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Use It or Lose It: Can Residual Goodwill Avert Abandonment?
The notorious legal battle over the right to use the MUSTANG RANCH trademark for legal brothel services illustrates the 'use it or lose it' adage as applied to trademark rights and the difficulty of establishing an excuse for nonuse. Burgess v. Gilman, 78 U.S.P.Q.2d 1773 (D. Nev. 2006). Because U.S. law does not permit the warehousing of trademarks, the owner of a trademark typically must use the mark in commerce or lose the ability to prevent others from using it. For this reason, '8 of the Lanham Act requires trademark owners to file a declaration of use between the fifth and sixth year after registration and with renewals. 15 U.S.C. '1058.
Under '8, if the owner of a registration has temporarily ceased use of the mark due to circumstances beyond the owner's control, the owner 'must file an affidavit setting forth those goods or services in connection with which the mark is not in use in commerce and showing that any such nonuse is due to special circumstances which excuse such nonuse and is not due to any intention to abandon the mark.' 15 U.S.C. '1058(b) (emphasis added). 'Excusable nonuse' of a mark is difficult to prove. The owner of the mark must 'set forth the date when use of the mark in commerce stopped and the approximate date when use is expected to resume; and recite facts to show that nonuse as to those goods and services is due to special circumstances.' 37 C.F.R. '2.161(e)(2) (emphasis added). The owner must also 'specify the reason for nonuse, the specific steps being taken to put the mark back in use and any other relevant facts.' Trademark Manual of Examining Procedures '1604.11.
Circumstances that may excuse nonuse include a trade embargo, sale of a business, retooling of a plant or equipment essential to the production of the goods if no alternative equipment is available, intermittent production of large-ticket items such as airplanes that have been ordered but cannot be produced quickly or in large numbers, or fire or other catastrophe affecting the owner.
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