Rebranding has become a corporate fact of life. As the American economy emerges from the “great recession,” even established brands struggle to remain relevant in a changed economy. Witness General Motors' recent “retirement” of its MR. GOODWRENCH brand. After more than 30 years, General Motors recently announced its decision to phase out use of this well-known service mark.

Rebranding–whether as a result of an intentional marketing decision or corporate restructuring–presents substantial challenges to brand holders. If managed correctly, rebranding can allow a trademark holder to seamlessly transfer its established goodwill from one brand to another. But if managed incorrectly, rebranding efforts can lead to the abandonment of trademark rights, cause marketplace confusion and allow others to unfairly trade on the goodwill associated with an established mark.

Understanding the circumstances that can lead to trademark abandonment, as well as core strategies for keeping impacted trademarks alive, can help in-house counsel avoid these risks. By properly managing the trademark implications for rebranding efforts, companies can respond to market imperatives and business transitions while still protecting the value of the goodwill that resides in their existing brands.

Trademark Abandonment

Trademark rights are created and maintained through use of a mark in commerce. Under federal trademark law, trademark abandonment occurs when the holder of a mark discontinues its use with an intent not to resume use. Where a trademark holder discontinues use of a mark for three consecutive years, courts will presume that the mark has been abandoned. But, abandonment can take place in less than three years, and can even be instantaneous with discontinued use of a mark if the trademark holder clearly expresses its desire not to resume use. Once abandoned, a trademark enters the public domain and may be available for adoption by a competitor or the public at large.

A trademark may become vulnerable to allegations of abandonment through a variety of circumstances. Disputes over alleged trademark abandonment often arise where brand holders engage in marketing-driven rebranding campaigns or choose to change the scope of their trademark use. For example, when the well-known plaintiffs' bar organization Association of Trial Lawyers of America (ATLA) decided to rebrand their association as the American Association for Justice, they soon faced a dispute over whether they had abandoned rights to the federally registered ATLA mark. Only after extensive discovery demonstrated that the association had never fully stopped using its mark did the court in American Association for Justice v. The American Trial Lawyers Association reject the abandonment claim.

Non-marketing forces may also give rise to abandonment claims. For example, abandonment claims may arise where a brand holder suspends business operations because of supply interruptions or economic difficulties, or where a corporate brand owner is acquired or restructured. For example, in Crash Dummy Movie, LLC v. Mattel, Inc., Mattel faced claims that it had abandoned the mark CRASH DUMMIES because it had not used the mark–and had let its registration lapse–after acquiring the mark from its previous owner. A former licensee of the mark sought to register the mark in its own name, arguing Mattel's opposition to the registration should be rejected because Mattel's eight-year period of non-use constituted presumptive abandonment. To overcome the presumption, Mattel needed substantial evidence of its ongoing intent to resume use of the mark during the period of non-use. Ultimately, Mattel demonstrated that intent through evidence of its overall handling of the entire trademark portfolio obtained from the previous owner, information regarding necessary safety re-tooling and internal employee testimony and documents showing ongoing efforts directed toward the reintroduction of the branded line. While Mattel's evidence ultimately proved persuasive, a definitive finding of non-abandonment and rejection of the new registration only occurred after lengthy proceedings in both the Trademark Trial and Appeal Board and the Court of Appeals for the Federal Circuit.

Practical Strategies For Avoiding Trademark Abandonment

By implementing strategies to avoid trademark abandonment, brand holders can both protect their investment in established brands and keep open options for future brand use. These strategies for successful brand and trademark management during times of transition include:

