Trademark Abandonment

    Recently there has been a lot of talk about Tim Langdell's trademark, "EDGE". Many have a very strong opinion about the matter, particularly considering Langdell's involvement with the IGDA. This post has nothing to do with anyone's personal opinion, and I have none in the matter. Rather the trademark question raises various issues relevant in the games industry—for instance, when is a mark sufficiently distinctive under trademark law? When has a mark obtained a secondary meaning for trademark purposes? Is it readily identifiable to consumers? There are a variety of factors that may be used to determine whether a mark is valid, and like fair use this is frequently determined on a case by case basis. 

Another question is whether licensing the mark in the manner Langdell's company has is an appropriate use of trademark protection. Iit should be noted that the trademark wasn't filed for registration until 2006– although the claim of first use is 1984, and apparently the mark was "licensed" to various other products prior to the date of filing. Based on the website, and if rumors are to be believed, the company allegedly licenses its name to various unrelated projects and products without engaging in any continuous sale of a product of its own (although the website says the store is "closed during maintenance")—and presumably without having any oversight or involvement with the products licensing the name. If this is a case of trademark squatting (e.g., "owning" a trademark for the sole purpose of licensing the name to others without the mark satisfying any of the requirements of trademark law, such as identifying the source of a product in commerce or being sufficiently distinctive—relatively similar to patent trolling), then several arguments may be raised. One is whether the mark has been so "diluted" by indiscriminatory licensing so as to make the mark invalid. Another is trademark abandonment.

    While games such as Bobby Bearing (originally published in 1986) have been re-released in mobile form, most of the games listed on the company's website were developed in the 80s for platforms that are now nothing short of antique. The company lists various "forthcoming" titles, but there is a considerable platform generation gap between previous publication and what will supposedly become available. This raises a novel argument for trademark abandonment.

    This isn't to say that this is a great argument in light of the facts (few of which are readily available)– this is mostly my excuse to discuss something I've wanted to talk about for a while.

    The law of trademark abandonment, also referred to as "non-use" and "cancellation", is international in scope. While the time frame and specific definition for non-use and abandonment vary slightly from country to country, countries that acknowledge trademark rights permit opposition to the mark on the basis of abandonment and cancellation by non-use. A mark is considered abandoned under Section 45 of the Lanham Act, for instance, when "its use has been discontinued with intent not to resume such use."

    The period of discontinued use in the U.S. is three years. In many countries the period for non-use is as many as five years. Typically the burden of proof lay on the opponent of the mark. That burden varies drastically from country to country. The law on abandonment seems deceptively simple. At a glance it seems as though a mark is abandoned if the registrant (or the common-law owner of the mark) fails to use the mark in commerce for a set period of time. But what happens if the non-use is involuntary? What constitutes use? When is a use considered a nominal and valueless use that is solely intended to unlawfully preserve a mark? These are all issues that must be considered when determining whether a mark is in fact abandoned.

    The question becomes even trickier when international standards are at issue. The law of cancellation in Egypt, for instance, sets out clear exceptions to non-use cancellation. Other countries may not acknowledge those exceptions or may set forth different standards when evaluating those exceptions. A mark that is used internationally is subject to all of these varying standards.

    This post focuses predominantly on U.S. trademark abandonment law. However, the issues discussed below may also apply to the laws of other countries.

Involuntary Non-Use

    Trademarks are exposed to a variety of risks. Mergers, bankruptcy, or government seizure of a business may result in the unintentional non-use of a mark even if that business has no intention of abandoning the mark. Some courts have found that a mark is abandoned notwithstanding exigent circumstances. Other courts have ruled the opposite. Frequently the determination is based on the actual provable intent of the business and the likelihood of continued future use. Many claims for abandonment have been rejected based on a showing of "intent" not to abandon.

    One notable example comes in the form of the popular cordial Chartreuse. This liqueur was originally developed using a secret process by the Order of Carthusian Monks. It was named after the mother house of the order, the Monastery of the Grande Chartruese (located in France). The liqueur became popular in the late 19th century and was sold both locally and internationally. However, the French Government confiscated and liquidated the monks' business in 1901. The liquidator then sought to reproduce the monk's recipe in order to continue distribution under the old name "Chartreuse". As trustee of the business's estate the liquidator claimed he owned legal title to the international mark.

