Don't Forget IP Rights When Planning an Estate

As highlighted by a recent Trademark Trial & Appeal Board (TTAB) decision, Clementvision, Inc. v. Robert Clement, expressly including intellectual property rights in an estate plan can prevent complicated issues from arising. See Opposition No. 91256127, 2022 WL 15330806 (Oct. 25, 2022) (not precedential).

Case in Point: Cowboy Jack Clement and the Mark

The TTAB proceeding involves the estate of Cowboy Jack Clement – an iconic country singer, songwriter and producer.

In 1959, Cowboy Jack formed a music publishing and production company that came to be known as Clementvision. Since about 1975, Cowboy Jack operated his Nashville home as a recording studio, which was owned and operated by Clementvision.

Cowboy Jack's home recording studio was not just a studio but also a gathering place for fellow musicians. He called it THE COWBOY ARMS HOTEL AND RECORDING SPA (the Mark), and Clementvision continuously used the Mark in connection with the home studio from the mid-1970s until Cowboy Jack's death in 2013.

Cowboy Jack was inducted into the Country Music Hall of Fame in 2013 and died that same year. In his will, he left Clementvision and "all of [his] property, assets and belongings" equally to his two children, Kimberly Alison Clement Bolton (Alison) and Jack Sheldon Niles Clement (Niles). But, his will omitted any mention of Cowboy Jack's or Clementvision's intellectual property, including the Mark, which he had never registered.

Cowboy Jack's will named his second cousin, Robert Clement (Cousin Robert) and his accountant, Kent Harrell (Accountant), as co-executors and co-personal representatives of his estate. Generally, his children describe the probate of his estate as "unfriendly."

The Forgotten Trademark

Intellectual property (IP) is intangible property and, in many instances, it is not given particular attention in estate planning. Rights of publicity and trademarks are IP that derive value from public recognition.

A trademark is IP that identifies the source of a particular good or service. The policy behind trademark law is both to protect a brand and market protection for the benefit of the consumer so that consumers can easily recognize and purchase trusted, quality brands. The right of publicity prevents others from using a person's name, image or likeness for a commercial purpose without the person's consent. Celebrities, in particular, tend to acquire high value over the course of their career in association with their name and image and other IP. This was the case with Cowboy Jack Clement and his mark THE COWBOY ARMS HOTEL AND RECORDING SPA. Cowboy Jack maximized the synergy of his right of publicity with his use of trademarks and service marks to create greater public goodwill and stronger marks.

But, his estate plan omitted, in its entirety, Cowboy Jack's and Clementvision's IP. Estate planners who do not include questions about IP in their intake questionnaires, which are then followed up on with particular questioning, may be failing to identify valuable assets that need specialized attention and handling in the estate plan.

The 2019 Trademark Application

Through a series of events, Cousin Robert purchased Cowboy Jack's Nashville home in February 2019 and began using the Mark in association with music studio operations there. On Feb. 25, 2019, Cousin Robert filed a trademark application with the U.S. Patent and Trademark Office (USPTO) to use the Mark – THE COWBOY ARMS HOTEL AND RECORDING SPA – in associations with musical recording and recording studio services.

Cowboy Jack's children opposed the application on June 1, 2020, alleging that they owned the Mark, not Cousin Robert. A trial proceeded before the TTAB, an administrative tribunal within the USPTO for trademark disputes.

The TTAB: A Procedural Overview

After a trademark application is filed and if the examining attorney approves the application for publication, it is published for opposition. If a third party has grounds and chooses to oppose a trademark application, the TTAB is the venue where the registrability of the disputed application is decided. The TTAB utilizes a somewhat streamlined trial process wherein each side takes turns submitting evidence and testimony to the board and then, if a party requests it, an oral argument hearing may be held. Money damages are not available in TTAB proceedings; the proceedings are strictly for determining whether a mark may be registered or, if already registered, if a registration should be canceled.

A TTAB decision is appealable to a U.S. District Court or the U.S. Court of Appeals for the Federal Circuit.

The Twist and TTAB Analysis

As mentioned, Cowboy Jack left Clementvision to his children, Alison and Niles, but he appointed Cousin Robert and his accountant as co-executors. Before Clementvision was distributed to Alison and Niles, the co-executors (Cousin Robert and the Accountant) were sole shareholders of Clementvision and elected themselves as sole board members and officers. Upon the Accountant's death, Cousin Robert became sole executor, sole shareholder, board member and president of Clementvision.

