We’ve all encountered clients who believe that when a mark is unregistered, or the registration lapses, the client can immediately start using the trademark and take advantage of its residual goodwill. Brand significance can live on for many years and a newcomer may see an opportunity to leverage the goodwill in an unused mark to its advantage.
It’s really a policy balancing that plays out in the trademark law of abandonment. Do we protect a company’s original investment, but one that is going to waste and may entirely dissipate, or do we allow another company to leverage from an asset it has not built? And what role should consumer protection have?
River West Brands LLC, profiled by the New York Times here, is one company that deliberately identifies unused trademarks that have strong consumer association and creates new product lines for them (see a River West PowerPoint that includes a case study for the Coleco brand here). River West’s business model is bold: it files intent-to-use applications for marks that are still active on the register and, after receiving an office action refusing registration, files a petition to cancel the mark on an abandonment theory. See River West application for BURGER CHEF and cancellation action against the Hardee’s Food Systems registrations for BURGER CHEF; River West application for MISTER DONUT and cancellation action against the Mr. Donut of America registrations for MISTER DONUT. Sometimes River West readily abandons its application upon proof that the mark is still used by the original owner (see HAI KARATE and GAINES). No River West action has yet been decided on the merits.
River West isn’t always so concilliatory. It was sued in federal court by the J.M. Smucker Co. when Smucker objected to River West’s attempted “revival” of the PURITAN brand of cooking oil (complaint here). The district court case was filed in May, 2008, after a contested cancellation proceeding against the Smucker trademark registration had been going on for some time. The district court case was provoked by a fair showing of hubris by River West, which had demanded that Smucker cease using the PURITAN brand. There’s nothing wrong with the River West legal theory as follows: Smucker abandoned the mark, River West filed an intent-to-use application giving it a constructive use date, and Smucker’s resumption of use after that date was an infringement. River West could not have gotten an injunction to force Smucker to stop until its mark was registered, but there’s no reason not to put a future infringer on notice. Nevertheless, arguing that a mark was abandoned and then protesting its use is pretty provocative. The district court case settled 11 days after it was filed (copy of docket here) and River West expressly abandoned its PURITAN application the same day.
Smucker found some interesting legal theories for its complaint, too. River West hadn’t started using the mark itself yet, so there was no straight infringement theory. Instead, Smucker’s allegation of infringement was “Defendant’s use of the PURITAN mark, in connection with its scheme to traffic in the marks and goodwill owned by others, is likely to deceive and cause confusion and mistake among consumers as to the source of origin of the goods provided by Smucker and the sponsorship or endorsement of those goods by Defendant.” (highlighting added). It’s an interesting theory, raising the same problem currently causing disarray in the internet world “keyword” cases, which is whether and when there is “use” of a mark qua mark.
There are some other interesting points in the Smucker complaint. It alleges a dilution theory, at first blush an odd theory for a potentially abandoned mark, but one that makes sense since River West picks marks exactly because they are arguably famous. Smucker also argued fraud, caused by River West’s execution of a declaration stating that to its knowledge no other entity had the right to use the mark. Presumably River West had plenty of evidence that it believed the mark was abandoned; one assumes it does a lot of investigation before taking on this kind of challenge. The documents it files when dismissing petitions to cancel often have self-serving language that mentions how little use the trademark owner has made of a mark, e.g., “After discussions with the Attorney of Registrant, Registrant provided invoices showing the T.V. Time mark has been discontinued, but was sold within the last three years.” (Available here).
Smucker also makes the argument that River West can’t even fundamentally be a brand owner (all emphasis in original):
24. Upon information and belief, RWB does not have any manufacturing or production facilities.
25. Upon information and belief, RWB does not actually make, sell, or distribute any goods.
26. While it maintains no capacity to make, sell or distribute anything, since 2002 RWB has filed no fewer than 121 intent-to-use trademark applications according to records maintained by the United States Patent and Trademark Office (“USPTO”).
27. An intent-to-use application permits a company, or individual, to seek protection for a trademark even though that person or company has not yet sold a product in commerce in connection with the trademark. Significantly, a required element of every intent-to-use application filed with the federal government is a sworn statement that the party seeking it has a “bona fide intention to use the mark in commerce.” Prior to the actual registration of an intent-to-use trademark, the party must also submit a sworn statement attesting to its actual use of the mark in commerce.
28. While RWB has submitted a sworn statement regarding its intent-to-use trademarks no fewer than 121 times, it has failed to file any statement of actual use in connection with more than half of those applications [ed. comment - this doesn't strike me as a particularly low percentage for many companies regularly filing ITU applications].
The River West web site shows that, if doing what it claims, it may well be performing all the acts of a trademark owner. It has several brand-specific joint ventures (see third slide here) and appears to be no different from any other trademark holding company that we find legitimate. The real controversy about River West is the origin of the trademarks it is exploiting, not what it does with them.
But Smucker saved it strongest language for its vehement disagreement with River West’s business model:
29. Upon information and belief, unlike Smucker, RWB core beliefs have little to do with either quality or ethics.
30. Upon information and belief, RWB’s entire business model is premised upon the pirating of the goodwill developed by others in an attempt to deceive the consuming public.
31. As stated on RWB’s website, the company’s sole purpose is to:
[A]cquire rights to dormant consumer brands, revitalize them for modern relevance, reconstruct the business model for today’s marketplace, and ultimately return these brands to the consumer.
32. RWB admits on its website that its business model is premised on using the previously developed goodwill in these “dormant” brands to sell new products to unsuspecting consumers:
If you’re a manufacturer and are developing a better mousetrap, and you think that a base of consumer awareness and excitement can help your product launch and line extension, or if you are a retailer or distributor or you think that a proven credible real brand can help you drive pricing, turns and consumer loyalty, we look forward to hearing from you.
33. The RWB business model is contrary to the very purpose of the Lanham Act. The Lanham Act was enacted to protect consumers and competitors from a wide variety of misrepresentations related to products and services in commerce. Indeed, as specifically set forth in the Lanham Act:
The intent of this chapter is to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce…to protect persons engaged in such commerce against unfair competition; to prevent fraud and deception in such commerce by the use of reproductions, copies, counterfeits, or colorable imitations of registered marks…
34. Indeed, RWB has admitted on its website and in numerous interviews to the press, that its business model is premised on deceiving the public as to the source and nature of new, unrelated goods sold in connection with famous brands. As RWB’s own Founder and President, Paul W. Earle, Jr., admitted in an interview in 2004, “you can uninstall software from a computer but you can’t uninstall a brand name from someone’s head.”
If River West stays around long, it could generate some interesting new case law on trademark rights and abandonment.