What’s the News?

Macy’s, Inc. (Macy’s) is currently engaged in litigation to regain ownership of multiple trademarks associated with Macy’s-owned department stores that are no longer in use. Claiming that the marks were abandoned, Strategic Marks, LLC (Strategic Marks) filed applications for — and ultimately obtained rights to — the trademarks in dispute at the US Patent and Trademark Office (USPTO). The outcome of the case, which is pending in the Northern District of California, will help clarify exactly when a trademark is abandoned, making it fair game for other companies to acquire and use.

More Details on the Case

Strategic Marks’ business model consists of acquiring trademarks that are no longer active and rebuilding the associated brands. In 2010, the company filed applications with the USPTO to obtain rights to numerous marks associated with department stores that were previously purchased by Macy’s. The applications, which were ultimately granted, sought the rights to marks associated with stores such as Filene’s, Jordan Marsh, Robinson’s, and Abraham & Strauss. Strategic Marks began marketing and selling goods under these brand names.

In 2011, Macy’s sued Strategic Marks, alleging trademark infringement and violations of state unfair competition laws. According to Macy’s, Strategic Marks was attempting to trade on the goodwill and consumer recognition of the Macy’s-owned department stores. In 2007, however, Macy’s opted to unite its department stores under a single banner, converting them all to “Macy’s” stores. Through this rebranding, Strategic Marks claims, Macy’s abandoned the marks in question, opening the door to their acquisition by another party.

Macy’s disagrees, arguing that it never abandoned the marks. And, in fact, since 2011, Macy’s has been operating a website at which it sells clothing and accessories bearing many of the old department store logos. Interestingly, Strategic Marks counter-claimed, alleging that, through this website, Macy’s is actually infringing marks that it now owns. The case was originally set for trial in 2015. But when Strategic Marks filed applications for additional trademarks associated with other Macy’s-owned department stores, a second lawsuit ensued. The two cases have now been consolidated for additional hearings.

The Takeaway

To establish trademark abandonment under the Lanham Act, a challenger must prove that the owner stopped using the mark in question without the intent to resume use. Federal courts generally require a strong showing from a challenger before finding abandonment. While non-use for a period of three years creates aprima facie case for abandonment, the trademark owner can rebut such evidence by showing that it intended to resume use. Regardless of whether Strategic Marks ultimately prevails in proving abandonment, this case highlights the risks associated with rebranding efforts. Before making a business decision about the use or redevelopment of their brands, companies — both in retail and other industries — should be sure that they will not risk losing valuable intellectual property.