Zombie trademarks coming back to life after death

Zombie trademarks, also known as ghost brand trademarks, are trademarks that were previously abandoned by their original owner but are later revived and used by a new, unaffiliated entity. The purpose is usually to capitalize on any residual consumer goodwill and brand recognition associated with the abandoned mark, even though the original owner is no longer using it.[1][2]

Trademarks can become abandoned or "dead" in a few ways:

1. The owner stops using the mark in commerce with no intent to resume use. In the U.S., three consecutive years of non-use is considered prima facie evidence of abandonment.[6]

2. The owner fails to renew the trademark registration when required, causing the registration to lapse or expire.[1][8]

3. The mark becomes generic and loses its distinctiveness as a source identifier.[1]

When an abandoned mark is adopted by a new owner for similar goods/services as the original use, it becomes a "zombie trademark." The new owner seeks to benefit from the mark's lingering consumer awareness and reputation, without having invested in originally building up that goodwill.[1][2]

Zombie trademarks present several issues and challenges:

- They can deceive consumers who mistakenly believe the brand is still associated with the original owner and expect the same level of quality.[1]

- The new owner unfairly benefits from goodwill they didn't create, while the original owner's reputation can suffer if quality declines.[1][4]

- Zombie marks contribute to "deadwood" on the trademark register - registrations for marks not actually in use, cluttering the register.[8][9]

- Courts are still developing case law on zombie trademarks and "residual goodwill," leading to some uncertainty.[6]

So what can a competitor or new applicant do if they encounter a zombie trademark? A few options exist:

1. Argue the mark was abandoned

A competitor can try to prove the original owner abandoned the mark with no intent to resume use. Three years of non-use is prima facie evidence of abandonment, shifting the burden to the original owner to show they intended to resume use. But intent can be difficult to prove either way, and is a very fact-specific inquiry. Simply proving non-use isn't enough on its own.[6]

2. Challenge residual goodwill

Some courts recognize the concept of "residual goodwill" - that an abandoned mark may still have consumer recognition as a source identifier for a period of time after abandonment. An applicant trying to revive a zombie mark may need to show there is no lingering goodwill. Factors include how long the mark was used, how well-known it was, and how much time has passed since abandonment. Case law is limited and inconsistent on residual goodwill.[4][6]

3. Bring unfair competition claims

An applicant could argue the zombie trademark amounts to false advertising or unfair competition by deceiving consumers about the source of the goods/services. The original owner may have standing to bring such claims.[7]

4. Let time pass

The more time that passes after abandonment, the weaker any residual goodwill. Waiting several years makes it easier to argue the mark is clear to adopt.[6]

5. Choose a different mark

The uncertainty and risk of litigation may not be worth pursuing a zombie trademark. Selecting a clearly available mark is safest.

From the USPTO's perspective, zombie trademarks are part of a broader "deadwood" problem - the trademark register is cluttered with marks not actually in use in commerce.[8][9] Removing deadwood is important so the register accurately reflects marks in use and frees up marks for adoption.

In recent years, the USPTO has taken steps to combat deadwood and zombie trademarks:

1. Post-registration audits

In 2012, the USPTO began auditing post-registration maintenance filings to verify the mark is in use on all registered goods/services. Registrants are randomly selected and must provide additional proof of use. If they can't, the registration is cancelled or narrowed. Over half of audited registrations have been unable to verify use for all goods/services.[8][9]

2. Expungement proceedings

The Trademark Modernization Act of 2020 (TMA) created new ex parte expungement and reexamination proceedings to remove registrations for unused marks. Anyone can file a petition alleging a mark has never been used or is not in use, and the registrant must provide evidence of use. This makes it easier to clear zombie trademarks from the register.[8][10]

3. Streamlined cancellation procedures

The TMA also allows a petitioner seeking cancellation of an unused registration to submit evidence of the USPTO's electronic records showing non-use. This can expedite cancellation of abandoned marks.[10]

4. Increased foreign applicant scrutiny

The USPTO has seen a huge influx of fraudulent applications from China containing fake or doctored specimens of use. In 2019, they began requiring foreign applicants to be represented by a U.S.-licensed attorney to improve application integrity.[8][10]

While these measures help mitigate deadwood and zombie trademarks, they remain an ongoing challenge for the USPTO given the sheer volume of filings and the incentives that exist to revive abandoned marks. Careful selection and clearance searching for new marks remains prudent.

