The February 2016 resolution of the five-year-old trademark dispute between Macy’s Inc. and Strategic Marks, LLC in the United States District Court for the Northern District of California (Macy’s Inc. et al. v. Strategic Marks, LLC, Case No. 15-0612, N.D. Cal. 2016) is a reminder that zombie trademarks still walk among us.
What Is a Zombie Trademark?
Anne Gilson LaLonde describes so-called zombie brands as “previously abandoned, newly revived trademarks that still enjoy a measure, and sometimes an extraordinary measure, of consumer protection and loyalty.” Gilson on Trademarks § 3.05 [b] (Matthew Bender) (2016). These zombie brands or trademarks and the fictional zombies found in the movies and on television have one thing in common—both begin with a death. Under U.S. trademark law, a trademark “dies” after its owner ceases to use that trademark to identify the origin of products and services. At that point, the trademark owner is said to have abandoned the trademark and may no longer assert any ownership rights in the mark. Specifically, abandonment in the United States involves the trademark owner ceasing to use the mark without intent to resume use in the future. Non-use of the mark for three consecutive years creates a rebuttable presumption of abandonment.
But, just as death alone does not create a fictional zombie, abandonment alone does not create a zombie trademark. Gilson on Trademarks § 3.05 [b]. For the fictional zombie, the cause is typically a mysterious virus that reanimates the dead. For the zombie trademark, the cause is widespread consumer recognition and significant goodwill. Although the products and services are no longer sold under the mark, consumers still remember and may be favorably disposed toward the brand and the products or services that were sold under the abandoned brand.
Zombie trademarks require one additional element to exist. The zombie trademark must be adopted by someone other than the original trademark owner and used for products or services that are the same as or similar to those sold by the original owner. Gilson on Trademarks § 3.05 [b].
Why Do We Care about Zombie Trademarks?
Interest in zombie trademarks varies depending on the perspective of the relevant party. There are three potentially interested parties: (1) the original trademark owner; (2) the party that is adopting the abandoned trademark; and (3) the consumers who purchase products and services offered under the trademark.
On one hand, the original trademark owner should not be concerned because it abandoned and is no longer using the trademark. The original owner, however, may not like the idea of another party adopting its former trademark and benefiting from the consumer recognition and goodwill that was created through the energy and investment of the original owner. In fact, because abandonment requires an intent not to resume use, the original owner might argue that it actually did intend to resume use and that the trademark was, therefore, never “abandoned.”
The party that plans to reanimate the abandoned trademark hopes to capitalize on the widespread consumer recognition and goodwill that was associated with the abandoned trademark. This recognition and goodwill should make the new owner’s products or services immediately more appealing and save the new owner the time, trouble, and expense involved in establishing brand recognition and goodwill in a new trademark.
The consuming public is affected because use of the zombie trademark by the new owner could lead to deception. For example, there is no requirement that the new owner of the trademark sell products or services under the mark that are of the same quality as those sold by the original trademark owner. Yet, it is possible that the consuming public may assume that the original owner has reintroduced its products or services under the mark and that they will be of equal quality to those provided by the original trademark owner. As a result, consumers may purchase products and services based on the mistaken belief that they will acquire products or services of a quality consistent with their past experience with the brand.
How Have the Courts and the TTAB Faced the Question of Trademark Abandonment in the Context of a New Party Asserting Rights in the Abandoned Mark?
Abandonment is the critical issue when determining whether or not a third party can assert rights to a trademark that was once well-known and recognized by consumers. While there are few decisions that directly address the zombie trademark issue, the following three cases offer a few examples that illustrate how the Trademark Trial and Appeal Board (TTAB) and courts have adjudged the abandonment issue, when considering whether an original owner has abandoned a mark after a new owner has come along, attempting to assert rights in the trademark.
