U.S. Trademark Applicant Involved in Collision With Giant Toy Manufacturer: CAFC Affirms TTAB Decision of No Trademark Abandonment After Eight Years of Non-Use

I know the recently decided case of The Crash Test Dummy Movie, LLC v. Mattel, Inc. has been reported by other bloggers over the past couple of months. However, I just can’t shake it off as it’s made its way under my skin. Last week during the 2010 International Trademark Association conference in Boston, I discussed this case with other fellow bloggers and trademark attorneys. I needed to know whether I was in the minority of trademark attorneys – or one of the only trademark attorneys – who has lost sleep over this decision and believes that the courts simply got this decision wrong. Very wrong.

The question to ask in light of this decision is would you feel relatively comfortable adopting a trademark for certain products eight years after another company stopped using that same or essentially same trademark for similar products when after investigation there is not a trace – a single trace – of that other company’s use of that mark during the preceding seven plus years, except for expired federal trademark registrations?

Based upon the recently decided decision of The Crash Test Dummy Movie, LLC v. Mattel, Inc., brand owners better think twice about adopting marks or marks similar to marks that haven’t been in use for nearly a decade for similar products and, if they do select such names, be prepared for a potential head-on collision with a previous user.

The facts of this case appear fairly straightforward. Mattel acquired rights in the CRASH TEST DUMMIES and THE INCREDIBLE CRASH TEST DUMMIES in 1997 from Tyco Industries, Inc. Tyco ceased use of those marks in 1995 via licenses – or nearly three years prior. Mattel filed assignment documents with the U.S. Trademark Office in 1998.

Tyco apparently did not use the marks in 1996 or 1997. Mattel did not re-launch the subject marks in 1998, 1999, 2000, 2001, 2002 and, for the most part, 2003 (eight years after discontinuance by Tyco!) due to Mattel’s safety standards issues.

Generally, trademarks are abandoned when their owners cease use of them without the intent to resume their use in the future. Once a mark becomes abandoned, the previous user has no rights to the marks and cannot generally prevent others from adopting and using the abandoned marks. A prima facie case of trademark abandonment occurs when a mark has not been put to use for a period of three consecutive years. Prima facie abandonment may be rebutted, however, with evidence that the owner has not intended to abandon that mark due to plans to resume use of the mark in the future. The critical questions are what constitutes the “future” and at what point does or should a trademark owner forfeit its trademark rights for failure to act? Lets take a look at how the U.S. Trademark Trial and Appeal Board (the “Board”) and federal circuit answered those inquiries.

The Crash Test Dummy Movie, LLC filed an intent to use application for the mark CRASH DUMMIES for games and playthings in March 2003. Mattel opposed registration of the mark at the Board on the basis of priority of use and likelihood of consumer confusion.

The Board found a prima facie case of abandonment of the subject marks (e.g., non-use of the marks for at least three consecutive years). However, the Board also found that Mattel rebutted the presumption of abandonment by showing “reasonable grounds for suspension and plans to resume use in the reasonably foreseeable future when conditions requiring suspension abate.” Accordingly, the Board held in favor of Mattel.

I am hard-pressed to see how eight years of non-use is really considered reasonably foreseeable future. How about you?

The Crash Test Dummy Movie, LLC appealed the Board’s decision. On appeal, the Federal Circuit agreed with the Board finding no abandonment because – in the Court’s opinion – the facts of the case showed that Mattel had the intent to resume use and not to abandon the marks. Specifically, the Court found that (1) in 1998, Mattel entered into negotiations with KB Toys concerning KB Toys’ becoming the exclusive seller of CRASH TEST DUMMIES toys, (2) Mattel delayed use of the marks only because of the costs involved to redesign the toys due to safety standards concerns (Again, eight years? This is Mattel here. And the re-launched toys were not the same toys sold by Tyco!), (3) Mattel would not have recorded the trademark assignments with the U.S. Trademark Office if it did not intend to resume use of the marks (Really? How does the Court know that? Filing of assignments is a low-cost administerial task that is typically done after most deals.), (4) Mattel’s failure to renew the subject federal trademark registrations did not establish Mattel’s lack of intent to resume use of the subject marks (But its filing of the assignments with the Trademark Office did? If Mattel truly intended to resume use of the subject marks, why didn’t it file intent to use trademark applications to replace the expired registrations? Isn’t that what most companies would do it they intended to resume use of a mark? Wouldn’t Mattel want to place third parties on constructive notice of its intent to resume use the marks?) and (5) Mattel’s research and development efforts from 2000-2003 showed its intent to resume use of the mark (But what about the years of 1995-2000?!)

