To-Ricos, Ltd. v. Productos Avicolas del Sur, Inc.

(citation omitted).

In some cases, as here, a successive user of a mark may

seek a declaratory judgment deeming the mark abandoned by its

(purportedly) former owner. See, e.g., Kellogg Co. v. Exxon Corp.,

209 F.3d 562, 575

(6th Cir. 2000).15 To prevail in that endeavor,

"[t]he party asserting abandonment bears the burden of persuasion

with respect to two facts: (1) non-use of the mark by the legal

owner, and (2) lack of intent by that owner to resume use of the

mark in the reasonably foreseeable future." ITC,

.16

15 Put differently, the plaintiff in an infringement suit can "offensively" raise the claim that the defendant has abandoned any right it may once have had in the mark. See Yellowbook,

708 F.3d at 848

("[T]he issue of abandonment may be asserted offensively . . .."). An abandonment claim may also be raised "defensively" as an affirmative defense in infringement litigation. See

15 U.S.C. § 1115

(b)(2) (listing abandonment as an affirmative defense in infringement actions); see also Yellowbook,

708 F.3d at 847-48

(describing still other contexts in which an abandonment claim may be asserted). 16To-Ricos has also raised an analogous abandonment claim under Puerto Rico law. The parties agree that the statutory

- 11 - The Lanham Act provides that a challenger may establish

a prima facie case of abandonment by showing that the mark has not

been used for three consecutive years. See

15 U.S.C. § 1127.17

Such a prima facie showing creates a "rebuttable presumption" that

the prior owner has abandoned the mark. ITC,

(quoting Saratoga Vichy Spring Co. v. Lehman,

625 F.2d 1037, 1044

(2d Cir. 1980)).18 To rebut the presumption, the prior owner must

produce evidence that, within the statutory period, it either used

the mark or held an intent to resume use of the mark in the

reasonably foreseeable future. See Emergency One, Inc. v. Am.

FireEagle, Ltd.,

228 F.3d 531, 536-37

(4th Cir. 2000); see also

ITC,

n.9 (explaining that "a mark holder's intent

to resume use of the mark must be formulated during the three-year

definition of abandonment is essentially the same under the Lanham Act and the Puerto Rico Trademark Act. See Puerto Rico Trademark Act, 10 L.P.R.A. § 223(K). Thus, our analysis of To-Rico's federal claim applies equally to its claim under Puerto Rico law. 17 Earlier versions of Section 1127 provided that two consecutive years of nonuse established prima facie evidence of abandonment. Effective January 1, 1996, Congress amended Section 1127 to lengthen the required period of nonuse from two consecutive years to three. See Uruguay Round Agreements Act, Pub. L. No. 103–465, § 521,

108 Stat. 4809

, 4981-82 (1994); see also Cumulus Media, Inc. v. Clear Channel Commc'ns, Inc.,

304 F.3d 1167

, 1174 n.8 (11th Cir. 2002) (noting the amendment to the statute). 18 Ifthe alleged period of nonuse is shorter than three years, no presumption is triggered and the challenging party must carry the same burden of proof as would a party for which a prima facie case had been rebutted: "(1) non-use of the mark by the legal owner, and (2) lack of intent by that owner to resume use of the mark in the reasonably foreseeable future." ITC,

- 12 - period of non-use").19 What constitutes the "'reasonably

foreseeable future' will vary depending on the industry and the

particular circumstances of the case." Emergency One,

(noting that products with "very long lives" where "the good

will value of the mark persists long after production" may give

mark owners "five or six years [to] consider[] the reintroduction

of a brand, even though the same passage of time would be

unreasonable for a maker of a more ephemeral product, say potato

chips").

A prima facie case of abandonment shifts only the burden

of production, not persuasion, to the prior owner of the mark.