  • Consider even limited use of the mark. By definition, a mark in use has not been abandoned. But the use must be “bona fide” and not a “mere token” or sham use to keep a mark active. Where a brand holder decides to transition to a new brand image, it can maintain its existing trademark rights by continuing to use the old mark as sub-brand or on narrower categories of goods or services. Examples of such creative continued use include Kraft's sub-branding of its HAND-SNACK line with the name MR. SALTY (acquired from Nabisco) or Dial's use of the BRECK mark on a hotel line of shampoos after discontinuing its BRECK-branded consumer retail products.
  • Maintain license agreements. Trademark use by a licensee inures to the benefit of the trademark owner and may be sufficient to maintain trademark rights, even where the trademark owner stops its own use of the mark. Accordingly, even where a trademark owner decides to stop promoting a brand, it should carefully consider maintaining any existing license agreements.
  • Monitoring trademark use in joint efforts. As with licenses, when related companies legitimately use a mark, the use inures to the benefit of the trademark holder. But, trademark holders should be careful to properly document the corporate formalities allowing use by related companies. For example, in Wind Turbine Indus. Corp. v. Jacobs Wind Electrical Company, Inc., an original trademark owner sought to avoid a finding of abandonment based on the claim that it had participated in a joint venture that made authorized use of the mark. The court rejected this argument after finding that the mark holder had assigned its rights to the alleged joint venture.
  • Carefully control market messaging. Brand holders should be careful to make sure marketing communications do no kill-off their trademark rights. Even where a trademark holder decides to suspend all use of a given mark, it should carefully consider any definitive statements regarding the future of discontinued brands. Marketing materials that clearly express the brand holder's intention not to resume use of a mark may be compelling evidence of abandonment. If a brand holder wants to avoid abandonment of its discontinued trademark, it should refrain from definitive internal or external statements regarding the future of a brand.
  • Maintain trademark registrations. Courts often view lapsed registrations as evidence of a trademark owner's intention to abandon a mark. Where a trademark owner has a bona fide intent to resume use, keeping registrations current allows brand owners the greatest flexibility when it comes to future use, sale or licensing of a mark.
  • Document brand maintenance efforts. Where corporate restructuring or economic circumstances force the suspension of trademark use, brand holders should document their efforts to resume use. As detailed in Crash Dummy Movie, LLC v. Mattel, Inc., internal records evidencing efforts to maintain trademark rights and resume use of a mark can be crucial to avoid claims of abandonment.

Read Chris Larus' previous column. Read Chris Larus' next column.

Rebranding has become a corporate fact of life. As the American economy emerges from the “great recession,” even established brands struggle to remain relevant in a changed economy. Witness General Motors' recent “retirement” of its MR. GOODWRENCH brand. After more than 30 years, General Motors recently announced its decision to phase out use of this well-known service mark.

Rebranding–whether as a result of an intentional marketing decision or corporate restructuring–presents substantial challenges to brand holders. If managed correctly, rebranding can allow a trademark holder to seamlessly transfer its established goodwill from one brand to another. But if managed incorrectly, rebranding efforts can lead to the abandonment of trademark rights, cause marketplace confusion and allow others to unfairly trade on the goodwill associated with an established mark.

Understanding the circumstances that can lead to trademark abandonment, as well as core strategies for keeping impacted trademarks alive, can help in-house counsel avoid these risks. By properly managing the trademark implications for rebranding efforts, companies can respond to market imperatives and business transitions while still protecting the value of the goodwill that resides in their existing brands.

Trademark Abandonment

Trademark rights are created and maintained through use of a mark in commerce. Under federal trademark law, trademark abandonment occurs when the holder of a mark discontinues its use with an intent not to resume use. Where a trademark holder discontinues use of a mark for three consecutive years, courts will presume that the mark has been abandoned. But, abandonment can take place in less than three years, and can even be instantaneous with discontinued use of a mark if the trademark holder clearly expresses its desire not to resume use. Once abandoned, a trademark enters the public domain and may be available for adoption by a competitor or the public at large.

A trademark may become vulnerable to allegations of abandonment through a variety of circumstances. Disputes over alleged trademark abandonment often arise where brand holders engage in marketing-driven rebranding campaigns or choose to change the scope of their trademark use. For example, when the well-known plaintiffs' bar organization Association of Trial Lawyers of America (ATLA) decided to rebrand their association as the American Association for Justice, they soon faced a dispute over whether they had abandoned rights to the federally registered ATLA mark. Only after extensive discovery demonstrated that the association had never fully stopped using its mark did the court in American Association for Justice v. The American Trial Lawyers Association reject the abandonment claim.

