In Retrobrands USA LLC v. Intercontinental Great Brands LLC, the Trademark Trial and Appeal Board (TTAB) found that Retrobrands failed to prove that the well-known trademark CHICLETS for chewing gum had been abandoned.  The TTAB also found that Intercontinental affirmatively established intent to resume use.  The non-precedential decision illustrates the challenges of proving nonuse abandonment, and specifically, a registrant's intent not to resume use.  It also serves as a guide for legacy brand owners to avoid abandonment of valuable trademarks.

Abandonment

The two elements of a nonuse abandonment claim are (1) nonuse of the mark and (2) intent not to resume use.  A showing of three consecutive years of nonuse creates a rebuttable presumption of abandonment and shifts the burden to the owner to prove use of the mark or intent to resume use.  If the challenger cannot establish three years of nonuse, it has the difficult task of proving intent not to resume use. 

Facts of the Case

Intercontinental is the IP holding company for Mondelēz International, which sublicenses various IP rights to several Mondelēz entities, including Mondelēz North America.  Until 2016, Mondelēz North America marketed and sold CHICLETS gum in the U.S.  In early 2016, Mondelēz North America decided to stop selling CHICLETS, and ended sales later in 2016.  In 2017, Retrobrands applied to register the CHICLETS trademark, before another Intercontinental sublicensee—Mondelēz Exports—resumed U.S. CHICLETS sales in 2018.

Arguments

The parties did not dispute Intercontinental's period of non-use between 2016, when Mondelēz North America stopped sales of CHICLETS gum, and 2018, when Mondelēz Exports, began selling CHICLETS in the U.S.  This less-than-two-year nonuse period left Retrobrands with the burden to prove Intercontinental's intent not to resume use.  Retrobrands argued that:

  1. Mondelēz North America's decision to discontinue CHICLETS sales in 2016, its declining revenue from CHICLETS up to that point, and its failure to invest in the brand all evidenced an intent not to resume use;
  2. The absence of the CHICLETS brand from the Mondelēz U.S. website and its corporate annual reports further evidenced intent not to resume use;
  3. Mondelēz customer service emails and printouts from third-party seller websites established that Intercontinental had no intention to resume use; and
  4. Neither Mondelēz Exports' “post-abandonment use” in 2018, nor a single email between Intercontinental and another Mondelēz division prior to Retrobrands' 2017 application, showed Intercontinental's intent to resume use before Retrobrands filed its application.

Though the parties did not dispute Mondelēz North America's lapse in use of CHICLETS, Intercontinental claimed Mondelēz Exports intended to resume use based on evidence that, in September 2016, Mondelēz Exports was considering whether to pick up the CHICLETS brand the U.S., which it continually assessed during 2017, and eventually pursued in 2018.  

The TTAB Decision

Observing that “[i]ntent is difficult to prove” the TTAB concluded that “on balance, Petitioner's position is based more on speculation than fact.”  Much of the TTAB's reasoning was based on the notion that Mondelēz North America's termination of sales—and even its express statements of intent to abandon the mark—could not establish that all Mondelēz companies had this intent.  

Retrobrands argument relied heavily on Mondelēz North America customer service emails stating that “[a]t this time there are no plans to bring back this product.”  Yet the TTAB reasoned that Retrobrands could not establish that “this product” in the Mondelēz customer service emails referred to CHICLETS, or that any response from Mondelēz customer service, though it came from “Mondelēz,” permitted an inference of intent as to all Mondelēz entities.

Accordingly, the TTAB distinguished Hiland Potato Chip Co. v. Culbro Snack Foods, Inc., 720 F.2d 981 (8th Cir. 1983), which found that a court can infer intent not to resume use from “[a] public announcement of intention to discontinue the sale of a product,” reasoning that the customer service email could only apply to Mondelēz North America, not Mondelēz Exports.  The TTAB also rejected Retrobrands' reliance on Parfums Nautee Ltd. v. American Int'l Indus., 22 USPQ2d 1306 (TTAB 1992), which rejected “residual goodwill generated through postabandonment sales” as a defense to abandonment, noting that plaintiff in Parfums enjoyed a presumption of abandonment based on a three-year nonuse period, whereas Retrobrands did not.

Though unnecessary to its holding that Retrobrands failed to prove intent not to resume use, the TTAB went on to find that Intercontinental established an intent to resume use.  In doing so, the TTAB rejected Retrobrands' evidentiary arguments regarding three Mondelēz emails between September 2016 and November 2017 that discussed future use of the CHICLETS mark, even though it excluded speculative testimony “alluding to conversations that may have happened within Mondelēz Exports about picking up the CHICLETS brand.”  These emails, together with the 2018 sales, were sufficient to infer that, in 2016, Mondelēz Exports was considering whether to pick up the CHICLETS brand.  The TTAB also rejected Retrobrands arguments that Mondelēz Exports merely sought to reserve rights in the mark for an unspecified future date, and that its 2018 sales were token sales, noting that the record “reveal[ed] sales on a commercial level.”

Conclusion

The TTAB's decision illustrates the complexity and difficulty of proving abandonment, and specifically, intent not to resume use when the mark at issue is licensed and available for use across a range of related companies, and highlights the potential benefits of structuring a trademark portfolio to allow for affiliate use to avoid an inference of abandonment.  Such approach may accord flexibility to cycle, pause, and refresh legacy brands with a lesser risk of abandonment.  Even so, such approach should be carefully managed in the context of litigation and potentially burdensome discovery obligations across affiliate entities.

The case is Retrobrands USA LLC v. Intercontinental Great Brands LLC, Cancellation No. 9206664, 2020 WL 2853457 (T.T.A.B. May 29, 2020).

Originally published by Finnegan, July 2020

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