Id. at 536

; ITC,

482 F.3d at 148

. Put differently, the statutory

presumption merely alleviates the challenger's burden of

"establish[ing] the intent element of abandonment as an initial

part of its case." Imperial Tobacco Ltd. v. Philip Morris, Inc.,

899 F.2d 1575, 1579

(Fed. Cir. 1990). If a mark owner provides

evidence that "would permit a reasonable jury to infer that [the

owner] had not abandoned the mark," ITC,

, the owner

has satisfied its burden of production and the presumption of

abandonment "disappears," Saratoga,

625 F.2d at 1043

.20

We sometimes refer to the three-year period described in 19

Section 1127 as a "statutory period" and the presumption of abandonment as a "statutory presumption." If the (purportedly) former mark owner satisfies its burden 20

of production, the party asserting abandonment must ultimately persuade the factfinder that the prior owner had discontinued use

- 13 - Here, PAS admits that it did not use the Picú mark in

commerce between 2011 and 2016. Accordingly, the district court

concluded that To-Ricos had established a prima facie showing of

abandonment. To-Ricos,

2022 WL 19355737

, at *2. The burden thus

shifted to PAS to produce evidence that, during the relevant

period, it possessed an intent to resume use of the mark.

Id.

Determining that PAS provided no such evidence, the court held

that PAS had abandoned the Picú mark.

Id. at *3

. The court thus

granted summary judgment for To-Ricos.

Id.

III.

This dispute turns on whether PAS abandoned its right to

the Picú mark before To-Ricos appropriated the mark for its own

use. See J. Thomas McCarthy, 2 McCarthy on Trademarks and Unfair

Competition § 17:2 (5th ed. 2024) [hereinafter "McCarthy"] ("Once

abandoned, a mark may be seized immediately and the person so doing

so may build up rights against the whole world. After abandonment,

ownership of the mark goes to the first party after the abandonment

to achieve priority of use as a mark."); see also ITC,

PAS challenges the district court's abandonment holding

on two grounds. First, PAS contends that the court should have

of the mark with the intent not to resume such use. See Cumulus Media,

304 F.3d at 1176-77

; see also Emergency One,

228 F.3d at 540

(discussing proper jury instructions).

- 14 - excused PAS's nonuse of the mark because the company only stopped

using the mark due to its financial insecurity and litigation with

the Bank. Second, PAS asserts that it rebutted the presumption of

abandonment by producing evidence of its intent to resume use of

the mark. Such evidence includes PAS's attempt to sell the mark

in 2012, its agreement with the Bank to unencumber the mark in

2014, and its licensing of the mark to IMEX in 2017.

A. Excusable Nonuse

PAS first argues that its "nonuse should have been

excused as justified" because it was entangled in legal proceedings

against the Bank. More broadly, PAS asserts that a temporary

suspension of use for reasons beyond the control of the mark owner

cannot establish a trademark abandonment claim. To-Ricos responds

by noting that explanations for nonuse, standing alone, cannot

rebut the presumption of abandonment.

A trademark owner may, of course, argue that some

external event forced the owner to temporarily withdraw from the

market. See McCarthy, supra, § 17:16 (discussing "outside

causes"). Indeed, "a labor strike, bankruptcy, import problems,

unprofitable sales . . . [and] other involuntary action[s]" may

explain why an owner has temporarily stopped using a mark in

commerce. Id. (footnotes omitted). PAS, however, interprets that

basic proposition to mean that evidence of "excusable nonuse"

- 15 - prevents the three-year statutory period from running.21 In other

words, PAS contends that its evidence of "excusable nonuse"

prevents To-Ricos from establishing a prima facie case.

We disagree. The Lanham Act means what it says: "Nonuse

for 3 consecutive years shall be prima facie evidence of

abandonment."

15 U.S.C. § 1127

. The text does not distinguish

between inexcusable and excusable years of nonuse. Indeed, the

statute is agnostic about the reason for a mark's hibernation.

What matters, for the purpose of establishing a prima facie case,

is whether the mark was in use or not.

Still, PAS makes another argument. That is, even

assuming its nonuse of the mark established a prima facie case of

abandonment, PAS contends that it satisfied its burden of

production, and thus rebutted the presumption of abandonment, by

furnishing evidence of "excusable nonuse."

This proposition is similarly unavailing. Once a prima

facie case of abandonment has been established, the (purportedly)

prior owner of the mark must, at minimum, produce evidence of an

intent to resume use of the mark within the "reasonably foreseeable

future." Silverman v. CBS Inc.,

870 F.2d 40, 47

(2d Cir. 1989).

