Trademark Abandonment: When Has a Trademark Been Abandoned?

According to 15 U.S.C. 1127, a trademark is considered abandoned if “its use has been discontinued with intent not to resume such use.” The intent not to resume may be inferred from circumstances. Trademark abandonment, therefore, requires two elements:

1. nonuse; and

2. intent not to resume use.

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.

The abandonment doctrine derives from the well-established principle that trademark protection is acquired and maintained through use of the trademark. There is no such thing as property in a trademark except as a right appurtenant to an established business or trade in connection with which the mark is employed. This is true even of a registered trademark at the United States Patent and Trademark Office. Although a mark’s registration is a predicate to its protection under section 32(1)(a) of the Lanham Act, the underlying right depends not on registration but rather on use.” Indeed, one of the fundamental premises underlying the registration provisions in the Lanham Act is that trademark rights flow from priority and that priority is acquired through use. Registration of mark shall constitute constructive use of the mark, conferring a right of priority, nationwide in effect … against any other person except for a person whose mark has not been abandoned and who, prior to such filing, has used the mark. Thus, so long as a person is the first to use a particular mark to identify his goods or services in a given market, and so long as that owner continues to make use of the mark, he is entitled to prevent others from using the mark to describe their own goods in that market. It is axiomatic in trademark law that the standard test of ownership is priority of use.

Is there a presumption of abandonment?

Nonuse of a mark for three consecutive years creates a legal presumption that the mark has been abandoned. Legal presumptions relate to burdens of proof. Therefore, if a presumption of abandonment has been established, the burden shifts to the trademark owner to show that the mark has been in use during the time period or that the owner has an intent to resume use.

For example, a trademark owner may try to provide evidence of special circumstances to show that nonuse of the mark was temporal, such as medical issues or supply chain usses, and that the owner has the intention to resume usage. An owner could also provide examples of limited use or other commercial efforts to show intent to resume use of the mark in the reasonably foreseeable future.

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.

Plaintiffs in the Trademark Trial and Appeal Board must establish priority if their trademarks are not registered.  “The question of priority is an issue in this case because opposer has asserted common law [trademark] rights to [KINETIC LIGHTING] and does not own an existing registration upon which it can rely under Section 2(d).” Threshold.TV, Inc. v. Metronome Enters., Inc., 96 USPQ2d 1031, 1037 (TTAB 2010). “To establish its priority under Section 2(d), opposer must prove that, vis-à-vis applicant, it owns ‘a mark or trade name previously used in the United States … and not abandoned….’ Applicant, however, may rely on the filing date of its application ….” Id. (citing Trademark Act Section 7(c), 15 U.S.C. § 1057(c); and Larami Corp. v. Talk to Me Programs, Inc., 36 USPQ2d 1840 (TTAB 1995)). The existing trademark use matters.

A Trademark Cancellation proceeding at the Trademark Trial and Appeal Board exists to remove a live registration from the Principal Register of the USPTO.  This effectively turns the challenged mark into a dead trademark at the USPTO and will have the same effects of an abandoned trademark – lack of the ability to enforce on the part of the owner of the trademark. Many trademark applicants at the USPTO do file a cancellation against trademark registrants when an Office Action at the USPTO cites a federal registration against a new application for a trademark. The USPTO does not track when trademarks become abandoned, so it is up to the courts – such as the Trademark Trial and Appeal Board and the United States District Courts – to adjudicate an abandonment claim.  

Licensing and Abandonment

It is imperative that licensors have controls about the quality of products that the licensor allows its trademark to be on.  This is because the licensor may accidentally abandon the trademark otherwise.

“To establish the defense of abandonment, it is necessary to show either the owner’s intent to abandon the mark, or a course of conduct on the part of the owner causing the mark to become generic or lose its significance as a mark.” Hermes Int’l v. Lederer de Paris Fifth Ave., Inc., 219 F.3d 104, 110 (2d Cir. 2000) (citing Defiance Button Machine Co. v. C & C Metal Products Corp., 759 F.2d 1053, 1059 (2d Cir. 1985), cert. denied, 474 U.S. 844 (1985)). “Where a licensor retains no control over the nature or quality of goods or services provided in connection with the mark … such naked licensing will result in abandonment.” Patsy’s Italian Rest., Inc. v. Banas, 508 F. Supp. 2d 194, 212 (S.D.N.Y. 2007) (citing Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 F.2d 358, 367 (2d Cir. 1959)). The central question is whether “the licensees’ operations are policed adequately to guarantee the quality of products sold [or the services promised] under the mark.” General Motors Corp. v. Gibson Chem. & Oil Corp., 786 F.2d 105, 110 (2d Cir. 1986). Abandonment of a mark “constitutes a forfeiture of a property right,” so it “must be proven by clear and convincing evidence.” Empresa Cubana Del Tabaco v. Culbro Corp., 213 F.R.D. 151, 156 (S.D.N.Y. 2003); see also Warner Bros., Inc. v. Gay Toys, Inc., 724 F.2d 327, 334 (2d Cir. 1983) (holding that the movant must meet a “high burden of proof” to prove abandonment through failure to police).

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.