To-Ricos, Ltd. v. Productos Avicolas del Sur, Inc. ( 2024 )

United States Court of Appeals
For the First Circuit
No. 22-1853
TO-RICOS, LTD.,
Plaintiff, Appellee,
v.
PRODUCTOS AVÍCOLAS DEL SUR, INC.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jay A. García-Gregory, U.S. District Judge]
Before
Montecalvo, Lipez, and Thompson,
Circuit Judges.
Luis A. Oliver-Fraticelli, with whom Adsuar Muñiz Goyco Seda
& Pérez-Ochoa, P.S.C. was on brief, for appellant.
Sheila J. Torres Delgado, with whom Puerto Rico Legal
Advisers, LLC, Walter A. Winslow, and Coan, Payton & Payne, LLC
were on brief, for appellee.
September 19, 2024
LIPEZ, Circuit Judge. This case arises from a dispute
between two companies vying for the right to use the "Pollo Picú"
trademark in the sale of fresh chicken. Appellant Productos
Avícolas del Sur, Inc. ("PAS") sold chicken under the "Pollo Picú"
trademark ("Picú mark") until 2011, when the company stopped
selling products because of financial difficulties. Five years
later, in 2016, appellee To-Ricos, Ltd. ("To-Ricos") applied to
register the Picú mark, believing that PAS had abandoned it. When
PAS opposed To-Ricos's trademark applications, To-Ricos sued PAS
in federal district court, seeking a declaratory judgment that it
is the rightful owner of the Picú mark.
Concluding that PAS had abandoned the mark, the district
court granted summary judgment for To-Ricos. On appeal, PAS argues
that it never abandoned the Picú mark because the company's
financial adversity excused its nonuse of the mark. PAS also
asserts that, between 2011 and 2016, the company manifested its
intent to resume, not abandon, use of the Picú mark. We disagree
with PAS on both points and thus affirm the district court's grant
of summary judgment for To-Ricos.
I.
We summarize the relevant facts, which are undisputed
unless otherwise noted, in the light most favorable to PAS, the
non-moving party. See González-Arroyo v. Drs.' Ctr. Hosp. Bayamón,
Inc., 54 F.4th 7, 18 (1st Cir. 2022).
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A. PAS Stops Using the Trademark
PAS is a Puerto Rico corporation that sold Picú branded
chicken from 2005 to 2011.1 The Picú trademark consists of the
phrase "Pollo Picú" along with a cartoon chicken:
The brand was, at one point, well-recognized among
Puerto Ricans, with one industry executive going so far as to call
"Pollo Picú" the "Coca-Cola" of Puerto Rico chicken. However, PAS
faced administrative and financial challenges maintaining the Picú
tradition. For example, the U.S. Patent and Trademark Office
("USPTO") cancelled PAS's registrations of the Picú mark in 2006
and 2009 for failure to file a declaration, as required by Section
8 of the Lanham Act, attesting that the mark was either: (1) in
use, or (2) not in use due to excusable circumstances.2
1PAS temporarily paused sales for fourteen months within this
period because of a sudden increase in the price of corn.
2 In relevant part, Section 8 of the Lanham Act provides that,
at specified times, a registrant must submit an affidavit stating
that "the mark is in use in commerce," 15 U.S.C. § 1058(b)(1)(A),
or that the "mark is not in use in commerce," id.§ 1058(b)(2)(A), "due to special circumstances which excuse such
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PAS ultimately stopped selling chicken bearing the Picú
mark in 2011 after its bank -- Banco Popular de Puerto Rico ("the
Bank") -- froze PAS's financing.3 It soon became apparent that
the Bank was auditing PAS's credit accounts. In January 2012, the
Bank sued PAS in the Puerto Rico Commonwealth Court of First
Instance ("Commonwealth Court") for the collection of monies and
foreclosure of security interests under a preexisting loan and
security agreement between the entities. Under that agreement,
PAS had secured a loan by granting the Bank a lien over its assets,
including the Picú mark. The Bank's lien entitled it to recover
any income PAS garnered from its assets if PAS breached the loan
agreement.
