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Famous South Florida Deli Restaurants' Service Marks Subject to Cancellation Proceedings as a Result of Non-Use

By Troy & Schwartz, LLC • November 5, 2023
The Moral of the Blog: Perhaps one of the most misunderstood requirements for obtaining and maintaining the registration of a service or trademark is that the mark’s recited services/goods must be being offered in commerce to maintain a viable registration. Otherwise, the registered mark is subject to cancellation by the USPTO as this blog discusses. A Little Personal Background: Wolfie Cohen’s Rascal House, once located in Sunny Isles, Florida, was one of my late mother-in-law’s favorite restaurants. Despite her background as a famous dress designer in the 1950s and 1960s who introduced petite-sizing to the fashion world, she never stopped enjoying the food she grew up with in New York City where her stellar career was launched. The commentator still has fond memories of family lunches at this restaurant last century where the tween kids would try and outdo each other with grossness much to the chagrin of their elegant grandmother. Introduction: Rascal House (located in Boca Raton, Florida) and Wolfie Cohen’s Rascal House (both word marks) and Wolfie Cohen’s Rascal House (design mark) are registered service marks owned by Jerry’s Famous Deli, Inc. All three Registrations recite services for “restaurants and carry-our restaurant services.” All three registrations were renewed by the 6th, 10th, and the 20th year of registration. The renewals were based on the Registrant’s submission of specimens ostensibly showing use of the marks in commerce consistent with the Registration’s recited services. A critical tenant of trademark law is that a registered trademark must be used in commerce. Once registration is granted, the submission of renewal documents known as declarations 8 are periodically required to establish continued usage. Registered trademarks will be cancelled by the USPTO for failure of the Registrant to renew the registration by the timely submission of these declarations. Registered trademarks may also be cancelled as the result of cancellation proceedings brought by third parties before the Trademark Trial & Appeal Board (“Board”). One of the grounds for cancellation is non-use/abandonment of the registered mark as discussed in the Sept. 30, 2023 opinion by the Board in Rascal House, Inc. v. Jerry’s Famous Deli, Inc. Here, Rascal House, Inc. (“Petitioner”) filed petitions to cancel all three of the registered “Rascal House” marks alleging abandonment of the marks when the last of the two Rascal House restaurants closed its doors in 2008. The TTAB consolidated the proceedings and bifurcated the case into two stages. This first stage, which this blog discusses, addressed the issue as to whether the Respondent (Jerry’s Famous Deli, Inc.) had abandoned the marks. Registrations are presumed valid under the law, and a party seeking cancellation bears the burden of providing abandonment. The cancellation standard is preponderance of the evidence. For cancellation on the basis of abandonment, Section 45 of the Lanham Act requires that “usage of the mark has been discontinued with intent not to resume such use. Non-use for 3 consecutive years shall be prima facia evidence of abandonment.” The Act defines “use” of the mark as bona fide use of the mark in the ordinary course of trade, and not merely to reserve a right in the mark. For service marks, a mark is used in commerce on services when (1) when it is used or displayed in the sale or advertising of services; and (2) the services are rendered in commerce. Accordingly, mere display of the mark is insufficient to establish use unless the associated services, in this case, restaurant services, are actually being rendered. In Rascal House, the Respondent relied on its on-going usage of specimens showing the marks after the two Rascal House restaurants closed in 2008. The problem with this argument is that the Respondent merely displayed the specimens at its other establishments including Miami’s Epicure Market and at a California restaurant bearing the name Jerry’s. According to the Respondent’s own corporate representative, the usage of the marks was intended to cause customers to associate the Respondent’s non-Rascal House businesses with the Rascal House restaurants. That is, to take advantage of Rascal House’s iconic brand to “associate what they are getting [at the Respondent’s businesses] with the Rascal House.” As the Board pointed out, such a display would have constituted legitimate advertising of the Rascal House restaurants had the restaurants still been open. The restaurants could have been located anywhere. However, the Respondent’s display of the registered marks did not constitute rendering of the services recited in the Registrations. At most the usage “constituted an attempt to take advantage of residual good will in a past [local] iconic brand with services rendered under other brands such as JERRY’S or EPICURE. Residual goodwill will does not negate a finding of abandonment based on non-use.” Not surprisingly, the Board found that the RASCAL HOUSE marks were abandoned and emphasized what the Federal Circuit had stated in Imperial Tobacco Ltd. v. Phillip Morris: “The Lanham Act was not intended to