The impact of COVID-19 on U.S. business and commerce is obviously profound. Businesses of all types and sizes have been cutting back or stopping certain commercial activities, either in response to government orders or to customer and market behaviors. Whatever the cause, some companies are just not actively using some of their trademarked brands because of COVID-19’s economic suppression or the decline of demand for some trademarked products.
What is trademark abandonment?
Actual usage of a mark in the American marketplace establishes rights in and ownership of a trademark as a means of identifying the source of a product or service. When a trademark owner stops using a mark, the question arises whether the nonuse constitutes abandonment of the trademark. With so many trademark owners cutting back or ceasing operations during COVID-19, could the resulting nonuse of trademarks be seen as abandoning ownership rights to them?
For this purpose, “use in commerce” of a trademark “means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark,” to quote the federal Lanham Act. So, an occasional use just to avoid the appearance of abandonment is likely not enough – federal law requires regular use in the course of business.
The Lanham Act says that trademark abandonment in this context is shown by the owner stopping use “with intent not to resume such use,” which can be implied from the circumstances. Three years of nonuse is prima facie evidence of abandonment, meaning that the nonuse could be enough to infer abandonment, but that the owner could present in rebuttal evidence of intention to resume use.
To rebut an inference of abandonment, a business plan to resume use of a mark must have some definite structure and planned, concrete steps and not be merely a vague feeling of wanting to use it again someday.
Abandonment during COVID-19
In the case of nonuse because of the pandemic, the trademark owner could present explanations to rebut the inference of abandonment such as:
- Government orders to close nonessential businesses or to reduce service
- Financial stress from the pandemic requiring a pause in operations or production
- Temporary switch of business purpose and activity to meet COVID-19 needs
- Nonuse based on outside circumstances beyond the owner’s control
Trademark law requires a mark owner to periodically file with the U.S. Patent and Trademark Office (USPTO) a post-registration maintenance filing stating that the trademark is in continuous use. The author of a recent article on this topic in IPWatchdog recommends careful recordkeeping of dates of nonuse along with related reasons and circumstances. A trademark owner in these circumstances may opt to file a Declaration of Excusable Non-Use if they have had a pandemic-related period of trademark nonuse and plans to resume use.