Precedential No. 31: De Minimis Sales of Amplifiers Over Six-Year Period Leads to Cancellation of "CS" Registration for Abandonment

The Board granted a petition for cancellation of a registration for the mark CS for "amplifiers," finding that Petitioner Adamson Systems proved by a preponderance of the evidence that Respondent Peavey Electronics had discontinued use of the CS mark on amplifiers, with intent not to resume use. Peavey's de minimis domestic sales of amplifiers under the CS mark between 2016 and 2021 were "insufficient to constitute bona fide use of that mark in the ordinary course of trade," and there was no evidence "showing any intention to resume use of the mark, much less evidence excusing Respondent’s extended period of nonuse." Adamson Systems Engineering, Inc. v. Peavey Electronics Corporation, 2023 USPQ2d 1293 (TTAB 2023) [precedential] (Opinion by Judge David K. Heasley)

Under the Lanham Act, there are two elements to a claim of abandonment for nonuse: (1) use of the mark has been discontinued, (2) with intent not to resume use. A mark registered on the Principal Register is presumed to be valid (Section 7(b)), and therefore “the burden of persuasion in a cancellation proceeding rests on the party seeking to cancel the registration." A party must overcome the registration’s presumption of validity by a preponderance of the evidence. Under Section 45, if a petitioner can show three consecutive years of nonuse, it establishes a prima facie showing of abandonment, creating a rebuttable presumption that use of the mark was discontinued with intent not to resume use.

"The term 'use in commerce' means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark." Lanham Act, Section 45. Prior to passage of the Trademark Law Revision Act (TLRA) in 1988, "token sales and sporadic, casual, and nominal shipments of goods bearing a mark were insufficient to avoid a prima facie finding of abandonment."

“The pre-TLRA cases remain instructive because if a use does not meet the old pre-1989 ‘token use’ standard, then it certainly will not rise to the higher level of ‘use’” set forth in the TLRA. 3 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 19:111 (5th ed. Sept. 2023).

"[L]ooking at the evidence as a whole, as if each piece were part of a puzzle to be fitted together," the Board found that Peavey's use of the CS mark was "sporadic, casual, and nominal" from 2016 through 2021, and "would not even meet the lower, pre-TLRA standard of use in commerce, much less the current higher standard of bona fide use made in the ordinary course of trade."

[The] evidence indicates that there was bona fide domestic use of the CS mark on amplifiers in the ordinary course of trade from 2012 through 2015. In the 2012-2015 period, Respondent’s domestic sales, measured in dollar amounts, were in the five-to-six figure range annually. But after 2013, when Respondent last advertised the CS amps in its domestic catalogs, domestic sales plummeted, rapidly dwindling to single digits and then zero at some points in the critical 2016-2021 time frame.

Peavey argued that "[a] mark is only abandoned when all trademark significance, including residual good will, is lost.” The Board was unmoved. Referring to the statutory definition of abandonment in Section 45, the Board observed that "[t]he second part of the statute provides that a mark shall be deemed to be abandoned" when the mark "lose[s] its significance as a mark." However, the first part of the definition "speaks not to remembrance of things past, but to use. Under its terms, a mark may be deemed abandoned '(1) [w]hen its use has been discontinued with intent not to resume such use.'" (emphasis by the Board).

Furthermore, the re-sale of branded amplifiers did not qualify as use of the CS mark because such use does not inure to Peavey's benefit. "Similarly, the repair and refurbishment of Respondent’s CS amplifiers does not maintain its rights in the mark, as neither the repair shops nor the parts bear the brand."

With regard to intent to resume use, Peavey's CEO testified that "[W]e fully intended and intend to come out with, you know, new technology using -- you know, for the CS product as well and evolve it," but Peavey was unable to provide contemporaneous documentation of those purported plans. The Board observed that "[t]he probative value of the witness’s testimony is significantly undermined by his utter lack of detail."

In sum, the Board found the record "devoid of evidence showing any intention to resume use of the mark, much less evidence excusing Respondent’s extended period of nonuse."

And so, the Board granted the petition for cancellation.

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Text Copyright John L. Welch 2023.