To be sure, a justification for nonuse may help a (purportedly)

prior owner explain when or how it intends to resume use of the

21We use the phrases "excusable nonuse," "justifiable nonuse," and "explainable nonuse" interchangeably.

- 16 - mark. ITC,

482 F.3d at 151

n.10 (noting that a mark owner's

explanation for why it suspended use of a mark is relevant "only

as circumstantial evidence shedding possible light on [its] intent

to resume future use [of the mark] within a reasonable period of

time"). However, the prior owner cannot satisfy its burden of

production simply by providing a reason why it did not use the

mark during the statutory period. Silverman,

870 F.2d at 47

("A

proprietor who temporarily suspends use of a mark can rebut 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." (emphasis

added)).

If the rule were otherwise, a mark owner would be free

to indefinitely warehouse unused trademarks so long as that

proprietor could provide some excuse for the mark's nonuse. See

id. at 46

("Even after prolonged non-use, and without any concrete

plans to resume use, a company could almost always assert

truthfully that at some point, should conditions change, it would

resume use of its mark."). Indeed, any revenue shortfall,

corporate reorganization, or supply chain disruption could

"justify" the nonuse of a mark. Congress presumably never

"contemplated such an unworkable standard" in passing the Lanham

Act.

Id.

Rather, a prior mark owner seeking to rebut the

presumption of abandonment must, at minimum, produce evidence of

- 17 - its intent, within the statutory period, to use the mark in the

reasonably foreseeable future. That evidentiary requirement

"ensures that valuable trademarks are in fact used in commerce as

the Lanham Act intends, rather than simply hoarded or warehoused."

Emergency One,

PAS cites several non-binding cases for the proposition

that a mark owner may defeat an abandonment claim simply by showing

"a temporary suspension of use for reasons beyond the control of

the mark owner." However, each of those cases involved a mark

owner that also produced evidence of its intent to resume use of

the mark. For example, in Burgess v. Gilman,

475 F. Supp. 2d 1051

(D. Nev. 2007), the mark owner "had discussions about various

proposed plans for the [brand]" during the nonuse period.

Id. at 1062

. Similarly, the mark owner in Kardex Sys., Inc. v. Sistemco

N.V.,

583 F. Supp. 803

(D. Me. 1984), maintained an "intent to

return to [the] market" during a period of nonuse by servicing and

advertising the relevant product.

Id. at 817

; see also Miller

Brewing Co. v. Oland's Breweries (1971) Ltd.,

548 F.2d 349, 352

(C.C.P.A. 1976) (noting that a mark owner sufficiently "rebut[ted]

[a] prima facie case of abandonment" because it continued

advertising the mark during the period of nonuse, among other

activities expressing an intent to resume use). And, in Star-Kist

Foods, Inc. v. P.J. Rhodes & Co.,

769 F.2d 1393

(9th Cir. 1985),

the Ninth Circuit noted that the entity alleged to have abandoned

- 18 - marks during a time of financial hardship ultimately "intended to

and did resume use of the trademarks when profits could again be

made."

Id. at 1396

In sum, we reject PAS's arguments that it need only show

a "temporary suspension of use for reasons beyond [its] control"

to toll the statutory period of nonuse or rebut the presumption of

abandonment. Indeed, PAS's evidence of "excusable nonuse" is

neither sufficient nor necessary to satisfy its burden of

production. Though PAS's litigation with the Bank may help explain

why it stopped using the Picú mark, PAS must still produce evidence

of an intent to resume use of the mark to rebut the presumption of

abandonment. Of course, PAS asserts that it did in fact produce

such evidence of its intent. We thus evaluate below whether PAS's

purported evidence of its intent to resume use, combined with its

justification for not using the mark, satisfied its burden of

production.

B. Intent to Resume Use

We pause to further explain the procedural lens through

which we evaluate PAS's proffered evidence of its intent to resume

use of the mark. As noted above, to rebut the presumption of

abandonment, PAS must produce evidence that, during the statutory

period, it held an intent to resume use of the mark in the

reasonably foreseeable future. We emphasize again that PAS's

burden in this regard is one of production, not persuasion.

