Federal Circuit: Lack of Bona Fide Intent to Use at the Time of Filing Fatal to Trademark Application

25 June 2015 IP Litigation Current Blog

In a recent ruling the Federal Circuit affirmed the decision of the Trademark Trial and Appeal Board (TTAB) sustaining an opposition against a trademark application on the grounds that the applicant failed to prove that it had a “bona fide” intent to use the mark in commerce at the time he filed the application. M.Z. Berger & Co. v. Swatch AG, No. 2014-1219, 2015 U.S. App. LEXIS 9276 (Fed. Cir. 2015). While the TTAB has frequently sustained oppositions based on an applicant’s lack of bona fide intent to use the mark in commerce, this is the first time the Federal Circuit has addressed this issue.

M.Z. Berger, a New York-based watch manufacturer, filed an intent-to-use application for the mark “iWatch” in three categories of goods:  watches, clocks and goods related to watches and clocks. After the mark was published for opposition, Swatch opposed the application claiming “iWatch” was confusingly similar to its mark “Swatch” and M.Z. Berger did not have a bona fide intent to use the mark in commerce at the time of filing. Without considering the similarity between the marks, and focusing solely on the second ground of opposition, the TTAB evaluated the evidence provided by M.Z. Berger in support of its bona fide intent to use the “iWatch” mark and concluded that M.Z. Berger lacked such intent for each category of goods. With regard to clocks and goods related to watches and clocks, M.Z. Berger’s CEO and the company’s paralegal testified that M.Z. Berger never intended to use “iWatch” on such products and included them in the application merely to “leave all doors open.” As to watches, M.Z. Berger’s documentary evidence consisted of documents related only to the prosecution of the trademark application but included no evidence indicating the company’s intention to commercialize iWatch products. The TTAB was also not persuaded by M.Z. Berger’s testimonial evidence. While some company employees testified that there was a discussion with a potential buyer and internal meetings took place regarding commercialization of possible iWatch products, the company’s CEO admitted that as of 2010 – three years after the application was filed – he had no clear plan as to what type of watches would be sold under the iWatch mark.

Reviewing the TTAB decision, the Federal Circuit agreed with the TTAB , holding that an opposer may rely on any statutory ground under Section 1(b) of the Lanham Act to challenge a trademark, including lack of a bona fide intent to use. The Court then turned to the meaning of “bona fide intent,” noting that although the Lanham Act does not define “bona fide intent,” the statutory language and legislative history strongly suggest that the applicant’s intent to use the mark in commerce must be more than a mere subjective belief and must be demonstrated by objective evidence. The Court also noted that TTAB may evaluate the applicant’s evidence on a case-by-case basis and consider the totality of the circumstances. Reviewing M.Z. Berger’s evidence, the Court agreed with the TTAB that M.Z. Berger’s testimonial evidence was contradictory and there were no documents showing the company’s genuine intention to commercialize the iWatch mark. The Court therefore concluded that M.Z. Berger’s evidence, when considered as a whole, did not show the requisite intent at the time of the application filing. Rather, the evidence demonstrated that M.Z. Berger’s intent was merely to reserve a right in the mark.

The decision is an important reminder for trademark applicants who file an intent-to-use application to preserve documentary evidence showing the applicant’s intention to commercialize the mark in connection with each good and service listed on the application. While the Court did not elaborate on what types of evidence would establish a bona fide intent to use, applicants would be wise to keep in their records marketing and business plans, promotional materials, communications with potential buyers, minutes from marketing meetings and other documents related to product creation and development as well as licensing of the mark.

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