provide a warehouse for used marks.” The Board will next determine if the Respondent had an intent to actually use the marks. Based on the testimony of the corporate representative in stage 1 of the proceedings and the facts of the case, the commentator believes that the marks will be cancelled. This is because the restaurants have been closed since 2008 or far beyond the three (3) years which the law implies may be a reasonable period of non-use to prevent cancellation, e.g., where the business had supply chain issues or was confronted with events that affected its business operations such as a fire. Discussion: The commentator is a stickler for ensuring that a registration’s recited services/goods are indeed being offered in interstate commerce at the time of registration and when renewal declarations are filed. The USPTO cannot verify that every piece of information provided to it is true and accurate. It depends on the forthrightness of the filing attorney and registrant to be truthful. Moreover, when working with clients who are considering purchasing a registered mark as part of an asset acquisition, the commentator always reviews the prosecution and renewal history of the registered mark(s) to ensure there are no red flags concerning the registration status of the mark which could make it susceptible to cancellation. With the “Rascal House” marks’ renewal documentation, the documentation filer was representing that the marks were still being used in commerce (i.e., the restaurant services were being provided) when in fact they were not after 2008. Although the marks were renewed by the USPTO, the situation caught up with the Registrant when a cancellation proceeding was filed in 2020. It should be noted that defendants in a trademark infringement lawsuit involving a registered mark may also seek cancellation of the registered trademark by the court. Take Home Point: A registered mark is only as “good” as its usage status in commerce. Use it or lose it so to speak. In Need of Legal Counsel on Trademark Matters? Trademark law is a complex area of the law. Contact Susan at 305-279-4740 for all matters related to trademark law from registration to proceedings before the Trademark Trial & Appeal Board and courts of law. THANK YOU FOR YOUR INTEREST IN THIS BLOG. AS USUAL, THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

Got a registered Trademark? Don't lose it by forgetting to maintain/renew it!

By Troy & Schwartz, LLC • September 16, 2023
This blog, part 1 of a 2-part series on the cancellation of federally registered trademarks, focuses on the cancellation of registered trademarks by operation of law. The maintenance of federally registered trademarks should be part of a strategic planning approach for protecting and enhancing the value of intellectual property rights obtained through hard work, a dream, and perseverance. For registered marks that are still being used in commerce, failure to renew these marks may well have a detrimental impact on registered mark’s owner strategic business plans including its exit strategy. This blog discusses: I) the importance of trademark registration renewals; II) the USPTO’s registered trademark renewal schedule; and III) recommendations for monitoring registration due dates. I. Background on Registered Trademarks & the Ramifications of Non-Renewal Federally registered trademarks are valuable, monetizable business assets for even small businesses because they promote brand recognition in the minds of target consumers/businesses. A registered mark may be leased, sold, and even used as collateral. Registered marks help establish the mark owner’s credibility amongst its customer base, whether that base is comprised of consumers or other businesses. Also, registered marks allow the mark owner to use and enforce the mark throughout the country in which it is registered. For the United States, the “reach” of registered trademarks includes all 50 states and U.S. territories. Securing a registered trademark is no small feat. That’s why registered mark owners need to understand that mark registration does not automatically result in “forever” associated rights under the law. Continued registration status is contingent upon the periodic renewal of the mark with the United States Patent & Trademark Office (and/or the foreign office(s) in countries where the mark has been registered). Failure to renew the registered mark will result in cancellation of the mark. The only way to get the mark “back” is to submit a new application which may or may not be approved. Failure to renew a registered mark can have serious ramifications including a decrease in a business’s valuation due to the loss of registration status; failure to procure the same registered mark upon submission of a new application; loss of brand awareness and client loyalty; and greater difficulty for a company to protect its goods or services against piracy or counterfeiting. If a registered trademark loses its registration status and cannot “regain” registration status, the user of the mark will need to depend on common law rights which are generally more difficult and costly to enforce. Common law trademarks generally only allow the owner to sue for infringement in state court. Also, whereas federally registered trademark owners may seek injunctive relief, common law trademark