After reading this, I am left wondering what is the point of a U.S. federal registration. The background:
Custom Vehicles created a van that it called “Work-N-Play.” The interior of the van could be converted from a mobile office to a camper so that the owner could “work out of it through the week” and be “playing out of it on the weekends.” In 2000, Custom Vehicles registered “Work-N-Play” with the U.S. Patent and Trademark Office as an “intent to use” trademark, meaning that it would have to be used in commerce within six months.
The following year, Forest River, a much larger company, built a towed van with a ramp door at the back and space inside for a repair shop so the van’s owner could both transport a motorcycle or snowmobile and repair it without taking it to a repair shop. Forest River called its product “Work and Play” and began selling the vans in 2002. By 2004, Forest River’s sales of the “Work and Play” van exceed $10 million in sales. On the other hand, Custom Vehicles sold only one “Work-N-Play” van—a demo model—to a family member for only 2.5 percent of the van’s normal sales price. Both Custom Vehicles and Forest River promoted their respective products at recreational-vehicle trade shows. Custom Vehicles sued Forest River for trademark infringement. The district court granted summary for Forest River and Custom Vehicles appealed.
The Seventh Circuit noted that Work-N-Play was a descriptive mark because it describes a characteristic of the vans. Therefore, in order for Work-N-Play to be a legally protected trademark, it must achieve “secondary meaning.” Custom Vehicles argued that a registered trademark carries a presumption of validity and secondary meaning and is therefore enforceable against sellers that use the term or a confusingly similar variant. The court rejected Custom Vehicles’ argument and noted that the act of registration merely begins the process that leads to the presumption. The court pointed out that a registrant could not bank or warehouse trademarks unrelated to any product or service in hopes of extracting a license fee from sellers of products or services for which one of the trademarks might be apt. Instead, a registrant must certify that trademark is used in commerce within six months of filing the trademark application. Within the six months following the trademark registration, Custom Vehicles had sold only one van, and the trademark was not used in the sale. However, even if the trademark had been used in the sale, that would not have been sufficient to place the trademark in the ordinary course of trade because the sale was too obscure to alert a significant number of consumers that Work-N-Play had a definite referent. The Court held that the Work-N-Play trademark had not achieved secondary meaning and there was no basis for supposing that consumers would think Forest River’s van had been produced by Custom Vehicles instead.
You can read the opinion here.
I am concerned by the rationale behind this decision. In a certain sense, I agree with the outcome. A single sale to a family member for 2.5% of the listed retail price in the course of four (4) years hardly seems to me to be use in commerce. According to the source, the trademark Work-N-Play did not even appear on the product which was sold to the family member.
Therefore, I have serious questions about the rationale that the mark was merely descriptive since the U.S. Patent & Trademark Office did not reach that conclusion. It was a Sec. 1(b) application and registered based on use in commerce – not 2(f). In essence, the Seventh Circuit appeals court substituted its judgment for that of the USPTO, and then rendered its decision based on its substituted judgment.
Rather than basing its decision based on its substituted judgment of descriptiveness, perhaps it should have determined that there was never any valid use of the mark in commerce (at least as I read the facts) and thus Custom Vehicles’ registration was invalid.
Perhaps there are facts of which I am not aware. However, it seems like the court just went down the wrong path.