by Emily Weiss
Specht v. Google Inc., No. 11-3317, 2014 WL 1330303 (7th Cir. Apr. 4, 2014)
The Seventh Circuit recently addressed the issue of trademark abandonment in Specht v. Google Inc., No. 11-3317, 2014 WL 1330303 (7th Cir. Apr. 4, 2014). Eric Specht, an individual who owned and operated Android Data Corporation (“ADC”), sued Google Inc. (“Google”), alleging that Google had infringed Specht’s ANDROID DATA mark by releasing the Android operating system for smart phones. Google counterclaimed that Specht had abandoned his mark. Id. at 1. The district court sided with Google, finding that Specht had abandoned his mark in 2002 and thus Google could not have infringed the ANDROID DATA mark. Id. at 3. Accordingly, the district court granted Google’s motion for summary judgment. Id. at 2-3. Specht appealed to the Seventh Circuit, which affirmed the district court in a decision written by Judge Ilana Rovner, joined by Judges Diane Sykes and John Tinder.
ADC was a technology company that licensed e-commerce software to clients. It also designed and hosted websites and offered computer consulting services. In 2000, Specht applied to register the mark ANDROID DATA, which the United States Patent and Trademark Office (the “PTO”) approved in 2002. ADC’s business started to decline in 2002. It lost five clients, which caused Specht to lay off his only employee, cancel ADC’s Internet service contract, move the business into his home, and eventually cancel ADC’s phone line. He also transferred all of ADC’s assets to another one of his companies, The Android’s Dungeon, Incorporated (“ADI”). Specht spent the next year unsuccessfully seeking a buyer for ADC’s assets. Specht’s business activities were minimal after 2002. While he operated ADC’s website for a while longer and hosted some websites for others, he let the registration for the company’s domain name (androiddata.com) lapse in 2005. Specht passed out some business cards bearing the ANDROID DATA mark in 2005, but, in the context of the litigation, he did not present evidence on how many he passed out and to whom. Id. at 1.
In 2007, Specht attempted to revive the use of the ANDROID DATA mark in two ways. In December 2007, he sent out a mass mailing bearing the ANDROID DATA mark, intended to promote his software suite to catalog companies. Two months later, he tried to license his software to a healthcare consulting firm. Neither effort generated any sales. Specht’s only other use of the mark was in 2009, when he resurrected his website, but with a slightly different domain name (android-data.com) and assigned the ANDROID DATA mark to ADI, retroactive to December 2002. Id.
In the meantime, a company called Android, Inc. began developing the Android operating system for smart phones. Google purchased Android, Inc. in 2005 and released a beta version of the Android software in November 2007, one month before Specht sent out his mass mailing with the ANDROID DATA mark. Google applied to register its ANDROID mark in 2007, but the PTO rejected the application, citing Specht’s ANDROID DATA registration. Id. at 2.
In assessing Specht’s claims, the Seventh Circuit explained that “a trademark is abandoned if its ‘use in commerce’ has been discontinued with no intent to resume use.” Id. at 4 (citing 15 U.S.C. § 1127). The Lanham Act provides that nonuse for three consecutive years is prima facie evidence of abandonment (citing 15 U.S.C. § 1127). However, a prima facie showing of abandonment may be rebutted with evidence excusing the nonuse or demonstrating an intent to resume use formulated within the three years of nonuse. The Seventh Circuit further stated that the use must pertain to the sale of goods or provision of services. Id.
Based on this standard, the Seventh Circuit found that Specht had ceased to use the ANDROID DATA mark at the end of 2002, the year that Specht essentially shut down his business. Specht argued that four activities after 2002 demonstrated his continued use of the mark, all of which the court deemed insufficient. First, as to Specht’s attempts to sell his business in 2003 and 2004, the Seventh Circuit stated that efforts to sell a business alone were not “use of the mark in commerce.” Second, it was not compelling that ADC’s phone service was not cancelled until 2003 because he included phone expenses from 2003 on ADC’s 2002 balance sheet, which confirmed that ADC did not operate in 2003. Third, Specht noted that ADC’s website operated until 2005. However, Specht did not identify any goods or services that ADC could have provided through or in connection with the website, and thus the website was not considered use in commerce. Id. at 5. Fourth, the court found Specht’s two sales efforts in 2007 “isolated and not sustained,” concluding that ”sporadic attempts to solicit business are not a ‘use in commerce’ meriting the protection of the Lanham Act.” Id.
The Seventh Circuit next found undisputed that Google began using its ANDROID mark in commerce in November 2007 when it released a beta version of the Android software. Specht conceded that point, but he argued that Google never acquired any lasting rights to the ANDROID mark because it released its operating system without retaining control over how developers or mobile phone companies could use the software, thus giving such developers and mobile phone companies a “naked license.” The court rejected the naked license argument for several reasons. Most important, the argument did not address the district court’s “sound conclusion” that the ANDROID mark had become abandoned by November 2007 and thus Google became the senior user of the ANDROID mark when it used the mark in commerce in November 2007, which “was enough to warrant trademark protection.” Id.
Finally, the Seventh Circuit rejected Specht’s argument that even if he had abandoned his mark, he either resumed using it or developed an intent to resume using it by December 2007 through his mass mailing. Id. at 6. The court found that “too late” because Specht had abandoned the mark by the end of 2002 and more than three years had passed before Google started using the mark in November 2007. Thus, with the mark permanently abandoned by November 2007, Specht could not reclaim it the following month. Id.
The facts of this case are a cautionary tale for those who wish to avoid abandonment. Specht’s limited use of his ANDROID DATA mark after he wound up his business was not enough to save him from a finding of abandonment. Thus, those who wish to keep their trademarks should keep in mind that such “sporadic” use of the mark is not sufficient.