- In General Motors Corp. v. Aristide & Co., Antiquaire de Marques, 87 U.S.P.Q.2d 1179 (T.T.A.B. 2008) [precedential], the TTAB determined that General Motors had abandoned its rights to the trademark LASALLE for motor vehicles, an important first step in the Zombie trademark analysis. By finding that General Motors owned no common law rights to LASALLE, the TTAB dismissed an opposition claim by the company. While the TTAB acknowledged that General Motors had established rights in the mark 65 years earlier, the company had not used the mark since the 1940s and evidenced no intent to reintroduce any vehicle under the mark. The TTAB determined that General Motors had abandoned its rights in the mark, explaining that “[m]erely because a party has used a mark a long time ago and it could use the mark in the future is not enough to avoid abandonment.” Citing Silverman v. CBS Inc., 870 F.2d 40, 9 U.S.P.Q.2d 1778, 1783 (2d Cir. 1989).
- Without abandonment, of course, a zombie mark cannot exist. In The Crash Dummy Movie, LLC v. Mattel, Inc., 94 U.S.P.Q.2d 1315 (Fed. Cir. 2010) [precedential], the U.S. Court of Appeals for the Federal Circuit (the Federal Circuit) upheld the TTAB’s determination that Mattel was able to rebut the statutory presumption of abandonment of its CRASH DUMMIES mark. First, the court found that the facts established a case of prima facie abandonment of CRASH DUMMIES through three years of non-use by Mattel. The Federal Circuit, however, concluded that “[s]ubstantial evidence supports the Board’s finding that Mattel intended to resume use of the CRASH DUMMIES marks during the contested time period.” Id. at 1391. The evidence, in relevant part, included Mattel’s recordation of an assignment of the mark from Tyco Industries, Inc., and Mattel’s subsequent discussions with KB Toys about producing a line of CRASH DUMMIES toys. Mattel rebutted the presumption of abandonment of its common law trademark rights by showing “reasonable grounds for the suspension and plans to resume use in the reasonably foreseeable future when the conditions requiring suspension abate.” Id. at 1390.
- Finally, in a third example regarding abandonment and whether or not a third party’s claims to the mark of a prior owner were legitimate, the U.S. Court of Appeals for the Eleventh Circuit (the Eleventh Circuit) evaluated whether or not the initial owner had, in fact, abandoned a certain mark long enough for a third party to assert rights. In Cumulus Media, Inc. v. Clear Channel Communications., Inc., 304 F.3d 1167 (11th Cir. 2002), Cumulus filed a complaint against Clear Channel for taking up use of THE BREEZE to identify its radio station. For nearly six years, Cumulus had used THE BREEZE to identify its station, but it changed its name and altered its music programming. Clear Channel waited 13 months before changing its name to “The Breeze.” Cumulus filed claims for trademark infringement and unfair competition, and Clear Channel countered with abandonment. The district court found that Cumulus had not completely abandoned its use of the mark, as it continued to use the name in marketing materials such as a large outdoor sign and other promotional items, which the district court determined went beyond mere token use. The appellate court affirmed, but noted that if Clear Channel had met its burden of proof in averring an affirmative defense of abandonment, it could have succeeded in use of the mark. “A defendant who successfully shows that a trademark plaintiff has abandoned a mark is free to use the mark without liability to the plaintiff.” Id. at 1173. It did not help Clear Channel’s case that it began advertising its version of “The Breeze” with advertisements using phrases such as, “It’s back … and now it’s 107.1 FM — The Breeze” and “[Y]ou told us you want The Breeze back … so we did exactly what you wanted.” As part of its ruling, the district court found that Clear Channel made use of the mark in order to divert audience share in a way that could mislead consumers into thinking its use of the term was a continuation of Cumulus’ prior use. The Eleventh Circuit affirmed the district court’s grant of injunction against Clear Channel’s usage of the term.
Abandonment and related “zombie” issues require fact-intensive scrutiny. One of the more recent judicial determinations in this area demonstrates just how important the particular facts surrounding each case really are in assessing “zombie” and abandonment issues.
In Macy’s Inc. et al. v. Strategic Marks LLC et al., Case No. 15-0612 (N.D. Cal. 2016), Macy’s filed suit against Strategic Marks in 2011, based on Strategic Marks’s use of marks once used by Macy’s for an array of its regional retail department stores. These brand names (labeled “Heritage Marks” by Macy’s), which were associated with regional department stores that Macy’s owned but had converted to Macy’s stores in 2006, included ABRAHAM & STRAUS, BAMBERGER’S, THE BON MARCHÉ, THE BROADWAY, BULLOCK’S, BURDINES, FILENE’S, FOLEY’S, GOLDSMITH’S, HECHT’S, I. MAGNIN, JORDAN MARSH, KAUFMANN’S, LAZARUS, MACY’S, MARSHALL FIELD’S, MEIER & FRANK, RICH’S, ROBINSONS-MAY, STERN’S, and STRAWBRIDGE’S.
