GR&R Obtains Favorable TTAB Decision Canceling Bad Faith Application

By Jonathan M. Purow

GR&R client “Third Generation Enterprises (“3rd Gen”)” is a family-owned business that bought the longstanding specialty soda brands TOP POP and CITY CLUB in 2009. A couple years after buying the brands, 3rd Gen’s trademark registration for CITY CLUB lapsed due to an oversight. In 2012, Hurricane Sandy flooded 3rd Gen’s warehouse, and inflicted great harm to the company by destroying virtually all inventory.

3rd Gen then resumed sales of its brand TOP POP, and intended to resume sales of CITY CLUB once its financial situation improved further. But before it could do so, 3rd Gen was shocked to find that its large competitor Day’s Beverages had filed an intent-to-use trademark application for 3rd Gen’s CITY CLUB mark. 3rd Gen tried to resolve the matter between the parties, but when Day’s refused to drop its application 3rd Gen was left with little choice and proceeded to file an opposition to cancel Day’s CITY CLUB application. The opposition was based on 3rd Gen’s clear priority of use and the likelihood of confusion between the marks.

As the marks were identical, and Day’s application stated that it intended to use its CITY CLUB on soda, there was no doubt that there would be confusion among consumers if Day’s application was permitted to proceed to registration and Day’s commenced use of the mark. Since its registration had lapsed, 3rd Gen was only able to assert that it had prior rights to the CITY CLUB mark based on its sales of the soda. Day’s entire defense was therefore based on its argument that 3rd Gen had abandoned its rights in the CITY CLUB mark by not selling CITY CLUB soda in the years following Hurricane Sandy.

During discovery, 3rd Gen produced evidence of its sales running through Hurricane Sandy, and evidence of sales that it had recommenced in late 2014, approximately two years after the storm. One of its principals, Marlen Bracho, testified in a deposition about the damage done to 3rd Gen and how it had always intended to start selling the CITY CLUB brand again. Day’s did not produce a single document.

After submission of briefs, the Trademark Trial and Appeal Board entered a decision vindicating 3rd Gen, and canceling Day’s application. The Board found that City Club had never abandoned the CITY CLUB mark and therefore 3rd Gen had priority of rights in it. Under trademark law, a presumption of abandonment is only created when an owner has not used a mark for 3 years. As discussed above, the damage from Hurricane Sandy only caused 3rd Gen to cease sales of CITY CLUB for approximately two years. GR&R was happy to use its expertise to assist this family-owned business in defending its valuable trademark during a time of need.