Confronting financial challenges and pending litigation,
the president of PAS -- Fernando Echegaray -- considered selling
the company to To-Ricos, PAS's main competitor.4 In March 2012,
Echegaray discussed a sale of PAS's assets with Pedro Del Valle
López ("Del Valle"), the president of To-Ricos, indicating that
PAS would either sell its assets or resume production. With Del
nonuse and is not due to any intention to abandon the mark," id.
§ 1058(b)(2)(B).
3 The financial institution at issue had different names and
owners during the period relevant to this litigation. Those
changes in name and ownership are not relevant to this appeal, so
we refer to the entity as "the Bank" for simplicity.
4 PAS and To-Ricos had also discussed the sale of the Picú
mark in prior years.
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Valle's encouragement, Echegaray sent an offer letter to the
president of To-Ricos's parent company. However, no sale
materialized.
PAS spent the next two-and-a-half years litigating with
the Bank. Eventually, in October 2014, PAS and the Bank signed a
settlement agreement requiring PAS to pay a stipulated sum to the
Bank by December 2014. Under the agreement, if PAS failed to make
that payment, the Bank would foreclose on most of PAS's assets to
satisfy the judgment, after which PAS would be released from all
debts and obligations to the Bank. The Picú mark was not among
the foreclosable assets. The agreement provided, however, that
the Bank would retain its lien over the mark until the foreclosure
proceedings concluded.
PAS failed to make the December 2014 payment. By mid-
2017, the Bank had still not exercised its right to foreclose on
PAS's assets. The Picú mark remained encumbered by the Bank's
lien during that period. Due to the Bank's inaction, PAS moved
for the Commonwealth Court in June 2017 to order the Bank to
foreclose on PAS's assets or declare PAS free of its obligations
to the Bank.5 In November 2019, the Commonwealth Court finally
granted PAS's motion, ultimately discharging PAS from its
5 For procedural reasons irrelevant to this appeal, the
Commonwealth Court did not rule on PAS's motion for more than two
years.
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outstanding obligations, thus removing the Bank's lien over the
mark.
B. To-Ricos Applies to Register the Trademark and PAS Responds
Meanwhile, To-Ricos filed an application in April 2016
to register the Picú mark with the USPTO. No other trademarks
bearing the term "Picú" were registered with the USPTO at the time
To-Ricos filed its application.6 However, just three months later,
in July 2016, PAS filed its own application to register the Picú
mark.7 And, in October 2016, PAS filed an opposition to To-Ricos's
application with the Trademark Trial and Appeal Board ("TTAB"), an
administrative tribunal housed within the USPTO.8
About one year later, in September 2017, PAS executed a
trademark licensing agreement with IMEX Americas Trading, LLC
("IMEX"), a company in the import/export industry.9 The agreement
granted IMEX a non-exclusive right to use the Picú trademark in
6 As noted, the USPTO cancelled PAS's earlier registration of
the Picú mark in 2006 and 2009 for failure to file certain
declarations required by the Lanham Act.
7 PAS applied to register the term "Picú" in addition to
"¡Ahora Más Sabroso!" The parties treat the marks as identical to
one another, so we do the same.
8 In June 2016, To-Ricos applied to register the same mark
with the Puerto Rico Patent and Trademark Office ("PRTO"). PAS
opposed that application, as it did with To-Ricos's application
with the USPTO. Because the parties make no argument related to
the PRTO application, we focus our analysis on the dispute over
federal registration.
9 IMEX is owned by Echegaray’s nephew, Derick Lugo-Colón.
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the United States. IMEX started selling chicken under the Picú
mark in March 2018.10 However, IMEX stopped selling Picú branded
chicken just a few months later, around June 2018, after To-Ricos
sent cease and desist letters to clients of the company.
