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15 November 2016Trademarks

Federal Circuit answers Church’s prayers in Adidas TM suit

The US Court of Appeals for the Federal Circuit has overturned a decision by the Trademark Trial and Appeal Board (TTAB) to cancel trademarks owned by the Christian Faith Fellowship Church.

In 2009, sports clothing company Adidas sought a trademark for the phrase ‘Adizero’, covering clothes, but the US Patent and Trademark Office (USPTO) refused the application because of its likelihood of confusion with the Church’s ‘Add a Zero’ marks.

Four years earlier, in 2005, the Church had begun selling caps and shirts emblazoned with the phrase ‘Add a Zero’ as part of a fundraising campaign to pay off the debt on its church facility in Zion, Illinois.

That year, the Church filed two clothing-based trademark applications at the USPTO, one for use of ‘Add a Zero’ in standard characters and another for a stylised design of the phrase.

“The Church’s applications relied on actual use of the marks in commerce, not intent to use the marks in commerce,” said the ruling by the Federal Circuit yesterday, November 14.

After Adidas’ 2009 application was rejected, the sports company brought an action before the TTAB to cancel the Church’s marks.

Adidas argued several grounds for cancellation: the Church’s failure to use the marks in commerce before registration, the marks’ failure to function as trademarks, and the Church’s abandonment of the marks for non-use.

Agreeing with Adidas’s failure-to-use argument, the TTAB cancelled the Church’s marks without addressing Adidas’s remaining cancellation grounds, explained the Federal Circuit.

According to the TTAB, the Church’s documented sale of two trademarked hats to an out-of-state resident (in Wisconsin) were de minimis, thereby not constituting use of the marks in commerce under the Lanham Act.

But the Federal Circuit came to a different conclusion. It said that the Lanham Act defines commerce as “all activity regulable by Congress”.

The Church’s sale to an out-of-state resident fell within Congress’s power to regulate under the commerce clause, the court added, reversing the TTAB’s cancellation of the marks and remanding the case for further proceedings.

“Moving to the facts of this case, it is clear in light of the foregoing precedent that the Church’s sale … is regulable by Congress under the commerce clause and, therefore, constitutes ‘use in commerce’ under the Lanham Act,” said Circuit Judge Kara Farnandez Stoll.

She added: “We reach this conclusion without defining the outer contours of Congress’s commerce clause powers because the transaction at issue falls comfortably within the bounds of those powers already sketched for us by the Supreme Court.”

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