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Eleventh Circuit: Unsolicited proposals insufficient to show intent to resume use of trademark

June 16, 2008
Post by Blog Staff

In a decision Friday, the Eleventh Circuit affirmed a district court's grant of summary judgment in favor of the defendant, finding the plaintiff had abandoned its trademarks. Although the complaint consisted of both federal and state common law claims, the analysis ultimately came down to whether a valid Lanham Act claim existed, as the remaining claims were based on the alleged § 1125 claims. The Eleventh Circuit held the trademarks in question were abandoned due to nonuse, and that mere hope that the company could get funding from an unknown source was not enough to show intent to resume use in the future. As a result, the district court's grant of summary judgment on the issue was proper. The court also held the plaintiff did not have prudential standing to bring a false advertising claim, given the defendant did not sell the allegedly infringing products while the plaintiff was selling products bearing its marks. Because the Lanham Act claims failed, the remaining claims likewise failed, and the district court's grant of summary judgment was affirmed.More concerning Natural Answers, Inc. v. SmithKline Beecham Corp. after the jump.From 2000 to 2002, the plaintiff, Natural Answers ("Natural"), developed, manufactured, and marketed HerbaQuit lozenges, which were designed to "help satisfy cravings related to the smoking habit." HerbaQuit lozenges contained no nicotine. Natural applied for a federal trademark registration for HERBAQUIT and HERBAQUIT LOZENGES, but neither was registered. After selling approximately 50,000 packages, the sale of the lozenges was discontinued in March 2002, and the website was taken down in November 2002. Due to not being able to market HerbaQuit, the CEO of Natural claimed that he sent a letter to Philip Morris in December 2003 to offer a joint venture, but the only response was only a request for more information. No deal was struck.In November 2002, SmithKline Beecham Corp. (d/b/a GlaxoSmithKline, "GSK") introduced Commit Lozenges, advertised as "the first and only stop smoking lozenge." GSK obtained FDA approval on its nicotine lozenge, and also federally registered the word mark COMMIT.Natural filed its complaint in October 2004, alleging federal and state trademark infringement, false advertising, and unfair competition claims (and some additional claims that were dismissed at the pleading stage). The district court granted GSK's motion for summary judgment on all claims. Natural appealed.The Eleventh Circuit affirmed. The court first noted that all claims were violations of either the Lanham Act (§ 1125 claims based on trademark infringement and false advertising) or Florida's common law and statutes predicated on Lanham Act violations. As a result, if Natural could not succeed on the Lanham Act claims, all its claims failed.With this background, the court examined whether Natural's trademark had been infringed. To have a valid claim, Natural first had to show it held a valid trademark, and that it had not abandoned its mark. To prove abandonment of a trademark, a defendant must show that the plaintiff has ceased using the mark in dispute and that the plaintiff has done so with an intent not to resume its use. Nonuse for three consecutive years is prima facie evidence of abandonment, which creates a rebuttable presumption of intent no to resume use.Here, Natural had not used the mark for more than three years (although it had not yet been three years when the complaint was filed), and failed to provide any evidence that showed that they had a genuine intent to resume the use. The only evidence provided was of the brief correspondence with Philip Morris, which was insufficient to overcome the presumption of abandonment. As stated by the court: "Such putative negotiations amount to nothing more than an unsolicited proposal by Natural Answers that led nowhere." As a result, Natural did not hold a valid trademark upon which to base its claim for infringement.Natural fared no better on its false advertising claim: The court held Natural lacked prudential standing to bring the claim. The Eleventh Circuit applies a five-factor test to determine whether a plaintiff has prudential standing to bring a Lanham Act false advertising claim:

  1. The nature of the plaintiff's alleged injury: Is the injury of a type that Congress sought to redress in providing a private remedy for violations of the LA?
  2. The directness or indirectness of the asserted injury;
  3. The proximity or remoteness of the party to the alleged injurious conduct;
  4. The speculativeness of the damages claim; and
  5. The risk of duplicative damages or complexity in apportioning damages.
The court held none of the five factors favored Natural. The first factor was not met because the parties were not competitors, and so Natural could not have lost any customers or sales from the advertising. The court relied on the fact of no competition between the parties to determine that the second and third factors weighed against standing as well. Turning to the fourth factor, Natural could not prove that it lost customers and sales, and thus any damages would be entirely speculative. Finally, the court held allowing Natural to carry on with the false advertising claim would open the door for all competitors of GSK to sue for the same reason, which would present the risk of duplicative damages. As a result, Natural's Lanham Act false advertising claim failed as well.Because Natural's Lanham Act claims failed as a matter of law, the court likewise affirmed the grant of summary judgment on the remaining claims.To read the full decision in Natural Answers, Inc. v. SmithKline Beecham Corp., click here.


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