IP Law Daily Nonuse not proper ground for cancelling mark registered for five years
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Monday, February 6, 2017

Nonuse not proper ground for cancelling mark registered for five years

By Cheryl Beise, J.D.

The federal district court in Columbus, Ohio, erred in concluding that NetJets’ registration for INTELLIJET was void ab initio for failure to use the mark in commerce in connection with the identified goods, "computer software for managing aircraft leasing and sales." Because NetJets’ mark had been used longer than five years, a challenge based on nonuse was precluded by Section 14 of the Lanham Act. However, the district court properly granted summary judgment to IntelliJet on NetJets’ trademark infringement and related claims because consumers were not likely to confuse NetJets’ INTELLIJET software product with IntelliJet’s aircraft brokerage services (NetJets, Inc. v. IntelliJet Group, LLC, February 3, 2017, Stranch, J.).

NetJets, Inc., is a private-aviation company that specializes in "fractional ownership" of private airplanes, private-plane management services, and used plane sales. NetJets’ intellectual property is owned by Columbia Insurance Company, which licenses it back to NetJets. IntelliJet Group LLC is primarily a broker for private jet purchases. NetJets and Columbia (together, "NetJets") sued IntelliJet in January 2012, alleging trademark infringement and false designation of origin under the Lanham Act and unfair competition and deceptive trade practices under Ohio law. IntelliJet counterclaimed for cancellation of NetJets’ INTELLIJET mark, registered in connection with "computer software for managing aircraft leasing and sales."

In 2013, the district court granted summary judgment to IntelliJet on the claims brought against it and on its counterclaim for cancellation of the INTELLIJET registration on the ground of abandonment. In 2015, the Sixth Circuit reversed the abandonment ruling, finding that genuinely disputed questions existed about whether NetJets had sold or licensed its software to external customers. On remand, the district court rejected NetJets’ argument that its INTELLIJET mark was incontestable and not subject to a use-based challenge. The district court concluded that NetJet’s registered mark was void ab initio because it was not used in commerce on the date of registration in 1995 and 2001, the time period during which NetJets’ mark purportedly became incontestable. The court also found that there was no likelihood of confusion between NetJets’ use of INTELLIJET for software and IntelliJet’s use of an identical mark on aircraft brokerage services. The court granted summary judgment to IntelliJet. NetJet again appealed.

Cancellation counterclaim. Under Section 14 of the Lanham Act, a mark that has been registered for five years is subject to challenge only for a limited set of reasons, such as fraudulent registration or if the mark has become generic. 15 U.S.C. §1064. Because nonuse of the mark, or void ab initio, was not one of enumerated reasons, the Sixth Circuit concluded that Section 14 barred IntelliJet’s counterclaim for cancellation of the mark.

The district court reasoned that NetJets’ mark never achieved "incontestable" status because the mark had not been used in commerce at the time of registration and therefore, the registration was void ab initio. Section 15(3) of the Lanham Act provides that in order to be incontestable, a registered mark must be continuously used in commerce for "five consecutive years" subsequent to the date of such registration and must still be in use in commerce. 15 U.S.C. §1065(3).

The Sixth Circuit rejected the district court’s reasoning. "The power of federal courts to cancel a mark under the Lanham Act, as provided for under §1119, is subject to §1064 and limited to the grounds listed in the statute," the appeals court said. In Park ‘N Fly Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 203 (1985), the Supreme Court stated that "the power of the courts to cancel registrations and ‘to otherwise rectify the register’ must be subject to the specific provisions concerning incontestability." The court also noted that the Trademark Trial and Appeals Board recently rejected a void ab initio claim against an incontestable registration because the claim was "not enumerated under Trademark Act Sec. 14(3)." University of Kentucky v. Kentucky Gameday, LLC, 2015 WL 9906634 (T.T.A.B. 2015).

The Sixth Circuit concluded that Section 14 bars IntelliJet Group from bringing its challenge to the mark as void ab initio. The court declined to examine whether the mark was incontestable under Section 15 and whether the limitations on challenging incontestable marks in Section 33 of the Lanham Act applied.

Likelihood of confusion. The Sixth Circuit agreed with the district court’s conclusion that there was no likelihood of confusion between NetJets’ software used to perform various aspects of its private aviation operations and IntelliJet’s aviation brokerage services. Although the parties both used the word INTELLIJET (albeit presented differently), IntelliJet did not sell software that might be confused with NetJets’ IntelliJet software. In fact, there was no evidence that NetJets marketed its IntelliJet software as a standalone product. NetJets also did not produce any evidence of actual confusion. Moreover, purchasers of IntelliJet Group’s private aviation sales services likely possessed a high level of sophistication.

The court affirmed the district court’s grant of summary judgment to IntelliJet Group on NetJets’ claims, reversed the district court’s cancellation ruling, and remanded the case to the district court to address IntelliJet Group’s argument that NetJets had abandoned its mark through non-use.

The case is No. 15-4230.

Attorneys: Jeffrey S. Standley (Standley Law Group LLP) for NetJets Inc. and Columbia Insurance Co. Joseph Richard Dreitler (Dreitler True, LLC) for IntelliJet Group, LLC, d/b/a IntelliJet International.

Companies: NetJets Inc.; Columbia Insurance Co.; IntelliJet Group, LLC, d/b/a IntelliJet International

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