Filing a New ITU Trademark Application? Be Prepared to Prove Your Intent

Legal Alert

Staking an early claim to a brand has inspired many hasty (and sometimes ill-advised) trademark applications. For example, trademark applications representing political rallying cries and pop culture slogans such as JE SUIS CHARLIE, OCCUPY WALL STREET, ICE BUCKET CHALLENGE and LEFT SHARK have all been filed at the Trademark Office (and promptly rejected, abandoned, or mocked). In fact, the number of trademark applications has more than quadrupled from 82,426 in 1989 (a year after the intent-to-use system was established) to 336,275 in 2014.

The Court of Appeals for the Federal Circuit’s (CAFC) recent decision in M.Z. Berger & Co. v. Swatch AG, No. 2014-1219, 2015 WL 3499267 (Fed. Cir. June 4, 2015), serves as a cautionary tale for hastily filed intent-to-use (ITU) applications. The CAFC held for the first time that lacking proof of a “bona fide intent” to use a mark can doom a trademark application.

Berger sought to register the mark “iWatch” for more than 30 different products in three categories: watches, clocks, and personal products. (View the application HERE.) Swatch opposed the application, claiming that Berger lacked a bona fide intent to use the mark in commerce at the time it filed the application (among other grounds). The Trademark Trial and Appeal Board (TTAB) sided with Swatch and refused the registration. The CAFC affirmed. 

The CAFC held that “bona fide intent to use” a trademark must be demonstrated objectively. All that is required when filing an ITU application is a sworn statement that, yes, the applicant intends to use the mark. However, the CAFC blessed longstanding TTAB practice requiring applicants to provide documentary evidence proving this intent, upon request by an Examining Attorney or demand by an opposer. While the evidentiary bar is not high, the objective evidence must show that the applicant’s intent was “firm and not merely intent to reserve a right in the mark.” Berger, 2015 WL 3499267, at *7.

ITU applications are a product of the Trademark Law Revision Act of 1988 (TRLA). The ITU mechanism under the TRLA allows applicants to file a trademark application before they’ve developed, marketed or sold a product or service. Once the registration issues, substantive trademark rights flow from the filing date of the application. Without a registration, a trademark owner’s rights are traditionally established upon branded sales of a product or service.

Consider the applicant who files an ITU application on January 1, sells the first branded product September 1, and receives its registration December 1. That trademark owner has priority over – and may enjoin – someone who began selling similarly branded goods on February 1 of the same year.

These benefits inspire hundreds of thousands of new applications. Berger’s missteps serve as important reminders to brand owners about the perils of hasty trademark filings.

Number 1: Don’t file an application for a mark you have no intent to use just to “leave all doors open.”

Berger’s CEO, Bernard Mermelstein, provided the key testimony in the case. Mermelstein testified:

Q. At the time you filed the application you didn’t expect the iWatch mark to be used for clocks and personal care products?

A. No. Correct.

The TTAB and the CAFC, therefore, came to the obvious conclusion that Berger lacked intent to use the iWatch mark on clocks and personal products.

Number 2: Perform trademark searches early and often.

The TTAB noted, “In some cases, a trademark clearance search may be probative evidence of a bona fide intent to use.” Swatch AG v. MZ Berger & Co., Inc., 108 USPQ2d 1463 (TTAB September 30, 2013). However, Berger conducted just one search, on the day the application was filed. This search was conducted solely for the purpose of filing.

Registrability searches should always be performed immediately before filing. But searches done a few weeks or months before filing can indicate that the applicant was surveying the marketplace and making plans to use the mark, particularly when common law sources beyond the USPTO database are searched. 

Number 3: Follow your standard product development process.

Berger’s standard product development process involved creating physical models and renderings. But that didn’t happen for the proposed iWatch product—not before filing, nor during the three years after filing. Berger argued that it did create renderings of the iWatch product. However, these renderings were created solely to respond to an inquiry by the Examining Attorney about how the mark would be used.

If a company normally creates renderings for new branded products, make sure those renderings (and their purpose) are saved. If consumer surveys or market research typically precedes a new product launch, conduct and document them. This type of evidence is important even months after the filing date. In fact, the TTAB noted that documentary evidence created nine to 11 months after an application was filed may be “sufficiently contemporaneous evidence of intent.” Swatch AG v. MZ Berger & Co., Inc., 108 USPQ2d 1463 (TTAB September 30, 2013)

Number 4: Document everything.

