IP Law Daily, TRADEMARK—4th Cir.: CEO’s declaration of intent to re-use a mark was sufficient to get the case to the jury on infringement, (Aug 14, 2024)

By Robert B. Barnett Jr., J.D.

In reversing the lower court’s decision, the Fourth Circuit ruled that the statutory abandonment test of 15 U.S.C. §1127 applies to a common law trademark.

After a Virginia federal district court granted summary judgment on abandonment grounds to T-Mobile in a suit filed by Simply Wireless alleging that T-Mobile infringed Simply Wireless’s SIMPLY PREPAID trademark, the Fourth Circuit has reversed and remanded, ruling that genuine disputes of material fact existed about whether Simply Wireless intended to resume use of the SIMPLY PREPAID trademark. The lower court had granted summary judgment to T-Mobile after concluding that Simply Wireless had ceased use of the common law mark in 2009 after the market had soured for prepaid cell phones and that its plans were too vague to constitute an intent to re-use the mark (Simply Wireless, Inc. v. T-Mobile US, Inc., No. 22-2211 (4th Cir. Aug. 13, 2024)).

Background. Simply Wireless, Inc., is a Virginia-based telecommunications company in business for 27 years, which has used several trademarks, including SIMPLY WIRELESS. It sells cell phones, accessories, and prepaid airtime. It operated brick-and-mortar retail stores until 2009. In addition, Simply Wireless sells prepaid airtime through its website, simplyprepaid.com, which it offered from 2002 to 2008 under the trademark SIMPLY PREPAID. Simply Wireless also sold third-party wireless phones and accessories through home shopping networks.

In 2009, Simply Wireless paused its sale of prepaid airtime using the trademark SIMPLY PREPAID and the Simply Prepaid website because of an industry-wide shift away from prepaid refills. The website remained inactive from 2009 until August 2014.

In 2012, after discussing resumption of the SIMPLY PREPAID business model with Ignite Media, Simply Wireless began using the trademark SIMPLY PREPAID in connection with sales on a website called toptvstuff.com. Results were modest, but 243 consumers in 44 states engaged in 277 transactions. In 2013, Simply Wireless again temporarily stopped using the trademark SIMPLY PREPAID.

T-Mobile, meanwhile, in 2014 began operating brick-and-mortar stores under the trademark SIMPLY PREPAID. On August 13, 2014, T-Mobile filed to register SIMPLY PREPAID as its own trademark, followed by Simply Wireless on October 2, 2014. At that point, Simply Wireless launched a revamped Simply Prepaid website, which did not begin offering prepaid cell phones until 2016.

In 2015, Simply Wireless sued T-Mobile in Virginia federal court, asserting a claim for trademark infringement. T-Mobile successfully obtained an order for arbitration, which the Fourth Circuit affirmed. After the arbitrator ruled that these claims were not subject to arbitration, Simply Wireless filed the present suit, alleging common law trademark infringement and trademark dilution.

Both parties filed summary judgment motions. The district court began its analysis by ruling that Simply Wireless had obtained valid common law rights in the mark SIMPLY PREPAID. The court, however, then granted summary judgment to T-Mobile, ruling that (1) disuse of the mark for three years (2009-2012) constituted abandonment and (2) Simply Wireless failed to demonstrate a sufficient intent to resume use of the SIMPLY PREPAID mark during the three-year period of non-use.

Simply Wireless appealed the decision to the Fourth Circuit in Richmond, Virginia.

Abandonment. Under 15 U.S.C. §1127, three years of non-use of a valid common law trademark creates a rebuttable presumption of abandonment. The evidence clearly established that Simply Wireless abandoned its mark for at least the required three years. At this point, the burden shifted to Simply Wireless to establish that it had an intent during the three years of abandonment to resume its use of the trademark. Resumption must be in the “reasonably foreseeable future” rather than at some unspecified future date.

