May
29

Prior Use by Another May Prevent Registration of a Trademark

A Little Background

The federal trademark registration process allows third parties to oppose the registration of an Applicant’s mark.   Opposition proceedings before the Trademark Trial & Appeal Board (TTAB) generally involve a likelihood of confusion claim by the Opposer.  The Opposer need not actually have a registered mark to commence an opposition proceeding providing the standing requirement is met.   The results of opposition proceedings often boil down to a priority contest between the Applicant and the Opposer – that is, who used the mark first in commerce.

The Recent Decision by the TTAB in 3rd Generation Enterprises Co., Corp. vs. Day’s Beverages, Inc. – Opposition no. 91220327 decided on April 24, 2017

This opposition proceeding involved the mark CITY CLUB for soft drinks.  In this case, the Applicant admitted that the Opposer was indeed the first user of the non-registered mark CITY CLUB but argued that the Opposer had abandoned the mark prior to the Applicant’s application filing date of July 15, 2014.

Whether or not a mark has been abandoned requires a factual inquiry to determine if the facts comply with the two elements of an abandonment claim: non-use of the mark AND intent not to resume use.  Under Section 45 of the Lanham Act, if a mark has not been in use for three (3) year period, there is a presumption of abandonment by the registered mark owner and the burden shifts to the mark owner to show the following:  1) the mark has been use; or 2) that the mark was not in use but the owner had the intent to resume usage of the mark, or 3) that the non-use was excusable.

The Applicant alleged that: 1) the Opposer stopped using its mark in July 2011 when it liquidated its City Club inventory or more than three years before the filing of the Applicant’s trademark application; 2) the Opposer had not used the mark since; 3) the Opposer had no intent to resume usage of the mark; and 4) the Opposer’s failure to use the mark was not the result of excusable neglect.

The Opposer provided evidence of mark usage in 2009 through July 18, 2012 when it lost its biggest customer.   Then, Hurricane Sandy struck New Jersey where the Opposer’s warehouse was located.  As a result, the Opposer lost its entire inventory, computers, and business records. The Opposer again had sales in 2014 and 2015 although not at the pre-Hurricane Sandy level.

Based on the facts, the TTAB found that the Opposer did not abandon its mark as defined by the Lanham Act.  Clearly the “Act of God” impact on business operations was found to be a mitigating factor in the TTAB’s finding that the Opposer had the intent to resume usage of the mark and the Opposer’s failure to use the mark was the result of excusable neglect under the circumstances.  Moreover, the actual period of non-usage was actually two years and not three years.

It is important to note that an Opposer need not have “impressive” sales to overcome an allegation of abandonment.  As the TTAB stated, while “hardly impressive,” Opposer’s sales were certainly of a magnitude that demonstrates prior and continuous use of the mark with no abandonment, rather than as Applicant contends, mere liquidation the [CITY CLUB] brand.”

 Take-Home Points

Applicants who are considering filing an application for a mark identical to or nearly identical to a previously registered mark should be careful in assuming that a previously registered mark has been abandoned.  This is so particularly where the USPTO’s own records do not show a Section 8 cancellation of a previously registered mark for failure of the registrant to file documentation showing on-going usage of the mark.

To be able to prevail in an opposition proceeding when the applicant alleges abandonment of the registered mark as defense, the owners of registered marks should keep sales records for several years in the event they would ever need to prove that the mark was not abandoned.  It is not the amount of money made under a mark that counts but demonstrated on-going usage of the mark in interstate commerce as evidenced by invoices, sales receipts, etc.

Applicants should also keep in mind that the users of non-registered marks can oppose the applicant’s mark as was the case in the 3rd Generation matter.  This is why a thorough trademark search which encompasses both common law marks and registered marks can be instructive – to provide a snap shot as to what is out there so to speak.

If it knew that the City Club brand had been a recently “active” brand, the 3rd Generation Applicant assumed the very real risk of encountering problems with its trademark application which it indeed did.  A mark applicant should never presume that the owner of a common law mark will not find out about a registered mark application or an actual registration.  Indeed, the owner of a common law marks can initiate a cancellation proceeding of a registered mark within five (5) years of the registration date on likelihood of confusion and prior use grounds.  Therefore, no registered mark is really safe from a cancellation proceeding on likelihood of confusion grounds until five years following its registration under the Lanham Act.   Hence another reason for being “smart” in the selection of a mark to brand a service or product.

 

© 2017 by Troy & Schwartz, LLC

WE THANK YOU FOR READING THIS BLOG.  HOWEVER, THE FOREGOING IS NOT LEGAL ADVICE AND IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY.  IF YOU ARE CONTEMPLATING ANY ACTION THAT MAY HAVE LEGAL CONSEQUENCES, YOU SHOULD CONSIDER CONSULTING WITH AN ATTORNEY.