Judges: Newman, Rader (author), Bryson [Appealed from TTAB]

In The Crash Dummy Movie, LLC v. Mattel, Inc., No. 09-1239 (Fed. Cir. Apr. 16, 2010), the Federal Circuit affirmed the TTAB’s decision finding that Mattel, Inc.’s (“Mattel”) nonuse of the CRASH DUMMIES and THE INCREDIBLE CRASH DUMMIES marks (collectively “CRASH DUMMIES marks”) for nearly eight years did not constitute abandonment where Mattel produced substantial evidence of its intent to resume use of the marks during that period of nonuse.

Mattel’s predecessor-in-interest, Tyco Industries, Inc. (“Tyco”), began using the CRASH DUMMIES marks in 1991, obtained federal registrations for those marks in 1993, and sold toys under those marks through at least 1994. Tyco also entered into a number of licenses for use of the CRASH DUMMIES marks, which expired on December 31, 1995. In the mid-1990s, Tyco experienced financial difficulties, and on February 12, 1997, Tyco assigned its trademark portfolio, including the CRASH DUMMIES marks, to Mattel. On February 13, 1998, Mattel recorded Tyco’s assignment for the CRASH DUMMIES marks with the PTO.

In 1998, KB Toys approached Mattel about becoming the exclusive retailer of CRASH DUMMIES toys, but Mattel declined the offer because it needed to retool Tyco’s CRASH DUMMIES toys to meet its stringent safety standards and the costs associated with retooling were too significant, given KB Toys’ sales projections at the time. In 2000, Mattel began brainstorming ideas for a new line of toys under the CRASH DUMMIES marks, researched and tested the new toys as early as 2001, obtained concept approval by 2002, began manufacturing the new toys in October 2003, and reintroduced them into the market in December 2003. During this time, the PTO cancelled the registrations for the CRASH DUMMIES marks owned by Mattel for failure to file a Section 8 Declaration of Use.

 “[C]ancellation of a trademark registration does not necessarily translate into abandonment of common law trademark rights. Nor does it establish its owner’s lack of intent to use the mark.” Slip op. at 5-6.

On March 31, 2003, The Crash Dummy Movie, LLC (“CDM”) filed an intent-to-use application for the mark CRASH DUMMIES for games and playthings. Mattel opposed CDM’s application on the grounds of priority and likelihood of confusion. CDM conceded that the parties’ marks were confusingly similar, so the only issue before the TTAB was whether Mattel could establish prior rights in its CRASH DUMMIES marks. The TTAB found a prima facie case of abandonment by Mattel of the CRASH DUMMIES marks based on three years of nonuse, beginning at the earliest on December 31, 1995, and ending at Mattel’s actual shipment of the CRASH DUMMIES toys in December 2003. The TTAB concluded, however, that Mattel had rebutted the presumption of abandonment by showing “reasonable grounds for the suspension and plans to resume use in the reasonably foreseeable future when the conditions requiring suspension abate.” Slip op. at 3-4. CDM appealed the TTAB’s decision sustaining Mattel’s opposition.

The Federal Circuit found that substantial evidence supported the TTAB’s finding that Mattel intended to resume use of the CRASH DUMMIES marks during the relevant time period of nonuse (December 31, 1995, to December 2003). Specifically, the Federal Circuit found that there was no evidence that Mattel rejected the business opportunity with KB Toys in 1998 because it had decided to abandon its marks. Rather, Mattel did so because of the high cost of retooling Tyco’s product line to meet Mattel’s safety standards. Second, Mattel would not have recorded Tyco’s trademark assignment with the PTO in 1998 unless it intended to use the CRASH DUMMIES marks in the foreseeable future. Third, the cancellation of Mattel’s registrations for the CRASH DUMMIES marks did not establish Mattel’s lack of intent to use those marks. Finally, the Federal Circuit concluded that Mattel’s research and development efforts from 2000 to 2003 showed its intent to resume use of the marks. Accordingly, the Federal Circuit held that the TTAB correctly found that Mattel had not abandoned its trademark rights, and, therefore, CDM was not entitled to registration of the CRASH DUMMIES mark.