Losing Trademark Rights by Abandonment

Copyrights and patents expire after a fixed term, but trademark rights will continue in perpetuity as long as a mark remains in use. Trademark rights are a “use it or lose it” proposition—if the marks are abandoned, the rights will be lost.

Merely ceasing use of a mark does not result in its abandonment. A mark owner must discontinue use of a mark with the intention not to resume use in order to abandon its trademark rights.

Abandonment can serve as a defense to a claim of trademark infringement. The defense applies when the alleged infringement is premised on use of a mark that occurs after that mark has been abandoned. The abandonment defense applies to alleged infringement of both federally registered marks and common law (or unregistered) marks.

Abandonment is also grounds for cancellation of a trademark registration.

Abandonment requires proof (1) that use of a mark has been discontinued, with (2) intent not to resume use of the mark. The party asserting abandonment bears the burden of proving these elements by clear and convincing evidence.

Discontinued Use of a Mark

Prolonged nonuse of a mark for three or more consecutive years creates an inference or presumption that there is no intent to resume use of the mark. The presumption of abandonment can be overcome by evidence indicating a valid reason for the suspension of use and an intent to resume use of the mark in the near future.

Forced suspensions of use due to temporary factors outside the trademark owner’s control, such as weather events, natural disasters, terrorist acts, or temporary legal prohibitions (such as a trade embargo), are generally not sufficient to support an inference that the owner does not intend to resume use of a mark.

Example: A devastating flood occurred last year in Ellicott City, Maryland, causing many of the Main Street businesses to shut down for several months while the area was cleaned up and the business premises were renovated and restored. The fact that these businesses temporarily stopped operating under their marks did not cause an abandonment of their trademark rights because they intended to and did reopen their businesses under their marks once the necessary clean up and renovations were completed.

Not using a mark because of product redesign or interruption of production for retooling equipment also provides a reasonable explanation for the temporary non-use of a mark and indicates an intent to resume use.

Additionally, non-use of a mark due to lack of demand for products or services could possibly be overcome by the trademark owner’s proof of continuing marketing efforts.

Example: A court determined that non-use of a mark for five years due to financial difficulties did not constitute abandonment of the mark because the non-use was involuntary and the owner continuously sought to sell the mark at all times during the period of non-use, and ultimately sold it to a buyer who resumed use of the mark.

Intent to Resume Use

“Intent to resume use” of a mark also requires that a mark owner intend to resume use within the reasonably foreseeable future. A claimed possibility of resuming use of a mark at some indefinite future point would likely be insufficient to overcome an abandonment argument. Instead, a mark owner needs to be able to demonstrate plans or ongoing efforts to recommence use of its mark in the foreseeable future once the reason for the suspension of use has been addressed.

Example: A business that announces it is closed for renovations but will reopen in three months can establish an intent to resume use of its mark and no abandonment. On the other hand, a good case for abandonment can be made when a business announces that it is changing its name, or when it closes its doors and ceases operations with no ongoing efforts or intention to reopen or to sell to a buyer who will do so.

Additionally, to avoid abandonment the trademark use must be active commercial use in the ordinary course of trade, and not mere token use to reserve rights in a mark. If a product is discontinued but the manufacturer produces and distributes a handful of product under a brand name each year in an effort to reserve rights in its brand name, such effort is not the bona fide commercial use of a mark in the ordinary course of trade sufficient to avoid abandonment.

Abandonment by Acts or Omissions

Trademark rights can also be abandoned as a result of acts or omissions of the trademark owner that cause a mark to lose its significance as a mark.

A mark will be abandoned if it becomes the generic name for the products or services with which it is used. Because a generic term identifies the products or services themselves, it is incapable of performing the trademark function of identifying and distinguishing the source of such products or services.

A trademark can become the generic name for the products or services with which it is used if the trademark owner fails to use the mark correctly in advertising and selling its products or services, or fails to prevent generic or infringing uses of its mark.

Example: The terms “aspirin” and “thermos” were once brands that became generic and lost their trademark protection. The marks XEROX and KLEENEX were also once in jeopardy of becoming generic and relegated to the public domain. To avoid this fate, the marks’ owners ran ad campaigns to educate consumers as to how to perceive and use these marks as source identifiers rather than as the common name of the product itself. One of Kimberly-Clark Corporation’s ads explained “‘Kleenex’ is a brand name . . . and should always be followed by an ® and the word ‘Tissue’. [Kleenex® Brand Tissue] helps us keep our identity, ours.” One of Xerox Corporation ads stated “You can’t Xerox a Xerox on a Xerox. But we don’t mind at all if you copy a copy on a Xerox® copier.” Another Xerox ad campaign advised consumers: “When you use ‘Xerox’ the way you use ‘aspirin’ we get a headache.” More recently, Google successfully fended off a claim that its mark had become the generic term for “internet search” by establishing that consumers are still aware of its trademark significance even though they may use the term generically by using the phrase “google it”.

When a trademark owner permits third party use of the same or a similar mark that otherwise would be infringing, it risks diminishing the strength and distinctiveness of its mark and weakens its ability to enforce its trademark rights. If such third party use is extensive, it could ultimately give rise to destruction and abandonment of the mark, because a trademark is supposed to symbolize only one source. For this reason, it is critically important for trademark owners to police their marks and take appropriate action against infringers.

Finally, trademark rights can be abandoned through omission, such as in the case of naked licensing. Naked licensing occurs when a trademark owner permits a third party to use its mark without both retaining and exercising control over the quality of the products or services sold under the mark.

Any time a mark owner allows a third party to use its mark, it needs a written license agreement that specifies the licensor’s right to review and approve the quality of the products or services provided under the mark, along with the nature and scope of the permitted use, the form of use of the mark, the parties’ termination rights and indemnification obligations, the duration of the license, whether the use is exclusive or non-exclusive, whether the rights are transferable, any license fees or royalties, and an acknowledgement of the licensor’s ownership rights.

If you need help in preserving, protecting or licensing your trademarks, Goodell DeVries can help. Contact Donna Thomas, Esq. at 410-783-3522 or dthomas@gdldlaw.com.