4th Circuit Ruling: Abandonment Test Applies to Common Law Trademarks

In a recent decision, Simply Wireless v. T-Mobile, the Fourth Circuit Court of Appeals held that the statutory trademark abandonment test applies to common law trademark usage.

Background

Simply Wireless has been selling cell phones, accessories and prepaid airtime under the mark SIMPLY WIRELESS since 1997. From 2002 to 2008, the company sold prepaid airtime under the SIMPLY PREPAID trademark, both in stores and through its website, simplyprepaid.com. However, in 2009, Simply Wireless paused sales of its prepaid airtime under the SIMPLY PREPAID trademark and website. As a result, the website remained inactive until August 2014.

Despite the cessation of use of the SIMPLY PREPAID trademark, Simply Wireless never intended to abandon the mark. This is evidenced by an agreement with a media agency contracted to market products under the SIMPLY PREPAID mark through a separate website, where transactions occurred from 2012-2013. Thereafter, Simply Wireless ceased using the SIMPLY PREPAID trademark for a second time.

In June 2014, T-Mobile began operating its stores under the trademark SIMPLY PREPAID and subsequently filed a trademark with the United States Patent and Trademark Office. Upon learning of T-Mobile’s filing, Simply Wireless sought to federally register SIMPLY PREPAID. Thereafter, Simply Wireless relaunched its Simply Prepaid website and resumed selling prepaid cell phones.

Underlying Suit

Simply Wireless initially sued T-Mobile for trademark infringement in the Eastern District of Virginia in 2015. T-Mobile sought arbitration, which was granted. However, the arbitrator determined that the claims were not subject to arbitration, and Simply Wireless filed a subsequent federal lawsuit in May 2021.

Simply Wireless filed a motion for summary judgment asserting reverse confusion. T-Mobile also filed a motion for summary judgment on trademark infringement, alleging that Simply Wireless failed to show ownership of the SIMPLY PREPAID trademark in 2014—T-Mobile’s first use of the mark. T-Mobile also claimed that Simply Wireless failed to show continuous and exclusive use of the trademark SIMPLY PREPAID. The Court awarded summary judgment to T-Mobile and denied Simply Wireless’s motion. The Court noted that Simply Wireless had acquired common law rights in the SIMPLY PREPAID mark but abandoned any rights to that mark by failing to use the mark in commerce for over three years. Simply Wireless appealed to the Fourth Circuit.

Fourth Circuit Ruling

Under Section 1127 of Title 15, there is a rebuttable presumption of abandonment when a trademark challenger can show a lack of use for three consecutive years. If the presumption is applicable, the burden shifts to the trademark owner to show that he intended to resume his use of the trademark.

On appeal, Simply Wireless contended that genuine issues of material fact existed regarding the resumption of use of the SIMPLY PREPAID trademark. This was evidenced by the CEO’s Declaration and the proposed agreement between Simply Wireless and the media company contracted for their marketing. T-Mobile, on the other hand, argued that even if the district court erred in its abandonment ruling, it is still entitled to summary judgment because the abandonment inquiry only applies to registered trademarks.

The Fourth Circuit determined that the Declaration of Simply Wireless’s CEO was specific and “explicitly reveals Simply Wireless’s intent” to resume use of the SIMPLY PREPAID mark. Therefore, the Fourth Circuit concluded that the district court erred in ruling that the declaration failed to show Simply Wireless’s intent to resume use of the SIMPLY PREPAID mark.

The Fourth Circuit also noted that T-Mobile’s “continuous use” theory was not applicable in this case. Instead, as the district court properly noted, the abandonment inquiry applies, in accordance with the court’s precedent. Based on the evidence presented, the Fourth Circuit vacated and remanded the district court’s grant of summary judgment to T-Mobile.

Takeaway

In the Fourth Circuit, three years of non-use creates a statutory presumption of abandonment for both common law and federally registered trademarks.