Wednesday, September 23, 2015

Finding Lack of Use in Commerce, TTAB Orders Cancellation of "ADD A ZERO" Registrations

The Board granted the petition of adidas AG for cancellation of two registrations owned by the Christian Faith Fellowship Church for the mark ADD A ZERO, in standard character and design form, for "clothing, namely shirts and caps," finding that the Church had not used the marks in commerce prior to the filing date of the underlying applications. adidas AG v. Christian Faith Fellowship Church, Cancellation No. 92053314 (September 14, 2014) [not precedential].

Respondent operates a church in Zion, Illinois, near the Wisconsin border, and its members come from both states. In 2004, it began selling shirts and caps bearing the subject marks, purchasing the items from an Illinois company. The items were sold only in the church bookstore (in Illinois), prior to the filing of the underlying applications in March 2005. The Church submitted evidence of two sales transactions in an effort to counter Petitioner's claims of non-use. The sales were made at the bookstore to two different individuals.

The Board observed that an application filed under Section 1(a) is void ab initio if the mark was not in use in commerce in connection with the identified goods prior to the filing date of the application. It noted that "commerce" includes intrastate transactions that affect interstate or foreign commerce. The Church maintained that the two sales at its bookstore in Illinois, together with its ability to sell the goods to out-of-state parishioners who cross state lines to attend the church, were sufficient to satisfy the "in commerce" requirement because they have an effect on interstate commerce.

As to the first transaction, it was not clear whether the purchaser was a resident of Illinois. The second purchaser, however, paid with a check having a Wisconsin address, and the Board concluded that she crossed state lines when she made her purchase of two caps at the church bookstore.

The Board concluded that the Church's activities did not have an effect on interstate commerce. It distinguished the three cases cited by the Church: Gastown, Silenus Wine, and Larry Harmon.

In Gastown, the CCPA held that a gas station that provided services to customers traveling interstate on federal highways had a direct effect on interstate commerce, noting that the involved vehicles "[o]bviously ... could not travel at all without the gasoline."

In Silenus Wines, the CCPA allowed registration of a mark used on imported wine sold intrastate because "were it not for the intrastate sales anticipated by the appellant-importer, the foreign commerce that occurred ... would probably not have occurred - unquestionably a direct effect."

And in Larry Harmon, the CAFC held that a single-location restaurant that served interstate travelers was using its mark "in commerce."

Here, the Board found, "the sale of two ADD A ZERO caps at a minimal cost within the state of Illinois to Ms. Howard [the second purchaser], who resides outside the state, does not affect interstate commerce that Congress can regulate such that the transaction would constitute use in commerce for purposes of registration."

The Church provided no support for the proposition that merely offering the goods in the bookstore to parishioners who reside out of state, combined with the aforesaid two sales, constituted use of the marks in commerce. "Respondent cannot rely on the fact that its goods could have been purchased by people who reside out of state." The sale in Illinois of two caps to a Wisconsin resident "is de minimis and, under the circumstances shown here, is insufficient to show use that affects commerce."

The Board therefore ordered cancellation of the two registrations on the ground of non-use.

Read comments and post your comment here.

TTABlog comment: Holy mackerel. That is harsh, isn't it? If the Church had purchased the goods from out-of-state, would that have made a difference? I think not.

Text Copyright John L. Welch 2015.


At 9:49 AM, Anonymous Anonymous said...

Isn't Adidas at all concerned about its reputation for effectively forcibly taking a mark from a church? This appears to be merely a slogan mark for some intended marketing campaign. Couldn't it have just negotiated to acquire this mark with some nominal giveback or even a donation to the church? This hardly sounds like a mark the church really needed and had to retain, though I'm merely speculating and the church did apparently pay to defend its rights in this mark.

At 12:11 PM, Blogger TMBaron said...

As I have previously opined, perhaps the greatest single factor affecting TTAB decisions is the identities of the parties. Large, well-known entities seem to come out on top a highly disproportionate amount of the time.

In tis case, the Board had to literally bend over backwards to hold against the Registrant. Discounting ACTUAL interstate commerce as insignificant was unwarranted. It is unlikely that the Registrant will find it cost effective to appeal, but it would be nice to have them do it to achieve justice.

At 1:29 PM, Blogger John L. Welch said...

Does the Church have priority by way of use analogous to trademark use? Could the Church succeed in opposing the attempt by adidas to register its mark?

At 1:39 PM, Anonymous Anonymous said...

This appears to be a really BIG deal on the Interstate commerce issue.

I always assumed based on recent cases that just about anything qualified for Interstate Commerce. Was the Board just plain wrong here?

I guess we all need to be much more careful now.

At 6:23 PM, Blogger Anonymous said...

Yeah, I don't think this case squares with Gonzalez v. Raich (2005).

The Board says: "Respondent is still left with the sale in Illinois of two caps to a Wisconsin resident as the only evidence of a sale that arguably could affect interstate commerce. This sale is de minimis and, under the circumstances shown here, is insufficient to show use that affects interstate commerce."

Here is what the Supreme Court says in Gonzalez, discussing Wickard v. Filburn (1942): "Our case law firmly establishes Congress’ power to regulate purely local activities that are part of an economic “class of activities” that have a substantial effect on interstate commerce. . . . The fact that Wickard’s own impact on the market was “trivial by itself ” was not a sufficient reason for removing him from the scope of federal regulation. . . . [W] have often reiterated that '[w]here the class of activities is regulated and that class is within the reach of federal power, the courts have no power ‘to excise, as trivial, individual instances’ of the class.'"

In other words, the Board was wrong to focus on the "de minims" nature of Respondent's individual sale, when the class of activities, i.e. selling a t-shirt to an out-of-state visitor, is sufficient in the aggregate to affect interstate commerce such that Congress could regulate it. And if Congress can regulate it, then it's a "use in commerce." See 15 U.S.C. § 1125 (“The word ‘commerce’ means all commerce which may lawfully be regulated by Congress.”).

At 5:11 PM, Anonymous Jessica said...

To me this is just goods v. services, and is perfectly consistent with the PTO's requirements regarding use of a mark on goods. The TTAB is merely reiterating the distinction between goods that travel in interstate commerce - and saying that the fact that the purchaser is from out of state doesn't mean the sale of those goods counts as use of the mark ON GOODS in interstate commerce. While the church may be making sales in interstate commerce if it's open to selling to out of state residents, the application is for goods and not services. Good for the Board for clearing the register of registrations that never should've made it.

At 12:12 PM, Anonymous Flann Lippincott said...

So how much "use," then, is more than "de minimus"? How many interstate sales does the applicant need to make to satisfy this new standard? How to analyze the client's business's effect on interstate commerce? I don't think it squares with anything in the TMEP, and makes counseling clients on this matter tricky indeed.

At 12:17 PM, Anonymous Flann Lippincott said...

Well, at least it's not precedential.

At 2:02 PM, Anonymous Anonymous said...

Oral argument took place on June 8, 2016, and it sounds like it went very well for the appellant.


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