Property, intangible

a blog about ownership of intellectual property rights and its licensing

Working Around Incontestability

Once a trademark is incontestable, its validity cannot be challenged except on certain limited bases. Is “void ab initio” one of them? “Void ab initioisn’t listed in the statute as a basis for challenge, but the defendant in NetJets Inc. v. IntelliJet Group, LLC found a workaround.

The plaintiff registered its trademark, INTELLIJET, for computer software for managing aircraft leasing and sales and the registration was incontestable. But the software was only used internally by NetJets, although it also described the software’s functionality in newsletters to its customers and demonstrated the software on tours of its facility. The lower court held that that the trademark was abandoned because it had not been used in commerce,* but the Court of Appeals for the Sixth Circuit saw some other possible use of the mark and reversed:

NetJets did, in fact, put forward evidence that it has sold the Intellijet software itself, rather than the private-plane services, to two external customers: Marquis Jet Partners and National Private Air Transport Services Company Limited…. The questions about the nature and existence of these licenses are nonetheless sufficient to call into question whether NetJets was marketing software, under the INTELLIJET mark, to other private-plane companies. In light of the dynamics of the private-plane industry and the nature of the software product, a reasonable jury could find such limited market involvement to nonetheless reflect a “bona fide use … in the ordinary course of trade,” 15 U.S.C. § 1127, and that NetJets had therefore not abandoned the mark.

The lower court was instructed to consider on remand “whether there was a separate defect in the ownership of the mark other than abandonment.”

“Void ab initio” was offered by the defendant as another defect, but we have the problem of incontestability. Which turns out to not be a problem, because for a mark to be incontestable the requirements of incontestability have to be met, in this case use of the mark for five years after the date of registration, July, 1995.** But, there were no sales to external customers for the five years of 1995-2002, so the conditions of incontestability weren’t satisfied. The registration could therefore be challenged on the basis that it was void ab initio and, indeed it was invalid, since the software was not being sold at the time the use-based application was filed.†

But wait – wasn’t it really just a defect in the application, which was erroneously filed for software rather than for the aircraft sales and leasing services? If so, then NetJets would have common law rights in the service mark. But too late for that argument; the court previously held that the software was “the conduit through which NetJets provides its services.” According to Trademark Manual of Examining Procedure § 1301.02, “A term that is used only to identify a product, device or instrument sold or used in the performance of a service rather than to identify the service itself does not function as a service mark.” (Emphasis in original.)

NetJets Inc. v. IntelliJet Group, LLC, No. 14-3118 (6th Cir. Feb. 20, 2015).
NetJets Inc. v. IntelliJet Group, LLC, No. 2:12-cv-00059 (S.D. Ohio Oct. 13, 2015).

  • According to the district court, non-use can be an abandonment: “As Defendant acknowledges in its motion for summary judgment, most cases of alleged abandonment of a trademark involve a situation where the owner was at one point making commercial use of the mark. Abandonment may also be established, however, through proof that a registrant is not using or has never used its mark in commerce. See e.g. Imperial Tobacco Ltd. v. Philip Morris Inc., 899 F.2d 1575, 1579-82 (Fed. Cir. 1990) (finding abandonment of mark on basis of nonuse).”

** The court said the trademark was registered in July 1995, but the trademark record says the appliication was filed in December, 1995 and granted in December, 1996. The claimed date of first use was July, 1995.

See the Fourth Commandment, “Don’t invoke a registered right that you are not prepared to lose.”

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