Here’s a sickening tale of how one “IP entrepreneur” shamelessly used his “stealth” trademark as a cash cow until the Seventh Circuit Court stopped him.
In a nutshell, the owner of the STEALTH trademark sued anyone under the sun for the rights to use the term on their products, even though his 33 registrations were unsupported (no solid proof of actual sales). In the end, the court canceled the mark in question. Score one for freedom!
[Third parties,] when threatened with litigation… entered into licensing or settlement agreements for use of the STEALTH mark. These agreements cover a startling collection of products, ranging from “hand tools to make prosthetic limbs to construction consulting services to track lighting.”
It was reported that [the trademark owner] even accused Sony Pictures of infringing the STEALTH mark by including the word as the title of a film featuring Navy pilots.
Not only did the Seventh Circuit approve of the district courts decision to cancel the plaintiff’s mark, the court stated that “where . . . a registrant’s asserted rights to a mark are shown to be invalid, cancellation is not merely appropriate, it is the best course.”
Consumers, trademark owners, and competition all directly benefit by vigilant enforcement of the use in commerce requirement.
Marks that have been registered for less than five years may be cancelled “for any reason which would have been sufficient to deny registration in the first instance.”62…
[A mark] may always be challenged on the grounds that it has been abandoned regardless of how long a mark has been registered.64
The TTAB has jurisdiction over four types of inter partes proceedings: oppositions, cancellations, interferences, and concurrent use proceedings.76 Cancellation proceedings may be initiated by any person who believes that they are or will be damaged by a registered mark.77 An inter partes proceedings before the TTAB is similar to district court proceedings in that there are pleadings, motions, discovery and brief filing.78 They differ, however, because the TTAB is an administrative tribunal and thus, proceedings are conducted solely in writing.79 A party to a proceedings may never even come before the board, by way of giving witness testimony or otherwise, unless a party requests oral hearing on the matter.80
[Where] one doubts the validity of a registration it is always the better course to petition to cancel the mark rather than adopting a “wait and see” approach.83
Unlike inter partes procedures before the TTAB, cancellation of a trademark cannot be the only basis of a plaintiff’s suit.93 The Seventh Circuit has held that federal courts do not have jurisdiction to hear a claim for cancellation brought by a plaintiff without a current registration.94
As noted above, although the plaintiff claimed to be either the registrant or assignee of “33 federally registered STEALTH or STEALTH formative marks,” only two were conceivably relevant to this suit.116 This is due to the likelihood of confusion requirement: only the use of a mark that is likely to cause consumer confusion is actionable.117
If there were a commercial use spectrum, Central Manufacturing would be at the bottom of the evidentiary standard of proof. In characterizing the plaintiff’s proof as “unsupported assertions” and “unauthenticated evidence of small amounts of sales,” the court held the plaintiff failed to prove ownership rights to the STEALTH mark.128 The most obvious problem was the lack of invoices and receipts characteristic of actual business transactions between the plaintiff and consumers or businesses.129 However, to support his claim of ownership the plaintiff attempted to admit the following documentary evidence: advertising material and charts of “sales” activity.130 The court rejected this evidence as unsubstantiated, unbelievable or both.
the court stated the law was clear that “mere advertising and documentary use of a notion apart from the goods do not constitute technical trademark use.131
(See p.475 and following re: evidence of commercial use standards.)
After assessing the parties’ respective arguments, the district court granted the defendant’s motion for summary judgment.160 In granting the defendant’s motion, the court also took two steps seemingly outside of the norm of trademark litigation: the court ordered the plaintiff to pay the defendant’s attorneys’ fees and costs and ordered the cancellation of the plaintiff’s 249’ registration.161
Read the full article at the Chicago-Kent College of Law here.
The author of the paper is Anna B. Folgers.