In summary, zombie trademarks occur when an abandoned mark is revived by a new owner seeking to exploit its residual consumer goodwill. This presents issues of consumer deception and unfair competition, while cluttering the register with unused marks. Competitors have some options to challenge zombie marks, like proving abandonment, attacking residual goodwill, and bringing unfair competition claims. The USPTO has also stepped up efforts to clear deadwood and fraudulent filings through audits, new expungement and cancellation procedures, and increased scrutiny of foreign applications. But ultimately, the problem requires ongoing vigilance by the USPTO and trademark owners alike.

Successful Zombie Brands and Companies

there are a few key examples of companies that have bought and resurrected trademarks to capitalize on residual goodwill:

1. River West Brands - This Chicago-based company specializes in acquiring and relaunching dormant consumer brands. Some of their notable resurrections include:

• Salon Selectives hair care products, which they acquired from Unilever and later sold to Walgreens as a private label brand.
• Nuprin pain reliever, acquired from Bristol-Myers Squibb, relaunched, and then sold to CVS for use as a store brand.
• Coleco toys and games, a popular brand in the 1980s that River West is working to bring back to the market.

2. Leaf Brands - Founded by Ellia Kassoff, Leaf Brands focuses on reviving discontinued candy and snack brands. Their portfolio includes:

• Astro Pops, a cone-shaped lollipop invented in the 1960s that Leaf brought back in its original form as well as new varieties like sodas.
• Bonomo's Turkish Taffy, a nostalgic candy that Leaf acquired the trademark for after a legal dispute with Tootsie Roll.
• Hydrox cookies, often considered the original sandwich cookie that predated Oreos, which Leaf resurrected.

3. Retrobrands - Founded by Jeff Kaplan, Retrobrands acquires trademarks for brands that companies have let lapse and either licenses them or manufactures the revamped products. Kaplan has filed trademark applications for several brands with controversial histories like Aunt Jemima, Uncle Ben's and Eskimo Pie after the original owners abandoned them.

These companies operate by identifying brands that still have consumer recognition and nostalgia (residual goodwill), even years after they were discontinued. By acquiring the trademarks and intellectual property, they are able to relaunch these "zombie brands" and tap into that existing brand equity, saving on the marketing costs needed to establish a new brand.

Resurrecting brands, especially ones with problematic histories, does come with reputational risks and the potential for legal challenges from the original owners in some cases. But overall, the business model of reviving dormant trademarks has proven successful for these specialist companies that see value in nostalgia.

Citations:
[1] https://blog.ipleaders.in/zombie-trademarks-old-mark-new-owner/
[2] https://en.wikipedia.org/wiki/Zombie_trademark
[3] https://www.lexology.com/library/detail.aspx?g=cdf42eb5-c23d-4ee1-a81d-e8801979bec9
[4] https://www.simandsan.com/intellect_zombie_trade_marks.html
[5] https://www.dreyfus.fr/en/2021/06/15/what-are-the-challenges-of-zombie-trademarks/
[6] https://ipwatchdog.com/2012/08/23/zombie-trademarks-bringing-a-trademark-back-from-the-dead/id=27567/
[7] https://www.thebrandprotectionblog.com/2013/10/protection-against-zombie-trademarks/
[8] https://www.khuranaandkhurana.com/2022/12/05/deadwood-trademark/
[9] https://www.sternekessler.com/news-insights/publications/uspto-takes-deadwood/
[10] https://www.crowell.com/en/insights/client-alerts/cutting-the-dead-wood-the-uspto-s-post-registration-trademark-use-audit-program