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Emergency One, Incorporated v. American FireEagle, Limited

U.S. Court of Appeals, Fourth Circuit
228 F.3d 531 (2000)
ELI5:

Rule of Law:

Under the Lanham Act, a trademark owner who discontinues use of a mark on its goods cannot avoid abandonment unless it has an intent to resume use within the reasonably foreseeable future. The 'use' required to maintain trademark rights must be a bona fide use on the specific goods in the ordinary course of trade, not merely token or promotional use on other merchandise.


Facts:

  • In 1989, Emergency One, Inc. (E-One) acquired American Eagle Fire Apparatus Co., including its 'AMERICAN EAGLE' trademark and associated goodwill.
  • Shortly after the acquisition, E-One's president announced that while the company would fulfill existing orders, it would not build 'American Eagle branded products forever'.
  • Between 1989 and June 1992, E-One built a final batch of fire trucks, some bearing the AMERICAN EAGLE mark, to satisfy back orders.
  • By mid-1992, E-One ceased all manufacturing of new fire trucks under the AMERICAN EAGLE brand.
  • From mid-1992 to 1995, E-One did not sell new AMERICAN EAGLE fire trucks but used the logo on promotional items like T-shirts and hats, and on its security guards' uniforms. During this period, E-One considered but did not execute specific plans to reintroduce the brand.
  • In 1994, Michael Carter, a former American Eagle employee, founded American FireEagle, Ltd. (AFE) and began marketing fire trucks with a similar 'AMERICAN FIREEAGLE' mark, believing E-One had abandoned its rights.
  • After discovering AFE and noting dealer confusion, E-One complained to AFE about the mark.
  • In September 1995, E-One announced it would begin selling a line of low-cost fire trucks under the AMERICAN EAGLE brand.

Procedural Posture:

  • Emergency One, Inc. (E-One) filed a trademark infringement suit against American FireEagle, Ltd. (AFE) in federal district court.
  • AFE asserted the affirmative defense that E-One had abandoned the mark and filed a counterclaim for infringement.
  • The parties stipulated that the only issue for trial was whether E-One had abandoned the AMERICAN EAGLE mark.
  • Following a trial, the jury returned a verdict in favor of E-One, finding no abandonment.
  • The district court entered judgment for E-One and issued a permanent injunction against AFE.
  • The district court denied AFE's renewed motion for judgment as a matter of law.
  • AFE, as the appellant, appealed the judgment to the U.S. Court of Appeals for the Fourth Circuit, with E-One as the appellee.

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Issue:

Under the Lanham Act, to avoid abandonment of a trademark, must an owner who has discontinued its use have an intent to resume use in the 'reasonably foreseeable future,' and must the 'use' be on the specific goods in the ordinary course of trade rather than on promotional items?


Opinions:

Majority - Michael, Circuit Judge

Yes. To avoid abandonment, a trademark owner's intent to resume use must be within the reasonably foreseeable future, and the only 'use' that prevents abandonment is bona fide use of the mark on the relevant goods in the ordinary course of trade. The district court erred by failing to properly instruct the jury on these two critical points. The court reasoned that under the Lanham Act, 'use' is not satisfied by promotional activities on different goods (like T-shirts) or by token uses. While E-One presented enough evidence of its 'intent to resume use' to create a jury question, the jury was not properly guided. The instructions failed to explain that a vague, subjective intent to resume use at some unspecified date is insufficient; the intent must be to resume use in the 'reasonably foreseeable future,' a standard that depends on the industry and circumstances. Because the jury may have wrongly concluded that E-One's promotional activities constituted 'use' or that a non-specific intent was sufficient, the errors were prejudicial and a new trial is required.



Analysis:

This decision significantly clarifies the standards for the trademark abandonment defense, particularly regarding 'use' and 'intent to resume use.' It establishes that use is product-specific, meaning a company cannot warehouse a valuable mark by using it on tangential promotional merchandise instead of the primary product. The ruling also adds an objective reasonableness component to the 'intent to resume use' element, requiring that the owner's plans be for the 'reasonably foreseeable future,' thereby preventing owners from indefinitely shelving marks based on a vague hope of future use. This holding makes it more difficult for trademark owners to defend against abandonment claims when a mark has been dormant on its core product for a significant period.

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