In 2010, Strategic Marks submitted trademark applications to the United States Patent and Trademark Office (USPTO) to register marks composed of the names of retail stores that had previously been converted to Macy’s, specifically Abraham & Straus, Filene’s, The Broadway, Jordan Marsh, The Bon Marché, Robinson’s, Bullock’s, and May Company. Strategic Marks also began development of its website, which it launched in October 2011, and offered for sale t-shirts displaying some of these marks. Macy’s, on the other hand, created “Macy’s Heritage Shop” on its own website, which gave a brief description of each Heritage Mark and offered for sale t-shirts and tote bags bearing the Heritage Marks. Subsequently, in December 2011, Macy’s filed suit against Strategic Marks, alleging trademark infringement. In January 2015, prior to trial, Strategic Marks expanded its website to include references to an additional 12 Heritage Marks: MARSHALL FIELD’S, BURDINES, FOLEY’S, GOLDSMITH’S, HECHT’S, I. MAGNIN, KAUFMANN’S, LAZARUS, MEIR & FRANK, RICH’S, STRAWBRIDGE’S, and STERN’S, and included the sale of t-shirts bearing these additional Heritage Marks. Based on this expansion, Macy’s filed a second suit against Strategic Marks in February 2015.
U.S. District Judge Edward M. Chen granted Macy’s motion for partial summary judgment on 8 of the 12 disputed trademarks, finding that Strategic Marks specifically chose the disputed marks because they “are well-known and there remains favorable consumer recollection and feelings towards the brands.” Id. at *7. Even though the court acknowledged that Macy’s no longer uses the marks in conjunction with retail store services, Macy’s retained a valid interest in them, stating: “Simply because a store has ceased operations does not mean that its proprietor or owner does not maintain a valid interest in the registered trademark of the business. A trademark can still exist and be owned even after a store closes.” Id. at *8.
Although Strategic Marks attempted to show that Macy’s use of the Heritage Marks in the Macy's Heritage Shop was merely ornamental, Judge Chen found the marks to be still protectable as used and “not purely ornamental, but well-known, strong marks that indicate a source.” Id. at *10. Judge Chen also rejected Strategic Marks’ arguments that Macy’s use of the marks did not constitute a bona fide use in commerce.
Following Macy’s victory in court, the parties entered a settlement agreement, and although the settlement was not made public, it was reported by the Chicago Tribune that Macy’s transferred to Strategic Marks the following marks: JORDAN MARSH, I. MAGNIN, BAMBERGER’S, FOLEY’S, BULLOCK’S, and ROBINSON-MAY. Becky Yerak, Chicago Tribune (Feb. 29, 2016.
Considerations for Original Trademark Owners and Those Adopting Zombie Trademarks
Owners of trademarks that have widespread consumer recognition and considerable goodwill should think carefully before abandoning those marks. If it is determined that the original owner actually abandoned its mark, the owner no longer has legal rights in the mark to enforce and the mark becomes fair game for another to adopt for products and services that may be the same as, or similar to, those offered by the original owner. The original trademark owner might consider salvaging the mark by using it as a sub-brand to preserve trademark rights and avoid abandonment. Of course, any defensive uses of the mark designed to maintain protection must be made in good faith.
Those considering adopting an abandoned trademark that has considerable consumer recognition should use care to consider the possible consequences of adopting the mark. If the new trademark owner engages in conduct that creates a false association with the original owner, the original owner may have a claim under Section 43(a) of the Lanham Act for false designation of origin or false or misleading description or representation of fact. The new owner may end up in litigation—or an opposition or cancellation proceeding—before the TTAB on the issue of whether or not the mark had in fact been abandoned by the original owner.
Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.
© 2016 International Trademark Association