Erich Specht v. Google Incorporated
2014 WL 1330303, 110 U.S.P.Q. 2d (BNA) 1319, 747 F.3d 929 (2014)
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Rule of Law:
A trademark is deemed abandoned if its owner discontinues its use in commerce with no intent to resume use within a three-year period, allowing the mark to return to the public domain for appropriation by another.
Facts:
- In 1998, Erich Specht founded Android Data Corporation (ADC) to license e-commerce software and perform web-based services.
- In 2002, Specht successfully registered the 'Android Data' trademark with the United States Patent and Trademark Office.
- By the end of 2002, ADC ceased major operations, Specht laid off his only employee, canceled ADC's internet service, moved the business into his home, and transferred all of ADC's assets, including the 'Android Data' mark, to his other wholly-owned company, The Android’s Dungeon, Incorporated (ADI).
- In 2003, Specht shut off ADC's phone line and spent the year unsuccessfully attempting to sell ADC's assets.
- Specht continued to host ADC's website for some time, but let the registration for androiddata.com lapse in 2005.
- In November 2007, Google released a beta version of its new Android operating system for mobile phones.
- In December 2007, Specht sent out a mass mailing promoting his software suite with the Android Data mark, which garnered no sales, and two months later unsuccessfully attempted to license his software to a healthcare consulting firm using the mark.
- In April 2009, Specht resurrected a website with a slightly different URL (android-data.com) and retroactively assigned the Android Data mark to ADI.
Procedural Posture:
- Erich Specht, Android Data Corporation (ADC), and The Android’s Dungeon, Incorporated (ADI) sued Google Inc., the founders of Android, Inc., and the Open Handset Alliance in the United States District Court for the Northern District of Illinois, Eastern Division, alleging trademark infringement and unfair competition under the Lanham Act, a violation of Illinois’s Deceptive Trade Practices Act, and common-law trademark violations.
- The district court dismissed the founders of Android, Inc. and the Open Handset Alliance as defendants, finding no claim could be stated against them.
- The district court dismissed Specht and ADC as plaintiffs from the trademark infringement claim, ruling that only ADI, as the current owner, had standing.
- Google filed counterclaims against ADI, seeking a declaration that the mark had been abandoned and requesting the court to cancel the mark.
- Google moved for summary judgment.
- The district court excluded certain screenshots submitted by Specht due to lack of proper authentication.
- The district court found that Specht had abandoned the mark in 2002, and consequently, all of Specht's claims failed as a matter of law.
- The district court granted summary judgment to Google, issued a declaration that the mark was abandoned, and ordered the cancellation of Specht’s registration.
- Specht, et al., appealed the district court's judgment to the United States Court of Appeals for the Seventh Circuit.
- At oral argument, Google dismissed its remaining cross-claims with prejudice to establish appellate jurisdiction.
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Issue:
Does discontinuing the commercial use of a registered trademark for over three consecutive years, without continuous commercial utilization or intent to resume bona fide use in commerce during that period, constitute abandonment, thereby forfeiting the owner's rights against a subsequent user?
Opinions:
Majority - Rovner, Circuit Judge
Yes, discontinuing the commercial use of a registered trademark for over three consecutive years, without continuous commercial utilization or intent to resume bona fide use in commerce during that period, constitutes abandonment, thereby forfeiting the owner's rights against a subsequent user. The court affirmed the district court's grant of summary judgment to Google, finding that Specht had abandoned the 'Android Data' mark by the end of 2002 and did not form an intent to resume use in commerce within the statutory three-year period. The court applied 15 U.S.C. § 1127, which states that a trademark is abandoned if its 'use in commerce' has been discontinued with no intent to resume use, and that nonuse for three consecutive years is prima facie evidence of abandonment. The intent to resume use must be formulated within the three years of nonuse, and the 'use' must pertain to the sale of goods or provision of services. The court found that Specht ceased using the mark for commercial purposes by the end of 2002, when ADC shut down major operations, laid off its employee, and transferred assets. Specht's attempts to show continued use were insufficient: efforts to sell business assets are not 'use in commerce' for the mark; a phone line closure in 2003 was budgeted as a 2002 expense, indicating non-operation; his website operating until 2005 was not a 'use in commerce' because he offered no goods or services through it; and his two sales efforts in 2007 were 'isolated and not sustained,' not constituting continuous commercial utilization. By the time Google began using its 'Android' mark in November 2007, the 'Android Data' mark lay abandoned. Once a mark is abandoned, it returns to the public domain and can be appropriated anew. Google's uninterrupted and continuous use since November 2007 established it as the senior user. Specht's attempted revival of the mark in December 2007 was 'too late' as the mark was already permanently abandoned after more than three years of nonuse. The court also upheld the district court's dismissal of Specht and ADC as plaintiffs due to lack of standing (only the current owner, ADI, could sue), and its evidentiary rulings, including the exclusion of unauthenticated screenshots. Finally, the court confirmed the district court's authority to cancel the mark and award costs to Google.
Analysis:
This case reinforces the stringent requirements for maintaining trademark rights, particularly regarding the 'use in commerce' standard for avoiding abandonment. It clarifies that merely holding onto assets or making sporadic, unsuccessful attempts to sell services does not constitute sufficient commercial use to rebut a prima facie case of abandonment. The ruling emphasizes the 'first to use' principle for abandoned marks, allowing a subsequent party to establish new rights if the original owner has ceased active commercial use for the statutory period. This provides important guidance for trademark holders on the necessity of continuous, bona fide commercial activity to protect their intellectual property.