What could The Crash Test Dummy Movie, LLC have done? Run a full trademark search? Probably did. Even so, it would not have found any recent (i.e., past eight years!) use of Mattel’s marks. Would have found expired trademark registrations. At what point does a trademark owner’s inaction – i.e., not using its marks for over eight consecutive years, passively allowing its federal trademark registrations to expire (presumably without an attempt to renew them based upon excusable non-use) and not filing intent to use trademark applications (within a reasonable time from the dates on which the registrations expired) to place third parties on constructive notice of its intent to resume use of those marks – constitute outright forfeiture of rights against bona-fide third parties?

Any thoughts? I think you know mine.

Six Actions Brand Owners Can Take To Prepare For Potential Deluge Of New Generic Top Level Domain Names

As brand owners await ICANN’s imminent launch of various new generic top-level domain names (“gTLDs”), they should be reviewing and, if necessary, revising current domain name policies to meet anticipated new challenges. Below are six actions brand owners can take right now to ready themselves for the potential deluge of hundreds of new gTLDs.

1. Determine annual budget. How much funds are being allocated for reserving domain names that point towards active sites or redirect to active sites, may be used in the future and are pure defensive plays (those domain names reserved for the purpose of keeping them out of the hands of cyber squatters and Domainers)? Then plan accordingly.

2. Conduct periodic audit of domain name portfolio. An audit should determine which of your current domain names could be dropped due to little or no activity. If there’s little or no activity on certain sites, than those domain names would have little or no value to cyber squatters anyways. Consider letting those go.

Maintain those .COM – and possibly those .BIZ, .NET, .INFO and country code – domain names that correspond to common misspellings of brand names (consider new devices on market and what typos are being made), key brand names in key territories, generic product names (i.e., runningshoes.com for running shoe company) and potentially damaging sites such as yourtrademarkSUCKS.com. .COM domains are still the most coveted of gTLDs by Domainers and cyber squatters. I suspect that cyber squatters would prefer NIKEapparel.com to Nike.gardening or FORDvehicles.com to FORD.movies. Wouldn’t you agree?

Add new domain names that correspond to newly adopted gTLDs that are likely to result in misdirected Internet traffic and potential lost profits. For example, automakers should reserve domain names that correspond to .AUTO, .CARS and .TRUCKS gTLDs. However, I really can’t think of a reason why auto manufacturers would want to allocate funds to reserve domain names that correspond to unrelated gTLDs, such as Toyota.food and Ford.gardening? For most companies, those funds should be allocated to enforcement activities.

Also, as new brand names are launched, reserve priority domain names that correspond with those new names. For those brands that go to the graveyard, consider allowing those corresponding domain names to expire in due time.

3. Establish policing policy. In addition to compiling a healthy domain name portfolio, brand owners must also actively police third-party registrations of potentially harmful domain names. A global watch program can cost thousands of dollars annually, so plan accordingly if such a service is desirable. Alternatively, brand owners can opt to conduct periodic in-house searches.

4. Establish consistent policy for enforcing brands. Create a policy for taking action against third parties that reserve potentially harmful domain names. The policy should be detailed. Determine in advance – outlined in policy – which “infringements” warrant action. When a credible threat is detected, take quick and decisive action. However, pick your battles.

5. Don’t overprotect. Brand owners simply cannot reserve all domain name permutations. It’s just too costly. That will become more evident as new gTLDs are launched. A better approach is to combine a healthy domain name portfolio with consistent monitoring and enforcement.

6. Take a deep breath and relax. For most brand owners, the launch of new gTLDs will likely go unnoticed. For those same brand owners, there will likely be bigger fish to fry.

Stay tuned as I’ll be reporting from Boston May 22-26 at this year’s International Trademark Association conference where we’re expecting over 8,000 trademark attorneys from around the planet to gather to make new friends, business relationships and memories.  New England, I’m coming home!