The law of trademark abandonment, also referred to as “non-use” and “cancellation”, is international in scope. While the time frame and specific definition for non-use and abandonment vary slightly from country to country, countries that acknowledge trademark rights permit opposition to the mark on the basis of abandonment and cancellation by non-use. A mark is considered abandoned under Section 45 of the Lanham Act, for instance, when “its use has been discontinued with intent not to resume such use.” The period of discontinued use in the U.S. is three years. In many countries the period for non-use is as many as five years.
Typically the burden of proof lay on the opponent of the mark. That burden varies drastically from country to country.
The law seems deceptively simple. At a glance it seems as though a mark is abandoned if the registrant (or the common-law owner of the mark) fails to use the mark in commerce for a set period of time. But what happens if the non-use is involuntary? What constitutes use? When is a use considered a nominal and valueless use that is solely intended to unlawfully preserve a mark? These are all issues that must be considered when determining whether a mark is in fact abandoned.
The question becomes even trickier when international standards are at issuethe law of cancellation in Egypt, for instance, sets out clear exceptions to non-use cancellation. Other countries may not acknowledge those exceptions or may set forth different standards when evaluating those exceptions. A mark that is used internationally is subject to all of these varying standards.
This discussion focuses on U.S. trademark abandonment law. However, the issues discussed below also apply to the laws of other countries.
Trademarks are exposed to a variety of risks. Mergers, bankruptcy, or government seizure of a business may result in the unintentional non-use of a mark even if that business has no intention of abandoning the mark. Some courts have found that a mark is abandoned notwithstanding exigent circumstances. Other courts have ruled the opposite. Frequently the determination is based on the actual provable intent of the business and the likelihood of continued future use. Many claims for abandonment have been rejected based on a showing of “intent” not to abandon.
One notable example comes in the form of the popular cordial Chartreuse. This liqueur was originally developed using a secret process by the Order of Carthusian Monks. It was named after the mother house of the order, the Monastery of the Grande Chartruese (located in France). The liqueur became popular in the late 19th century and was sold both locally and internationally. However, the French Government confiscated and liquidated the monks’ business in 1901. The liquidator then sought to reproduce the monk’s recipe in order to continue distribution under the old name “Chartreuse”. As trustee of the business’s estate the liquidator claimed he owned legal title to the international mark.
Ever perseverant, the monks moved to Spain and continued to make the liquor by importing the required herbs from France. They distributed the old secret recipe under the name “Peres Chartreux” and stated on the bottle that it was the only liqueur that was made in the identical manner as that made in the Monastery of the Grande Chartruese. The monks also pursued legal action in several countries and distributed to the U.S. under the old label to preclude a claim of abandonment.
SCOTUS found that a) the liquidation did not include rights to the trademark outside of France, as the business and good will associated with the mark arose from the secret process through which the liqueur was made and not the location, and b) the adoption of the new mark did not show the requisite intent to abandon. The Court found that the adoption of the new mark was necessary as the old mark could not be used within France, and it was natural that the monks would want to adopt a mark that could be used in France as well as abroad. The monks demonstrated their desire to avoid abandonment by their prompt assertion of trademark rights in other countries. See Baglin, Superior General of the Order of Carthusian Monks v. Cusenier Co., 221 U.S. 580 (1911).
It should be noted, however, that U.S. courts (including the Second Circuit) may apply a different intent test; i.e. “no intent to resume use in a reasonably foreseeable future.” This is the precedential norm in the U.S. due to the language of the Lanham Act. By that standard even a good faith intent to not abandon will not preclude abandonment if the intent to resume is vague, unspecific, or impossible within the reasonably foreseeable futureas may be the case in bankruptcy.
Courts seem to be slightly more lenient in the event of merger. The Sixth Circuit found that the mark of one of the merging companies was not abandoned if the name was still invoked or used in the course of business or where some portion of the work continued under the prior name. Stilson & Assocs. V. Stilson Consulting Group, 129 Fed. Appx. 993 (6th Cir. 2005). Similarly, the 9th Circuit recently found that sell off of remaining stock and inventory under the former trademark was sufficient “use” to negate the claim of abandonment. Grocery Outlet Inc. v. Albertsons, Inc., No. 06-2173 (N.D. Calif. 2008)
This raises another major issue: use.
THE QUALITY AND QUANTITY OF USE
Even if a trademark is still technically “in use” it may be deemed abandoned. The quality and nature of the use is therefore important when determining whether the use precludes abandonment. Courts will examine the number of goods sold that make use of the mark and whether the mark is being used for commercial purposes or token purposes. Generally the use must be continuous and deliberate. However there is no black letter law that sets out whether a use precludes abandonment; typically this is determined on a case by case basis.
However, U.S. companies may not hoard trademarks. In fact most countries have some regulation that prohibits “token” use of a mark to prevent cancellation. Trademark “maintenance” programs such as limited arranged sales will not protect a mark from abandonment. Exxon Corp. v. Humble Exploration Co., 695 F.2d 96 (5th Cir. 1985). Typically, when a mark is discontinued, any future intent to resume must be an actual good faith commercial use.
Even in the U.S. it is not always easy to determine whether a trademark is abandoned. Frequently it is determined on a case by case basis. There are also other considerations such as geographical abandonment (when the non-use only occurs in a particular region) that may also play a role in a Court’s determination. In the case of international abandonment of a mark there are dozens of other considerations at play, including presentation of evidence and burden of proof. It is imperative that a business takes these considerations into account when deciding to discontinue or suspend use of a mark.