Wednesday, February 15, 2017

Incontestability precludes non-listed defenses, court affirms

NetJets Inc. v. IntelliJet Gp., LLC, No. 15-4230 (6th Cir. Feb. 3, 2017)

NetJets is a private aviation company that specializes in “fractional ownership” of private airplanes and related endeavors. NetJets’s predecessor company developed a software program to “run [the company’s] business,” and named the program IntelliJet. In 1995, it successfully applied to register INTELLIJET in connection with the good of computer “software . . . for managing the business of aircraft leasing and sales.” In 2002, the company filed a “declaration of use and incontestability,” which was accepted by the USPTO.

NetJets licensed the IntelliJet software to two external companies, though one apparently stopped and the other was acquired by NetJets. The company also uses the software to communicate with caterers and other vendors. In early 2013, NetJets debuted an “owner’s portal,” allowing customers to put their reservation requests directly into the IntelliJet software over the internet; the portal features the INTELLIJET mark. NetJets discusses IntelliJet on tours of the NetJets facility for customers and potential customers, and in its own promotional literature, and the mark has been mentioned in several trade press and general news sources.
Portal--see "powered by IntelliJet" at the bottom: good use?
IntelliJet was founded in 2005 and is primarily a broker for private jet services, or helping customers buy or sell an aircraft. It offers referral services for aircraft management and leasing services, but does not perform these services itself. IntelliJet uses a sales-tracking software that it has referred to as “IntelliShit.” In choosing the name, IntelliJet searched the internet for other jet aircraft brokers, business names in Florida, and the USPTO website. That last search turned up several registrations of “IntelliJet,” including NetJets’s registration. IntelliJet’s principal Spivack determined that the mark was “specifically for a software package,” and that “being in the industry,” he knew the registered agent as “NetJets.” 

NetJets sued for trademark infringement and related claims; IntelliJet counterclaimed for cancellation of NetJets’s trademark registration on the grounds that NetJets abandoned it and that it was void ab initio. This appeal was from the district court’s grant of summary judgment to IntelliJet.  The district court reasoned that NetJets’s mark was not incontestable and that the mark was void ab initio because NetJets could not show that it was used in commerce at the time of its registration. Nor could NetJets show that it had rights to the INTELLIJET mark as a service mark under the Lanham Act or Ohio common law. Finally, the district court also granted summary judgment on the basis that there was no likelihood of confusion.

The court of appeals reversed the cancellation but otherwise affirmed.

A mark may become incontestable if it is not successfully challenged within five years of its registration. One requirement is continuous use in commerce for “five consecutive years” subsequent to the date of the registration, along with continued use in commerce. “Once incontestability is established, only [the] . . . defenses enumerated in § 1115(b) can be interposed in an action for trademark infringement.” Void ab initio, or non-use at the time of registration, isn’t one of the defenses enumerated in § 1115(b).  (And, unlike functionality, void ab initio wasn’t implied from a “judicially created rule which predates the Lanham Act”—even though use and nonfunctionality are both pretty important parts of the common law.)  Thus, the court of appeals held, it was not a proper defense to incontestability.  See University of Kentucky v. Kentucky Gameday, LLC, 2015 WL 9906634, at *2 (T.T.A.B. 2015),(rejecting a void ab initio claim because the claim was “not enumerated under Trademark Act Sec. 14(3), and is not available against a registration which is more than five years old.”).

It seems to me that one could establish lack of continuous use for any 5-year period at all over the life of the registration and defeat incontestability; one simply can’t start with “void ab initio.”  It must be the case that it is valid to challenge incontestability on the ground that the registrant failed to satisfy the statutory requirements therefor; it’s just that distinctiveness is not one of the statutory requirements, and apparently use at the time of registration isn’t either—but five years of continuous use is.  Because §1064 barred IntelliJet’s void ab initio challenge, the court of appeals said, it didn’t need to decide whether the mark was actually incontestable under §1065; thus, the issue remains for remand.

The court of appeals did affirm the district court’s conclusion that IntelliJet wasn’t a service mark under Ohio common law, because it was used as a mark for software as a good, not as a service mark. The IntelliJet software is “the conduit through which NetJets provides its services,” not the service provided by NetJets itself.

Likely confusion: IntelliJet is suggestive, and relatively weak, “especially considering other federal registrations of the term and additional third party uses of the same or similar terms.”  NetJets argued that incontestability made the mark presumptively strong, but incontestability (if it existed) wouldn’t be determinative of strength.  The services were related but not directly competitive.  Although the district court reasoned that no one would confuse NetJets’s IntelliJet software with NetJets’s aviation services, the question was about source confusion, not product/service confusion.  Still, IntelliJet doesn’t sell software that could be confused with NetJets’s software; relatedness didn’t favor NetJets.  Similarity: obviously favors NetJets.  There was no evidence of actual confusion, which favored IntelliJet.  Marketing channels: both used the internet, but the products were still marketed differently, and NetJets’s software wasn’t marketed as a standalone product.  Consumer care: the parties’ customers are highly sophisticated.

Intent: Use of a mark with knowledge of another’s rights can be evidence of likely confusion.  But here, IntelliJet knew of several IntelliJet registrations, and there was no indication that it chose the name to copy or compete with NetJets specifically.  Likely expansion: Though NetJets argued that IntelliJet wanted to compete with NetJets in areas such as chartering, leasing, and aircraft management, it wasn’t appropriate to compare NetJet’s business as a whole with IntelliJet’s services.  There was no indication that NetJets intended to market its software separately, or that IntelliJet intended to begin selling its own aviation software.

Based on this de novo review, the court of appeals found confusion unlikely.

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