owners are generally restricted to receiving monetary damages. Finally, lack of a registered trademark(s) can also interfere with a company’s growth strategy across state lines including growing a franchise. Once a mark is cancelled, anybody may file an application to register the mark through the USPTO (or other relevant jurisdiction). This does not mean that the application will actually evolve into a registered mark since the application will be examined on its own merits. Theoretically, the former owner of the registered mark may also still have common law priority rights in the mark. II. The USPTO’s Trademark Renewal Schedule The owners of a registered trademark must periodically renew their registered trademark to maintain the mark’s registered status. This process of “renewing” a registered trademark is known as post-registration maintenance. Failure to do so will result in cancellation of the mark. Trademark law imposes the following renewal deadlines: between the 5th and 6th years after the registration date though a Section 8 Declaration, the 9th and 10th years after the registration date, and every 10 years thereafter. The latter two types of renewals involve the filing of a combined Section 8 and Section 9 Declaration. The Section 8 Declaration actually refers to mark maintenance while the Section 9 Declaration refers to mark renewal. It is important to note that the registrant is asserting that the mark is indeed being used in commerce when submitting the declarations. Additionally, the registrant must amend the original description of goods and/or services to delete any goods/services no longer being sold or offered in commerce. Specimens showing use of the mark must also be submitted. In other words, Section 8/9 Declarations require something more than a statement “we’re good to go.” If the registered mark is no longer being used in commerce with at least one of the registration’s specified goods/services, the registrant should not file a Section 8/9 Declaration. The USPTO provides a 6-month grace period after each of the deadlines for filing the renewal for an additional filing fee. Failure to at least file the required declaration within the 6-month grace period will result in cancellation of the registered mark. The registrant may file a petition to revive the cancelled mark within 2 months of the USPTO’s notice of cancellation. The petition must be accompanied by all necessary declarations and fees. If more than 2 months have passed since the USPTO’s cancellation notice, a trademark owner will need to file a new application for the same mark. There is no guarantee that the new application will evolve into a registered mark. If a registered mark is subsequently cancelled by operation of law (i.e., for failure to renew), the effective cancellation date stated in the USPTO’s record’s publicly viewable records will be the last day immediately preceding the start of the 6-month grace period associated with the renewal period. III. Steps a Registered Mark Owner Should Take to Monitor Renewal/Maintenance Due Dates The commentator advises her trademark/IP clients to do the following to not only maintain their registered trademarks but also to enhance their value and the value of all of the registrant’s other intellectual property: For a new registrant, calendar the due date for the 5/6 year Section 8 Declaration. Ideally, file the documentation on the 5th anniversary date and no later than 6th year anniversary date even though the USPTO does offer a 6-month grace period following the 6th year anniversary date . If our law office obtained the registration on behalf of the registrant, our office also calendars the due dates. It is recommended that the required documentation be filed by an attorney, preferably the original attorney of record to ensure that any required amendments to the original description of goods and services are made. If a Section 8 Declaration 8 is filed as above, calendar the 10th anniversary date and the last date to timely file the Section 8/9 Declarations if the registrant is going to rely on the 6-month grace period. Keep calendaring the renewal days in 10 year increments. We encourage all registrants to establish an IP portfolio which contains all government-granted IP rights (patents, registered trademarks, and registered copyrights) wherein the portfolio is maintained by a designated authorized representative for business registrants. Such organized records may come in very handy for those businesses which are seeking investors, potentially involved in an M&A, establishing a growth strategy, or considering selling/licensing their IP assets. It is noted that issued utility patents must also be maintained periodically. Any such patent owner also needs to calendar patent maintenance due dates. If trademark rights are assigned by the registrant, the assignee should plan to take charge of all renewal dates and calendar the due dates. In Need of Legal Counsel on Trademark Matters? Trademark law is a complex area of the law. Contact Susan at 305-279-4740 for a complimentary consultation on trademark law matters as well as matters related to patents, copyrights, and trade secrets. THANK YOU FOR YOUR INTEREST IN THIS BLOG. AS USUAL THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.
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