Opinion ID: 411741
Heading Depth: 1
Heading Rank: 2

Heading: abandonment of humble

Text: 7 The district court framed the abandonment issue thus: Is the limited use of a famous trademark solely for protective purposes a use sufficient to preclude abandonment under the common law and the Lanham Act? It answered the question in the affirmative. Plaintiff-Appellee withdrew its Texas and common law claims in the district court, so the resolution of the abandonment issue must focus on the federal standards for abandonment set forth in the Lanham Act. 8 Under the Act, 9 A mark shall be deemed to be abandoned-- 10 (a) When its use has been discontinued with intent not to resume use. Intent not to resume may be inferred from circumstances. Nonuse for two consecutive years shall be prima facie abandonment. 11 15 U.S.C. Sec. 1127 (1982). The burden of proof is on the party claiming abandonment, but when a prima facie case of trademark abandonment exists because of nonuse of the mark for over two consecutive years, the owner of the mark has the burden to demonstrate that circumstances do not justify the inference of intent not to resume use. See Sterling Brewers, Inc. v. Schenley Industries, Inc., 441 F.2d 675, 679 (Cust. & Pat.App.1971). 12 Appellant argues that Exxon has not used the HUMBLE mark since its changeover program. Since that time, Exxon has 1) sold existing inventory of packaged products bearing the name Humble Oil and Refining Company; 2) made periodic sales of nominal amounts of Exxon gasoline, motor oil and grease in pails bearing the names HUMBLE and EXXON; 3) sold Exxon bulk gasoline and diesel fuel to selected customers, who received HUMBLE invoices, through three corporations organized for that purpose; and 4) sold 55-gallon drum products from the Baytown, Texas refinery, all bearing a stencil with the names HUMBLE and EXXON. 13 The existing inventory was depleted by mid-1974; the sale of 55 gallon drums began in 1977. Whether or not these sales are uses for the purposes of 15 U.S.C. Sec. 1127, the period between those sales was longer than two years, and under the Lanham Act, nonuse for two consecutive years is prima facie abandonment. 15 U.S.C. Sec. 1127. During that period between sales of inventory and sales of 55-gallon drum products, 2 Exxon can point to only two types of sales as possible uses. As earlier described, Exxon made limited sales of packaged products with both EXXON and HUMBLE on the labels to targeted customers in these amounts: $9.28 in 1973, $.0 in 1974, $140.12 in 1975 and $42.05 in 1976. Second, products in bulk form and not bearing a trade name or mark were sold to selected customers who received the explanation that they were receiving Exxon products. The only use of HUMBLE in connection with these sales was on the invoices sent to the customers. The issue, thus, is whether these two categories of arranged sales through the trademark protection program during that period constitute use sufficient to avoid prima facie abandonment. 14 Appellant relies primarily on La Societe Anonyme des Parfums LeGalion v. Jean Patou, Inc., 495 F.2d 1265 (2d Cir.1974), and Procter and Gamble v. Johnson & Johnson, Inc., 485 F.Supp. 1185 (S.D.N.Y.1979), aff'd without opinion, 636 F.2d 1203 (2d Cir.1980), to support its argument that arranged sales are nonuse. In Jean Patou, the plaintiff LeGalion, a French perfume manufacturer, had sold its perfume under the trademark SNOB in a number of foreign countries but was unable to sell its product in the United States because of Patou's registration for the mark in this country. Claiming that Patou had not established rights in the mark, LeGalion filed suit. The facts revealed that Patou had made 89 sales of perfume over a 20-year period and engaged in no advertising. The court found that Patou's real purpose in making the 89 sales was to keep a competitor at bay and that this purely defensive token use was insufficient to obtain enforceable rights in the mark. Id. at 1273-74. The court observed: The token sales program engaged in here is by its very nature inconsistent with a present plan of commercial exploitation. Id. at 1273. It continued: A trademark maintenance program obviously cannot in itself justify a minimal sales effort, or the requirement of good faith commercial use would be read out of the trademark law altogether. Id. at 1273 n. 10. 