- 19 - Emergency One,

228 F.3d at 536

. That means PAS need not prove

anything at this procedural stage. It must only produce evidence

that would "permit a reasonable jury to conclude that, in the

three-year period of non-use," PAS "nevertheless maintained an

intent to resume use of its registered mark in the reasonably

foreseeable future." ITC,

In determining whether PAS satisfied its burden of

production, we must view its proffered evidence not in isolation

but in its totality -- including, as noted, PAS's reason for

suspending its use of the mark. See

id.

(viewing the record in

its totality to evaluate intent). Moreover, we must evaluate such

evidence in the light most favorable to PAS, the nonmoving party

on summary judgment. See González-Arroyo,

54 F.4th at 18

. The

burden of production is thus no "heavy burden." Empresa Cubana

del Tabaco v. Culbro Corp.,

399 F.3d 462

, 467 n.2 (2d Cir. 2005).

That said, summary judgment must be entered against a party who

fails to adduce enough evidence to satisfy this burden. See, e.g.,

ITC,

(granting summary judgment for the party

asserting an abandonment claim because the nonmoving party failed

to furnish evidence of its intent to resume use of a mark);

Yellowbook,

708 F.3d at 848

(same).22

22We reject PAS's argument that the district court improperly shifted the burden of proof, rather than the burden of production, to PAS. To be sure, the district court at times referred to PAS's inability to "disprove" certain facts. To-Ricos,

2022 WL 19355737

- 20 - With these procedural requirements in mind, we now turn

to the three circumstances that, according to PAS, reflect the

company's intent to resume use of the mark.

1. Attempted Sale (2012)

PAS first points to its attempt to sell the Picú mark as

evidence of its intent to resume use of the mark. As noted, PAS

sought to sell its assets, including the Picú mark, to To-Ricos in

2012. During those negotiations, Echegaray, PAS's president,

expressed his intention to either "reopen" production or "do

something with th[e] assets."

The circuits are divided on whether an attempt to sell

a mark expresses an intent to use that mark in commerce. See

Specht v. Google Inc.,

747 F.3d 929, 934

(7th Cir. 2014) ("[A]n

effort to sell the assets of a business is different from trading

on the goodwill of a trademark to sell a business's goods or

services and therefore does not constitute a use of the mark in

commerce."); but see Defiance Button Mach. Co. v. C & C Metal

Prods. Corp.,

759 F.2d 1053, 1060-61

(2d Cir. 1985) (rejecting

at *2. However, the context surrounding those references makes clear that the district court was referring to PAS's failure to produce evidence showing an intent to resume use. See id. at *3 ("[PAS] has not provided competent evidence of an intent to resume use during the relevant time period." (emphasis added)); id. ("There is no evidence of business plans, marketing strategies, licensing efforts, or other actions undertaken between 2011 and 2016 to establish an intent to resume use of the mark in commerce." (emphasis added)).

- 21 - abandonment claim, in part, where owner, after a period of nonuse,

tried to sell a mark). We need not reach that issue here, however,

because PAS tried to sell the Picú mark in 2012, before the

relevant three-year statutory window. As discussed, To-Ricos

applied to register the Picú mark in 2016. Thus, to rebut the

statutory presumption of abandonment PAS needed to produce

evidence that, between 2013 and 2016, it either used the mark in

commerce or held an intent to resume use of the mark. See ITC,

n.9.23 PAS's attempt to sell the mark in 2012 thus

cannot rebut To-Ricos's prima facie case of abandonment absent

evidence that PAS carried that intent into the statutory period.

To that end, PAS argues that the comment made by its

president during the 2012 negotiations provides forward-looking

evidence of the company's intent to resume use of the mark. Of

course, courts may consider evidence "regarding [a mark owner's]

practices that occurred before or after the three-year statutory

period to infer [an owner's] intent to resume use during the

three-year period." Crash Dummy Movie, LLC v. Mattel, Inc.,

601 F.3d 1387, 1392

(Fed. Cir. 2010). However, the relevant comment

only indicates that PAS held a vague intention, as of 2012, to

23While it is undisputed that PAS did not use the mark from 2011 to 2016, To-Ricos identifies April 2013 to April 2016 as the relevant three-year period of nonuse. PAS does not challenge this framing by To-Ricos, so we similarly treat April 2013 to April 2016 as the relevant statutory period for our analysis.

