With Hollywood churning out monster hits such as the “Walking Dead,” “Warm Bodies“ and “World War Z,” and UK’s “Shaun of the Dead” and “The World’s End,” zombies are in the spotlight and certain to shuffle through neighborhoods everywhere on October 31st. But there is a lesser-known zombie looking to take a bite out of companies and unsuspecting consumers, and current gaps in the law leave them as unprotected as Rick Grimes without his trusty Colt Python. If a company does not use a trademark for three consecutive years, courts will presume the mark was abandoned. 15 U.S.C. § 1127 (“Nonuse for 3 consecutive years shall be prima facie evidence of abandonment”). For example, if Tootsie Roll Industries stopped producing TOOTSIE ROLL® candies for three consecutive years, another entity could file an application to register the TOOTSIE ROLL® mark, seek to cancel any remaining trademark registrations for TOOTSIE ROLL® still at the U.S. Patent and Trademark Office based on abandonment of rights, and begin producing a product under the same name. The TOOTSIE ROLL® mark would then transform into a “zombie trademark”—a once dead mark that comes back to life. Zombie trademarks may become problematic when the public believes the new product is identical to a brand that was loved from childhood. The new owner benefits from the mark and prior owner’s “good will” and history—a valuable commodity Tootsie Roll Industries established by years of brand development. The new owners obtain a windfall because they do not own rights to the brand’s history, only to produce under the mark. Legally, the new owner must distinguish the marks, but this does not always occur. Surprisingly, the law limits protection of the original owner’s rights to the mark’s prior “good will.” The courts and Trademark Trial and Appeals Board have been unsympathetic to owners of abandoned trademarks. Consequently, corporations are searching for viable causes of action to protect their abandoned marks from entities attempting to “steal” their good will or “confuse” consumers to buy a new product.

Unfair competition and false advertising claims

The Lanham Act prohibits unfair competition, stating that a person who makes “any false designation of origin which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation . . . shall be liable in a civil action . . . .” 15 U.S.C. § 1125 (a)(1). In addition, the Lanham Act imposes liability upon any person who “in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services or commercial activities.” 15 U.S.C. § 1125(a)(1)(B). These causes of action are particularly applicable when a zombie mark owner promotes the resurrected mark with advertising materials from the original owner, a logo similar to the historic brand, or plays on the consumers’ nostalgia. Unfair competition and false adverting claims are the most common and successful against zombie trademarks. But if the new owner sufficiently differentiates the marks, the original owner is often left helpless.

Residual good will argument

Courts struggle whether to protect a dead trademark when the public strongly associates a product with the original owner. This legal gray area occurs when advertising clearly designates the product’s origin, but the mark stirs an affiliation with the prior owner’s brand quality; a phenomenon called “residual good will.” Original owners attempt to stop zombie trademarks by asking courts to block applications or stop use of a dead mark when residual good will exists. The U.S. District Court for Western District of Pennsylvania supported this argument in dicta, stating “it is not the law that the slightest cessation of use causes a trademark to roll free, like a fumbled football, particularly where the mark retains residual goodwill.” Peter Luger v. Silver Star Meats, No. 01-1157, 2002 U.S. Dist. LEXIS 19483, at *39 (W.D. Pa. May 17, 2002) (emphasis in original). While the Luger court found a similar trade name and dress justified injunctive relief, the court based its decision on the fact the plaintiff had not actually abandoned the mark. Id. The court in dicta concluded: “injunctive relief is warranted, even if the defendants succeed on their abandonment defense, in order to prevent confusion caused by the residual association of [the] name and trade dress with its former user.” Id. at *40–41. Courts will presume irreparable harm when there is a likelihood of confusion, because the prior corporation lacks quality control. Id. at *43–44. Thus, the door is open to argue that residual good will protects against the reintroduction of an abandoned mark by a third party. However, no subsequent cases have affirmed the Lugar dicta, and two distinguished it. See Metropolitan Life Ins. Co. v. O’M Ass’n LLC, No. 06-5812, 2009 WL 3015210 (N.D. Ill. 2009) (rejecting Lugar because the plaintiff abandoned the mark with no intent to resume); Warren Publishing Co. v. Spurlock, 645 F. Supp. 2d 402 (E.D. Pa. 2009) (finding Luger precedent not applicable because the defendant ceased all business activities immediately). When facts of a zombie trademark case do not fall into the well-worn Lanham causes of action, the success of a residual good will argument is still uncertain. With the rise in popularity of resurrecting these dead marks, upcoming litigation will create an opportunity for courts to define just how far use of zombie marks can go. But one thing is for certain, zombie marks will not disappear quietly into the night . . . Sources: Peter Luger v. Silver Star Meats, No. 01-1157, 2002 U.S. Dist. LEXIS 19483 (W.D. Pa. May 17, 2002); Metropolitan Life Ins. Co. v. O’M Ass’n LLC, No. 06-5812, 2009 WL 3015210 (N.D. Ill. 2009); Warren Publishing Co. v. Spurlock, 645 F. Supp. 2d 402 (E.D. Pa. 2009)

This article was prepared by Lauren A. Valkenaar (lauren.valkenaar@nortonrosefulbright.com / +1 210 270 7190) of Norton Rose Fulbright’s US Intellectual property group.