15 In Procter and Gamble, the plaintiff maintained a Minor Brands Program for the purpose of protecting its ownership rights in brand names not being actively used in commerce on its products. Employees not normally involved in Procter and Gamble's (P & G's) merchandising operation took an active P & G product, labeled it with a minor brand, and shipped it to customers. For example, P & G's Prell shampoo was bottled under thirteen different minor brand labels. Fifty units of each were shipped annually to at least ten states. The court held that the plaintiff had no enforceable rights in the mark SURE for tampons on the basis of its inclusion in this minor brands program. 16 The district court below distinguished these cases because they treat the acquisition or adoption of a trademark that has not developed goodwill. According to the court, Exxon's use of the HUMBLE mark in commerce for protective purposes is a good faith use because of the residual goodwill built up in the mark. Despite the trial court's distinction, section 1127 of the Lanham Act, without mentioning goodwill, requires continued use of a mark or intent to resume use to avoid a finding of abandonment. The first requirement is not present on this record. The limited sales of packaged products to targeted customers and the arranged sales of bulk products through the three shell corporations were not sufficient uses to avoid prima facie proof of abandonment under the statute. The HUMBLE trademark was not used to identify the source of the goods. The packaged products were Exxon products with HUMBLE used as a secondary name. Of course, the fact that a product bears more than one mark does not mean that each cannot be a valid trademark. Old Dutch Foods, Inc. v. Dan Dee Pretzel & Potato Chip Co., 477 F.2d 150, 154 (6th Cir.1973). For example, in Old Dutch the defendant had used concurrent marks, OLD DUTCH and DAN DEE, on all his products for over thirty years. Each mark must, however, be a bona fide mark. See Blue Bell, Inc. v. Farah Manufacturing Company, Inc., 508 F.2d 1260, 1267 (5th Cir.1975). 17 In this case, the mark HUMBLE was used only on isolated products or selected invoices sent to selected customers. No sales were made that depended upon the HUMBLE mark for identification of source. To the contrary, purchasers were informed that the selected shipments would bear the HUMBLE name or be accompanied by an HUMBLE invoice but were the desired Exxon products. That is, the HUMBLE mark did not with these sales play the role of a mark. 3 That casting, however, is central to the plot that the Lanham Act rests on the idea of registration of marks otherwise born of use rather than the creation of marks by the act of registration. That precept finds expression in the Lanham Act requirement that to maintain a mark in the absence of use there must be an intent to resume use. That expression is plain. The Act does not allow the preservation of a mark solely to prevent its use by others. Yet the trial court's reasoning allows precisely that warehousing so long as there is residual good will associated with the mark. Exxon makes the same argument here. While that may be good policy, we cannot square it with the language of the statute. In sum, these arranged sales in which the mark was not allowed to play its basic role of identifying source were not use in the sense of section 1127 of the Lanham Act. 18 In finding that there is no reason of competitive fairness for finding an abandonment because the HUMBLE mark had amassed enormous residual goodwill, the district court relied on two decisions of the Trademark Trial and Appellate Board. In American Motors Corp. v. Action-Age, Inc., 178 U.S.P.Q. 377 (T.T.A.B.1973), the Board held SCRAMBLER could not be registered as a trademark because of a likelihood of confusion with the famous mark RAMBLER, used by American Motors. The Board, emphasizing the continued goodwill of the mark, stated: 19 While opposer has discontinued the use of RAMBLER as a trademark for vehicles produced by opposer over the past few years, the record falls far short of establishing any abandonment thereof. In fact, there is a considerable reservoir of goodwill in the mark RAMBLER in this country that inures to opposer as a consequence of the large number of RAMBLER vehicles still on the road; opposer's activities in supplying RAMBLER parts and accessories to owners of these vehicles; and the use by dealers of the term RAMBLER as a portion of their corporate or business names and their maintenance of RAMBLER signs on their premises. 