Losing Trademark Rights
The government grants registration benefits to trademarks; but in exchange registrants must monitor and use their marks to enjoy those rights. Trademark rights are not only acquired, they can be lost. Companies spend a lot of money and time to have their marks registered, but some take no precautions to ensure that they keep those rights.
Two Ways of Losing Your Trademark Through Abandonment
1. Non-Intentional Acts of the Owner
Uncontrolled Licensing of the Mark
The purpose of a trademark is to tell a consumer about the source and quality of a product. Trademark owners have a duty to control quality when they license their marks. When trademark owners do not monitor the products that bear their mark, the goods or services may not be "genuine" and the trademark loses its significance. Rights are given in trademarks to assist consumers in making informed purchases and to protect producers and sellers.
Dilution by Third Parties
The classic case of dilution is dilution by blurring, where the same mark is used more than one producer to identify different products. For famous marks, no likelihood of confusion is required. In these cases, there is not a likelihood of confusion, but the distinctiveness of the mark is diluted because consumers will associate the mark with more than one producer or product. The distinctiveness of a trademark is its value. If a mark is not distinctive, it cannot build goodwill for the name.
Dilution by Tarnishment
The defendant's unauthorized use of the mark is to tarnish, degrade, or dilute the distinctive quality of the mark. Since 1996, the Lanham act provides for protection against dilution. If a registrant does not police and protect their mark against dilution, they will lose the distinctiveness of their mark (even though their registration will not be cancelled).
Assignment of a Mark Without Good Will
A trademark is merely a symbol of goodwill; it has no independent significance apart from the goodwill it symbolizes. A mark cannot be sold without the goodwill that it symbolizes. Good will can no more be separated from a business than reputation from a person.
A generic name can never serve as a trademark. A generic term merely identifies the genus of which the particular product is a species. "Automobile" or "car" cannot be trademarked for vehicles because it would not give competitors (or consumers) another way to describe the product. They would have a monopoly on the only way to describe the product. The problem of genericide is that a once distinctive mark has become the generic term for describing the product. When a seller develops trademark rights in a term that a majority of the relevant public then appropriates as the name of a product, the mark is a victim of genericide. These trademark owners are victims of their own success (and their lack of foresight). Genericide frequently arises where the challenged mark was the first product of its kind on the market. Genericide usually comes up in two contexts: 1) Litigation - a registrant challenges another's use of the mark only to have their mark cancelled for being generic by a federal court. 2) Cancellation - a challenger can offensively seek to cancel a mark for being generic in an attempt to avoid litigation. In both cases, the decision is made on a case-by-case basis.
Trademark victims of genericide include: ASPIRIN, BRASSIERE, BUDDY LIST, BUNDT, CELLOPHANE, COLA, DRY ICE, EASTER BASKET, ESCALATOR, GOLD CARD, HOAGIE, KLEENEX, MONOPOLY, MULTISTATE BAR EXAMINATION, SHREDDED WHEAT, THERMOS, TRAMPOLINE, YELLOWPAGES, and YO-YO.
2. Non-Use of the Mark
The U.S. trademark system is based on use, not registration. Use is defined as "the bona fide use of the mark in the ordinary course of trade and not merely to reserve a right in a mark." Marks can be cancelled for non-use in two ways. The first is through cancellation - another party wants to use the mark seeks cancellation of a mark they believe is no longer in use. The trademark owner must intend not to resume using the old mark. I.e. A company advertisement stating "We Are Changing Our Name from ALPHA to ZETA. Don't Call Us ALPHA any more." Courts require clear and convincing evidence of abandonment because it is a forfeiture of trademark rights. The second is through a failure to renew registration (or to prove continued use at renewal) - continued use must be proven between the 5th and 6th year after registration and then marks must be renewed every 10 years. At renewal, continued use must be proven. The PTO may cancel a mark even if it is not challenged by a third party if use is not proven. Marks are deemed abandoned when "its use has been discontinued with intent not to resume use" and non-use for 3 consecutive years is prima facie abandonment. This is a presumption of abandonment.
Trademarks are assets, in some cases, the most valuable asset of a company. Thus, to prevent losing trademark rights, owners should do two things: First, they should retain a trademark attorney to review and monitor their trademark portfolio. Second, they should make sure they have continued use.
Attorneys can: Review and monitor licensing of trademarks, review proposed assignments, order watch services and send cease and desist letters to 3rd parties, ensure proper usage of trademarks, monitor use by others, and monitor deadlines for renewal. Trademark rights as the embodiment of consumer goodwill are valuable but intangible, thus sometimes owners overlook them until it is too late to protect them.