Lucent Information Management, Inc. v. Lucent Technologies, Inc.
1999 U.S. App. LEXIS 18051, 51 U.S.P.Q. 2d (BNA) 1545, 186 F.3d 311 (1999)
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Rule of Law:
To establish common law trademark rights superior to a subsequent federal intent-to-use (ITU) applicant, a party's prior use of the mark must be more than de minimis and achieve sufficient market penetration to create a genuine public association between the mark and its services.
Facts:
- In 1995, Norman Feinstein and three others formed Lucent Information Management, Inc. (LIM), a Pennsylvania corporation providing document imaging and management services.
- On September 5, 1995, Feinstein sent a letter on another company's letterhead to approximately 50 personal and business contacts to announce LIM's services.
- On October 5, 1995, a LIM principal installed a modem for the Israel Bonds Office for $323.50; the invoice bore LIM's name, but the principal personally received the payment.
- Through the end of 1995, LIM did not engage in any public advertising, relying instead on word-of-mouth and making sales presentations to acquaintances at three companies, which did not result in sales.
- Lucent Technologies, Inc. (LTI) was created as a spin-off from AT&T.
- In November 1995, AT&T's trademark counsel conducted searches for the name 'LUCENT' and the search reports included a reference to LIM.
- On November 30, 1995, LTI's predecessor filed a federal intent-to-use (ITU) application with the U.S. Patent and Trademark Office for the mark 'LUCENT'.
- On February 5, 1996, LTI was publicly announced through a massive media campaign.
Procedural Posture:
- Lucent Information Management, Inc. (LIM) filed suit against Lucent Technologies, Inc. (LTI) in the U.S. District Court for the District of Delaware, alleging trademark infringement.
- LTI moved for summary judgment, arguing it had prior rights to the 'LUCENT' mark due to its federal intent-to-use application.
- The district court granted summary judgment in favor of LTI on the trademark infringement claims.
- LIM, as appellant, appealed the district court's grant of summary judgment to the U.S. Court of Appeals for the Third Circuit, where LTI was the appellee.
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Issue:
Do minimal, non-public, pre-launch business activities, including one minor sale and several sales presentations, constitute sufficient 'use in commerce' to establish common law trademark rights superior to a subsequent filer of a federal intent-to-use application?
Opinions:
Majority - Greenberg, Circuit Judge
No. Minimal, non-public activities do not constitute sufficient 'use in commerce' to establish common law trademark rights against a subsequent filer of an intent-to-use application. To establish priority, a user must show use 'sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind.' The court applied the four-factor Natural Footwear test for market penetration and found LIM's activities wanting. (1) LIM's single sale for $323.50 was de minimis. (2) With only one sale, there were no 'growth trends' to analyze. (3) The ratio of one customer to the potential market was minute. (4) LIM engaged in no public advertising. These activities were insufficient to demonstrate the market penetration required to establish common law rights before LTI filed its ITU application. The law protects established goodwill, not the mere intention to create it.
Dissenting - Ackerman, Senior District Court Judge
Yes, a genuine issue of material fact exists as to whether LIM's conduct constitutes sufficient use. The majority errs by applying the Natural Footwear market penetration test, which is intended to determine the geographic scope of a remedy between two established users, not the threshold question of whether use exists at all. The correct standard for common law rights is 'deliberate and continuous' use in commerce, which need not be extensive or result in widespread recognition. LIM's activities—including making a sale, creating marketing materials, attending a trade show, and making multiple sales presentations—are sufficient for a jury to find it had established common law rights before LTI's filing. The majority's high standard unfairly penalizes start-up companies and conflates the standard for establishing rights with the higher standard required for a broad injunction.
Analysis:
This decision solidifies the principle that trademark rights are earned through substantial market activity, not mere preparatory steps. By applying the Natural Footwear market penetration test to the threshold question of 'use,' the court raised the bar for establishing common law rights, particularly for start-ups. The ruling gives significant weight to the federal intent-to-use (ITU) filing system, creating a clear priority rule that favors those who formally declare their intent over those with only nascent, non-public commercial activities. Future litigants seeking to establish common law priority will need to prove more than token use, demonstrating commercially significant sales, advertising, and public recognition.
