Use it or Lose It: Abandoning Your Brand Can Have Dire Consequences
Trademark rights arise out of use in commerce, and can provide protection for your name, brand, and reputation in the community provided, that the marks are continuously used in connection with your goods or services. While brands change over time, whether the result of re-branding or through mergers or other acquisitions, it is important to consider that abandoning a valuable trademark or logo may permit a third party to claim it for its own use, often at your expense.
Trademark rights can continue so long as a mark is used in commerce, and even short periods of non-use are allowed. However, there is a legal presumption in trademark law under the Lanham Act that non-use for a period of three consecutive years equates to a legal presumption of abandonment of trademark rights. Failure to maintain your trademark rights may open up opportunities for competitors to step in and claim those rights, as Macy’s recently found with a case set for trial next week.
In 2010, California-based Strategic Marks LLC scooped up the rights to certain trademarks – namely, old retail store brands including JORDAN MARSH, BULLOCK’S, MARSHALL FIELD’S, ROBINSONS-MAY, MAY, FILENE’S, ABRAHAM & STRAUS, THE BROADWAY and THE BON MARCHÉ department store marks – and claimed they were up for grabs because Macy’s no longer used them. Specifically, Strategic Marks laid claim to the “dormant” brands, saying Macy’s acquired, then abandoned the brands in order to eliminate regional competition. At issue in this case is whether a third party can adopt and use certain trademarks which are no longer in use and have arguably been abandoned by the original owners – including for the same goods and services offered by the original owner – without infringing on the prior owner’s rights. Originally filed in 2011, this case is now set for trial on March 2, 2015.
In addition to the retail store brands named above, other valuable brands with established goodwill in the marketplace have been abandoned: Hydrox (cookies), Astro Pops (lollipops), Pan Am or TWA (airlines), and Oldsmobile (car), and may be vulnerable to outside claims. A more recent example of a mark in transition is the popular airplane retail magazine Skymall. The magazine, a cult favorite of travelers, recently announced plans to discontinue publication, though its plans for extended use of its own trademark are unknown at this time. A new adopter of any of these previously revered brands may benefit from a competitive advantage obtained by tapping into their residual goodwill and name recognition – sometimes at the expense of existing rights-holders (like Macy’s) who failed to consider how to preserve and harness that goodwill for itself.
This case highlights the importance of maintaining a time-tested brand alongside new trademarks, and the need to consider the business effect of transitioning away from or abandoning a trademark or brand. By maintaining existing trademarks and brands alongside new ones, you have a better chance to prevent others from trading on your valuable reputation and name recognition in the marketplace, and avoiding the issues currently faced by Macy’s.