- 22 - potentially restart chicken production at some unspecified date.

That "bare assertion of possible future use is not enough."

Silverman,

870 F.2d at 47

(holding that a mark owner failed to

rebut the presumption of abandonment). Indeed, "courts have

generally held that a trademark owner cannot rebut a presumption

of abandonment merely by asserting a subjective intent to resume

use of the mark at some later date." ITC,

482 F.3d at 150

; see

also Emergency One,

("[T]he owner of a trademark

cannot defeat an abandonment claim . . . by simply asserting a

vague, subjective intent to resume use of a mark at some

unspecified future date.").

Thus, neither PAS's attempt to sell the mark in 2012,

nor the comment PAS's president made during that negotiation,

support the requisite intent, within the statutory period, to

resume use of the mark in the reasonably foreseeable future.

2. Unencumbering the Mark (2014)

PAS next argues that it manifested its intent to resume

use of the Picú mark by settling its litigation with the Bank in

2014. Recall that PAS, as part of the initial loan agreement, had

granted the Bank a lien over its assets, including the Picú mark.

When PAS allegedly breached the loan agreement, the Bank sued to

collect on outstanding payments and exercise its right to foreclose

on PAS's assets. Under the 2014 settlement agreement between the

two parties, the Bank had a right to foreclose on most of PAS's

- 23 - assets, but not the Picú mark. The agreement provided that once

the Bank foreclosed on PAS's other assets, the lien on the Picú

mark would be discharged. PAS argues that its exclusion of the

Picú mark from the list of foreclosable assets in the settlement

agreement reflected its intent to resume use of the mark.

However, PAS cannot rely on evidence of its settlement

agreement to help satisfy its burden of production. That is

because PAS's effort to own an unencumbered right to the Picú mark

does not imply its intent to resume use of the mark in commerce in

the reasonably foreseeable future. See

15 U.S.C. § 1127

("'[U]se

in commerce' means the bona fide use of a mark made in the ordinary

course of trade, and not made merely to reserve a right in a

mark."). The Bank's lien never precluded PAS from using the mark;

it only gave the Bank the right to apply PAS's profits to PAS's

unsatisfied debts. By attempting to remove the Bank's lien, PAS

simply sought to regain the unencumbered right to profit from the

mark, not its ability to use the mark. See AmBrit, Inc. v. Kraft,

Inc.,

812 F.2d 1531, 1550

(11th Cir. 1986) ("Trademark rights flow

from use, not from intent to protect rights.").

More importantly, the record contains no evidence

indicating that PAS in fact intended to resume use of the mark

before or after it became free of the Bank's encumbrance. See

Vais Arms, Inc. v. Vais,

383 F.3d 287, 294

(5th Cir. 2004) (burden

of production not satisfied by evidence of a mark owner's

- 24 - "subjective, uncommunicated desire not to abandon the mark,

without any indication of when or how he intended to resume its

commercial use"). PAS could have licensed the then-encumbered

mark to another entity to maintain the brand's goodwill, yet PAS

took no such action during the relevant statutory period -- i.e.,

between 2013 and 2016. Moreover, under the settlement agreement,

PAS agreed to allow the Bank to foreclose on "almost everything"

owned by the company, including its machinery and facilities, so

it is unclear how PAS would (or could) resume using the mark in

the reasonably foreseeable future once freed from the lien. By

protecting its trademark from foreclosure proceedings, PAS may

have thought the mark held some value independent of the

infrastructure used to make the company's products. Yet

"traditional principles of trademark law" provide that "[t]here is

no such thing as property in a trademark except as a right

appurtenant to an established business or trade in connection with

which the mark is employed." Yellowbook,

708 F.3d at 844

(alteration in original) (quoting Rock & Roll Hall of Fame &

Museum, Inc. v. Gentile Prods.,

134 F.3d 749, 753

(6th Cir. 1998)).