C. This Litigation
The following summer, in June 2019, To-Ricos began
selling Picú branded chicken. That same month, To-Ricos filed the
present federal lawsuit against PAS. To-Ricos's complaint sought,
among other remedies, a declaratory judgment establishing To-Ricos
as the legal owner of the Picú mark.11
After the parties completed discovery, To-Ricos moved
for summary judgment, arguing that PAS had abandoned the Picú mark
by the time To-Ricos applied to register the mark in April 2016.12
PAS, in opposing the motion, asserted that its litigation with the
Bank excused its nonuse of the mark, and that its conduct since
2012 demonstrated that it did not abandon the mark.
10 Tobe precise, IMEX sold chicken under the Picú mark through
a separate distributor and a separate supplier. The names of those
entities are irrelevant to this appeal.
11 In November 2020, the TTAB stayed the administrative
proceeding between PAS and To-Ricos pending the conclusion of this
litigation.
12 PAS filed its own motion for summary judgment on a
counterclaim it had asserted against To-Ricos. PAS's motion, which
the district court denied, is not relevant to this appeal.
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The district court entered summary judgment for To-
Ricos. To-Ricos, Ltd. v. Productos Avícolas del Sur, Inc., No.
19-1592, 2022 WL 19355737, at *3 (D.P.R. Sept. 22, 2022). The
court noted that To-Ricos had established "a prima facie showing
of abandonment" given that PAS admitted to not using the mark in
commerce for at least three consecutive years before To-Ricos
applied to register the mark. Id. at *2 (quoting Gen. Motors Corp.
v. Aristide & Co., Antiquaire De Marques, 87 U.S.P.Q.2d 1179, *3
(T.T.A.B. 2008)). Finding that PAS had not met its burden of
production with the evidence required to show its intent to resume
use of the mark within that three-year period, the court held that
To-Ricos was entitled to summary judgment on its abandonment claim.
Id. at *2-3. The court therefore entered a declaratory judgment
pronouncing To-Ricos as the lawful and rightful owner of the Picú
mark.13 This appeal followed.
II.
A. Standard of Review
We review a district court's summary judgment decision
de novo. Gerald v. Univ. of P.R., 707 F.3d 7, 16 (1st Cir. 2013).
13 The judgment, in relevant part, provided that:
"(i) Plaintiff To-Ricos Ltd. is the legal and rightful owner of
the 'Pollo Picu' mark in connection with the sale, marketing, and
promotion of poultry and poultry-related products in the United
States, including the Puerto Rico territory; (ii) Plaintiff
To-Ricos Ltd. has superior and priority rights in the 'Pollo Picu'
mark; and (iii) Defendant Productos Avicolas del Sur, Inc. does
not have any rights over the 'Pollo Picu' mark."
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Though the issue of trademark abandonment involves questions of
fact, it can be resolved via summary judgment when there is no
genuine dispute of material fact such that the moving party is
entitled to judgment as a matter of law. See Yellowbook Inc. v.
Brandeberry, 708 F.3d 837, 848 (6th Cir. 2013); see also Fed. R.
Civ. P. 56(a). A genuine dispute is one which "a reasonable jury
could resolve . . . in the favor of the non-moving party," and a
material issue is one with the "potential to affect the
outcome . . . under the applicable law." Cherkaoui v. City of
Quincy, 877 F.3d 14, 23-24 (1st Cir. 2017) (quoting Sánchez v.
Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)). When the moving
party "bears the burden of proof at trial," as To-Ricos does here
on the issue of abandonment, the movant "must demonstrate every
element of [its] case such that 'no reasonable trier of fact could
find other than for [the moving party].'" Harley-Davidson Credit
Corp. v. Galvin, 807 F.3d 407, 411 (1st Cir. 2015) (quoting Lopez
v. Corporación Azucarera de P.R., 938 F.2d 1510, 1516 (1st Cir.
1991)).
