First things first: the game isn't canceled.
But, this is a move that will no doubt shake gamer confidence in the already delayed, open world neo-hacker crime title. Publisher Ubisoft has filed an "express abandonment" request which was spotted on NeoGAF on February 1. The filing, which can be seen here, was filed by Ubisoft CEO Yves Guillemot and the trademark was one of five Ubsisoft was in possession of.
What this means is that Ubisoft may be planning a name change for the title, or, since Watch Dogs is a fairly common set of words, perhaps the US Trademark Office offered to buy it from Ubisoft for something completely unrelated. Ubisoft hasn't released a comment as yet, but there's already been far too much time and money put into the title for an outright cancellation.
Ubisoft expects the series to be a major revenue driver for 2014 and plans for Watch Dogs to be the first in a planned franchise. Watch this space for developments.