Fourth Circuit Ruling Reinforces Standards for Common Law Trademark Abandonment

In a pivotal decision impacting common law trademark rights, the Fourth Circuit Court of Appeals vacated and remanded a summary judgment ruling favoring T-Mobile in Simply Wireless, Inc. v. T-Mobile US, Inc., 115 F.4th 266 (4th Cir. 2024). The case addressed critical issues surrounding trademark abandonment and the standard for demonstrating intent to resume use under the Lanham Act.

Background of the Dispute

Simply Wireless, a Virginia-based telecommunications company, claimed common law rights to the “SIMPLY PREPAID” trademark, first used in 2002 for selling prepaid airtime and related services. Between 2002 and 2008, the mark generated over $20 million in revenue for the company. However, Simply Wireless paused use of the mark from 2009 to 2011 due to industry changes, triggering a potential presumption of abandonment under the Lanham Act.

In 2014, T-Mobile began using the “SIMPLY PREPAID” mark for its retail operations and filed a trademark registration application. Simply Wireless filed its own competing application and initiated litigation, alleging trademark infringement and dilution. The district court granted summary judgment for T-Mobile, ruling that Simply Wireless had abandoned the mark during the period of nonuse.

Fourth Circuit’s Analysis

The Fourth Circuit vacated the district court’s ruling, holding that Simply Wireless had presented sufficient evidence to raise genuine disputes of material fact regarding its intent to resume use of the trademark. Key findings included:

1. Presumption of Abandonment and Intent to Resume Use:
   • Under the Lanham Act, three years of nonuse triggers a rebuttable presumption of abandonment (15 U.S.C. § 1127). Simply Wireless bore the burden of showing intent to resume use during the 2009-2011 period.
   • Evidence presented by Simply Wireless, including a 2011 negotiation with Ignite Media and subsequent sales under the “SIMPLY PREPAID” mark in 2012, was sufficient to rebut the presumption of abandonment.
2. Factual Nature of the Intent Inquiry:
   • The court reaffirmed that intent to resume use is “an intensely factual question” and rarely suitable for summary judgment (Emergency One, Inc. v. Am. FireEagle, Ltd., 228 F.3d 531, 537 (4th Cir. 2000)).
   • Simply Wireless’s evidence of negotiations, agreements, and sales activity created triable issues of fact regarding its intent during the relevant period.
3. Application of Statutory Abandonment Test to Common Law Marks:
   • The Fourth Circuit confirmed that the Lanham Act’s abandonment provisions apply to common law trademarks, rejecting T-Mobile’s argument that a separate “continuous use” standard should govern.

Implications of the Decision

The Fourth Circuit’s ruling offers important guidance for trademark practitioners:

• Presumption of Abandonment is Rebuttable: Even modest evidence of intent to resume use—such as negotiations or preliminary agreements—may be sufficient to overcome the presumption of abandonment.
• Documentation is Key: Clear records of efforts to resume use, such as communications, proposed partnerships, and sales activity, can protect trademark rights during periods of nonuse.
• Statutory Framework for Common Law Marks: The decision confirms that common law trademark disputes are subject to the same abandonment principles as federally registered marks under 15 U.S.C. § 1127.

Broader Impact

This case reinforces the need for businesses to strategically manage trademarks, particularly during periods of nonuse, and highlights the challenges of proving abandonment in litigation. The decision also provides critical clarity on the application of statutory and common law principles to trademark disputes, ensuring a more predictable framework for future cases.

As the case proceeds on remand, it will continue to shape the legal landscape for trademark abandonment and protection. For full details, refer to Simply Wireless, Inc. v. T-Mobile US, Inc., 115 F.4th 266, 2024 U.S. App. LEXIS 20333 (4th Cir. 2024)

To learn more about these issues, contact the author of this article, Arvind Jayakumar. Arvind is a brand protection attorney who counsels brands on how to prevent unfair competition, avoid unnecessary liability, and enforce their intellectual property rights. He has successfully litigated various commercial issues related to unfair competition, false advertising, trademark infringement, copyright infringement, breach of contract, and other business disputes. In addition to his litigation practice, Arvind boasts a robust trademark and copyright prosecution practice in which he helps brands register their intellectual property and secure IP rights.