Tag: abandonment

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Lapse of Trademark Registration is Not Abandonment of All Trademark Rights

CrashDummiesYou search the trademark database at the USPTO and find that your competitor’s trademark registration was canceled because the competitor did not file renewal documents and fees. You jump at the chance to grab their trademark by filing your own trademark application on their mark. Did you succeed in grabbing up rights in their trademark? Not necessarily.

Common law trademark rights can be obtained by use of the trademark in business/commerce alone without a federal registration. Therefore lapse of a trademark registration does not automatically result in a loss of all trademark rights.

This principle is demonstrated in the case of Crash Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387 (Fed. Cir. 2010).

Crash Dummies Fight

Mattel owned a trademark registration on CRASH DUMMIES for toys. Mattel acquired rights in the CRASH DUMMIES trademark when it 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.

Registration Lapse is not Abandonment

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.”

As explained in prior abandonment posts here and here, a trademark is abandoned if (1) its use in commerce has been discontinued (2) with no intent to resume use. The Lanham Act provides “[n]onuse for 3 consecutive years shall be prima facie evidence of abandonment….” 15 U.S.C. § 1127. This means that after three years of nonuse there is a presumption that the mark has been abandoned.  But, the trademark owner can rebut that presumption by presenting evidence that during the three years the owner formulated an intent to resume use of the trademark in commerce.

Presumption of Abandonment and Rebuttal Evidence

Abandonment depends on trademark use and owner intent and not on registration alone. In the Crash Dummy Movie case, the presumption of abandonment attached because Mattel did not use the CRASH DUMMIES mark for more than three years beginning in December 1995 and ending in December 2003 (8 years) when Mattel made a shipment of CRASH DUMMIES toys.

But Mattel was able to rebut the presumption of abandonment and maintain its ownership of the mark by presenting evidence that Mattel intended to resume use of the mark during the first three years of non-use. That evidence included: (1) Mattel’s discussion with KB Toys in 1998 about them being the exclusive retailer of CRASH DUMMIES toys, (2) Mattel recorded trademark assignment in 1998 transferring ownership of the CRASH DUMMIES mark from Tyco to Mattel, and (3) research and development activities by Mattel from 2000 to 2003 regarding CRASH DUMMIES toys.

Looking at the Trademark Database is Not Enough

The Crash Dummy Movie case demonstrates that the failure to renew a trademark registration does not automatically result in abandonment of all the owner’s trademark rights. The trademark owner may still have common law trademark rights based on their ongoing use or intent to resume use of the mark.

Therefore, simply looking at the status of a registration in the USPTO trademark database will not tell you conclusively whether a trademark owner has abandoned all rights in the trademark. You will need to perform due diligence to gain reasonable assurance that the trademark owner has (1) stopped using the mark in business/commerce and (2) does not intend to resume use.

Determining the trademark owner’s intent is often not easy. So grabbing up an apparently dead trademark of another will likely carry some risk that the trademark owner has not abandoned all of its trademark rights.

8 Years of Non-Use Not Too Long

The risk that the owner has not abandoned all rights may reduce as the period of non-use grows over time. However, Mattel did not use its CRASH DUMMIES mark for 8 years from 1995 to 2003 and still retained its trademark rights based on its activities showing intent to resume use as explained above.

Risks If Trademark Rights Not Abandoned

If the original trademark owner has not abandoned all of its trademark rights, the owner might be able to sue you for trademark infringement based on your use of the mark and/or may oppose your registration of the mark as Mattel successfully did in the Crash Dummy Movie case.

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Reviving Dead Brands of Others: Trademark Windfalls

DURAFLAMEKingsford-Clorox owned the trademark Duraflame for artificial firelogs. Kingsford-Clorox decided to get out of the firelog business and wanted to write off the goodwill associated with the Duraflame mark for accounting purposes. So it published a notice in the Wall Street Journal announcing the abandonment of the Duraflame trademark effective on the date of publication.

Two companies scrabbled to grab the Duraflame trademark, which resulted in the case of California Cedar Products Co. v. Pine Mountain Corp., 724 F.2d 827 (9th Cir.  1984). California Cedar won rights in the Duraflame mark because it was the first to use the Duraflame trademark after the mark was abandoned.

WindFall of Goodwill in Picking Up an Abandoned Trademark

When one company abandons a trademark, any other person or entity can grab the abandoned trademark through use or by filing an intent to use trademark application. The new person or entity picking up the trademark will receive a windfall of goodwill associated with that trademark.

Assuming the trademark is associated with a favorable reputation, the new trademark owner will gain that goodwill for essentially no cost, other than the cost of using the mark to make a sale or render service.

California Cedar acquired a windfall of goodwill associated with the Duraflame brand simply by being the first to use the mark after it was abandoned.

Problems in Reviving Abandoned Marks: You Don’t Know Its Abandoned

Why not go around grabbing up abandoned brands? You can, but the difficulty is knowing for certain that trademark is abandoned.

A trademark is abandoned if (1) its use in commerce has been discontinued (2) with no intent to resume use. The Lanham act provides “[n]onuse for 3 consecutive years shall be prima facie evidence of abandonment….” 15 U.S.C. § 1127. This means that after three years of nonuse there is a presumption that the mark has been abandoned.  But, the trademark owner can rebut that presumption by presenting evidence that during the three years the owner formulated an intent to resume use of the trademark in commerce.

Determining whether the the trademark owner has an intent to resume using the mark is difficult. This is why it is possible, but often risky, to attempt to resurrect a trademark mark that appears to no longer be in use.