Resumption. To support its argument at summary judgment that it had the requisite intent, Simply Wireless submitted a declaration from its CEO to that effect. Ordinarily, a simple declaration that the company had the requisite intent would be insufficient to meet the company’s burden. This declaration, however, also contained details of the then-ongoing discussions with Ignite Media in 2011 and their joint plans to operate a business using the SIMPLY PREPAID mark. The declaration also detailed the sales that resulted from those discussions.

The Fourth Circuit noted that T-Mobile had two high hurdles to clear to obtain summary judgment under these facts, given the Fourth Circuit’s decision in Emergency One, Inc. v. Am. FireEagle, Ltd., 228 F.3d 531 (4th Cir. 2000). First, the question of whether the company had the requisite intent to resume use of the mark, the Fourth Circuit has said, “is an intensely factual question.” Second, the intent inquiry is “rarely amenable to summary judgment.”

The Fourth Circuit then ruled that the Virginia district court erred when it granted summary judgment to T-Mobile. In effect, the lower court erred when it rejected Simply Wireless’s assertions of an intent to resume use of the mark. At summary judgment, the trial judge is supposed to construe all assertions in favor of the non-moving party. Instead, the judge construed the assertions in favor of the moving party.

The Fourth Circuit ruled instead that the CEO’s declaration was sufficient for summary judgment purposes to demonstrate an intent to re-use the SIMPLY PREPAID trademark. The lower court erred when it concluded that the declaration was “vague and indefinite.” The district court, however, “was not entitled to make such adverse credibility findings.”

Continuous use theory. On appeal, T-Mobile made a second argument. It asserted that the lower court erred when it applied the §1127 abandonment test to a common law trademark. Under T-Mobile’s interpretation of the law, the lower court should have instead applied the “continuous use” test. In other words, T-Mobile argued that, when a common law trademark is involved, the court should look only at whether the trademark has been in continuous use, without resorting to an analysis of abandonment or intent to re-use. Because the trademark has clearly not been in continuous use, T-Mobile argued, the court should have granted summary judgment to T-Mobile on that basis. Instead, it argued, the lower court applied the wrong test.

The Fourth Circuit rejected the argument, not least because the only judicial support for such a theory were a lower court California case with no application in the Fourth Circuit and a Fourth Circuit decision that did not preclude the abandonment inquiry. The appellate court then posed the critical question: Does the statutory abandonment test of §1127 apply to a common law trademark?

Citing its own Emergency One decision, decisions from at least two other circuits, and the applicable Restatement, the Fourth Circuit answered the question with a resounding “yes.” The abandonment inquiry applies in common law trademark ownership disputes just as it applies in statutory trademark ownership disputes. The district court correctly applied the abandonment test.

The Fourth Circuit, therefore, vacated and remanded the district court’s grant of summary judgment to T-Mobile.

Concurrence. Circuit Judge Allison Rushing filed a separate opinion concurring in the judgment, noting that Simply Wireless “just barely” produced sufficient evidence to reverse the grant of summary judgment to T-Mobile. The judge filed her concurrence, she said, “to clarify the applicable legal standard for abandonment cases at summary judgment and to explain how that standard applies here.”

Judge Rushing clarified that the party opposing summary judgment under these facts must rebut the presumption of abandonment “with respect to what outside events occurred from which an intent to resume use during the non-use period may reasonably be inferred.” She agreed with the majority that Simply Wireless had presented such sufficient evidence. She reiterated what the majority had said about simple declarations of intent being insufficient. She went on to note that the district court judge’s conclusion that the evidence was insufficient to establish an intent to re-use the mark was reasonable. It was just as reasonable, however, for a jury to conclude the opposite. Thus, she agreed with the decision to reverse.

The Case is No. 22-2211.

Judge: King, R.

Attorneys: Saul Daniel Cohen (Kelly IP, LLP) for Simply Wireless, Inc. Brittany Blueitt Amadi (WilmerHale LLP) for T-Mobile US, Inc. f/k/a T-Mobile USA, Inc.

Companies: Simply Wireless, Inc.; T-Mobile US, Inc. f/k/a T-Mobile USA, Inc.

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