Intellectual Property Law

Chapter 5 Lecture Notes

Major points to be addressed in the chapter materials include the following:

1. Between years five and six after registration and in the year before the end of each tenyear
period after registration the registrant must file an Affidavit or Declaration of Use,
verifying that the mark is still in use in commerce in connection with the goods/services
identified in the registration. A specimen showing use of the mark (for each class of
goods/services) must be submitted. Failure to file or timely file the Declaration within the
stated period (or within a six-month grace period) will lead to cancellation of the
registration. (Although the registration may be cancelled, the owner may still continue to
use the mark; this usage will result in common law rights for the owner).

2. If there have been changes in ownership of the mark since registration, the registrant
must prove its ownership of the mark and demonstrate the chain of title that allows it
to file the Declaration of Use.

3. If the mark has been changed since the date of registration, the USPTO will
determine if the change is material. If so, the USPTO will refuse the Declaration of
Use on the basis that the mark in use is a new mark for which a new registration
should be sought. If the change is not material, the USPTO will accept the
Declaration (and the registrant will be encouraged to amend its registration to show
the new version of the mark).

4. If the mark is not in use in commerce, the registrant may submit evidence showing
why nonuse is excusable (labor strikes, catastrophe, etc.).

5. If the mark is on the Principal Register and has been in continuous use for five years
and there has been no decision adverse to the registrant’s claim of ownership of the
mark, the registrant should file a Section 15 Affidavit of Incontestability, which will
significantly reduce or narrow the challenges that can be made to the mark. For
example, incontestability precludes challenges to a mark on the basis that it is
descriptive or confusingly similar to another mark. Registrations on the Supplemental
Register cannot become incontestable.

6. Trademark registrations have a duration of ten years. Within one year of the
expiration date (or within a six-month grace period thereafter), and every ten years
thereafter, registrants must renew the registration or it will be automatically cancelled
(although common law rights to the mark may still exist if the mark is still in use).
The new renewal period is for another ten years.

7. Requirements for renewals are similar to those for filing a Declaration of Continued
Use, namely:

• The document must be filed by the owner of the mark and a chain of title must be
shown at the USPTO
• If the mark is materially different, the renewal application will be refused
• Only extreme circumstances justifying nonuse will be permitted

8. Rights to trademarks can be forfeited due to abandonment, failure to protect marks, or
improper assignment or licensing of marks.

9. A mark will be deemed abandoned when it becomes a generic name or use of it is
discontinued with intent not to resume use. Nonuse for three consecutive years
creates a presumption the mark has been abandoned.

10. A mark can become generic through consumer misuse of the mark. If consumers
begin to call the product or service offered under the mark by the mark itself (“Hand
me a Kleenex”) the mark may become generic and trademark rights will be lost.

11. Marks can be abandoned through nonuse. Mere cessation of use of the mark is
insufficient; the nonuse must be coupled with an intent not to resume use for
abandonment to occur. Once a party can demonstrate nonuse for three years, the
burden shifts to the trademark owner to rebut the presumption and prove the mark has
not been abandoned. Use anywhere in the United States is sufficient to avoid
abandonment, although the use cannot be a mere token use. The trademark owner
may also attempt to show extreme circumstances (labor strikes, acts of God) that
would justify nonuse.

12. Abandonment causes a loss of common law rights as well as rights under the Lanham
Act.

13. To avoid loss of trademark rights through genericide or abandonment, many
companies institute trademark compliance policies to instruct others on use and
display of the mark. Some guidelines for proper usage follow:

• The mark should be displayed prominently
• The mark should be used in connection with the appropriate goods/services
• The registration symbol should be used because it informs the public that
trademark rights are claimed
• The mark should be used consistently
• The owner of the mark should be identified
• The mark should not be used in the plural or possessive form
• The mark should be used as an adjective and not as a noun to ensure it does not
become generic
• The mark should not be used in a slang fashion

14. To maintain rights to marks, trademark owners should docket the critical dates for
renewals, etc., subscribe to the OG or pay for a watch service to detect infringing
marks, and be alert to competing uses in the marketplace.

15. Use of another’s mark may be acceptable if it is a fair use. Informing the public that
one’s products fit with those of another is permissible or other comparative
advertising is acceptable (so long as it is true).

16. A trademark may be assigned to another if the goodwill symbolized by the mark is
assigned with it. An assignment without goodwill is ineffective to transfer trademark
rights. Assignments of marks in which federal rights are claimed must be in writing.
The written agreement should recite that the mark and the goodwill symbolized by
the mark are being transferred.

17. If all of the assets of a business are sold, it is assumed that all marks and their
goodwill pass with the other assets, even if they are not specifically mentioned in the
sales documents.

18. While there is no statutory requirement to record the assignment with the USPTO, it
should be recorded because it helps establish the chain of title to the mark.
Assignments may be recorded electronically using ETAS.

19. Marks that are the subject of pending intent-to-use applications cannot be assigned
prior to filing a statement of use with the USPTO unless certain circumstances exist
(this prevents trafficking of intent-to-use applications; moreover, there can be no
goodwill attached to a mark that has not been used). Assignment of a mark that is the
subject of an ITU application prior to filing the statement of use is not only invalid
but also voids the underlying application or any resulting registration (absent special
circumstances).

20. A party may license the use of its mark to another. The license may be exclusive or
nonexclusive. The licensor will lose its rights, however, it if does not control the
nature and quality of the goods/services offered by the licensee. Thus, license
agreements should include quality control provisions to ensure the licensee offers
goods/services consistent with those offered by the trademark owner. Failure of the
licensor to exercise quality control will result in a “naked license” and loss of the
licensor’s rights in the mark. Most licenses are viewed as private agreements between
parties and are not recorded at the USPTO.

21. Trademarks can be used as collateral to secure a trademark owner’s promise to
perform some obligation. If the trademark owner defaults in his/her obligation, the
secured party will seize the mark(s).

22. If a trademark licensor files a bankruptcy petition, the licensee may well lose its
ability to use the marks licensed if the trustee decides to reject the license agreement
(for the benefit of the bankrupt estate). This could dramatically affect a licensee’s
ability to operate its business although the licensee will have a claim for breach of
contract and damages (although damages in bankruptcy actions are often just pennies
on the dollar).