Losing Your Trademark Rights

​If your product or service is built around a particular brand identity, then you probably already understand the importance of registering your trademark with the USPTO. And if you’ve already made it through the long and painstaking registration process, then congratulations! But all too often, our small business and nonprofit clients assume that receiving the registration certificate is the end of the story. How do you make sure the time and expense you just went through to get your trademark registered in the first place doesn’t go down the drain? What do you need to know to avoid losing your trademark rights?

Use It or Lose It
First, trademark rights are based on actual use. If you stop using your trademark for three consecutive years (i.e., you stop selling that particular product or service or change the trademark in some way), then legally, you have abandoned the trademark. At this point, one of your competitors can file a petition with the USPTO to cancel your trademark registration. (Technically, a petition to cancel a trademark registration can also be based on evidence that the trademark owner stopped using the mark for less than three years if there is evidence showing that the trademark owner does not intend to resume using the mark within the three-year window. However, these cases are much more difficult to prove.)

Quick Tip: Almost any change to your trademark from what was actually registered with the USPTO will be considered a new trademark and will need to be registered if you plan to protect it.

Second, you can lose your trademark rights by failing to timely file certain documents with the USPTO. The Section 8 Declaration of Use is due between the 5th and 6th anniversary of your trademark registration. And every ten years, you must submit both the Section 9 Renewal and Section 8 Declaration of Use. Both of these forms require a statement under oath that you have continuously used the trademark in question. You are also required to submit specimens showing how the trademark is actually being used in commerce.

Unfortunately, the USPTO does not send trademark owners reminders about these important deadlines. Compounding matters, scammers will send fake reminders (often before the actual due date). While they may appear to be associated with the USPTO, in reality, they simply take your money and disappear.

2. Avoid Naked Licensing
In addition to not using your trademark, you can also lose your trademark rights if you engage in “naked licensing.” Naked licensing refers to situations where you give others the right to use your trademark (i.e., in joint venture, marketing, or distribution deals) without taking steps to adequately control and supervise the other party’s use of the trademark. In other words, when you license your trademarks to another party, your licensing agreements should require the other party to meet your quality control standards for the product or service itself and your brand guidelines for how the trademark is used.
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This is yet another reason to stop doing business on a handshake. By not having a written agreement in place, you run the risk of a court deciding that you have effectively abandoned your trademark. And no, an unsigned policy document in your business files or on your organization’s website or in an email chain isn’t good enough. In naked licensing cases, the courts typically look to see whether you exercised contractual control over the licensee’s use of the trademark.

While naked licensing is obviously a bad business practice, you may be wondering why the law cares. The doctrine is tied up with the purpose behind trademark law: protecting consumers. If you are not policing how your trademarks are used and the quality of the goods or services associated with those trademarks, then there is a very real risk that when consumers see the mark and make buying decisions based on that branding, they could end up purchasing goods or services that don’t live up to the quality that they have come to associate with the trademark in question. Effectively, the consumer has been deceived into thinking they are buying from one source (you) with a particular reputation for quality and consistency, when in fact they are buying from another source (the party you licensed your trademark to) and receiving an inferior product or service. Trademark law is meant to protect consumers by ensuring that trademarks identify the source of the goods or services associated with that particular mark. In plain English: no one spends hundreds of dollars on Jordan brand basketball shoes expecting to get a knock off product. And that’s what trademark law is meant to protect!

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If you have questions about your business’s or nonprofit’s trademarks, then schedule a consultation with our experienced trademark attorneys.

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