Non-marketing forces may also give rise to abandonment claims. For example, abandonment claims may arise where a brand holder suspends business operations because of supply interruptions or economic difficulties, or where a corporate brand owner is acquired or restructured. For example, in Crash Dummy Movie, LLC v. Mattel, Inc., Mattel faced claims that it had abandoned the mark CRASH DUMMIES because it had not used the mark–and had let its registration lapse–after acquiring the mark from its previous owner. A former licensee of the mark sought to register the mark in its own name, arguing Mattel's opposition to the registration should be rejected because Mattel's eight-year period of non-use constituted presumptive abandonment. To overcome the presumption, Mattel needed substantial evidence of its ongoing intent to resume use of the mark during the period of non-use. Ultimately, Mattel demonstrated that intent through evidence of its overall handling of the entire trademark portfolio obtained from the previous owner, information regarding necessary safety re-tooling and internal employee testimony and documents showing ongoing efforts directed toward the reintroduction of the branded line. While Mattel's evidence ultimately proved persuasive, a definitive finding of non-abandonment and rejection of the new registration only occurred after lengthy proceedings in both the Trademark Trial and Appeal Board and the Court of Appeals for the Federal Circuit.

Practical Strategies For Avoiding Trademark Abandonment

By implementing strategies to avoid trademark abandonment, brand holders can both protect their investment in established brands and keep open options for future brand use. These strategies for successful brand and trademark management during times of transition include:

  • Consider even limited use of the mark. By definition, a mark in use has not been abandoned. But the use must be “bona fide” and not a “mere token” or sham use to keep a mark active. Where a brand holder decides to transition to a new brand image, it can maintain its existing trademark rights by continuing to use the old mark as sub-brand or on narrower categories of goods or services. Examples of such creative continued use include Kraft's sub-branding of its HAND-SNACK line with the name MR. SALTY (acquired from Nabisco) or Dial's use of the BRECK mark on a hotel line of shampoos after discontinuing its BRECK-branded consumer retail products.
  • Maintain license agreements. Trademark use by a licensee inures to the benefit of the trademark owner and may be sufficient to maintain trademark rights, even where the trademark owner stops its own use of the mark. Accordingly, even where a trademark owner decides to stop promoting a brand, it should carefully consider maintaining any existing license agreements.
  • Monitoring trademark use in joint efforts. As with licenses, when related companies legitimately use a mark, the use inures to the benefit of the trademark holder. But, trademark holders should be careful to properly document the corporate formalities allowing use by related companies. For example, in Wind Turbine Indus. Corp. v. Jacobs Wind Electrical Company, Inc., an original trademark owner sought to avoid a finding of abandonment based on the claim that it had participated in a joint venture that made authorized use of the mark. The court rejected this argument after finding that the mark holder had assigned its rights to the alleged joint venture.
  • Carefully control market messaging. Brand holders should be careful to make sure marketing communications do no kill-off their trademark rights. Even where a trademark holder decides to suspend all use of a given mark, it should carefully consider any definitive statements regarding the future of discontinued brands. Marketing materials that clearly express the brand holder's intention not to resume use of a mark may be compelling evidence of abandonment. If a brand holder wants to avoid abandonment of its discontinued trademark, it should refrain from definitive internal or external statements regarding the future of a brand.
  • Maintain trademark registrations. Courts often view lapsed registrations as evidence of a trademark owner's intention to abandon a mark. Where a trademark owner has a bona fide intent to resume use, keeping registrations current allows brand owners the greatest flexibility when it comes to future use, sale or licensing of a mark.
  • Document brand maintenance efforts. Where corporate restructuring or economic circumstances force the suspension of trademark use, brand holders should document their efforts to resume use. As detailed in Crash Dummy Movie, LLC v. Mattel, Inc., internal records evidencing efforts to maintain trademark rights and resume use of a mark can be crucial to avoid claims of abandonment.

Read Chris Larus' previous column. Read Chris Larus' next column.