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What is Trademark Abandonment?

Would you want another business to “freeload” off of your business’ goodwill? If your business does not protect its trademarks and service marks, that is exactly what can happen. If another business wants to use your business’ mark, it can petition a court to determine that your business has abandoned its mark.  Likewise, another business can claim that you have abandoned your mark as a complete defense to trademark infringement.  If a court determines your business’ mark to be abandoned, anyone can use it – even in connection with the same goods or services in which your business deals.    

Trademark Abandonment means someone else can haul your trademark away!

Federal law, specifically the Lanham Act, governs the law of trademarks and service marks, and it requires a business to actually use in commerce its registered marks in order to keep them protected. Under the Lanham Act, “use” has a specialized meaning: businesses must engage in bona fide use of a mark in the ordinary course of trade, and not use which is made merely to reserve a right in a mark. 15 U.S.C. §1127. Therefore, businesses making merely token use of their mark, or making promotional use of their mark on goods in a different course of trade do not meet the requirement of “use in commerce.” Imperial Tobacco, Ltd. v. Philip Morris, Inc. (1990) 899 F.2d 1575, 1582-83.

Under 15 USC §1127, a trademark abandonment is “[w]hen [a trademark’s] use has been discontinued with intent not to resume such use.” There is a presumption of abandonment where there has been nonuse for three consecutive years. “Once the presumption is triggered, the legal owner of the mark has the burden of producing evidence of either actual use during the relevant period or intent to resume use.”  Emergency One, Inc. v. American FireEagle Ltd., 228 F.3d 531, 536 (4th Cir. 2000).

To prove trademark abandonment as a defense to a claim of trademark infringement, a defendant must show that there was: “(1) discontinuance of trademark use and (2) intent not to resume such use.” Electro Source, LLC v. Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 935 (9th Cir. 2006). Even a “single instance of use is sufficient against a claim of abandonment of a mark if such use is made in good faith.” Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir. 1970).

This tells us that all bona fide uses in the ordinary course of business must cease before a mark is deemed abandoned.

However, an intent to resume use must be made in the reasonably foreseeable future if a trademark owner has an intent to resume use of the mark.

Here are some of the ways that a trademark owner can show intent to reuse a trademark:

  1. a showing that the trademark owner has sought regulatory approval for the goods and use cannot begin until the same is granted;
  2. a showing of the distributors approached for the goods;
  3. a showing of any purchased advertising for the goods that features the trademark;
  4. a production internal “story boards” or presentations referring to goods bearing the trademark; or
  5. a showing of an outside licensing agency that has been obtained.

According to the Court of Appeals for the Second Circuit, in order to defeat an abandonment charge, a mark holder must have formulated an intent to resume use of its mark during the three-year period of nonuse that triggers the statutory presumption of abandonment. TC Ltd. v. Punchgini, Inc., 482 F.3d 135, 149 n.9, 82 U.S.P.Q.2d 1414 (2d Cir. 2007).

Self-serving and conclusory statements of an intent to resume use or possible use in the future are given little weight. Furthermore, sporadic or token use of a mark is not sufficient to overcome a showing of abandonment. Changes in the form of the mark also can constitute trademark abandonment.  And finally, statements of a name change and an intent not to resume use as a result of that change may establish abandonment of a mark.

An example: Crash Dummies trademark

Here’s a case to use an example: Crash Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387 (Fed. Cir. 2010).

Mattel owned a trademark registration on CRASH DUMMIES for toys, which Mattel acquired when Mattel acquired Tyco in 1997. In December of 2000, the USPTO cancelled Mattel’s registration on CRASH DUMMIES because Mattel did not file the required trademark renewal documents and fees.

On March 31, 2003, The Crash Dummy Movie, LLC (“CDM”) filed an intent-to-use trademark application on CRASH DUMMIES for games and playthings.

Mattel filed an opposition against the CDM’s trademark application based on Mattel’s common law rights in the mark CRASH DUMMIES. CDM claimed that Mattel abandoned its trademark rights in the mark.

The Court stated, “Although Mattel later allowed its trademark registrations to lapse, cancellation of a trademark registration does not necessarily translate into abandonment of common law trademark rights.”  The actual use in commerce mattered in this case – Mattel was using the mark, so it still had rights in the mark.

Conclusion

Trademark abandonment essentially is considered a forfeiture of rights and must be proved by clear and convincing evidence. Even when a brand owner no longer uses a mark, that mark is not necessarily abandoned through that nonuse. There must be a corresponding intent not to resume use of a mark. Moreover, abandonment has not been found where there remains public recognition of a mark. Even nonuse may be justified or considered excusable in certain situations. Examples of justified nonuse can stem from nonuse beyond a brand owner’s control and caused by outside forces, such as government action, intervention or labor strikes. Excusable nonuse also can be found when bankruptcy proceedings have been instituted, financial difficulty arises or where there has been a temporary unprofitability of sales. 

There are a few takeaways here. The first is simple: never assume that your competitor has abandoned their trademark unless you have done your due diligence and have established beyond any doubt that they are no longer using the mark – and even then, proceed with extreme caution. The second is that before resuming use of a mark, consider the length of time that mark has been out of use and investigate whether there has been any intervening, new use of that mark by a third party. The third thought is that before discontinuing any use of a mark, assess the current and prospective value that mark has to a company. If a mark has continued value, trademark owners are advised to continue using that mark and avoiding statements that they no longer will use such a mark.