Intellectual Property Law

Court Finds No Trademark Abandonment Despite Unclear Standard of Proof

By Michael Atkins

On Dec. 17, the Northern District of California found on summary judgment that defendant grocery store Albertsons Inc. had not abandoned its LUCKY trademark even though it shuttered all of its LUCKY-branded stores by 1999 following its merger with the owner of that chain. In doing so, the court dismissed plaintiff Grocery Outlet Inc.’s claim that it had a right to open its own grocery stores under the LUCKY name.

The court found that Albertsons’ depletion of existing LUCKY-branded stock constituted bona fide continued use of the mark given the Ninth Circuit’s decision in Electro Source, LLC v. Brandess-Kalt-Atena Group, Inc., 458 F.3d 931 (9th Cir. 2006). This was a change from the court’s order on Albertsons’ motion for preliminary injunction two years earlier, in which the court reached the opposite conclusion. In light of the changed law, the court found its 2006 decision “that what it deduced from the evidence as sell off of residual inventory not constituting bona fide use of a trademark can no longer hold.”

The court also found: “There is sufficient evidence in the record to establish that Albertsons did not act with an intent not to resume use after the 2005 sales of inventoried Lucky-branded items. There is undisputed evidence that Albertsons intended to resume use of the LUCKY mark on grocery stores both before and after the conversion.”

Interestingly, the court noted it was unclear whether Grocery Outlet needed to prove abandonment by a preponderance of the evidence or by clear and convincing evidence.

“Abandonment of a trademark must be strictly proven. ‘Because a finding of abandonment works an involuntary forfeiture of rights, federal courts uniformly agree that defendants asserting an abandonment defense face a ‘stringent,’ ‘heavy,’ or ‘strict’ burden of proof.’ While the Ninth Circuit has still not defined the ‘strictly proved’ standard further, the majority of courts applying that standard have found that evidence of abandonment must be clear and convincing. It is not the law that ‘the slightest cessation of use causes a trademark to roll free, like a fumbled football, so it may be pounced on by any alert opponent.’”

Despite this uncertainty, the court found that Grocery Outlet failed to make the grade. “Because the Court finds that there was continued use through 2005 and there is undisputed evidence in the record indicating Albertsons’ intent to resume use within the relevant time period, the Court finds that summary judgment is appropriate under either the clear and convincing standard of proof or the preponderance of the evidence standard. Therefore, this Court need not decide the issue of what standard of proof is appropriate.”

The case’s discussion of the uncertain standard of proof in the Ninth Circuit is the subject of a recent Law.com story.

The case cite is Grocery Outlet Inc. v. Albertsons, Inc., No. 06-2173 (N.D. Calif. Dec. 17, 2008) (White, J.).

Full post as published by Seattle Trademark Lawyer on December 29, 2008 (boomark / email).