20 Id. at 378. The Board thus suggested that the maintenance of goodwill was connected to significant ongoing commercial activities using the trademark. In Lyon Metal Products, Inc. v. Lyon Incorporated, 134 U.S.P.Q. 31 (T.T.A.B.1962), a manufacturer that had extensively promoted and sold kitchen equipment for ten years under the trademark LYON discontinued the sale of the equipment at retail but continued to sell to builders under the same trademark. Six months after the retail sale of the equipment was discontinued, another manufacturer began marketing sinks under the name LYONCRAFT. The Board refused to register the mark and noted that the discontinuance of one channel of distribution cannot constitute an abandonment, per se of the mark for such goods.... [T]here is nothing to preclude opposer as the prior user of the mark LYON in the field to resume, at some time in the future, the retail sale of its LYON kitchen equipment.... Id. at 35. In dictum the Board noted: 21 Even assuming arguendo that the [mark holder] has abandoned use of the mark ... a question arises as to whether under such circumstances as here, where a party has, for ten years, extensively advertised and promoted a product under a mark with substantial commercial success another party ... can enter the field and sell closely related goods ... without creating confusion in the trade as to the source of the goods and damage to the first party. The substantial goodwill which accrued to the first party because of his extensive promotion and use of his mark does not cease immediately upon a decision to discontinue manufacture and sale of the goods associated with said goodwill. There is a residual goodwill in the mark ... until ... the purchasing public no longer is reasonably likely to associate the second party's product with the first party. 22 Id. at n. 5. Despite this dictum, the two cases relied upon by the district court are distinguishable from the facts before us. In American Motors the court focused on the continued extensive use of RAMBLER in parts and dealership names; in Lyon Metal, the opposer actually continued using the same trademark but in a different market. 23 This court recognizes that the goodwill associated with the mark HUMBLE has immense value to Exxon. That fact, coupled with the efforts under the trademark maintenance program, could suggest Exxon's intent to resume use of the mark, 4 but the trial court did not make that finding. The court found that the trademark protection program evidenced an intent not to relinquish HUMBLE and an intent not to abandon HUMBLE, but it did not specifically address Exxon's intent to resume use as required by section 1127 the Lanham Act. The trial court relied on the language of Saratoga Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037 (2d Cir.1980), in which the court observed:  'Acts which unexplained would be sufficient to establish an abandonment may be answered by showing that there was never an intention to give up and relinquish the right claimed.'  Id. at 1044 (quoting Saxlehner v. Eisner & Mendelson Co., 179 U.S. 19, 31, 21 S.Ct. 7, 12, 45 L.Ed. 60 (1900)). There is a difference between intent not to abandon or relinquish and intent to resume use in that an owner may not wish to abandon its mark but may have no intent to resume its use. In factual contexts where there is no issue of a hoarding of a mark, the language an intent to abandon or relinquish may be used to express the Lanham Act requirement of an intent not to resume use. For that reason, it is important that cases using the language of intent to abandon be carefully laid into their factual molds. In United States Jaycees v. Philadelphia Jaycees, 639 F.2d 134 (3d Cir.1981), the court concluded: [The] twin requirement of non-use and intent to abandon is embodied in [15 U.S.C. Sec. 1127(a) ] of the statutory definition of abandonment (emphasis supplied). This interchange of intent to abandon for intent to resume use was unimportant because there was no claim that the owner wanted to retain the mark only to prevent its use by others. It is not authority for the assertion that intent to resume use does not mean what it says but instead allows hoarding. In the context of a challenge strictly under the Lanham Act to an alleged warehousing program, as the facts of this case present, the application of the statutory language is critical. 5 That is, this court having found that the two types of uses under the trademark maintenance program were not sufficient uses to avoid prima facie proof of abandonment, the district court must specifically address Exxon's intent to resume use of the HUMBLE trademark. 6 An intent to resume requires the trademark owner to have plans to resume commercial use of the mark. Stopping at an intent not to abandon tolerates an owner's protecting a mark with neither commercial use nor plans to resume commercial use. Such a license is not permitted by the Lanham Act. 7