The probate did not proceed in an amicable manner. Cousin Robert blocked Alison's and Niles' efforts to use Cowboy Jack's Nashville home and studio to finish projects and bring in new clients. Then, in late 2014, the Nashville home and recording studio was sold to a third party. At the close of probate in 2016, Clementvision was finally distributed to the children. In January 2018, Cousin Robert secretly purchased the Nashville home and began providing music recording studio services using the Mark. Alison and Niles made a variety of public objections to the use of the Mark, including that they had objected to Cousin Robert purchasing the Nashville home in 2014.

In the face of their objections, in 2019, Cousin Robert filed the trademark application in dispute.

During the TTAB trial, Cousin Robert acknowledged that Clementvision owned the Mark prior to Cowboy Jack's death but, in his defense, argued that the Mark had been abandoned. If abandoned, the Mark would have been available for use by others, including Cousin Robert.

Evidence of three consecutive years of nonuse establishes a rebuttable presumption of abandonment without the intent to resume use. 15 U.S.C. § 1127. However, the TTAB was not convinced by Cousin Robert's flat argument that Alison and Niles had conceded nonuse. Rather, it found plentiful evidence of an intent to use or resume use. For example, Clementvision (owned by Alison and Niles) collected royalties under a variety of Cowboy Jack's service marks continuously since Cowboy Jack's death (including under the COWBOY ARMS MUSIC mark, which the board noted was substantially similar to THE COWBOY ARMS HOTEL AND RECORDING SPA mark). Further, they made several efforts to carry on their father's businesses and legacy, including negotiating the sale of film rights for a feature film about Cowboy Jack. Cousin Robert offered no evidence of three years of nonuse, wholly failing to carry his burden of proof. Even if nonuse had been established, any such nonuse was excusable because, not only did Cousin Robert block their use of the Mark, Alison and Niles presented sufficient evidence to establish their intent to resume use.

Cousin Robert's abandonment defense having failed, the board turned to the question of who owns the Mark to determine whether Cousin Robin had rights to the trademark application. A trademark application filed by one who is not the owner is void ab initio. 15 U.S.C. § 1051 (a)(1). The TTAB found the factors considered in ownership disputes between a departing member and remnant group instructive and utilized them to guide the ownership analysis. The factors are: 1) the parties' objective intentions or expectations; 2) who the public associates with the mark; and 3) to whom the public looks to stand behind the quality of goods or services offered under the mark. Lyons v. Am. Coll. of Veterinary Sports Med. & Rehab., 859 F.3d 1023 (Fed. Cir. 2017).

First, the board found that no one, including Cowboy Jack, ever intended for Cousin Robert to own the Mark. It was clear – despite the omission of Cowboy Jack's IP in his will – that Cowboy Jack intended all of his assets (with minor exceptions) to pass equally to Alison and Niles. Conceding that point, Cousin Robert instead argued that the Mark was transferred with the sale of the Nashville home. He relied on the premise that no written assignment was necessary, as assignment of a trademark can be established by oral testimony. However, such oral testimony must be clear and uncontradictory, and it was not. Again, Cousin Robert's argument failed. The TTAB instead found that common law rights in a mark are presumed, absent contrary evidence, to pass with sale of the business. Thus, when Clementvision (and Cowboy Jack's other businesses) passed to Alison and Niles, all marks, service marks and their associated goodwill presumptively transferred to Alison and Niles along with them. And the rights to the Mark did not transfer to Cousin Robert with the subsequent sale of the house. This is objectively consistent with Cowboy Jack's intentions, as well as those of his heirs.

Second, the public associated the Mark with Cowboy Jack for 38 years, and the TTAB found no evidence of any disassociation and reassociation with Cousin Robert. To the contrary, the TTAB noted that Cousin Robert, while using the Mark (over Alison and Niles' objection), contributed to the public's association of the Mark with Cowboy Jack by promoting the studio's and his own familial connection with Cowboy Jack in association with the Mark.

Finally, it is in the public interest to preserve the public's association of the Mark to the underlying quality of services provided under the Mark, first by Cowboy Jack, and now by his children. Where Cousin Robert is relatively unknown to the public, the TTAB found that the public would likely believe Clementvision would stand behind the quality of services offered under the Mark.

On Oct. 25, 2022, the TTAB issued its opinion in favor of Alison and Niles. With their opposition sustained, they established that Cousin Robert did not own the Mark, and he was prevented from registering the Mark.

Good Estate Planning for Trademarks

Estate planners should work with clients to identify all trademarks and other IP rights owned by the individual and his or her companies when planning an estate. An estate planner might suggest securing registrations of any marks in use and then clearly identify those IP assets and transfer of those assets in the client's will. Taking these few steps could result in a smoother and quicker transfer of benefits to the intended heirs.

For more information or questions on trademarks or IP rights, contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.