The CAFC held that evidence related to “‘product or service research or development, market research, manufacturing activities, promotional activities, steps to acquire distributors, steps to obtain governmental approval, or other similar activities’” can prove objective intent to use a mark. (Quoting 37 C.F.R. § 2.89(d).) Documents relating to these activities will carry more weight than vague testimony about them.  

If you conduct a search and find no similar marks, make a note to the file. If you discuss the new product with potential buyers or manufacturers, send a follow-up email to that person confirming the conversation. If your staff participates in brainstorming sessions, keep—and date—all related notes.

In Berger’s case, Berger’s vice president of merchandising offered only hazy recollections of merchandising meetings and one conversation with a buyer, none of which were documented. 

Number 5: Understand what your employees are doing.

Much of the evidence presented by employees other than Berger’s CEO would have been sufficient if the CEO hadn’t contradicted that evidence in his own testimony. For example, Berger’s vice president of merchandising recalled discussing the iWatch mark with a buyer during a discussion in a Berger showroom. But Mermelstein denied that the company discussed the iWatch mark with anyone outside the company.

The vice president of merchandising also recalled describing the “smart” interactive features of the watch to the buyer. During prosecution of the mark, however, Berger told the Examining Attorney that the watch would not have any interactive features.

Number 6: Don’t overreach with your goods and services descriptions or the number of applications you file.

Berger claimed more than 30 products in its application, though the only one it arguably ever intended to sell was watches. If the number of products claimed in an application are higher than what the applicant could reasonably produce while the application is pending, this indicates a lack of bona fide intent to use the mark with all those products.

In addition, claiming a laundry list of new products that the company has never produced can also cut against “bona fide intent to use.” 

In Berger’s case, the vice president of merchandising claimed that the product was going to be an interactive “smart” watch. Berger had a long history in the analog watch industry, but it had no experience with “smart” technology features. If Berger had demonstrated that it was moving into this technological field (by hiring programmers, licensing software, or negotiating with vendors), this evidence would have been more credible. 

The legislative history for the TLRA provides numerous examples of circumstances indicating a lack of a “bona fide intent to use,” including:

  • the applicant may have filed numerous intent-to-use applications to register the same mark for many more new products than are contemplated;
  • numerous intent-to-use applications for a variety of desirable trademarks intended to be used on single new product;
  • numerous intent-to-use applications to register marks consisting of or incorporating descriptive terms relating to a contemplated new product;
  • numerous intent-to-use applications to replace applications which have lapsed because no timely declaration of use has been filed;
  • an excessive number of intent-to-use applications to register marks which ultimately were not actually used;
  • an excessive number of intent-to-use applications in relation to the number of products the applicant is likely to introduce under the applied-for marks during the pendency of the applications; and
  • applications unreasonably lacking in specificity in describing the proposed goods.
S. REP. 100-515, 23-24, 1988 U.S.C.C.A.N. 5577, 5586.

However, filing more than one ITU trademark applications because the proposed marks are contingent on, for example, market research or product testing is OK under certain circumstances. For example, suppose that a company is planning to launch a new streaming music service, and it’s narrowed down the product names to RIVERZ or STREAMZ. Filing for both these marks is fine, so long as the applicant doesn’t maintain the STREAMZ application after definitively deciding to call the product RIVERZ.

Number 7: Use the Berger case offensively.

Berger confirms that a lack of bona fide intent to use can be the sole basis on which to oppose an application. But it is also grounds to cancel a registered mark. Registrations issuing from ITU applications that were filed without a “bona fide intent” to use are void ab initio. See Bobosky v. Adidas AG, 843 F. Supp. 2d 1134, 1139 (D. Or. 2011); Rolex Watch U.S.A., Inc. v. PRL USA Holdings, Inc., No. 12 CIV. 6006, 2015 WL 1909837, at *5 (S.D.N.Y. Apr. 27, 2015).

The same is true for registrations issuing under Section 44(e) or 66(a) of the Lanham Act, which must objectively show a bona fide intent to use the mark in the United States at the time of filing. See Honda Motor Co. v. Winkelmann, 90 USPQ2d 1660 (TTAB 2009); Sandro Andy, S.A. v. Light Inc., No. 12 CIV. 2392 HB, 2012 WL 6709268, at *1 (S.D.N.Y. Dec. 27, 2012).

The Berger case did not foreclose the possibility that bona fide intent may be proved in the absence of documentary evidence. However, the case provides a helpful (and binding on the TTAB) reminder that applicants filing without sufficient documentary evidence may pick a long, expensive fight with competitors who have one more tool to challenge the application.

If you have any questions about the content of this alert, please contact a key contributor.

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