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Federal Circuit Upholds TTAB’s Trademark Registration Cancellation for Lack of Use

March 30, 2009

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Last Month at the Federal Circuit - April 2009

Judges: Newman (dissenting), Linn, O’Grady (District Judge sitting by designation; author)

[Appealed from: TTAB]

In Aycock Engineering, Inc. v. Airflite, Inc., No. 08-1154 (Fed. Cir. Mar. 30, 2009), the Federal Circuit held that the TTAB correctly found Respondent-Appellant Aycock Engineering, Inc.’s (“Aycock Engineering”) service mark void for failure to meet the Lanham Act’s “use in commerce” requirement.

Aycock Engineering was formed in mid-1960 by William Aycock to arrange charter flight seats for individual airline passengers. At the time Mr. Aycock began planning his service, air taxi companies leased entire airplanes rather than individual seats, so solo passengers faced more difficulty and financial expense in finding a charter flight. Mr. Aycock planned to advertise his service, which he named AIRFLITE, by providing a toll-free telephone reservations number. After a customer called the service, Mr. Aycock would then serve as a middleman between the customer and the air taxi service operators to arrange for the customer’s flight. In March 1970, Mr. Aycock invited all FAA-certified air taxi operators to join his operation by distributing fliers with in-depth information about AIRFLITE and its services. On August 10, 1970, Mr. Aycock filed a service mark application for the term AIRFLITE.

Mr. Aycock stated that he believed he needed to contract with at least 300 air taxi operators before the service could become operational. But Mr. Aycock entered into contracts with no more than twelve air taxi service operators throughout the company’s history. Despite these contracts, the record did not suggest that Mr. Aycock ever gave the public an opportunity to use the toll-free phone numbers to book reservations, that he ever spoke with a member of the general public about making a reservation, or that he ever arranged for a single passenger to fl y on a chartered flight.

Mr. Aycock’s AIRFLITE mark was registered on the Supplemental Register on April 30, 1974, after a lengthy prosecution. During the prosecution period, Mr. Aycock and the trademark examining attorney finally agreed on a recitation of services of “[a]rranging for individual reservations for flights on airplanes” for the AIRFLITE service mark. The AIRFLITE mark was renewed in April 1994.

Petitioner-Appellee Airflite, Inc. (“Airflite”) filed a petition for cancellation in 2001, alleging that Aycock Engineering did not use the AIRFLITE mark prior to registration for the services identified in its registration. The TTAB agreed with Airflite and canceled the AIRFLITE registration, finding that Aycock Engineering failed to render in commerce the service described in its registration.

On appeal, the Federal Circuit examined the issue of whether Aycock Engineering’s use of its AIRFLITE mark satisfied the Lanham Act’s requirement for use in commerce. As a prerequisite for deciding the use requirement issue, the Court agreed with the TTAB that the service described in Mr. Aycock’s registration was 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, and that this entails more than the arranging of the network of air taxi operators.

The Federal Circuit held that Aycock Engineering did not meet the Lanham Act’s “use in commerce” requirement by using its service mark in the preparatory stages of development but never offering the service to the public. The Court began by analyzing section 45 of the Lanham Act, which discusses the “use in commerce” requirement. The Court noted that different statutory requirements apply to applications filed after November 16, 1989, the effective date of the Trademark Law Revision Act of 1988 (“TLRA”). The TLRA 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,” in order to prevent applicants from acquiring registrations based on mere “token uses” of a mark without legitimate use in commerce. Slip op. at 10. Because Aycock Engineering’s application for AIRFLITE was filed in 1970, the case must be decided according to the pre-1989 version of the Lanham Act. However, the Court noted that because the language of the service mark use requirement was “materially identical” in both versions, its holding also applies to the current, post-1989 service mark use requirement.

The Court held that an applicant’s preparations to use a mark in commerce are insufficient to constitute use in commerce. Advertising or publicizing a service that the applicant intends to perform in the future will not support registration, and there must be an “open and notorious” public offering of the services to those whom the services are intended in order for an applicant to meet the use requirement. The language of the statute, by requiring that the mark be “used or displayed in the sale or advertising of services, and the services are rendered in commerce,” makes it clear that mere preparations to use a mark sometime in the future are insufficient and that advertisement and actual use of the mark in commerce are required for registration.

The Court examined Aycock Engineering’s use of the AIRFLITE mark under this standard and found substantial evidence to support the conclusion that it failed to offer its service to the public because he never gave anyone an opportunity to use his AIRFLITE service to make a charter flight reservation. Instead, the Court found that Mr. Aycock merely took sporadic steps in preparing to offer his services to the public. These activities, even taken together, did not constitute a service that falls within the defined recitation of services for the AIRFLITE registration. Finally, the Court observed that although Aycock Engineering’s application for AIRFLITE was filed before the 1989 TLRA’s prohibition on mere token use of a mark, Mr. Aycock did not argue, and the facts did not show, that he ever attempted to make a token use of the AIRFLITE service.

In a dissenting opinion, Judge Newman stated that after thirty-five years of federal registration of the service mark without any objection or opposition to the registration, it is inappropriate for the PTO to criticize its own description of the services and invalidate the registration as void when granted. Judge Newman stated that the TTAB erred in interpreting the description as excluding the very services that were the basis of the registration. If there were a fl aw in the registration, it should be clarified and corrected, not voided. To Judge Newman, cancellation of the long-standing registration was seriously flawed and unjust.