Property, intangible

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“Incontestability” and Cancellation

I previously reported on a case that managed to find a non-statutory basis for cancelling an “incontestable” trademark registration, specifically that the application for the registration was void ab initio. The plaintiff and trademark owner was NetJets, with a registered trademark for a software program INTELLIJET. The defendant was a company named Intellijet Group. Both companies provided services related to private jets.

Intellijet Group’s initially successful counterclaim for cancellation of the NetJets registration took a bit of legal jujitsu. Lanham Act § 14, 15 U.S.C. § 1064 says that a trademark registration can be cancelled for any reason within five years of its registration, but after five years there are only limited grounds for a cancellation. The Southern District of Ohio held, however, that the requirements of incontestability as described in § 15, 15 U.S.C. § 1065, had to be met before the limitations on the challenge to a trademark registration in § 14 apply. Those requirements include continuous use for the five years preceding the filing of the Declaration of Incontestability. But, NetJets didn’t have sales to external customers for five years, so the conditions of incontestability weren’t satisfied. And, according to the district court, since the registration wasn’t incontestable, the registration could therefore be challenged on the basis that it was void ab initio and sure enough it was invalid, since the software was not being sold at the time the use-based application was filed.

In a non-published decision, the Court of Appeals for the Sixth Circuit has reversed. Its reason was the absence of “void ab initio” from Section 14:

The district court did not address the limits of § 1064 in its opinion, but simply moved from the conclusion that NetJets’s mark was not incontestable to its conclusion that it was void ab initio because it was not used in commerce at the time of registration. This determination is incompatible with § 1064.

The defendant’s various theories why a “void ab initio” challenge was nevertheless available didn’t get any traction with the appeals court.

But the appeals court didn’t explain where the district court erred with it’s two-step theory, saying inscrutibly

Under the statutory requirements of § 1065, the district court determined that NetJets’s INTELLIJET mark was not incontestable because internal use of the software did not constitute use in commerce sufficient to satisfy the Lanham Act, and as a result, the registration was only prima facie evidence of the mark’s validity. The court held that because the mark did not satisfy § 1065’s requirements for inconstestability, IntelliJet Group ws not limited to challenges in § 1115(b) seeking cancellation of the mark. Because we find that § 1064 bars IntelliJet Group from bringing its challenge to the mark as void ab initio, we decline to examine whether the mark is incontestable under § 1065 and whether the limitations of § 1115(b) apply.

Not the best explanation, but I expect what they were trying to say is a drum that John Welch has been beating for awhile. John points out that “incontestability” has no role in a cancellation, which is clear from a careful reading of the statute. Section 15 says only that an incontestable registration is conclusive evidence of the validity of the trademark. The appeals court also alluded to § 33, 15 U.S.C. §1115(b), but that section identifies some defenses to infringement, not bases for cancellation.

Whether the trademark is “incontestable” has nothing to do with the bases available for a cancellation; it is only the passage of time that limits the grounds for cancellation. Enough time passed and therefore NetJets’ INTELLIJET registration was not susceptible to cancellation on the basis that it was void ab initio.

NetJets Inc. v. IntelliJet Group, LLC, No. 15-4230 (6th Cir. Feb. 3, 2017).

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2 responses to ““Incontestability” and Cancellation”

  1. I don’t think I ever thought about this issue. So if a registration that should never have issued because the application to register the mark was never valid is not canceled within 5 years of the registration date, then suddenly the registration from an invalid application becomes valid? I wonder if a different decision would be reached if the application was determined to be void ab initio because it wasn’t filed by the owner of the mark?

    1. I think the outcome is the same in either case. It’s fundamentally the same as Park ‘N’ Fly, it’s a matter of quieting title.

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