April 2009 Issue

Civil Cases

Aycock Eng'g, Inc. v. Airflite, Inc.,
2009 WL 805304 (Fed. Cir. Mar. 30, 2009)


ABSTRACT
In a decision assessing the “use in commerce” requirements of the Lanham Act prior to the effective date of the Trademark Law Revision Act of 1988 and the corresponding intent-to-use provisions, the Federal Circuit upheld the TTAB’s decision to cancel a registration where the registrant had undertaken a number of preparatory steps to create the network necessary to offer the services identified in its registration, but had never actually offered those services to the general public.  In reaching its decision, the Federal Circuit emphasized that the description of the services embodied in the issued registration (as contrasted with the description as originally filed and amended during a lengthy prosecution process) ultimately controlled.

CASE SUMMARY

FACTS
William Aycock formed Respondent-Appellant Aycock Engineering, Inc. (“AEI”) in 1960 to obtain charter flight seats for individual airline passengers.  At the time, air taxi companies leased entire airplanes rather than individual seats, making it difficult, if not financially prohibitive, for solo travelers to locate and travel on charter flights.  Operating under the mark AIRFLITE, Aycock planned to serve as a middleman between members of the public and a network of air taxi service operators to arrange for individual customer flights.  He planned to advertise his AIRFLITE service to the public via a toll-free reservations number.

In March of 1970, Aycock distributed fliers with in-depth information about AIRFLITE to FAA-certified air taxi operators and invited them to join his operation.  During testimony, Aycock stated that he believed he needed to contract with at least 300 air taxi operators before his service could become operational, a goal that was never reached.  Between the 1970s and 2001, Aycock entered into contracts with 12 air taxi service operators.  While Aycock secured two toll-free telephone numbers, he never advertised the AIRFLITE service to the general public, nor arranged for a single passenger to fly on a charter flight.

In August of 1970, AEI filed an application to register the AIRFLITE mark for services.  During a lengthy prosecution period, AEI agreed to describe its services as:  “arranging for individual reservations for flights on airplanes.”  The mark registered on the Supplemental Register on April 30, 1974, and was renewed in April 1994.

In 2001, Petitioner-Appellee Airflite, Inc. (“Airflite”) filed a petition for cancellation, alleging that AEI did not use the AIRFLITE mark “in commerce” for the covered services prior to registration.  The TTAB ruled in Airflite’s favor and cancelled AEI’s AIRFLITE registration.

ANALYSIS
On appeal, the Federal Circuit considered whether AEI’s use of the AIRFLITE mark satisfied the Lanham Act’s requirements for “use in commerce.”  As an initial matter, the court emphasized the need to define with particularity the nature of the services covered by AEI’s AIRFLITE mark and the ultimate consumer to whom those services would be offered.  AEI argued that its services should be construed as the arranging of a network of air taxi operators.  The court rejected this argument, agreeing with both the TTAB and Airflite that the covered services were more accurately interpreted as arranging for the transportation of a person to his destination or providing a communication service between a person desiring custom air travel and an air taxi operator. 

Having determined the proper construction of the services and their end user (namely, members of the public), the court turned to the question of whether AEI had satisfied its “use in commerce” requirement by taking initial steps to form a network of air taxi operators but never offering its services to the public.  Having issued in 1974, the AEI registration predated the November 16, 1989, effective date of the Trademark Law Revision Act of 1988 (“TLRA”), which ushered in the intent-to-use provisions and simultaneously altered the burden that applicants must meet by requiring that an applicant make “a bona fide use of the mark in the ordinary course of trade.”   This new requirement was intended to prevent applicants from acquiring registrations based on mere “token uses” that did not qualify as legitimate uses in commerce. 

Under Section 45 of the Lanham Act, the “use in commerce” requirement for service marks is satisfied when:  (1) a mark is “used or displayed in the sale or advertising of services,” and (2) either (i) the services are “rendered in commerce” or (ii) the services are “rendered in more than one state or in the United States and a foreign country and the person rendering those services is engaged in commerce in connection with those services.”  Noting that the use requirement for a service mark was “materially identical” in both the pre-TLRA and post-TLRA Lanham Act, the court emphasized that its holding should apply also to post-1989 service mark use.

By requiring that a mark be “used or displayed in the sale or advertising of services” and “that the services are rendered in commerce,” the language of the Lanham Act makes clear that mere preparations to use a mark sometime in the future are insufficient and, further, that there must be “an open and notorious” public offering of the services to the intended customer base for an applicant to satisfy the use in commerce requirements.  Noting that the record did not indicate a single instance of a potential customer contacting one of the toll-free numbers or, alternatively, that anyone associated with AEI ever spoke with a member of the general public about making a flight reservation through the AIRFLITE services, the court found substantial evidence to support the TTAB’s conclusion that AEI’s preparatory activities in registering toll-free telephone numbers and soliciting members for a network of air taxi operators, but never advertising or offering services to the general public, failed to qualify as “use in commerce” within the meaning of the Act.  Instead, the court found that AEI undertook merely “sporadic steps in preparing to offer” its services to the public which, even taken together, did not constitute a service that falls within the defined recitation of services in the AIRFLITE registration.  The court characterized Aycock’s transactions with the several air taxi operators as mere preparatory steps that reflected attempts to build the underlying service infrastructure rather than to offer the services themselves.  Finding that AEI did not make even a “token use” of the AIRFLITE mark for the covered services, the court affirmed the TTAB’s decision to cancel the challenged registration.

CONCLUSION
This decision offers a useful framework for evaluating the “use in commerce” standard for a service mark under both the pre-TLRA and post-TLRA Lanham Act.  The court’s construction of the services covered by the challenged registration and, in particular, its rejection of the registrant’s arguments that the prosecution history supported an interpretation of the services apart from what appeared on the face of the registration itself, also serves as a reminder to both applicants and practitioners to ensure that applications contain accurate and complete recitations of goods and services.