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Outstanding Questions Prevent Summary Judgment on Assertions of TM Abandonment

Wednesday, November 27, 2013
By Anandashankar Mazumdar

Nov. 26 --Evidence that a trademark holder's goods were meant to have a long shelf life and that they could maintain a market presence through clients' use even during a three-year period in which the trademark holder itself made no sales was sufficient to create a triable question on the issue of trademark abandonment, the U.S. District Court for the Middle District of Florida ruled Nov. 14 (Health & Sun Research, Inc. v. Australian Gold, LLC, 2013 BL 316525, M.D. Fla., No. 8:12-cv-02319-VMC-MAP, 11/14/13).

Denying a defendant's motion for summary judgment, the court said that evidence that the plaintiff's goods might still have a market presence required a full evidentiary process to resolve the question of abandonment.

'Royal Flush' and 'Purple Rain' Tanning Lotions

Health & Sun Research Inc. d/b/a Kava Kava International and Vegas Tan of Oldsmar, Fla., is a seller of lotions used for indoor tanning beds to tanning salons and through distributors. Health & Sun's 300-some products include those sold under the brand names “Purple Rain” (on the market since 2001) and “Royal Flush” (since 2005).

Australian Gold LLC of Indianapolis is a maker of sunscreen lotions as well as indoor tanning lotions. In 2012, it obtained U.S. trademark registrations for the terms “Royal Flush” and “Purple Reign,” both of which it had begun selling in 2011.

Health & Sun sued, alleging false designation of origin under Section 43(a) of the Lanham Act, 15 U.S.C. §1125(a), and trademark infringement and unfair competition under Florida state common law.

Australian Gold answered with a defense of abandonment and trademark misuse, as well as a defense under the doctrine of laches. Australian Gold also counterclaimed for trademark infringement and abuse of process or trademark misuse. Australian Gold moved for summary judgment on Health & Sun's claims on the basis of abandonment.

Intent to Resume Use Question Unresolved

Judge Virginia M. Hernandez Covington first quoted from Cumulus Media Inc. v. Clear Channel Commc'ns, Inc., 304 F.3d 1167, 64 U.S.P.Q.2d 1353 (11th Cir. 2002), for the standard for a finding of abandonment. Cumulus Media sets forth two showings: “(1) that [Health and Sun] ceased using the mark[s] in dispute and (2) that [Health and Sun] has done so with an intent not to resume [their] use.”

Under Section 45 of the Lanham Act, 15 U.S.C. §1127, such use must be “the bona fide use of such mark made in the ordinary course of trade, and not merely to reserve a right in a mark.” The second element was also examined by Natural Answers Inc. v. SmithKline Beecham, 529 F.3d 1325, 87 U.S.P.Q.2d 1200 (11th Cir. 2008) (119 PTD, 6/20/08), which said that intent to resume use “cannot be far-flung or indefinite; rather, there must be an intent to resume use within the reasonably foreseeable future.” Section 45 also creates a rebuttable presumption of abandonment if there has been no use for three consecutive years.

Applying these standards to the fact in the instant case, the court first noted that there was no dispute that Health & Sun did not sell any Royal Flush lotion from July 2008 to September 2011, a period of longer than six years, triggering the presumption of abandonment.

The court found that there was sufficient evidence in the record to create an outstanding question of material fact regarding whether Health & Sun would be able to establish an intent to resume use of the trademark, including the fact that it actually did reintroduce the product after Australian Gold started marketing its own Royal Flush product.

Important to this finding was the fact that Health & Sun markets its products as having very long shelf lives and that its customers make bulk purchases intended to be kept in inventory for years, the court said. Thus, even if there had been no sales for three years, that did not mean that Health & Sun's Royal Flush trademark might still not be active in the marketplace.

In response to Australian Gold's market that Health & Sun was engaging in “token sales” merely to create the appearance of use, or that such sales were “de minimis” or “sporadic, casual, and nominal,” the court said that this question also could not be resolved at the summary judgment stage.

Turning to the Purple Rain trademark, the court first found that there was no presumption of abandonment because there was no three-year period of nonuse. Indeed, there was evidence in the record to support either party's position; thus, this question could not be resolved without a full evidentiary process.

Having found multiple genuine outstanding questions of material fact, the court thus denied Australian Gold's motion for summary judgment.

Health & Sun was represented by Eric Robert Pellenbarg and Harvey S. Kauget of Phelps Dunbar LLP, Tampa, Fla. Australian Gold was represented by Charlie J. Meyer of Woodard, Emhardt, Moriarty, McNett& Henry LLP, Indianapolis, and James J. McGuire of Thomas & LoCicero PL, Tampa.

 


Text is available at http://www.bloomberglaw.com/public/document/Health__Sun_Research_Inc_et_al_v_Designer_Skin_LLC_Docket_No_812c.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com

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