Saturday, November 19, 2016

Adidas Loses Trademark Case vs. Church

Last week, the U.S. Court of Appeals for the Federal Circuit blocked adidas from registering a trademark that sounds confusingly similar to a trademark that a small church had registered before. Here is how the case unfolded.

In 2009, adidas tried to register a federal trademark “Adizero.” However, adidas's application was denied because the Christian Faith and Fellowship Church had already registered a similarly sounding trademark "Add a Zero" for the same category of merchandise that adidas sells, "namely, shirts, and caps." "Add a Zero" was the church's trademarked fundraiser where every donor was encouraged to add an extra zero at the end of the amount they normally donate.

Adidas then offered $5,000 to the church to give up its trademark. However, the church felt the amount offered was too small. Adidas refused to add any more zeros to its offer and initially managed to get the USPTO’s Trademark Trial and Appeal Board (“TTAB”) to have the church's trademarks cancelled.

On what grounds? Federal trademark law states that, to register a valid trademark, you have to actually use it in interstate commerce. E.g., you'd have to actually sell something bearing the trademark, preferably to somebody out of state. It's not enough to just pay the filing fee and maintenance fees. The logic behind this rule is to ensure that good trademarks go to businesses that actually use them, not some squatters. Did the church sell anything using their trademark? Yes! Grand total of two hats to a parishioner who lives not much farther than 5 miles away from the church. Christian Faith Fellowship Church is located in Zion, Illinois, within five miles of the Illinois–Wisconsin border. Being located so close to the border, the Church’s parishioners include both Illinois and Wisconsin residents. So, the church argued that selling two hats counts as interstate commerce.  But the TTAB still cancelled the church's trademark for non-use because the TTAB concluded that two hats is too small ("de minimus") of a transaction and, therefore, should not count as "use in commerce."

The church appealed to the Federal Circuit and won last week. The Federal Circuit ruled that even a small sale should count as "use in commerce" because there is no de minimus exception in the Lanham Act that defines the "use in commerce" requirement.

However, the church's victory is not final yet. The Federal Circuit sent the case back to the TTAB for consideration of other arguments raised by adidas.