Consequences of Abandoning a Trademark Application or Withdrawing a TTAB Proceeding
There may be times when a trademark practitioner will need to advise a client that it is in his best interest to abandon a trademark application or withdraw a Trademark Trial and Appeal Board ("TTAB" or "Board") proceeding. One scenario may be that a trademark applicant seeks legal counsel only after he filed an application without first conducting a trademark clearance search. If an applicant fails to conduct his due diligence, then when the application is published for opposition, a third party may oppose the application alleging a likelihood of confusion between the applicant's mark and his registered trademark. If it is likely that confusion would occur between the source of the two marks and the opposer has senior rights in the mark, it may be wise to advise the applicant to abandon the application. However, there may be negative consequences to taking this action.
Keep in mind that typically a trademark applicant can abandon his trademark rights in an application by filing an express abandonment. However, if a trademark applicant chooses to abandon his rights in the subject trademark application after the commencement of an opposition, concurrent use proceeding, or interference, the applicant must acquire the written consent of every adverse party or else judgment shall be entered against the applicant. See 37 CFR §2.135 for more details regarding this circumstance.
Moreover, there will also be negative consequences for a trademark applicant if a default judgment is entered against him or if a TTAB action is dismissed "with prejudice". If either of the two actions occur a trademark applicant is precluded from filing the same trademark, in the same format, for the same goods or services that were the subject of the proceeding. There are some extenuating circumstances that would provide some exceptions to this general rule. One scenario would be if the opposing party closed its business or abandoned its trademark.
There are also circumstances that may require a trademark practitioner to advise a client to withdraw an opposition or cancellation proceeding. For example, if a party initiates an opposition or cancellation proceeding and then learns of unfavorable facts that will negatively impact his case, the party may wish to withdraw the proceeding. This could only be accomplished, without the opposing party's consent and without a dismissal with prejudice if an answer has not yet been filed. However, if an answer was filed the proceeding cannot be withdrawn without prejudice unless written consent of the opposing party is acquired. See 37 CFR §2.106(c) for more information on this subject.
If the action is withdrawn without prejudice, a new proceeding can be filed against the same mark at a later time. Conversely, if the case is withdrawn or dismissed with prejudice, then the party in the position of the plaintiff would then be barred from filing another proceeding (either an opposition or cancellation action) against the specific form of the trademark for the goods and services listed in either the application or registration. However, the plaintiff would not be barred if the mark was modified and perhaps a design element was added or if the goods and services were amended or altered.
In the majority of cases within our practice, we advise our clients to explore alternative business resolutions before committing to pursuing proceedings at the TTAB. There are several disadvantages of Board proceedings. One is that the Board will not consider market place realities. Another is that the Board will not necessarily be educated about a client's particular business. Instead, they will look to the four corners of the trademark application and/or registration to determine the scope of a party's goods or services and to determine if there is a likelihood of confusion.
In addition, it is important to be mindful that the jurisdiction of the TTAB is limited to determining if a mark is entitled to registration and nothing more. It cannot award money damages, attorney fees, or order an injunction. Often, it makes good business sense to negotiate an amicable settlement. This would require each party to agree to a compromise, but would allow the respective parties to continue with their businesses without interruption and without payment of significant litigation costs. The TTAB does not require the settlement agreement to be filed and made a public record. All that is required is that the parties file a document dismissing the action. This allows for the terms of the settlement to remain confidential. It is important that a trademark applicant seek legal counsel before filing a trademark application, before possibly abandoning an application, or before withdrawing a TTAB proceeding. If you have trademark inquiries, please feel free to contact our office for a courtesy trademark consultation.