Trademark deadwood, non-use claims, and “intent to commence use”

The US Patent & Trademark Office’s long-standing and often-restated goal of cutting down on the deadwood in the registry and the Federal Circuit and TTAB’s interpretation of the abandonment standard continue to be at odds. The TTAB recently issued a precedential decision in Wirecard AG v. Striatum Ventures BV, Cancellation No. 92069781 (TTAB Feb. 28, 2020), available at http://ttabvue.uspto.gov/ttabvue/ttabvue-92069781-CAN-21.pdf, a rare decision under the new expedited cancellation pilot program.

The case involved a registration for ZUPR (stylized) for software for checking products in stores, and related services. Reg. No. 4834250. The cancellation action was filed by a later applicant for the mark SUPR related to online shops, Ser. No. 88029940, against which it was cited as a bar to registration. The registration issued in October 2015, and the cancellation action was instituted in October 2018.

The Lanham Act provides helpfully defines abandonment, with the most relevant bits in italics. (Section (2) of the definition deals with abandonment via genericide; that doesn’t concern us.)

A mark shall be deemed to be “abandoned” if either of the following occurs:

(1) When its use has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of abandonment. “Use” of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark.

15 U.S.C. § 1127.

The facts were uncontested – the mark was not used in the US, and had never been. The parties disagreed about intent: the registrant presented internal PR / marketing strategy documents and evidence that it employed a US public relations firm.

For registrations issued under Section 66(a), the earliest date on which the three-year period for the statutory presumption of abandonment may begin in this case is the registration date. Dragon Bleu (SARL) v. VENM, LLC, 112 USPQ2d 1925, 1931 (TTAB 2014). Since evidence of nonuse of a mark for three consecutive years constitutes a prima facie showing of abandonment and triggers a rebuttable presumption that a mark was abandoned without intent to resume use, Rivard v. Linville, 133 F.3d 1446, 45 USPQ2d 1374, 1376 (Fed. Cir. 1998). The registrant only had a stub website and a YouTube video describing the “basic concepts” of their service, but nothing more; the rebuttable presumption was met here.

Where the presumption is met, the registrant must show evidence of: (1) use of the mark during or (2) the statutory period of nonuse; or (2) activities reflecting an intent to resume (or commence) use during the non-use period. Wirecard, p. 10.

The registrant nevertheless prevailed on the “intent to begin use” part of the analysis. The evidence that turned the tide and constituted the activities that “a reasonable business with a bona fide intent to use the mark in United State commerce would have undertaken,” id. p. 15:

  • a 2016 meeting at a Portuguese trade conference with a PR agency with “strong ties to the US market” about a market strategy for the US;
  • in 2017, signing a contract with that PR firm for the US market entry;
  • in later 2017, negotiating with an online marketing specialist that had done US work;
  • 2018 statements about an intent to launch in the US in 2019;
  • 2018 agreement with that online marketing specialist to use the ZUPR platform for an Italian clothing firm in the US once ZUPR launched in the US;
  • 2019 statement that the marketing specialist no longer represented the Italian brand, but wanted to have a US furniture retailer use ZUPR.

The TTAB did a fine job applying the relevant legal standings: the combination of some preparation to find US customers and ongoing technical development was consistent with an “intent” to generate use. However, the standard is and has always been exceedingly dumb — it places foreign registrants on wildly different footing than domestic registrants.

The domestic registrant had to make a use claim to get registration, so there is some market recognition out there to justify allowing the registrant’s cessation of use (remember, we’re talking about a three year time period — that’s a lot) when paired with an intent to resume use. A foreign registrant who has made any use in the US should be able to take advantage of the same, relatively lax, standard.

However, a foreign registrant who has never used the mark in the United States should not be able to take advantage of the statutory definition of abandonment, which is pinned to resumption of use. The Federal Circuit and Board have always assumed that a foreign registrant who has never started use should be treated as though the 44(e) registration is a substitute for US use, and dramatically change the “discontinued with intent not to resume” standard by adding the “(or commence)” parenthetical. As a result of this court-added amendment to the statutory definition of “abandonment,” the registrant with no presence amongst US consumers now gets the same benefits that a company whose mark was actually known in the US — and it’s this market recognition that should be the only reason to give an “abandoner” the benefit of the doubt in retaining their federal registration rights.

Just as bad, partial cancellation under this standard seems almost impossible. A US registrant who has continued to use some products but not others is typically vulnerable to a partial cancellation action; the foreign registrant who never used in the US seems almost immune to even partial cancellation under this “intended to use” standard.

The Federal Circuit and TTAB’s case law on abandonment is actively hindering the USPTO’s goal of cutting down on the amount of deadwood in the trademark registry, and an increasingly crowded registry continues to hinder applicant who get help up based on registrants who aren’t actually using their marks in US commerce.

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