Club name trademarked, owner quits

[publius]

What is the name of your state (only U.S. law)? WI

A guy starts a club several (say about 20) years ago. It started with just him, then him and a group of his local friends, then has been online for most of its existence. About 4.5 years ago he applied for a federal trademark of its name, and registration of the trademark was approved 3.5 years ago. He paid all expenses of registering the trademark and the registration was in his own name, but he stated on the club's web forum (after registration) that he was holding the trademark "in trust" for the club.

Then about three years ago (less than six months after the registration was finalized), he resigned from the club in a dispute with a number of its other members -- he felt that many of the club's newer members were causing the club to drift from its original mission and focus. Prior to his resignation he had always served as the club's president, but for several years the club had operated basically democratically under bylaws approved by him and the club's membership (and continued to operate under those bylaws after he left).

Now, about three years after resigning, he has "restarted" the club using the same club name and a different web site, and claiming (on the new web site) that his is the original and anyone else using that name is an imposter violating the club's trademark.

So, I wanted to ask:

1) Does the original founder of the club have a viable trademark infringement case against the group he resigned from, considering that the trademark was registered in his own name?

2) Does the answer to #1 change significantly once the founder's trademark becomes incontestable 5 years after registration? (I have read that incontestability doesn't affect a "valid right acquired under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration," but don't know how much use that state law protection will be since the club essentially operates worldwide via the Internet.) And does incontestability happen 5 years after the final registration date, or does the beginning of the 5 years relate back to the original application date (some sites I've seen say that but I don't see it in the law).

3) If the original founder files a trademark infringement suit against the version of the club that he resigned from, how strong of a "laches" defense would the club have based on the fact that he knew the club was continuing with business as usual every since he left 3 years ago and he has done nothing to stop it?

Any thoughts on any of these questions would be most welcome.What is the name of your state (only U.S. law)?

 

[divgradcurl]

1) Does the original founder of the club have a viable trademark infringement case against the group he resigned from, considering that the trademark was registered in his own name?

Maybe. If this ever went to trial, the presumption would be that he alone owned the trademark, it would be up to the other party to try and disprove the presumption.

2) Does the answer to #1 change significantly once the founder's trademark becomes incontestable 5 years after registration? (I have read that incontestability doesn't affect a "valid right acquired under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration," but don't know how much use that state law protection will be since the club essentially operates worldwide via the Internet.) And does incontestability happen 5 years after the final registration date, or does the beginning of the 5 years relate back to the original application date (some sites I've seen say that but I don't see it in the law).

Three things. First, "incontestability" isn't automatic -- you have to file for it, so unless he does that within the time window for it, the mark does not become incontestable.

Second, incontestable means that you can't file an opposition proceeding in the USPTO seeking cancellation of the mark -- it doesn't mean that you can't challenge the validity of the mark, or the ownership of the mark, at trial.

Third, what you appear to be confused about is the concept of common-law trademarks (or state registered trademarks), which, if they existed and were in use prior to the registration of the same mark in the USPTO by another party, can continue to be used even after the registration is granted -- but only in the limited geographical area where they are established. This isn't an issue in this case, because any "common law" rights you might have to the mark (these rights arise through use of the mark in commerce, not registration) occurred after the original mark was registered, so they could be infringing on the original mark.

3) If the original founder files a trademark infringement suit against the version of the club that he resigned from, how strong of a "laches" defense would the club have based on the fact that he knew the club was continuing with business as usual every since he left 3 years ago and he has done nothing to stop it?

Laches is always very fact dependent -- there just isn't an easy answer to this question. Because laches is an equitable remedy -- that is, it tries to work out what is "fair" in the particular situation -- you would really need to consider all of the facts, what was said, when things were said, if anything was done to hide the use, whether he asked you to stop using the mark, etc.

Unless you have some written agreement that states he is assigning the rights to the mark to the club operating group or whatever you have, or he is licensing the rights to the group, you really need to consider how you want to move forward with this. If laches is your only defense, well, that's a pretty weak case. If you haven't already, you should probably sit down with a local attorney, who can review all of the facts of your situation and advise you accordingly. Based solely on what you have written, it doesn't sound too promising -- but an attorney with access to all of the facts might be able to find a way out of your situation.

 

[publius]

Third, what you appear to be confused about is the concept of common-law trademarks (or state registered trademarks), which, if they existed and were in use prior to the registration of the same mark in the USPTO by another party, can continue to be used even after the registration is granted -- but only in the limited geographical area where they are established. This isn't an issue in this case, because any "common law" rights you might have to the mark (these rights arise through use of the mark in commerce, not registration) occurred after the original mark was registered, so they could be infringing on the original mark.

I'm confused about how I'm confused. Since the club existed, with the same name as the trademark, for years before the trademark was registered, I thought the club's claim to a common-law trademark would be based on that pre-existing use. I don't see how common-law rights would have arisen after the mark was registered since the club is operating just the same (under the same bylaws etc.) as it always has. The guy who founded the club resigned, but he left dozens of other members behind, and the bylaws covered things like resignation of members and filling vacancies in offices.

What concerned me is the limited geographical area aspect of common-law trademarks, since the club was operating on the Internet and soliciting members worldwide for years prior to the trademark registration.

 

[divgradcurl]

Since the club existed, with the same name as the trademark, for years before the trademark was registered, I thought the club's claim to a common-law trademark would be based on that pre-existing use..

That wasn't clear from the original posting -- I thought you were talking about rights that may have arisen after the registered trademark left the club.

In any event, who "owned" the club during the years it was operating before the registration was obtained? Was the club owned by an LLC, an LLP, or a corporation? Was the club owned by the owner?

 

[publius]

That wasn't clear from the original posting -- I thought you were talking about rights that may have arisen after the registered trademark left the club.

In any event, who "owned" the club during the years it was operating before the registration was obtained? Was the club owned by an LLC, an LLP, or a corporation? Was the club owned by the owner?

Sorry if I wasn't as clear as I should have been. This isn't a "club" as in a business, like a nightclub. It's a club as in a group of people organized for a social or recreational purpose. Think fan club, debate club, etc. The club started as one individual, its founder, who invited other individuals to join, and they adopted a constitution or bylaws to govern the club. I suppose it's an unincorporated association.

 

[divgradcurl]

Sorry if I wasn't as clear as I should have been. This isn't a "club" as in a business, like a nightclub. It's a club as in a group of people organized for a social or recreational purpose. Think fan club, debate club, etc. The club started as one individual, its founder, who invited other individuals to join, and they adopted a constitution or bylaws to govern the club. I suppose it's an unincorporated association.

What do the bylaws say about this, if anything? The reason I ask is this -- even if there were common-law rights that existed prior to the registration, who owned those rights? It may very well be that the same person who filed for the registration also owned the common-law rights to the name. You will need to look at the bylaws, and the timing. If the one person established the trademark (the club name) prior to forming the "association" with bylaws, unless the bylaws transfer ownership of the trademark to another entity, most likely the trademark would remain with its original owner.

Any analysis from here will require a detailed look at the bylaws, and a timeline including all of the relevant facts, to see who owned what when, and if any assignments, transfers or licenses were made. Again, you might want to consider hiring an attorney to work with you on this.