Use It or Lose It; What Breweries, Wineries and Distilleries Can Do To Protect Their Trademarks from Becoming Abandoned
By Douglas R. Luther on June 29, 2017
Trademark abandonment can be an issue for breweries, wineries and distilleries who may offer certain products for limited periods of time or in discrete markets and then attempt to bring them back years later. Abandonment is a defense to both trademark infringement and false designation of origin claims. Where a trademark is not being used (e.g. the product is not being sold), the question of abandonment will center around whether the trademark owner has an intent to resume use.
“Intent to resume use in abandonment cases has been equated with a showing of special circumstances which excuse a registrant's nonuse.” Imperial Tobacco Ltd., Assignee of Imperial Grp. PLC v. Philip Morris, Inc., 899 F.2d 1575, 1581 (Fed. Cir. 1990). One special circumstance could be that the trademark owner intends to rotate certain products at regular intervals. For example, a brewery may want to bring back a special beer once every 4 years. Another example may be that a winery has delayed or paused introducing a wine into a certain market until there are better economic conditions.
Once a mark is abandoned, it falls into the public domain and is free for all to use. So how do breweries, wineries and distilleries ensure that when they bring their product back to the market, the trademark hasn’t been abandoned?
A recent case is a lesson in the dangers of not setting forth concrete plans to resume use of a trademark. In Allied Lomar, Inc. v. Lone Star Distillery, LLC, Case No. A-14-CA-1078-SS, 2017 WL 1187949 (W.D. Tex. Mar. 28, 2017), Allied alleged that it owned the trademark “COWBOY LITTLE BARREL” for bourbon and whiskey products. It brought an action claiming that Lone Star Distillery doing business as Garrison Brothers’ “COWBOY BOURBON” mark infringed on its trademark. In response, Garrison Brothers argued that Allied’s trademark registration should be cancelled due to the mark being abandoned.
The case proceeded all the way to trial wherein a jury found there was not a likelihood of confusion and that Allied had abandoned the trademark. Allied contended that there was no evidence of abandonment and asked the court to reverse the jury verdict.
The Lanham Act expressly provides that a trademark shall be deemed to be abandoned when (1) its use has been discontinued; and (2) there is intent not to resume use. See 15 U.S.C. § 1127. When the party claiming abandonment provides evidence that the mark has not been used for three consecutive years, the burden shifts to the mark owner to establish that the circumstances do not justify the inference of intent not to resume use. In order to rebut the presumption, the owner of the mark must produce evidence of plans to resume use.
An owner cannot defeat an abandonment claim by testifying to a vague, subjective intent to resume use of a mark at some unspecified future date. Otherwise, a trademark owner would do this in every case rendering the abandonment doctrine ineffective. Similarly, whether an owner did not intend to abandon the mark is irrelevant. There must be evidence of actual concrete plans to resume use in the future.
At trial, Garrison Brothers provided evidence of Allied’s non-use for at least three consecutive years. Allied was then required to try to rebut the three years of non-use being a presumption of intent not to resume use. Allied’s president testified and provided evidence that COWBOY LITTLE BARREL products were in Allied’s product price lists and that Allied intended to resume use. However, Allied also admitted that it had no COWBOY LITTLE BARREL products in its inventory for sale and that the price list contained hundreds of products.
In response, Garrison Brothers provided evidence that Allied lacked the required Certificate of Label Approval from the Alcohol and Tobacco Tax and Trade Bureau to sell the products in the United States. There was also evidence that Allied had not advertised COWBOY LITTLE BARREL products in American publications nor had its product reviewed by whiskey critics.
Based on this, the court found that there was sufficient evidence in the record to support the jury’s finding. Allied’s trademark for “COWBOY LITTLE BARREL” had been abandoned. Consequently, Garrison Brothers could continue to use the “COWBOY BOURBON” mark for its popular whiskey.
So how should breweries, wineries and distilleries indicate that they intend to resume use of a product in the future and preserve their trademark? A party that intends to use a mark in the future should put together concrete plans for that future use. This could include documents or evidence relating to seeking out manufacturing and distribution retail partners, developing a marketing strategy or business plan, lining up investors, determining pricing, creating packaging, hiring a consultant, forecasting sales, preparing advertising and entering into agreements for distribution. Formalizing a distribution agreement for future sales of the product would be strong concrete evidence of a future plan to sale the products. Even research into selling a product into a market may evidence a future intent to use the mark. To the extent a trademark owner engages in any of the aforementioned activities, it will want to document that as evidence of intent to resume use.
Trademark owners should also be aware that the standard for non-use is high and usually requires complete cessation or discontinuance of trademark use. See e.g. Clearly Food & Beverage Co. v. Top Shelf Beverages, Inc., 102 F. Supp. 3d 1154, 1162 (W.D. Wash. 2015). For this reason, a party may want to consider that even if it does not want to sell large quantities of the product, it may make sense to sell limited batch productions to ensure that the trademark remains in use. Where the mark is being used in commerce, the mark’s owner should keep records identifying sales.
By taking these steps, a brewery, winery or distillery will strengthen their ability to argue that the trademark has not been abandoned. Otherwise, the owner of a trademark may wake up one day to find they no longer have a trademark.
This article was prepared by Douglas R. Luther (email@example.com), of the Irvine law firm of Mulcahy LLP. Mulcahy LLP is a boutique litigation firm that provides legal services to franchisors, manufacturers and other companies in the areas of antitrust, trademark, copyright, trade secret, unfair competition, franchise, and distribution laws.
Disclaimer: While every effort has been made to ensure the accuracy of this article, it is not intended to provide legal advice as individual situations will differ and should be discussed with an experienced franchise lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.