Use of a Trademark Merely to Maintain a Trademark Registration Does Not Constitute Valid Trademark Use and Causes Loss of Attorney-Client Privilege


The federal court in Oregon ruled that a major footwear company committed fraud on the Trademark Office when it applied for renewal of a trademark application, and certified its continued use of the trademark, even though that use had no commercial purpose other than to preserve the trademark registration. 

The submission of the renewal to the Trademark Office constituted fraud – and thus the trademark owner’s communications with its counsel on the renewal lost protection of the attorney-client privilege under the crime-fraud exception.  Adidas America, Inc. v. TRB Acquisitions LLC (D.Ore. 2018).

The decision has important lessons for trademark owners.  Most important is that use of a trademark to establish trademark rights must have a commercial purpose – use cannot be done merely to acquire (or retain) a trademark registration. This is so even where the use is sales in large quantities.

Jewelry Trademark Case Shows Importance of IP Foundation Work and Selection of Mark

A Sixth Circuit decision, Sterling Jewelers, Inc. v. Artistry Ltd. (2018), demonstrates the importance of (1) legal guidance in picking a trademark and avoiding weak marks that will only provide a narrow scope of protection and (2) proper foundational work to secure trademark rights.  The plaintiff in the case failed to do both, and learned the hard way that the rights it thought it had were far less effective than expected.

Impact of Second Circuit’s Preliminary Injunction Standard After Salinger

Preliminary injunctions, though available in any type of case, are not uncommon in copyright and trademark cases.  For over thirty years, federal courts in the Second Circuit used a two-part test first announced in Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979), requiring a party in any case seeking a preliminary injunction to show: “(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.”  

Furthermore, in both copyright and trademark cases, the Second Circuit held that once likelihood of success was shown, there arose a presumption of irreparable harm.  Thus, as a practical matter, a trademark or copyright owner seeking a preliminary injunction had to focus on proving a strong likelihood of success on the merits.  Once proven, and absent unusual circumstances (most usually delay in seeking relief), entry of a preliminary injunction was almost routine.

In April 2010, in Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010), a copyright case,  the Second Circuit held that the Jackson Dairy standard was effectively abrogated by the Supreme Court’s ruling in eBay, Inc. v. MercExchange, LLC,  547 U.S. 388 (2006), a patent case involving a permanent injunction. Salinger adopted a four-part test modeled after eBay.  

Furthermore, with respect to irreparable harm, the Second Circuit, again relying on eBay, rejected prior Circuit law that held that in copyright cases there is a presumption of irreparable harm upon a showing of likelihood of success.  See id. at 82.

Trade Dress, Trade Mark Distinction Meaningful Again?

Trademark law recognizes that many things can function as a “symbol of source” and may be protected as a trademark: a word, a design, a package, a product feature.  

In recent years, Congress and the Supreme Court have made it more difficult to protect a subset of these symbols – called “trade dress” – by enacting additional legal hurdles that are not required for “trademarks” in general.  Trade dress for product designs requires a showing of “secondary meaning” -- that the design has achieved commercial recognition as associated with one source.  And, trade dress cannot be “functional” – meaning it gives an advantage in terms of use, cost or competition.

Not surprisingly, some litigants have tried to get around these new hurdles by claiming that what they are trying to protect is merely a “trademark” and not “trade dress.”  The line between the two then becomes important.

As we discuss here, the Patent and Trademark Office and the courts have taken divergent approaches to drawing this line.  The PTO takes a consumer-perception oriented approach, which considers whether consumers would be pre-disposed to viewing the design as a trademark.  Under this test, even portions of designs may be determined to be “trade dress” and face the legal hurdles discussed.

In contrast, the Second and Sixth Circuits have taken a more definitional approach – which limits trade dress to the “overall look” of the product.  Under this test, portions of a design are not treated as trade dress at all.  But as we also discuss, this approach does not appear consistent with Supreme Court treatment of trade dress.