    Ever perseverant, the monks moved to Spain and continued to make the liquor by importing the required herbs from France. They distributed the old secret recipe under the name "Peres Chartreux" and stated on the bottle that it was the only liqueur that was made in the identical manner as that made in the Monastery of the Grande Chartruese. The monks also pursued legal action in several countries and distributed to the U.S. under the old label to preclude a claim of abandonment.

    SCOTUS found that a) the liquidation did not include rights to the trademark outside of France, as the business and good will associated with the mark arose from the secret process through which the liqueur was made and not the location, and b) the adoption of the new mark did not show the requisite intent to abandon. The Court found that the adoption of the new mark was necessary as the old mark could not be used within France, and it was natural that the monks would want to adopt a mark that could be used in France as well as abroad. The monks demonstrated their desire to avoid abandonment by their prompt assertion of trademark rights in other countries. See Baglin, Superior General of the Order of Carthusian Monks v. Cusenier Co., 221 U.S. 580 (1911).

    It should be noted, however, that U.S. courts (including the Second Circuit) will now typically apply a different intent test; i.e. "no intent to resume use in a reasonably foreseeable future." This is the precedential norm in the U.S. due to the language of the Lanham Act, and particularly relevant in the Edge Games trademark question due to the substantial platform generation gap mentioned previously. By this standard even a good faith intent to not abandon will not preclude abandonment if the intent to resume is vague, unspecific, or impossible within the reasonably foreseeable future, as may be the case in bankruptcy or insolvency.

    Courts seem to be slightly more lenient in the event of merger. The Sixth Circuit found that the mark of one of the merging companies was not abandoned if the name was still invoked or used in the course of business or where some portion of the work continued under the prior name. Stilson & Assocs. V. Stilson Consulting Group, 129 Fed. Appx. 993 (6th Cir. 2005). Similarly, the 9th Circuit recently found that sell off of remaining stock and inventory under the former trademark was sufficient "use" to negate the claim of abandonment. See Grocery Outlet Inc. v. Albertsons, Inc., No. 06-2173 (N.D. Calif. 2008)

This raises another major issue: use.

    The Quality and Quantity of Use

    Even if a trademark is still technically "in use" it may be deemed abandoned. The quality and nature of the use is therefore important when determining whether the use precludes abandonment. Courts will examine the number of goods sold that make use of the mark and whether the mark is being used for commercial purposes or token purposes. Generally the use must be continuous and deliberate. Regardless of this generalize standard, there is no black letter law that sets out whether a use precludes abandonment; typically this is determined on a case by case basis.

    However, U.S. companies may not hoard trademarks. In fact most countries have some regulation that prohibits "token" use of a mark to prevent cancellation. Trademark "maintenance" programs such as limited arranged sales will not protect a mark from abandonment. Exxon Corp. v. Humble Exploration Co., 695 F.2d 96 (5th Cir. 1985). Typically, when a mark is discontinued, any future intent to resume must be an actual good faith commercial use. This raises the question of whether re-releases of old titles like Bobby Bearing are merely "token" exercises to maintain a trademark employed otherwise exclusively as licensing tool.

    Conclusion

    Even in the U.S. it is not always easy to determine whether a trademark is abandoned. Frequently it is determined on a case by case basis. There are also other considerations such as geographical abandonment (when the non-use only occurs in a particular region) that may also play a role in a Court's determination. In the case of international abandonment of a mark there are dozens of other considerations at play, including presentation of evidence and burden of proof. It is imperative that a business takes these considerations into account when deciding to discontinue or suspend use of a mark.

    The Edge mark in particular raises quite a few grey areas as to what constitutes "abandonment". Although it is unlikely that the current licensing model used by Edge Games will be challenged in the near future, it would be interesting to see the outcome and to further interpret the definition of abandonment and dilution.

 

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