Even if the settlement agreement reflected PAS's intent

to use the mark at some vague point in the future, that would still

not be enough. See Qashat,

364 F.3d at 338

(explaining that a

"noncommittal, indefinite assertion of intent to resume use [is]

insufficient as a matter of law to rebut the presumption of

- 25 - abandonment"). As noted, to satisfy its burden of production, and

thus rebut the presumption of abandonment, PAS must furnish

evidence of its intent to resume use in the "reasonably foreseeable

future." Silverman,

870 F.2d at 47

(emphasis added). The goodwill

associated with ephemeral products like chicken is often

short-lived, so what constitutes a "reasonably foreseeable future"

in this context may be a narrow window. See Emergency One,

.24 Far from expressing an intent to use the mark in

the near future, the settlement agreement established that the

Bank would retain a lien over the mark until it completed

foreclosure proceedings on PAS's other assets. So, by failing to

specify a deadline for the completion of those foreclosure

proceedings, PAS deferred its right to an unencumbered Picú mark.25

At no point did PAS ever express when or how it would use the mark

once the lien was discharged. See Qashat,

364 F.3d at 337

-38

While there appears to be some evidence that the Picú mark 24

was well-recognized by consumers even after PAS stopped using the mark, PAS does not argue that there was any goodwill still associated with the mark at the end of the statutory period that would impact our analysis of PAS's intent to resume use or abandonment of the mark. Similarly, PAS cannot maintain that its excuse for not 25

using the mark was due to an "external cause." See McCarthy, supra, § 17:16. PAS agreed from the start to secure its financing by granting the Bank a lien over its assets. Moreover, in settling the resulting litigation, PAS failed to bargain for a specific deadline on which the Bank's lien would be discharged. PAS, not some "external cause," is therefore largely responsible for the mark's prolonged encumbrance, cutting against the company's excuse for nonuse.

- 26 - (holding that a mark owner could not rebut the presumption of

abandonment because it took "no steps" to introduce its product to

the market during the statutory period).

Thus, no reasonable jury could therefore view the

settlement agreement as probative, alone or combined with other

evidence, of PAS's intent to resume use of the mark in the

foreseeable future.

3. The Licensing Agreement (2017)

Finally, PAS contends that its licensing agreement with

IMEX in September 2017 provides evidence of an intent to resume

use of the mark. This argument is alluring at first glance.

Generally, a mark owner's intent to resume use can be shown by

valid efforts to license a mark. See Sands, Taylor & Wood Co. v.

Quaker Oats Co.,

978 F.2d 947, 956

(7th Cir. 1992); see also

McCarthy, supra, § 17:11 ("An intent to resume use can be evidenced

by continuing efforts to license the mark, which can be sufficient

to rebut a prima facie case of abandonment.").

That said, there are two problems with PAS's position.

First, PAS entered the licensing agreement in September 2017, more

than a year after the statutory period of nonuse elapsed in April

2016. "Once a period of nonuse results in abandonment, a

resumption of use thereafter cannot cure the preceding

abandonment." McCarthy, supra, § 17:3; see also ITC,

n.9 ("An intent to resume use of the mark formulated after

- 27 - more than three years of non-use cannot be invoked to dislodge the

rights of another party who has commenced use of a mark -- thereby

acquiring priority rights in that mark -- after three years of

non-use."). To be sure, "evidence arising after the relevant

three-year period" could, in some cases, "demonstrate an intent

within that period to resume use." ITC,

n.9.26

However, no such backward-looking evidence suggests PAS

contemplated signing the 2017 licensing agreement within the

statutory period. See McCarthy, supra, § 16:9 ("Initial use of

the mark, followed by a long period of nonuse, may result in

abandonment of whatever rights accrued to the initial usage.").

Accordingly, evidence of this agreement does not rebut the

statutory presumption of abandonment, and the district court

correctly concluded that PAS had abandoned the mark as of 2016.

See AmBrit,

812 F.2d at 1550-51

. The Picú mark thus returned to

the public domain by the time To-Ricos applied to register the

mark in April 2016. See ITC,