Crash Dummy Movie, LLC v. Mattel, Inc.
601 F.3d 1387, 94 U.S.P.Q. 2d (BNA) 1315, 2010 U.S. App. LEXIS 7774 (2010)
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Rule of Law:
A trademark owner can rebut the statutory presumption of abandonment that arises from three years of nonuse by producing evidence of activities that demonstrate a continuous intent to resume use of the mark in the reasonably foreseeable future.
Facts:
- Mattel's predecessor, Tyco, produced and sold a line of toys under the CRASH DUMMIES marks starting in 1991 through at least 1994.
- Tyco entered into forty-nine licenses for the marks, which expired at the end of 1995 with some sell-off periods into 1996.
- The Crash Dummy Movie, LLC (CDM) had an option agreement with Tyco to produce a motion picture, which expired in July 1996.
- Facing financial difficulties, Tyco assigned its trademark portfolio, including the CRASH DUMMIES marks, to Mattel in February 1997.
- In 1998, Mattel considered but declined an offer from KB Toys to be the exclusive retailer of CRASH DUMMIES toys, citing the significant cost of retooling the products to meet Mattel's safety standards.
- From 2000 to 2003, Mattel engaged in brainstorming, research, development, testing, and concept approval for a new line of toys under the CRASH DUMMIES marks.
- Mattel began manufacturing the new toys in October 2003 and reintroduced them to the market in December 2003.
Procedural Posture:
- Tyco obtained federal trademark registrations for the marks in 1993.
- The United States Patent and Trademark Office (USPTO) cancelled the registrations on December 29, 2000, due to Mattel's failure to file a declaration of use.
- On March 31, 2003, The Crash Dummy Movie, LLC (CDM) filed an intent-to-use application with the USPTO for the mark CRASH DUMMIES.
- Mattel opposed CDM's application before the Trademark Trial and Appeal Board ('Board').
- The Board found that while a prima facie case of abandonment existed due to over three years of nonuse, Mattel had successfully rebutted the presumption.
- The Board sustained Mattel's opposition, preventing CDM's registration of the mark.
- CDM (appellant) appealed the Board's decision to the U.S. Court of Appeals for the Federal Circuit, with Mattel as the appellee.
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Issue:
Does a trademark owner's activities, such as internal product development, business negotiations, and addressing retooling challenges, constitute sufficient evidence of an 'intent to resume use' to rebut the statutory presumption of trademark abandonment arising from three consecutive years of nonuse?
Opinions:
Majority - Rader, Circuit Judge.
Yes. A trademark owner's activities can rebut the statutory presumption of abandonment. A prima facie case of abandonment, established by three consecutive years of nonuse, creates a rebuttable presumption that the owner intended to abandon the mark. The burden then shifts to the trademark owner to produce evidence of an intent to resume use. Here, Mattel successfully rebutted the presumption by demonstrating its continuous intent through several actions during the period of nonuse. First, Mattel's 1998 negotiations with KB Toys, though ultimately unsuccessful, showed it was actively contemplating the manufacture and sale of the toys. The decision not to proceed was based on business and safety concerns (retooling costs), not an intent to abandon the mark. Second, Mattel's efforts from 2000 to 2003—including brainstorming, research, development, and concept approval—provided substantial evidence of a concrete plan to resume use. The court found that such internal development activities, culminating in the product's actual relaunch, were sufficient to show Mattel's intent to use the mark in the reasonably foreseeable future.
Analysis:
This case clarifies the type and quantum of evidence required to rebut the presumption of trademark abandonment. It establishes that a trademark owner does not need to engage in public-facing use or marketing to demonstrate an 'intent to resume use.' Internal activities, such as product development, research, and even failed business negotiations, can be sufficient if they show a consistent, ongoing plan to bring the mark back to the market. This holding provides significant protection for companies that acquire dormant brands and require substantial time to retool, redesign, or reposition products before relaunching them.
