MarkIt to Market® – June 2023: How to Lose a Mark in 3 Ways – Part 1 | Sterne, Kessler, Goldstein & Fox P.L.L.C.
[co-author: Payton Miles, Summer Associate]
There are plenty of fish in the sea when it comes to trademarks: from word marks to service marks; from symbols to surnames; from product packaging to product design. When the time is right, and you feel like you have found “the one,” it is important to lock it down. Under Section 45 of the Lanham Act, obtaining trademark protection requires that a distinctive word, name, symbol, or device be used in commerce to distinguish one’s goods and/or services from another’s. Registering a mark with the United States Patent and Trademark Office also provides an important extra layer of protection, serving an important defensive benefit to deter would-be infringers, and simplifying enforcement.
Unfortunately, some trademark owners end up losing rights to their marks. When a trademark owner loses rights in a mark, that mark can then be used or registered by unrelated third parties—no strings attached! This summer, we are exploring several ways an owner may lose trademark rights—abandonment, genericide, and improper licensing or assignment. This three-part series will take a closer look at how a mark owner may come to lose rights in a mark, how they may or may not be able to get them back, and what a loss of rights can mean.
A trademark is deemed abandoned when an owner stops using the mark in commerce—i.e., by not selling any goods and/or services under the mark. If a trademark owner does not use their mark in commerce for three or more consecutive years, that lack of use is prima facie evidence that the mark has been abandoned, and creates a rebuttable presumption that the owner has abandoned that mark. In a conflict with a third party relying on this presumption, the burden of proof is on the trademark owner to prove that they have, in fact, used their mark in the past three years, or that they have an intent to use their mark in the future.
The Federal Circuit case Crash Dummy Movie, LLC v. Mattel provides a helpful roadmap of how a mark owner can rebut the presumption of abandonment by demonstrating that (1) there were reasonable grounds for the nonuse, and (2) they have an intent to resume use in the near future. In this case, Mattel acquired the rights to several CRASH DUMMIES marks from Tyco Industries Inc. covering a line of toys. Tyco had registered the CRASH DUMMIES marks in 1993, but discontinued manufacturing its Crash Dummies toys due to cash flow problems. After acquiring the marks, efforts to sell toys under the marks stalled due to the high cost of reconfiguring the toys to meet modern safety standards. During the period that Mattel was reconfiguring and starting production of the new Crash Dummies toys, it was unable to submit evidence of use required to maintain its federal registrations for the CRASH DUMMIES mark, and its registrations were cancelled effective December 29, 2000.
The Crash Dummy Movie, LLC then filed an intent-to-use trademark application for the mark CRASH DUMMIES in 2003, with the intent to produce a movie featuring the characters; Mattel opposed registration of the mark. Even though Mattel had not used the CRASH DUMMIES marks for nearly eight years at that point, it was able to rebut the presumption of abandonment by presenting evidence of its preparations to resume use, including evidence related to discussions with KB Toys about becoming the exclusive retailer of CRASH DUMMIES toys and additional research and development efforts from 2000 to 2003. Based on this information, the Federal Circuit found for Mattel.
In cases where a senior user has been using its mark for the past three years, but there may be other circumstances pointing toward abandonment, Section 45 of the Lanham Act shifts the burden of proof to the junior user, who must prove that the senior user has (1) stopped using their mark and (2) has no intent to use it in the future. It can be tricky to prove another party’s lack of intent, though. Other examples of cases involving abandonment due to lack of use/intent to resume use include:
- Pado, Inc. v. SG Trademark Holding Co., LLC (E.D.N.Y. 2021) (holding that maintenance of a promotional website, without evidence of manufacturing or selling goods under the PURWAVE mark for three years before selling the mark to a third party, was insufficient by itself to establish an intent to resume use of the PURWAVE mark)
- Marketquest Grp., Inc. v. BIC Corp. (S.D. Cal. 2018) (holding that Marketquest’s use of the ALL IN ONE and THE WRITE CHOICE marks in catalogs and trade show booth displays and on its website, shipping labels, and packing slips for the goods was sufficient use in commerce to overcome BIC Corp.’s claim that Marketquest had no intent to resume use)
- Grocery Outlet Inc. v. Albertsons, Inc. (9th Cir. 2007) (holding that limited use of the LUCKY mark on grocery items by Albertsons constituted use in commerce, and that evidence of internal discussions about planned use of the mark on storefronts constituted intent to resume use of the mark)
The takeaway from all of this is that trademark owners should take care to use their mark, or risk losing it all when some better user comes along—use it or lose it!
Next month, we will explore the flip side of the coin and discuss genericide, when everyone loves a mark a little too much—stay tuned!
