Party Seeking Cancellation of Registered Mark Bears Heavy Burden: Eighth Circuit

Practical Law Legal Update 7-561-2826 (Approx. 4 pages)

Party Seeking Cancellation of Registered Mark Bears Heavy Burden: Eighth Circuit

by Practical Law Intellectual Property & Technology

Background

Lovely Skin, Inc. sells cosmeceutical skin care products under the brand name Lovely Skin primarily through its website, www.lovelyskin.com. In 1999, Lovely Skin filed applications to register the marks LOVELYSKIN and LOVELYSKIN.COM with the USPTO. The USPTO, determining that these marks were merely descriptive, refused to register them on the Principal Register, resulting in their placement on the Supplemental Register instead.

In 2004, Lovely Skin's attorney again prepared and filed an application to register LOVELYSKIN on the Principal Register, this time under Section 2(f) of the Lanham Act, which permits registration on the Principal Register when a mark has acquired distinctiveness through substantially exclusive and continuous use in commerce for at least five years (15 U.S.C. § 1052(f)). Lovely Skin declared in its application that it had made substantially exclusive and continuous use of the mark during the five years that followed the mark's earlier registration on the Supplemental Register.

The USPTO registered LOVELYSKIN on the Principal Register. Lovely Skin then later applied to register LOVELYSKIN.COM, claiming that this mark had acquired distinctiveness based on Lovely Skin's ownership of the LOVELYSKIN registration. In 2007, the USPTO also registered LOVELYSKIN.COM and placed it on the Principal Register.

By March 2006, Lovely Skin had become aware of the website, www.livelyskin.com, on which Ishtar sold many of the same products as Lovely Skin. After demanding that Ishtar discontinue use of this site, Lovely Skin filed suit alleging trademark infringement and false designation of origin under the Lanham Act and common law unfair competition claims. Ishtar counterclaimed, seeking cancellation of Lovely Skin's registrations, which, it argued, had not acquired distinctiveness at the time of their registration.

After a bench trial, the district court cancelled Lovely Skin's registrations based on the court's finding that Ishtar had met its burden of showing that the registered marks lacked acquired distinctiveness at the time of their registration on the Principal Register. Also finding no likelihood of confusion between Ishtar's livelyskin.com and Lonely Skin's marks, the district court entered judgment for defendant Ishtar on all of Lovely Skin's claims.

Outcome

On appeal, Lovely Skin argued that the district court erred in:

Cancelling its registrations.
Finding that there was no likelihood of confusion between its marks and livelyskin.com.

Cancellation of Lovely Skin's Marks

The Eighth Circuit's review of the district court's judgment cancelling the registrations of Lovely Skins' marks addressed two fundamental issues. These were whether the lower court had:

Applied the correct legal standard.
Committed clear error in finding Ishtar's evidence sufficient to overcome the registration's statutory presumption of validity.

The district court's application of the correct legal standard depended on whether the court rested its decision on a finding that Ishtar successfully rebutted a presumption that Lovely Skin’s trademarks had acquired distinctiveness as of the date of their registrations through five years of continuous and “exclusive” use, rather than "substantially" continuous and exclusive use, which is the correct standard under Section 2(f) of the Lanham Act (15 U.S.C. § 1052(f)).

The Eighth Circuit put aside this issue, noting that the district court's application of the correct legal standard was both debatable and unnecessary to decide if it were to rule that the district court's fact findings were clearly in error.

Looking to the second primary issue, the district court's factual findings, the Eighth Circuit ruled that these constituted clear error and reversed the district court's judgment canceling Lovely Skin's trademark registrations because:

The USPTO registered Lovely Skin's marks under Section 2(f) of the Lanham Act, after accepting this applicant's declarations as prima facie evidence of the acquired distinctiveness of its marks.
USPTO registrations are entitled to a strong presumption of validity, which includes a presumption that the marks had acquired distinctiveness (secondary meaning) at the time of their registration.
Although lack of acquired distinctiveness is a valid ground for cancellation, Ishtar, as the party moving for cancellation of Lovely Skin's registrations, had both:
- the initial burden of establishing a prima facie case that Lovely Skin's marks had not acquired distinctiveness at the time of their registration on the Principal Register; and
- the ultimate burden of persuasion to prove, by a preponderance of the evidence, that Lovely Skin's marks were invalid.
Ishtar's evidence of third-party registrations of marks that contained the terms "lovely" or "love" in combination with "skin", did not show how or the extent to which these other registered marks were:
- used;
- promoted or advertised by the third-parties; or
- recognized by the public,
during the five-year period preceding Lovely Skin's application for registration.
Ishtar's testimonial evidence only tended to show that:
- Lovely Skin's attorneys did not investigate, or did not recall investigating, whether Lovely Skin's marks had been in substantially exclusive use at the time they applied for the marks' registration; and
- nearly eight years after the filing of its application for registration, Lovely Skin no longer had any evidence that its use of the marks was substantially exclusive as of that time.
Therefore, considered both individually and as a whole, Ishtar's testimonial and documentary evidence was insufficient to:
- meet its burden of establishing a prima facie case that Lovely Skin's marks had not acquired distinctiveness at the time of registration; and
- overcome the strong statutory presumption of validity of these marks and their registrations (see 15 U.S.C. § 1057(b)).

Lovely Skin's Remaining Claims

In addition to the trademark infringement claims, Lovely Skin also alleged false designation of origin, unfair competition and deceptive trade practices. For each claim to succeed, Lovely Skin was required to show that a likelihood of confusion existed between Lovely Skin's marks and livelyskin.com. After considering the six factor test from SquirtCo v. Seven-Up Company, the district court concluded that the parties' marks presented no likelihood of confusion (628 F.2d 1086 (8th Cir. 1980)).

The Eighth Circuit reviewed the district court's SquirtCo factor analysis for clear error and found its findings were a permissible view of the evidence. Accordingly, the Eighth Circuit affirmed the district court's judgment in favor of Ishtar on Lovely Skin's remaining claims.

Practical Implications

This case is notable for highlighting the heavy burdens of persuasion and proof that a party seeking cancellation of a mark registered on the basis of acquired distinctiveness must meet to prove that the mark has not acquired distinctiveness at the time of its registration.

Party Seeking Cancellation of Registered Mark Bears Heavy Burden: Eighth Circuit | Practical Law