Our analysis "look[s] to all of the record materials on
file, including the pleadings, depositions, and affidavits,"
without "evaluat[ing] the credibility of witnesses nor weigh[ing]
the evidence." Ahmed v. Johnson, 752 F.3d 490, 495 (1st Cir.
2014). Though we draw all reasonable inferences in PAS's favor as
the non-moving party, Harley-Davidson Credit Corp., 807 F.3d at
- 9 -
408, the "test for summary judgment is steeped in reality," so the
non-moving party cannot rely on "conclusory allegations,
improbable inferences, and unsupported speculation" to establish
a dispute of material fact. Ellis v. Fid. Mgmt. Tr. Co., 883 F.3d
1, 7 (1st Cir. 2018) (quoting Medina-Munoz v. R.J. Reynolds Tobacco
Co., 896 F.2d 5, 8 (1st Cir. 1990)).
B. Trademark Abandonment Framework
A trademark includes any "word, name, symbol, or device"
used to "identify and distinguish" goods. 15 U.S.C. § 1127.
Though trademark rights may be established under the Lanham Act or
common law, "the right is conditioned upon use [of the mark] in
commerce" in both circumstances. Gen. Healthcare Ltd. v. Qashat,
364 F.3d 332, 335 (1st Cir. 2004).14 Only the "bona fide" use of
a mark will establish such a right; token uses that "merely" aim
"to reserve a right in a mark" will not suffice. See 15 U.S.C. §
1127 (defining "use in commerce" as "bona fide use of a mark in
the ordinary course of trade").
14 Neither party has identified distinctions between the
Lanham Act and the common law relevant to the issues raised in
this appeal. Our analysis here focuses on the parties' rights
under the Lanham Act. See Qashat, 364 F.3d at 336 n.6 (drawing on
the Lanham Act despite the invocation of common law rights because
"the general principles qualifying a mark for registration under
the Lanham Act are for the most part applicable in determining
whether an unregistered mark is entitled to protection" (quoting
Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992))).
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Likewise, an owner may lose rights to a trademark once
they stop using it in commerce. See ITC Ltd. v. Punchgini, Inc.,
482 F.3d 135, 146-47 (2d Cir. 2007). A trademark is considered
"abandoned" if "its use has been discontinued with intent not to
resume such use." 15 U.S.C. § 1127. An abandoned mark returns to
the public domain, where it may "be appropriated for use by other
actors in the marketplace, in accordance with the basic rules of
trademark priority." ITC, 482 F.3d at 147 (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, 482 F.3d at
147.16
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
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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. § 1127.17Such a prima facie showing creates a "rebuttable presumption" that
the prior owner has abandoned the mark. ITC, 482 F.3d at 147(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, 482 F.3d at 149 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, 482 F.3d at 147.
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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, 228 F.3d at
537 (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, 482 F.3d at 149, 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
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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, 482 F.3d at
147.
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).
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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"
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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.
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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
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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, 228 F.3d at 537.
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
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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.
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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, 482 F.3d at 149.
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, 482 F.3d at 149 (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,
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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)).
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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,
482 F.3d at 149 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.
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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, 228 F.3d at 537 ("[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
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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, 228
F.3d at 537.24 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.
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(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, 482 F.3d at149 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, 482 F.3d at 149 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, 482 F.3d at 147 (explaining that an
26For example, consider a scenario in which, one year after
the statutory period has elapsed, a mark owner sends the following
email to a distributor: "As you know, my product has not been
sold for some time. I am excited to announce that, after spending
the past five years working to decrease production costs, I am
ready to sell my product to the public again." That type of
evidence, though arising after the statutory period, is
nonetheless probative of the mark owner's intent during the
relevant period.
