Warnervision Entertainment Inc. v. Empire of Carolina, Inc.
101 F.3d 259, 1996 WL 682122 (1996)
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Rule of Law:
The holder of an intent-to-use (ITU) trademark application may use that application as a defense against a preliminary injunction sought by a party whose commercial use of the mark began after the ITU application's filing date.
Facts:
- On September 9, 1994, Thomas Lowe Ventures, Inc. (TLV) filed an intent-to-use (ITU) application with the Patent and Trademark Office for the mark 'REAL WHEELS' for toy vehicles.
- After TLV's filing but before the application appeared in the public database, Warner-Vision Entertainment Inc. (WarnerVision) began using the 'REAL WHEELS' mark for home videos shrink-wrapped with toy vehicles.
- Around the same time, a toy manufacturer named Buddy L also began using the 'REAL WHEELS' mark for a line of vehicle replicas.
- WarnerVision filed its own application to register the mark on January 3, 1995, three days before Buddy L filed its application.
- Buddy L later filed for bankruptcy, and its assets were purchased by Empire of Carolina, Inc. (Empire).
- On October 20, 1995, Empire purchased all rights to the 'REAL WHEELS' mark from TLV, thereby acquiring the pending September 1994 ITU application.
- Empire simultaneously licensed TLV to use the 'REAL WHEELS' mark for toy automobiles.
Procedural Posture:
- WarnerVision sued Empire and TLV in the United States District Court for the Southern District of New York for trademark infringement.
- WarnerVision moved for a preliminary injunction to stop Empire and TLV from using the 'REAL WHEELS' mark.
- Empire filed a cross-motion for a preliminary injunction against WarnerVision.
- The district court granted WarnerVision's motion for a preliminary injunction and denied Empire's cross-motion.
- Empire and TLV, as appellants, appealed the district court's orders to the United States Court of Appeals for the Second Circuit.
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Issue:
May a court preliminarily enjoin an 'intent-to-use' (ITU) trademark applicant from making the commercial use necessary for registration based on a claim of priority by a party who began using the mark after the ITU application was filed?
Opinions:
Majority - Van Graafeiland, Circuit Judge
No. A court may not enjoin an ITU applicant from making the use necessary for registration on the grounds that another party has used the mark subsequent to the ITU filing. The Lanham Act's ITU provisions were designed to allow applicants to secure a priority date before commencing commercial use. Granting a preliminary injunction to a junior user would eviscerate the ITU provisions by preventing the applicant from ever completing the use requirement for registration, thereby permanently terminating their statutory rights. While an ITU application does not confer offensive rights to enjoin others before registration, it serves as a defense to preserve the applicant's ability to perfect its mark. An injunction is meant to preserve the status quo and the court's ability to render a meaningful decision, not to grant ultimate relief that effectively decides the case on a preliminary basis.
Analysis:
This decision solidifies the legal power of an intent-to-use (ITU) trademark application as a defensive shield during the pre-registration period. It clarifies that the priority date established by an ITU filing is legally significant even before the mark is registered. The ruling protects the investment and planning of businesses by preventing junior users from 'pirating' a mark and then using litigation to block the senior ITU filer from completing the registration process. This reinforces the integrity of the ITU system, ensuring that it provides a meaningful way to reserve a trademark without the immediate need for commercial use.