California Cedar Products Co. represents the easy case is where the trademark owner publicly announces the abandonment of the mark. However, this rarely happens.

It is more common for a company or entity to stop taking action publicly, e.g. stop selling in retail, stop updating a website, stop attending tradeshows, etc. These things may indicate that the company has stopped using the mark. But you can’t be sure. These things do not tell you (1) whether the company has in fact stopped selling, maybe the company is still using the mark to serve at least one customer, or (2) whether the the owner has an intent to resume using the mark if the owner has actually stopped using the mark.

Out of Business

Even when a company goes out of business or looks like it is out of business this is no guarantee that its trademarks are abandoned.

If the trademark owner goes out of business, it is possible that the trademark owner could transfer its assets, including the trademark, to another company. That receiving company would then have rights in the mark as long as the gap in trademark use is not too long.

Abandonment uncertainty is illustrated by the case of Specht v. Google, 758 F.Supp.2d 570 (N.D. Ill. 2010), aff’d, 747 F.3d 929 (7th Cir. 2014). As discussed in my prior post, Specht and his companies ADC and ADI abandoned the trademark rights in ANDRIOD DATA after ADI/ADC stopped using the Android Data mark in 2002 when ADI lost all of its customers and essentially went out of business. Google then picked up rights in ANDRIOD when it launched its mobile operating system in 2007.

Google’s rollout of ANDROID in 2007 was somewhat risky because at the time ADI owned a federal registration over the mark ANDROID DATA, and ADI/ADC maintained a website at androiddata.com. The website did not offer any price information about the Android Data software and was mostly purposeless. These uses were not enough to keep ADC/ADI’s trademark rights alive.

While Google was ultimately successful, Google did not know for sure that Specht and his companies had abandoned the ANDRIOD DATA trademark until Google obtained internal documents and information from Specht during the lawsuit.

Bankruptcy

If the trademark owner goes into bankruptcy, the trademark and associated goodwill can be sold off to satisfy debts of the owner. The entity receiving the trademark as a result of bankruptcy will then have rights in the mark as long as the gap in use of the mark was not too long.

Conclusion

You can gain a windfall of trademark goodwill by adopting an abandoned trademark. The problem is that it is usually difficult to determine whether the trademark is actually abandoned. A long passage of time may give an increased assurance of abandonment.

However, to be sure the mark is abandoned, it is best to have an express statement of abandonment, as happened with the Duraflame trademark. Yet, this rarely happens.

If an express statement of abandonment is not provided, then extensive due diligence is necessary to gain reasonable assurance of abandonment. As the abandonment standard considers the trademark owner’s intent to resume use of a trademark, reviving another’s trademark will likely carry some risk that abandonment has not occurred unless an express statement of abandonment is available.

While picking up an abandoned mark can provide a windfall to the new trademark owner, the uncertainty of abandonment is a risk that may offset some of the windfall benefit.

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Use it or lose it: Android Trademark Abandonment and Revival

ANDRIODIn 1998, Erich Specht formed Android Data Corporation (ADC) and began selling e-commerce software under the trademark Android Data. ADC later transferred its assets, including the trademark, to Andriod’s Dungeon Inc. (ADI), which was owned by Specht. In 2009, Specht and ADI filed a trademark infringement lawsuit against Google based on Google’s use of the Android mark to refer to its mobile operating system. But Specht and ADI lost.

ADC lost because it stopped using the Android Data mark in 2002 when it lost all of its customers and essentially went out of business.

Trademark Rights Tied to Use

Trademark rights exist in conjunction with the use of the mark in the sale of goods or services in business/commerce. When the owner stops using the trademark through sales or licensing for a period of time, the owner can loose its rights in the trademark. This is called abandonment. And this is what happened to Specht and ADI in the case of Specht v. Google, 758 F.Supp.2d 570 (N.D. Ill. 2010), aff’d, 747 F.3d 929 (7th Cir. 2014).

After abandonment, anyone can grab the trademark through use or by filing an intent to use trademark application. Google grabbed the Android mark in 2007 when it launched its operating system.

Trademark Abandonment

The Lanham act provides “[n]onuse for 3 consecutive years shall be prima facie evidence of abandonment….” 15 U.S.C. § 1127. This means that after three years of nonuse there is a presumption that the mark has been abandoned.  But, the trademark owner can rebut that presumption by presenting evidence that during the three years the owner formulated an intent to resume use of the trademark in commerce. Therefore it is often difficult to determine, from public ally available information, whether

Maintaining an Email Addresses & A Ghost Website is Not Enough

In the Specht case, Specht and ADI argued the use of email addresses containing @androiddata.com and the maintenance of a website at androiddata.com after 2002 was sufficient use of the mark to avoid abandonment. The trial court disagreed. The court found that the use of an email address to identify an Internet host computer does not constitute a bona fide use of the trademark in commerce.

Regarding the website, the court noted that the Plaintiffs did not claim  site offered any price information about the Android Data software, information about how a visitor to the website could license the software, or detailed information and pricing on ADI’s services. Further, ADI did not license or sell the Android Data software. The court concluded that Specht and ADI could not preserve its trademark by “posting the mark on a functional yet mostly purposeless website.”

ADI lost rights in the ANDRIOD DATA mark because it stopped using it without a demonstrated intent to resume use of the mark. Google was able to acquire rights in the ANDRIOD mark because ADI abandoned it through non-use.

Use It or Risk Loss

If you want to maintain ownership over a trademark it is best to continue using it in the sale of goods or services. If you stop using the mark too long, you can loose your trademark rights in the mark.