- 28 -
abandoned mark "returns to the public domain and may, in principle,
be appropriated for use by other actors in the marketplace").27
Second, and more importantly, licensing agreements
without adequate quality control cannot show an intent to resume
use of the mark. Trademark law does not protect these sorts of
arrangements -- referred to as "naked licensing" agreements -- for
good reason. See McCarthy, supra, § 18:48 ("Licensing of a mark
27 The district court concluded that "To-Ricos acquired
superior legal rights over the mark by filing trademark
applications with the USPTO and PRTO in 2016 -- when there were no
other live registrations or pending applications containing the
term 'Picu' for poultry or related products and services -- and
began selling 'Pollo Picu' branded products on or around June 14,
2019." To-Ricos, 2022 WL 19355737, at *3. To the extent the
district court implied that To-Ricos established priority rights
to the mark as of 2016 by merely applying to register the mark,
that conclusion is likely incorrect. Generally, trademark rights
vest based on the use of a mark, not mere registration. See
Volkswagenwerk Aktiengesellschaft v. Wheeler, 814 F.2d 812, 815
(1st Cir. 1987); but see ITC, 482 F.3d at 146 n.8 (describing an
exception under 15 U.S.C. § 1051(b) not applicable here). However,
this error does not change our conclusion. For one, PAS never
raised the issue, thus waiving our consideration of it. See United
States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990). More
importantly, it is immaterial whether To-Ricos first established
its priority to use the mark in 2016 (when it applied to register
the mark) or 2019 (when it started selling Picú-branded chicken).
Under either date, To-Ricos would still have priority rights over
PAS because PAS never resumed using the mark after it was abandoned
in 2016. See Cal. Cedar Prods. Co. v. Pine Mountain Corp., 724
F.2d 827, 828 (9th Cir. 1984) (noting that "the first party to use
an abandoned trademark in a commercially meaningful way, after its
abandonment, is entitled to exclusive use and ownership of the
trademark"); see also, infra, n.28 (noting that PAS's licensing of
the mark to IMEX did not confer priority rights to PAS because,
under 15 U.S.C. § 1055, the benefit of a licensee's "first use"
inures to a licensor only when the licensor "control[s] . . . the
nature and quality of the goods" sold by the licensee).
- 29 -
without adequate quality control is known as 'naked licensing.'").
"The purpose of a trademark, after all, is to identify a good or
service to the consumer, and identity implies consistency and a
correlative duty to make sure that the good or service really is
of consistent quality, i.e., really is the same good or service."
Gorenstein Enters., Inc. v. Quality Care-USA, Inc., 874 F.2d 431,
435 (7th Cir. 1989). With "[a]ll courts . . . in agreement" that
naked licensing may independently result in the abandonment of a
trademark, McCarthy, supra, § 18:48, it follows that such
agreements cannot show an owner's intent to resume use of a mark.
See FreecycleSunnyvale v. Freecycle Network, 626 F.3d 509, 516
(9th Cir. 2010) ("[N]aked licensing is 'inherently deceptive and
constitutes abandonment of any rights to the trademark by the
licensor.'" (emphasis omitted) (quoting Barcamerica Int'l USA Tr.
v. Tyfield Imps., Inc., 289 F.3d 589, 598 (9th Cir. 2002)));
Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., 277 F.3d
253, 259 (2d Cir. 2002) ("Marvel, as the licensor of the 'X–Men'
property, is obliged to maintain some control over the quality of
the licensed property as an incident of valid licensing or risk
abandonment of its mark.").28
28 We need not discuss whether the licensing agreement here
could independently establish that PAS abandoned the Picú mark.
That is because, as we have explained, PAS had already abandoned
the mark before it entered the agreement. We refer to the naked
licensing doctrine only to explain why the PAS-IMEX agreement is
not probative of PAS's intent to resume use of the trademark.
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Here, it is undisputed that PAS never inspected the
chicken sold by IMEX under the Picú mark. Nor did PAS receive
reports of the product's quality from IMEX. To be sure, some
provisions in the 2017 licensing agreement aim to regulate the
quality of Picú-branded chicken. For instance, PAS retained the
contractual right to inspect IMEX's Picú-branded products.
