by Robert Litowitz, Partner, Kelly IP
“Once you’re gone, you can never come back.” My My, Hey Hey (Out of the Blue) by Neil Young
In the United States, patents and copyrights have finite terms. Both types of intellectual property flow from Article I, Section 8, Clause 8 of the U.S. Constitution, which grants Congress the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Trademarks—brand names, logos, slogans, packaging, product shapes, even sounds and colors—are different. Trademark protection does not spring from the Constitution. So, trademarks are not subject to the “limited time” proviso of Article I, Section 8. To paraphrase DeBeers’ famous diamond slogan, trademarks can be forever. Indeed, some current trademarks date back to the 1880s.
There is a catch, however. To achieve immortality, a trademark must remain in use. If use ceases for too long, the owner risks losing the mark due to “abandonment.” Abandonment triggers a trademark free-for-all: another business can adopt and use an abandoned trademark, becoming its new owner.
But when is a trademark abandoned? When is the pause too long?
The Lanham Act (the Federal trademark statute) provides a framework for answering those intertwined questions. The Act states that “a mark shall be deemed to be ‘abandoned’ [due to non-use] [w]hen its use has been discontinued with intent not to resume such use.” 15 U.S.C. §1127. This sentence seems to give trademark owners carte blanche to indefinitely park their trademarks. After all, it would be rare for a trademark owner to publicly admit to having mothballed a trademark with the intent not to resume use.
But there’s more. The Lanham Act goes on to state that “[i]ntent not to resume may be inferred from circumstances. Nonuse for three consecutive years shall be prima facie evidence of abandonment.” That additional language also seems simple: not using a mark for more than three years counts as circumstantial evidence from which abandonment may be “inferred.” Does parking a mark for over three years make it fair game for the taking? Not quite.
There’s another catch: the phrase “prima facie evidence” means a “rebuttable presumption;” that is, the trademark owner still can show either (1) that it never completely stopped using the mark, or (2) that despite the gap in use, it had a genuine intent to resume using the mark.
Again, it would seem easy for a business to “rebut” the presumption of abandonment, say, by simply stating that it always intended to resume use. But uncorroborated statements of subjective intent are seldom enough. Likewise, the Lanham Act prohibits sporadic or occasional use merely to “reserve a mark.” Such “token use” is tantamount to non-use and typically cannot stave off abandonment.
In short, just because a mark has been dormant for three years or more does not mean it has been abandoned. Abandonment is a legal conclusion that can only be reached by a judge or jury. That means litigation.
Two cases from the U.S. Court of Appeals for the Fourth Circuit illustrate the challenges and complexities of proving abandonment. In the first case, Emergency One, Inc. v. American FireEagle, Ltd.[1], a leading fire truck maker, Emergency One (“E-One”), bought a smaller competitor called “American Eagle.” E-One then announced it would stop building fire trucks under the “American Eagle” trademark.
More than three years later, with no further “American Eagle” fire trucks from E-One forthcoming, a former American Eagle employee launched a new company. He called it “American FireEagle” (“AFE”) and began making and selling fire trucks under the “American FireEagle” trademark. This did not sit well with E-One, which had paid nearly $6 million for the “American Eagle” mark.
Unsurprisingly, E-One sued AFE for trademark infringement. In its defense, AFE claimed that E-One abandoned the “American Eagle” when it announced the end of the American Eagle fire truck line and had not made any “American Eagle”-branded firetrucks in over three years (thus triggering the rebuttable presumption). E-One countered that it had kept the “American Eagle” mark alive by selling promotional merchandise, having security guards wear “American Eagle” badges, and refurbishing American Eagle fire trucks (rebranding them under a different name). The jury found no abandonment and AFE appealed.
Myriad questions emerged during the lengthy litigation:
- Did placing the mark on souvenirs, security guards’ badges, and repairing fire trucks amount to “use” of the mark?
- The appeals court said “no.”
- Did those activities create a fact issue as to E-One’s intent to resume use of American Eagle on fire trucks? [2]
- The appeals court said “yes.”
- Did the trial court commit reversible error in not specifically instructing the jury that assertions of an intent to resume trademark use cannot be vague, speculative, or indefinite but rather must be in “the foreseeable future”?
- The appeals court also said “yes” and remanded the case for a second trial.
