Action Ink, Inc. v. N.Y. Jets, LLC, 576 Fed. App’x 321 (5th Cir. July 23, 2014)

Although football and beer go hand-in-hand, the Jets and Anheuser-Busch have something else in common this year. Both have been sued over their use of the phrase “Ultimate Fan.”

Action Ink, Inc., a Louisiana corporation, owned the service mark “Ultimate Fan” for promotional contests at sporting events. It last conducted such a promotional contest in 1995. From 1995 to 2012, Action Ink tried unsuccessfully to garner business and had no qualms about informing other businesses of their allegedly infringing uses of its mark.

In 2012, Action Ink took its enforcement a step further when it sued Anheuser-Busch, Inc. and New York Jets, LLC in separate suits for their uses of the phrase. The suits alleged federal claims of false designation of origin under the Lanham Act and state law claims of unfair competition, injury to business reputation, and unfair trade practices under Louisiana law. The court in the Jets case awarded summary judgment to the Jets on the grounds of abandonment. The court in the Anheuser-Busch case then awarded summary judgment to Anheuser-Busch on the grounds of collateral estoppel from the Jets judgment and Action Ink’s failure to show likelihood of confusion.

On appeal, the Fifth Circuit consolidated the cases and affirmed the grants of summary judgment. The court began by explaining abandonment under the Lanham Act. Under the Act, a mark is abandoned “‘[w]hen its use has been discontinued’ and . . . there is ‘an intent not to resume such use.’” The Act defines “use” as “the bona fide use of [a] mark made in the ordinary course of trade, not made merely to reserve a right in the mark.” Further, “[n]onuse for three consecutive years is prima facie evidence of abandonment.” Finally, establishment of a prima facie case of abandonment shifts the burden to the mark holder to show that “circumstances do not justify the inference of intent not to resume use.”

Here, the Fifth Circuit found that the Jets had made out a prima facie case of abandonment because Action Ink had performed no contests for seventeen years before its lawsuits. The court rejected Action Ink’s contention that its unsuccessful solicitation of clients constituted bona fide use because Action Ink had nothing to show for its years of solicitation efforts. The court also relied on three reasons for rejecting Action Ink’s contention that a 2013 licensing agreement showed intent to resume use. First, the agreement was executed after the initiation of the lawsuits against the Jets and Anheuser-Busch. Second, the agreement appeared to be a sham because of the insignificance of the consideration paid by the licensee. Third, Action Ink presented no authority to show that a licensing agreement can revive an abandoned mark. The court found that Action Ink failed to establish that “circumstances do not justify the inference of intent not to resume use.”

Ultimately, the court held that Action Ink had abandoned its mark with respect to the Jets, and because it failed to argue against collateral estoppel on appeal, its mark was also held to be abandoned as to Anheuser-Busch. This case helps to shape the definition of “use in commerce” as used in the Lanham Act by clearly indicating what types of acts do not qualify.