Incontestable - April 2010 - The Crash Dummy Movie, LLC v. Mattel, Inc.

Finnegan's monthly review of essential decisions, key developments, evolving trends in trademark law, and more.

April 2010 Issue

Civil Cases

The Crash Dummy Movie, LLC v. Mattel, Inc.,
2010 WL 1508203 (Fed. Cir. Apr. 16, 2010)

ABSTRACT
In 2003, applicant applied to register the mark CRASH DUMMIES for games and playthings. Mattel opposed the application on the grounds of priority and likelihood of confusion based on its alleged prior use of the marks CRASH DUMMIES and THE INCREDIBLE CRASH DUMMIES through its predecessor-in-interest. The parties agreed that their respective marks were likely to cause confusion, so the only disputed issue was whether Mattel could establish common-law trademark rights in the CRASH DUMMIES marks prior to applicant’s 2003 filing date. The TTAB found a prima facie case of abandonment of the marks by Mattel based on more than three years of nonuse, beginning at the earliest on December 31, 1995, and ending in December 2003. However, the TTAB also found that Mattel had rebutted the presumption of abandonment by showing “reasonable grounds for the suspension and plans to resume use in the reasonably foreseeable future when the conditions requiring suspension abate.” The Federal Circuit affirmed.

CASE SUMMARY

FACTS
Mattel, Inc.’s (“Mattel”) predecessor-in-interest, Tyco Industries, Inc. (“Tyco”), began using the marks CRASH DUMMIES and THE INCREDIBLE CRASH DUMMIES (“CRASH DUMMIES marks”) in 1991, obtained federal registrations for those marks in 1993, and sold toys under those marks through at least 1994. Tyco also entered into a number of licenses for use of the CRASH DUMMIES marks, which expired on December 31, 1995. In the mid-1990s, Tyco experienced financial difficulties, and on February 12, 1997, Tyco assigned its trademark portfolio, including the CRASH DUMMIES marks, to Mattel. On February 13, 1998, Mattel recorded Tyco’s assignment for the CRASH DUMMIES marks with the PTO.

In 1998, KB Toys approached Mattel about becoming the exclusive retailer of CRASH DUMMIES toys, but Mattel declined the offer because it needed to retool Tyco’s CRASH DUMMIES toys to meet its stringent safety standards and the costs associated with retooling were too significant, given KB Toys’ sales projections at the time. In 2000, Mattel began brainstorming ideas for a new line of toys under the CRASH DUMMIES marks, researched and tested the new toys as early as 2001, obtained concept approval by 2002, began manufacturing the new toys in October 2003, and reintroduced them into the market in December 2003. During this time, the PTO cancelled the registrations for the CRASH DUMMIES marks owned by Mattel for failure to file a Section 8 Declaration of Use.

On March 31, 2003, The Crash Dummy Movie, LLC (“CDM”) filed an intent-to-use application for the mark CRASH DUMMIES for games and playthings. Mattel opposed CDM’s application on the grounds of priority and likelihood of confusion. CDM conceded that the parties’ marks were confusingly similar, so the only issue before the TTAB was whether Mattel could establish prior rights in its CRASH DUMMIES marks. The TTAB found a prima facie case of abandonment by Mattel of the CRASH DUMMIES marks based on three years of nonuse, beginning at the earliest on December 31, 1995, and ending at Mattel’s actual shipment of the CRASH DUMMIES toys in December 2003. However, the TTAB concluded that Mattel had rebutted the presumption of abandonment by showing “reasonable grounds for the suspension and plans to resume use in the reasonably foreseeable future when the conditions requiring suspension abate.” CDM appealed the TTAB’s decision sustaining Mattel’s opposition.

ANALYSIS
The Federal Circuit found that substantial evidence supported the TTAB’s finding that Mattel intended to resume use of the CRASH DUMMIES marks during the relevant time period (December 31, 1995, to December 2003). Specifically, the Federal Circuit found that (1) there was no evidence that Mattel rejected the business opportunity with KB Toys in 1998 because it had decided to abandon its marks, but rather it did so because of the high cost of retooling Tyco’s product line to meet Mattel’s safety standards; (2) Mattel would not have recorded Tyco’s trademark assignment with the PTO in 1998 unless it intended to use the CRASH DUMMIES marks in the foreseeable future; (3) the cancellation of Mattel’s registrations for the CRASH DUMMIES marks did not establish Mattel’s lack of intent to use those marks; and (4) Mattel’s research and development efforts from 2000 to 2003 showed its intent to resume use of the marks. Accordingly, the Federal Circuit held that the TTAB correctly found that Mattel had not abandoned its trademark rights, and, therefore, CDM was not entitled to registration of the CRASH DUMMIES mark.

CONCLUSION
Even where there has been a period of nonuse of nearly eight years, the presumption of abandonment after three years of nonuse may be rebutted where a party shows that there were reasonable grounds for such nonuse and the party establishes an intent to resume use in the reasonably foreseeable future during the period of nonuse.