Macy’s had a recent win at the US District Court for the Northern District of California, when the court granted its partial motion for summary judgment against Strategic Marks, LLC. Judge Edward Chen ruled that Macy’s still has a “protected interest” in the trademarks of 8 well known but now-defunct department store chains that it acquired over the years.
The action began in 2011 when Macy’s filed suit against Strategic Marks alleging infringement of its federally registered trademarks for what it calls its “Heritage Marks” – all names of long-retired department stores previously acquired by Macy’s and re-branded as Macy’s stores in 2006.
In 2010, Strategic Marks filed trademark applications identical to the Heritage Marks. In July 2011, Macy’s created the “Macy’s Heritage Shop” on its website, offering for sale t-shirts bearing the Heritage Marks. Several months later in October 2011, Strategic Marks launched RetroDepartmentStores.com and also began offering for sale t-shirts bearing the Heritage Marks. In January 2015, Strategic Marks expanded its website to include an additional 12 Heritage Marks, and began selling t-shirts bearing the same. For 8 of these 12 additional Heritage Marks, Macy’s had registered trademarks in 2014 or earlier, prior to the Strategic Marks’ expansion. Macy’s moved for summary judgment on those 8 Heritage Marks.
Unlike patents and copyrights that have statutory temporal limitations, trademark rights can ostensibly survive in perpetuity, so long as use in commerce continues (ie, the mark is not abandoned) and the mark does not become generic. A trademark is deemed abandoned if the owner of a trademark ceases use for a protracted time period, and/or with no intent to resume the use. For the most part, abandonment is the end of the story, and others can begin use of the mark without legal ramifications or risk of consumer confusion.
But what about when a trademark is so well known that even after a period of non-use, it still resonates with consumers as a source identifier? Such can be the case with a sufficiently well-known brand: consumers may continue to associate the brand with the original owner long after it disappears from the marketplace. This is a “zombie” trademark – dead to the market, surviving only on the residual goodwill that lives in the minds of consumers. Strategic Marks’ business model is based on exploiting zombie trademarks, by offering new products under an old product name and capitalizing on the consumer recognition and nostalgia associated with the brand.
In the Heritage Marks litigation, Strategic Marks did not explicitly assert a claim for abandonment under 15 U.S.C. § 1127, instead proffering two bases for invalidating Macy’s federal registrations: Macy’s use (1) is merely ornamental, and (2) does not constitute use in commerce. The court rejected these arguments, considered sufficient Macy’s sales of t-shirts bearing the Heritage Marks on its website to establish use in commerce, and rejected claims that such use is merely ornamental. Therefore, the court held that Macy’s has a protectable interest in these particular Heritage Marks.
Despite Strategic Marks’ omission of a direct abandonment argument, the court construed Strategic Marks’ primary argument to be that the Heritage Brands are up for grabs because Macy’s no longer operates the regional stores under their original brand names, and therefore abandoned the Heritage Brands. The court rejected this position, pointing to evidence of the strength and renown of the Heritage Marks among consumers, and noting that Strategic Marks deliberately sought to exploit this residual goodwill in adopting the Heritage Marks. The court expressed concern that consumers may still be confused as to whether the Strategic Marks’ goods are authorized by and affiliated with Macy’s, the owner of the Heritage Marks. Indeed, Strategic Marks chose the Heritage Marks precisely because consumers still hold strong feelings for the brands.
Strategic Marks’ attempt to invalidate Macy’s 8 registrations on summary judgment was unsuccessful because Macy’s relied on its use of the Heritage Marks on t-shirts sold through Macy’s website and federal registrations, both of which predate Strategic Marks’ use. It will be interesting to see how the litigation progresses vis-à-vis the remaining Heritage Marks not adjudicated in the motion. That Judge Chen placed significant weight on the remaining substantial residual goodwill in the Heritage Marks, and on Strategic Marks’ admitted intent to exploit such goodwill in adopting the Heritage Marks, should prove beneficial to Macy’s going forward.
And in the US, trademark law has at its heart the goal of consumer protection. A trademark is not merely a piece of property – it serves to identify the unique source of a product’s origin so that consumers can navigate the marketplace with confidence. A zombie trademark is in inherent conflict with this principle, because its very purpose is to deceive. Drawn in by a familiar brand name, consumers expect the same standards of quality as when they first encountered the brand, to their inevitable disappointment. Zombie revivers, be forewarned: the Heritage Marks still have a pulse.