Loss of Trademark Rights
1. How can trademark rights be lost?
The most common way to lose rights in a mark is to stop using it with no intention to use it again. This is called “abandonment.” However, there are also ways in which trademark rights may be unintentionally lost. For example, in some countries, it is possible to lose rights in a mark by licensing the mark to others without controlling the nature and quality of the goods or services the licensee offers under the mark. This concept often is referred to as “naked licensing.” Another way in which rights may be lost is if the trademark owner, or third parties, improperly use the mark, so that the mark ceases to indicate the source of goods or services and becomes a generic word (such as escalator and cellophane, which originally were trademarks but came to be understood by the public as the generic names of the products for which they had been used as brands). Moreover, whether a mark loses its trademark significance may vary from country to country, as is the case with ASPIRIN, which is a generic term in the United States but a protectable trademark in Canada and Germany.
2. How can trademark rights be lost, or deemed abandoned, as a result of non-use?
In the United States, if a trademark owner ceases use of a trademark without intent to resume use of the trademark in the future, the trademark will be deemed abandoned. Under the Lanham Act, non-use of a trademark for three consecutive years creates a rebuttable presumption of abandonment of the trademark (whether registered or at common law). Temporary or seasonal non-use of a trademark, particularly when such cyclical use is typical in an industry or market, generally does not constitute grounds for abandonment under U.S. trademark law. Rather, periods of non-use must be accompanied by the “intent not to resume use.”
In many other countries, grounds for abandonment depend solely on whether the mark at issue has been in use, without regard to the subjective intent of the trademark owner. The period of non-use required to show abandonment typically ranges from three years (e.g., in Australia, Japan, South Korea, Canada, China, Russia and many Latin American countries) to five years (e.g., in various countries in Europe, such as Ireland and Norway).
In many countries, non-use in connection with certain goods or services associated with a mark may be considered abandonment with respect to those goods and services, despite continued use of the mark in connection with other goods and services. For example, the periodic Declaration of Use due in the United States requires the mark owner to declare use in connection with all of the goods and services listed in the registration, or otherwise delete any goods and services in connection with which there is no use.
3. How can a trademark owner rebut an allegation of non-use?
A showing that a mark has not been used for three years is prima facie evidence of abandonment under U.S. law. Under these circumstances, the burden of production shifts to the trademark owner to introduce documentary evidence or credible testimony of use, or an intent to resume use, of the mark. Examples of evidence relied on to rebut the presumption of abandonment include evidence showing the trademark owner has (a) sought regulatory approval for the goods and use cannot begin until the same is granted; (b) approached distributors for the goods; (c) purchased advertising for the goods bearing that features the trademark; (d) produced internal “story boards” or presentations referring to goods bearing the trademark; or (e) retained outside licensing agency. Although the required intent to resume use must exist during the initial three-year period of non-use, the trademark owner can show that intent through documentation and testimony of its activities outside of that period. If the trademark owner is able to produce evidence of use or intent to resume use, the ultimate burden of proof will remain with the party alleging abandonment.
In many countries, the owner of a challenged trademark has the burden of proof in a non-use cancellation proceeding. The nature and type of evidence vary from country to country. Token use and use by licensees may be permissible in some countries, but in others, genuine use on packaging or in connection with rendering services will be required. In some countries, use in connection with fewer than all the goods or services listed in a particular registration may be sufficient to preserve rights in connection with the entire listing of goods and services.
4. How is abandonment proven?
Courts typically analyze a wide range of objective evidence when considering whether a mark has been abandoned. The standard of proof for abandonment in the United States is “clear and convincing” evidence of abandonment without an intent to resume use. Objective evidence, such as the length and cause of non-use, outweighs self-serving testimony that a mark owner never had intent to abandon the mark or to not resume use. Evidence of the intent not to resume use may be inferred from public statements in marketing or other media that a company is changing its name, or that its products will be discontinued or produced and sold under another mark. Intent to resume requires that the trademark owner have concrete plans to resume commercial use of the mark, such as proffering negotiations with a new buyer or distributor. It is not sufficient to show such efforts after the mark has been abandoned. In other countries, too, intent plays an important role in abandonment determinations.
5. Is there excusable non-use?
Non-use that has occurred because of circumstances outside the trademark owner’s control may be considered “excusable” non-use that does not show abandonment. U.S. courts generally are receptive to the contention that an owner has not abandoned its trademark as a result of excusable non-use. A number of other countries also recognize excusable non-use. Examples of circumstances deemed to be outside the trademark owner’s control include (1) legal restrictions on the continued sale of goods under the mark, (2) labor strikes, (3) the need to retool equipment, (4) the bankruptcy or insolvency of the mark owner and (5) the lack of demand for the underlying goods and services.