After weighing the evidence with proper instructions, the jury in the second trial ruled in favor of AFE, implicitly concluding that E-One had failed to rebut the presumption of abandonment. The Court of Appeals affirmed the jury’s finding of abandonment, and in doing so, affirmed AFE’s right to adopt the abandoned “American Eagle” mark. [3]
In short, even though Emergency One had announced it had dropped the “American Eagle” line and then stopped making “American Eagle” trucks, the abandonment issue was anything but simple. It required two trials and two appeals.
The second case, Simply Wireless, Inc. v. T-Mobile, Inc.,likewise was anything but simple. Simply Wireless had used the mark “Simply Prepaid” for seven consecutive years for “prepaid airtime” for mobile phones. Then, sensing significant changes in the mobile phone industry, Simply Wireless paused using “Simply Prepaid.” In the fourth year after the pause began, Simply Wireless rebooted “Simply Prepaid” using a fresh marketing approach. Less than a year after that, with minimal sales, Simply Wireless benched “Simply Prepaid” again while it considered other opportunities to revive its mark.
Those plans were derailed two years later when the telecom giant T-Mobile began using “Simply Prepaid.” Simply Wireless sued for trademark infringement, claiming that T-Mobile’s use of the identical “Simply Prepaid” for prepaid phone plans presented a likelihood of reverse confusion; that is, T-Mobile, with its massive nationwide marketing clout, would swamp any “Simply Prepaid” reboot by Simply Wireless.
Abandonment became one of T-Mobile’s defenses. There was no dispute that Simply Wireless had triggered the presumption of abandonment by initially pausing use of “Simply Prepaid” for more than three years. The battle centered on whether Simply Wireless had maintained its intent to resume use of the mark during that hiatus. Would Simply Wireless’s low-level sales under its “Simply Prepaid” mark after the three-year “presumption period” be sufficient to rebut the presumption of abandonment?
Both parties moved for summary judgment. Simply Wireless argued that its resumed use proved that the company had maintained the intent to resume use all along. T-Mobile, on the other hand, contended that Simply Wireless had no tangible evidence from during the “presumption period” reflecting Simply Wireless’s intent to resume use of “Simply Prepaid.” Indeed, Simply Wireless’s documents expressly mentioning the use of “Simply Prepaid” for its reboot were dated more than three years after Simply Wireless had stopped using the mark.
After considering the parties’ briefs and two rounds of oral argument, the trial judge granted summary judgment for T-Mobile.
Simply Wireless appealed to the Fourth Circuit, which ruled in its favor, reversed summary judgment, and remanded the case for trial.[4] The appeals court found error in the trial court’s failure to view the evidence and draw reasonable inferences in Simply Wireless’s favor. Specifically, the Fourth Circuit concluded that because Simply Wireless had resumed use of its “Simply Prepaid” mark just a few months past the three-year mark, reasonable jurors could treat those sales as evidence that Simply Wireless had maintained the intent to resume use of its mark all along, especially when paired with sworn testimony from Simply Wireless’s CEO outlining steps the business had taken to resume such use during and after the three years. The case eventually settled, so the hypothetical outcome of the not-so-simple abandonment issue remains open to debate.
These two cases tell cautionary tales for trademark owners contemplating a break in trademark use. First, do not make statements, express or implied, renouncing the intent to resume use. Second, if you’ve paused using your mark and expect the hiatus to be longer than three years, don’t wait to document your intent to resume. Do it in writing—during the three-year “presumption period.”
In short, unlike patents and copyrights, trademarks are a “use it or lose it” form of IP. Continuous use is the gold standard for achieving trademark immortality. But ever-changing business forecasts, emerging technologies, and other circumstances may necessitate interruptions. With careful management of such “breaks in the action,” trademark owners can ensure that their valuable marks, like diamonds, can live forever.
Quote of the Day: “All is not lost . . .” Paradise Lost, John Milton
[1] Emergency One, Inc. v. American FireEagle, Ltd., 228 F.3d 531 (4th Cir. 2000). [2] E-One had argued on appeal that it was entitled to judgment as a matter of law on the issue of abandonment. [3] Emergency One, Inc. v. American FireEagle, Ltd., 332 F.3d 264 (4th Cir. 2003). [4] Simply Wireless, Inc. v. T-Mobile, Inc., 115 F.4th 266 (4th Cir. 2024).
