Do COVID-19 Closures Reset the Clock for Trademark Incontestability?

Do COVID-19 Closures Reset the Clock for Trademark Incontestability?

Apr 23, 2020

Client Alert

Brownstein Client Alert, April 23, 2020

Temporary business closures due to COVID-19 have inevitably forced trademark owners to rethink their brand protection strategies. In a previous alert, we advised shuttered businesses to delay certain filings with the United States Patent and Trademark Office (USPTO) because they require current trademark use in commerce. However, some USPTO filings not only require current use—they also require continuous use in commerce. One such filing is the Declaration of Incontestability, which confers important benefits to trademark owners following five years of continuous trademark use. As some businesses now appear poised for reopening, trademark owners are rightfully asking themselves: do I have to restart the five-year clock of continuous use to claim incontestability?

At a Glance—Incontestable Trademarks

Under the federal Trademark Act, “… [a] registered mark [that] has been in continuous use for five consecutive years subsequent to the date of such registration and is still in use in commerce, shall be incontestable ….”1 Incontestability is neither automatic nor mandatory. To secure an incontestable trademark, the owner must file a Declaration of Incontestability with the USPTO certifying, among other things, that the requisite five years of continuous use after registration has been satisfied. However, failing to file the declaration does not result in the loss of any rights.

While not a mandatory filing, obtaining incontestability provides the highest level of trademark protection afforded under federal law. Among other benefits, the designation provides a shield against some of the most common attacks on trademark registrations. For example, an incontestable trademark cannot be invalidated on the grounds that the mark is merely descriptive.2 Instead, incontestable trademarks can only be challenged on limited grounds, such as abandonment or fraud.3

Importantly, the USPTO simply rubber stamps the Declaration of Incontestability—leaving it up to courts to decide the validity of the filing in the context of a trademark infringement lawsuit. (Thus, you should not be lulled into a false sense of security just because the USPTO accepts your declaration.) If a court finds insufficient evidence of the requisite five years of continuous use to support the declaration, the court will invalidate the trademark’s incontestable status and may invalidate the entire trademark registration if it believes the declaration was fraudulently filed.4 Given these high stakes, trademark owners should take pause in filing a Declaration of Incontestability when they’ve had interruptions in their business operations.

What Constitutes “Continuous Use” of a Trademark?

Unfortunately, courts have interpreted the “continuous use” language of the Trademark Act different ways—providing no clear guidance for trademark owners. Some courts have applied a relatively strict reading of the phrase, requiring that “the use be maintained without interruption” and finding that “even short periods of nonuse can break the chain of continuous use.”5 Indeed, the Ninth Circuit has found even one year of nonuse sufficient to break the continuous use of a trademark.6

In contrast, other courts have determined that minor interruptions in business operations do not break the chain of continuous use. For example, a New York court found that the famous Tavern on the Green restaurant had continuous trademark use despite a temporary closure for renovations.7 In a decision affirmed by the Second Circuit, that same court found that a Cuban cigar company’s continuous use was not broken when its exports to the United States were interrupted by the American government’s embargo of Cuba.8

Notably, even those courts applying a strict interpretation of the “continuous use” language indicate they may excuse temporary nonuse under certain circumstances.9 In general, most courts appear to consider the following factors relevant in determining whether temporary nonuse breaks the chain of continuous use:

  • the trademark owner’s intent at the time of the nonuse (i.e., whether the owner intends to resume in the future);
  • whether continuing goodwill associated with the trademark persists following the nonuse; and
  • whether other business-related activities, such as continued advertising, may bridge the gap in nonuse.
Continuous Trademark Use and COVID-19

It is unclear exactly how courts will view gaps in trademark use due to impacts of the COVID-19 pandemic. Under a strict reading of the Trademark Act’s incontestability requirements, the five-year clock may reset following even brief business closures, regardless of whether the closure was forced by government mandate. However, given the extreme circumstances surrounding this pandemic, we think it is more likely that courts will show flexibility in evaluating whether COVID-19-related closures affect incontestability.

To avoid breaking the chain of continuous use, shuttered businesses should engage in activities aimed at bridging the gap in use, for example, maintaining use of trademarks on their websites and periodically communicating with customers through email/direct mail. Businesses can also retain goodwill among consumers by distributing “feel good” advertisements related to the COVID-19 pandemic and response. Further, by taking future reservations and/or advertising future events, a business can demonstrate its intent to reopen and resume trademark use. Engaging in these types of activities will bolster a claim of continuous use even if no goods or services are sold during a COVID-19-related closure.

Perhaps most importantly, we think it is highly unlikely that a court would invalidate an entire registration should a reopened business file a Declaration of Incontestability that is later invalidated. To do so, a court would have to find that the declaration was filed with the willful intent to deceive the USPTO—typically a very difficult showing to make. Generally, as long as you have a reasonable belief that you’ve met the statutory requirements, your registration is likely safe from cancellation.

Just like the pandemic itself, this issue is unprecedented. The trademark attorneys at Brownstein are available to advise you on filing Declarations of Incontestability and to assist with any of your brand management needs.

Information is changing daily and some of the content included in this alert may have changed or been updated since publication.

Click here to read more Brownstein alerts on the legal issues the coronavirus threat raises for businesses.

This document is intended to provide you with general information regarding the impact of COVID-19 on trademarks. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

 


1 15 U.S.C. § 1065 (emphasis added).

2 See Park N’ Fly, Inc. v. Dollar Park N’ Fly, Inc., 469 U.S. 169 (1985).

3 See 15 U.S.C. §§ 1115(b)(1)–(9).

4 See Robi v. Five Platters, Inc., 918 F.2d 1439, 1444 (9th Cir. 1990) (“Any false statements made in an incontestability affidavit may jeopardize not only the incontestability claim, but also the underlying registration.”).

5 Spin Master, Ltd. v. Zobmondo Entertainment, LLC, 944 F.Supp.2d 830, 851 (C.D. Cal. 2012); see also Brittingham v. Jenkins, 914 F.2d. 447 (4th Cir. 1990) (“The Lanham Act contains no exceptions to the five-year continuous use requirement for incontestability…”).

6 See Casual Corner Assocs., Inc. v. Casual Stores of Nev., Inc., 493 F.2d. 709 (9th Cir. 1974).

7 See City of New York v. Tavern on the Green, L.P., 427 B.R. 233, 242 (S.D.N.Y. 2010).

8 See generally Cuban Cigar Brands v. Upmann Intern., 457 F.Supp. 1090 (S.D.N.Y. 1978), aff’d, 607 F.2d 995.

9 See, e.g., Casual Corner, 493 F.2d at 713 (indicating that a party could bridge the gap in actual sales if a showing were made of goodwill remaining after the use was halted and that the party had an intent to resume use); see also Spin Master, 944 F.Supp.2d at 854 (noting that a party could potentially rely on advertising and promotional material to show continuous use).

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