However, "[u]nder the modern rule, the question is whether there
has been sufficient actual control by the trademark owner-licensor
over the nature and quality of the goods or services sold by the
licensee." McCarthy, supra, § 18:48. PAS's "contractual right to
control" is thus "secondary" to the fact that PAS exercised no
actual control over IMEX's products. See id.
Though federal health regulations impose some inspection
and quality requirements on IMEX's poultry supplier, see generally
21 U.S.C. § 451, PAS admits that all poultry processing plants in
the United States are subject to those regulations. Those
generally applicable regulations do not assure consumers that they
can expect a specific quality from Picú-branded chicken on a
consistent basis. See Gorenstein Enters., 874 F.2d at 435; see
also McCarthy, supra, § 18:55 ("The fact that all food service
establishments are subject to the regulations of the state
Department of Health does not mean that the trademark owner is
actually controlling the nature and quality of food products served
at a licensed restaurant.").
- 31 -
Finally, PAS notes that the owner of IMEX, Derrick Lugo
Colón, is the nephew of Fernando Echegaray, the president of PAS.
Though somewhat unclear, PAS seems to argue that, because of this
familial connection, PAS was entitled to rely on IMEX's own quality
control assurances. Indeed, some courts have looked beyond a
licensor's lack of quality control where the licensee was a family
member. See, e.g., FreecycleSunnyvale, 626 F.3d at 518 (noting
that one such example involved "siblings who were former business
partners" for seventeen years). Here, however, no evidence
suggests Lugo and Echegaray shared this type of "close working
relationship." Id.; Barcamerica, 289 F.3d at 597; see, e.g., Taco
Cabana Int'l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1117, 1122
(5th Cir. 1991), aff'd, 505 U.S. 763 (1992) (licensor and licensee,
who were brothers, enjoyed close working relationship for eight
years). PAS, exercising no actual control over the nature and
quality of IMEX's Picú-branded products, thus cannot rely on
evidence of such a naked licensing agreement to show an intent to
resume use of the mark.29
29 Though unclear, PAS appears to argue that, even if it
abandoned the mark as of 2016, the company's attempt to license
the mark in 2017 established a new date of first use of the mark.
See McCarthy, supra, § 17:3 ("[A] resumption [of use] represents
a new and separate use with a new date of first use."). However,
naked licensing agreements cannot confer priority rights to the
licensor. See 15 U.S.C. § 1055 (noting that the benefit of
licensee's "first use" of a mark inures to a licensor only if the
licensor "control[s] . . . the nature and quality of the goods").
Because we conclude that PAS failed to exercise the requisite
- 32 -
The bottom-line is that the 2017 licensing agreement,
alone or in concert with other evidence, does not show PAS's intent
to resume use of the mark within the relevant statutory period.
Accordingly, the district court correctly held that evidence of
the IMEX licensing agreement could not satisfy PAS's burden of
production to rebut the presumption of abandonment.
***
In sum, To-Ricos established a prima facie case of
abandonment by showing that PAS had not used the Picú mark for at
least three years before April 2016. After To-Ricos established
this presumption of abandonment, the burden of production shifted
to PAS to rebut the presumption by producing evidence in which a
reasonable jury could infer that, between 2013 and 2016, PAS held
an intent to resume use of the mark in the reasonably foreseeable
future. We agree with the district court's conclusion that PAS
failed to carry its burden of production. That is, no reasonable
jury could conclude that PAS held the requisite intent to resume
use of the mark. The mark was thus abandoned by PAS as of April
2016. To-Ricos established its priority to use the mark, at the
latest, by June 2019 when it began selling products under the Picú
control over IMEX's Picú-branded goods, the 2017 agreement between
PAS and IMEX did not provide PAS with a new "first use" date prior
to To-Ricos's use of the mark in 2019.
- 33 -
mark. We therefore affirm the entry of summary judgment in favor
of To-Ricos.
So ordered.
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