When Has a Trademark Been Abandoned?
Once your competitor’s trademark has been abandoned, it should be free for you to use – in theory. But how do you know when a trademark has been abandoned? A recent case shows how tricky this issue can be.The 9th Circuit Court of Appeals – which has jurisdiction over much of the Western US – heard the case of Wells Fargo v ABD Insurance and Financial Services (who will be referred to in this case as “New ABD,” for reasons that will hopefully become clear.)
Case background
Wells Fargo acquired a company called ABD in 2007 (“Former ABD.”) The next year, Wells Fargo changed the name of their acquisition to Wells Fargo Insurance Services, and did not renew the ABD trademark registration, but – crucially – they nonetheless “continued to display the Former ABD mark on customer presentations and solicitations, and maintained the the abdi.com website and metatags.”
In 2012, the members of Former ABD went on to launch a competing company with the same name (hence, New ABD.) Wells Fargo filed suit, asserting claims of trademark, false affiliation and advertisement, and unfair competition. Wells sought a preliminary injunction – seeking a court ruling that would prevent New ABD from using the trademark pending final resolution of the case.
The district (lower) court denied Wells Fargo’s preliminary injunction request, holding, in part, that Wells had abandoned the ABD trademark. Wells took the case to the 9th Circuit Court of Appeals. The 9th Circuit held that “the district court abused its discretion in its analysis of Wells Fargo’s likelihood of success on the merits of its claims…”
OK, so how do we know when a mark has been abandoned?
The defendant, New ABD, raised trademark abandonment as a defense to Wells Fargo’s claim of trademark infringement. After all, you cannot be liable for infringing on a trademark that has been abandoned. And Wells had changed the name of the company in a public manner and had not maintained the ABD trademark registration. Shouldn’t that be enough?
It turns out that the answer is no, because the law imposes a high standard for a defendant who asserts a defense of trademark abandonment. The 9th Circuit said, in this case:
To prove abandonment of a mark as a defense to a claim of trademark infringement, a defendant must show that there was: “(1) discontinuance of trademark use and (2) intent not to resume such use.” Electro Source, LLC v. Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 935 (9th Cir. 2006). Even a “single instance of use is sufficient against a claim of abandonment of a mark if such use is made in good faith.” Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir. 1970). All bona fide uses in the ordinary course of business must cease before a mark is deemed abandoned. (Emphasis mine.)
So the defendant must show both discontinuance of use and intent not to resume such use in order to succeed with an abandonment defense. In this case Wells had expressed its intent (satisfying element #2), but had not actually discontinued use, thereby failing to satisfy element #1
The moral
There are a few takeaways here. The first is simple: never assume that your competitor has abandoned their trademark unless you have done your due diligence and have established beyond any doubt that they are no longer using the mark – and even then, proceed with extreme caution.
The second is that courts can and do make mistakes. In this particular claim, Wells appears to have been in the right – but the district court denied their preliminary injunction motion nonetheless, and they had to expend the substantial cost of an appeal in order to have a hope of success. Wells may have been able to have it both ways – they established a new brand and let the old one go, but may still be able to prevent their competitor from using the mark. But this all came at a significant price tag for both parties.
