenoafund.us.” TMR shopped the program to various Indian tribes, and in 2013, penned a deal with CBC, a corporation wholly owned by the Paiute Indian Tribe of Utah.

In 2019, TMR filed a trademark application for the CHENOA FUND & Design covering inter alia mortgage financing services in Class 36 (Reg. No. 5925880). In 2021, CBC petitioned to cancel this registration on the grounds that CBC, rather than TMR, is the rightful owner of the Mark.

The TTAB Interpreted Relevant Contracts and Corporate Documents as Clearly Granting CBC Ownership

Despite TMR having a “great deal of operational responsibility, and even substantial management authority” in practice, the TTAB primarily relied on the parties’ contracts and various corporate documents, which contained clauses strictly delineating the parties’ roles and relationship.

For example, CBC “appointed” and “employed” TMR to “act, under the direction of CBC… as CBC’s sole and exclusive agent for the management and control of the Agency in operating the Business,” and while TMR had “joint” responsibility for “overseeing and managing” the Fund, the “principal” in the parties’ relationship was CBC. Indeed, the TTAB specifically pointed to language in the parties’ contracts which calls out TMR as an “agent,” “appointed agent,” and “contracted day-to-day operator,” and noted that this arrangement was “specifically bargained for” by TMR.

As a result, the TTAB held that while TMR “conceived of the mortgage business offered under the CHENOA FUND Mark, its role in managing the provision of mortgage services arises out of its appointment and employment by [CBC] ‘to act, under the direction of CBC,’ as its ‘exclusive agent,” and that “the [agreement] goes to great lengths and pains to repeatedly make clear, and leave no doubt, that CBC rather than [TMR] owns and controls the business that offers mortgage services under the CHENOA FUND Mark.”

The TTAB Interpreted Marketing Materials as Holding CBC Out as The Source of The Services 

The TTAB also specifically reviewed and referenced the Fund’s marketing materials, highlighting that these materials “make clear” that CBC is the source of the CHENOA FUND services because “the CHENOA FUND Mark is always associated with [CBC] rather than [TMR].” For example, the Chenoa Fund website states the Fund is “provided through [CBC]” and that CBC “created Chenoa Fund,” and does not mention the respondent. As a result, TMR “operates behind the scenes, out of public view,” while “[CBC] is out front, engaging with the public via materials that identify [CBC], and only [CBC], as the source” of the at-issue services.

The TTAB Clarified That TMR’s Preparational Efforts Were Insufficient To Establish Trademark Use

Notably, the TTAB also clarified that while TMR allegedly created the CHENOA FUND Mark in 2012, the CHENOA FUND Mark was merely a concept at that point and did not function as a trademark until the underlying services were actually offered beginning in 2014 – by CBC. This is consistent with TTAB precedence holding that mere “preparations to use a mark in commerce are insufficient to constitute use in commerce.” (internal citations omitted).

Altogether, the TTAB held that CBC, rather than TMR, is the rightful owner of the CHENOA FUND Mark and therefore canceled TMR’s registration therein on the ground of non-ownership.

Takeaway

As this case demonstrates, trademark ownership is not automatically conferred upon an entity just because it has significant responsibility and/or is the ‘brains behind an operation.’ Rather, the TTAB looks to things like contracts and marketing materials in resolving questions of ownership. Accordingly, businesses (and in particular, licensees and affiliates) should take great care to ensure agreements clearly delineate ownership and control, and that related marketing materials identify the appropriate source of the underlying goods and services.