If a mark owner holds a registration for its mark on the USPTO’s Principal Register, non-use of the mark in particular areas of the United States is not considered abandonment in those areas. Similarly, owners of European Community trademarks retain rights in all of the European Union, even if a mark is used only in a single EU member country.
6. How can improper trademark licenses or assignments result in abandonment of a trademark?
A trademark may be deemed abandoned if the trademark owner licenses or authorizes other parties to use its mark without adequate control over the quality of the goods or services offered under the mark. This is often referred to as abandonment via “naked licensing.”
See also Trademark Licensing
In addition, a trademark may be deemed abandoned if the trademark owner purports to assign its mark separate and apart from the goodwill represented by the mark. This is often referred to as an “assignment in gross” of the trademark under U.S. trademark law. Other countries may recognize assignments without goodwill being included. Always check with local counsel in the country in which an assignment is contemplated.
See also Assignments
7. How else may trademark rights be lost?
While the failure to use a trademark may result in abandonment of that trademark, improper use by a trademark owner or third parties also may result in the loss of trademark rights. A trademark should not be used in a manner that strips its significance as an indicator of origin of goods and/or services. For instance, trademarks should be distinguished from surrounding text and should be used in an adjectival context. Trademarks should not be used as nouns, pluralized or used in the possessive form. Third-party use of a trademark should be monitored for proper usage as well and for quality control.
A Guide to Proper Trademark Use
Genericide occurs when a trademark has been judicially determined to have lost its distinctiveness as a source identifier, such that the public considers the former trademark to represent a general category of products or services, rather than a particular standard of quality and single source of such products or services. Famous examples of trademarks that have been invalidated, in the United States, on the grounds of genericide include aspirin, cellophane, escalator and thermos (as applied to vacuum flasks). Trademark owners should carefully craft strategies to educate the public and police their marks to help avoid a judicial determination of genericide of their trademarks, such as XEROX and BAND-AID. Furthermore, while a trademark may be held to be a generic term in one country, valid rights may still exist in other countries. As mentioned above, aspirin is a generic term in the United States but a protectable trademark in Canada and Germany.
Trademarks vs. Generic Terms
Funeral for a Brand: How Trademarks Become Generic
Failure to Police
Trademark rights may also be lost when a trademark owner fails to effectively police its trademark against eroded distinctiveness owing to the presence in the marketplace of confusingly similar third-party marks. For example, if many third parties subsequently begin using the same or a similar trademark in commerce in connection with goods and/or services similar to the trademark owner’s after the trademark owner has already begun use, and the owner does little or nothing to police its trademark, the trademark is likely to lose some or all of its value as a source identifier in the marketplace. As a result, the trademark will become weaker, and in some cases it may lose its distinctiveness entirely. To help avoid such adverse consequences, the trademark owner may police its mark by enforcing its trademark rights through various legal means, such as (a) sending demand letters, (b) proceeding with opposition and cancellation proceedings with administrative entities, (c) proceeding with litigation in the courts, and/or (d) entering into licensing and/or other agreements with third parties, as may be appropriate under the circumstances. While some courts have determined that trademark owners need not necessarily prosecute every infringing third-party use of the mark, such third-party uses can still affect the distinctiveness of the mark in the minds of the public. The optimal policing and enforcement efforts for particular marks may vary with the particular circumstances involved, such as the nature and importance of the mark, the nature of the trademark owner and the size of its legal budget, and the number and nature of the potential third-party trademark infringements.
8. Can abandonment result when there are changes in the format of a mark or when the goods or services sold under the mark are changed?
Material alteration of the mark or in the goods and/or services associated with the mark may result in its abandonment. If, however, the original mark and its latter iteration create the same continuing commercial impression and the marks are used on the same or substantially similar goods or services, the owner may retain its rights in the mark. Minor modifications to the original mark, such as font, pluralization or color, may be permissible, but the addition or deletion of key words, or the substantial change of a design, can lead to abandonment. Consumers must consider the original and later versions of the mark as virtually indistinguishable to avoid abandonment.
Courts and administrative agencies often are faced with the question of whether changes to either a trademark or its associated products and/or services are negligible (resulting in a maintenance of trademark rights) or material (resulting in a loss of trademark rights). Although a trademark owner may develop new trademark rights in a materially altered trademark or in the use of a trademark with materially different goods or services, he or she will have lost the benefit of the priority date of the prior trademark use.