Beware zombie brands
Zombie brands are abandoned trademarks that are adopted by a new owner specifically to capitalise on consumer recognition of and loyalty to the discontinued mark. The new owner usually copies the abandoned mark to benefit from its nostalgic appeal.
Companies discontinuing a brand can continue to offer promotional items featuring the brand, use the brand as a sub-brand in a smaller form on the packaging, or offer seasonal or occasional “retro” packages for sale.
They could sell rights to the mark or, better yet, license the mark for use on related goods. These strategies continue use of the mark in commerce and provide value for the original mark owner.
Use on promotional goods might be able to block a later federal trademark registration by a zombie business. The Trademark Trial and Appeal Board (TTAB) affirmed a denial of registration for Trans World Airlines (TWA) for air transportation based on the registered TWA mark for model aeroplanes.
The marks were identical and evidence showed that major airlines in fact sell model aeroplanes on the same websites they use to book consumer plane tickets. But in another zombie case, the TTAB found that a closed fast food chain had abandoned the ‘Naugles’ mark despite use of the mark on clothing, and a zombie ‘Naugles’ restaurant could register the name.
Companies discontinuing brands should be cautious about announcing the end of the brand in press conferences or on social media. They should also instruct customer service on how to answer calls asking about discontinued products so that potential zombie businesses cannot easily obtain evidence that “we don’t make that anymore”.
Controversial marks
Recently, companies have been discontinuing the use of marks that perpetuate racial stereotypes. Businesses wishing to capitalise on these often well-known marks have been filing applications at the US Patent and Trademark Office (USPTO) to register these marks.
And not just for t-shirts but for the original goods—the applications include Eskimo pie for ice cream, Aunt Jemima for pancake syrup, and Uncle Ben’s for instant rice. Quaker Oats has included a small image on its new packaging that says “Same Great Taste as Aunt Jemima,” likely in an effort to preclude the zombie brand from taking over the name.
The initial question is whether the original mark owner has actually abandoned the mark. If not, the zombie owner likely cannot proceed because a true zombie use will be likely to cause consumer confusion.
Courts and the Trademark Trial and Appeal Board have also weighed the relevance of what’s known as “residual goodwill”. The goodwill of the mark as used by its original owner may well continue in the form of continued consumer loyalty and trust attached to the mark. But even if there’s goodwill in the hearts of consumers, courts won’t grant relief if the original mark was abandoned. Residual goodwill and fond memories don’t take the place of use in commerce.
Depending on the marketing, it may be false advertising for a zombie owner to sell its product as if it is the original. It would be problematic if the zombie owner explicitly misleads consumers to believe that the product is associated with the former mark owner or that the product is the same as it was before.
The owner of an abandoned mark likely cannot show injury and consumers lack standing to sue for infringement and false advertisement. Perhaps a competitor could claim injury to its business, however, particularly in the false advertising context.
Intent to use applications
Finally, another issue in the US relevant to zombies is the rule against selling intent-to-use applications. Assigning an intent-to-use application in the US can only be done after the applicant has filed a statement of use or amendment to allege use, except under very limited circumstances. This limitation is meant to stop trafficking in ITU applications, but it has not stopped firms whose sole business is reviving marks no longer in use by their original owners from transferring those applications to third parties.
The US Congress and the USPTO have been actively trying to declutter the federal register of unused marks. Decluttering will make room in the marketplace for new trademark owners who will actually use the same or similar marks in commerce. Attempts to stop anyone from using abandoned marks would fly in the face of this laudable policy.
But I have concerns about consumer confusion arising from zombie brands. There’s an inherently deceptive quality about zombie marks because the success of a zombie business seems to depend on how effectively consumers are deceived.
The value of a zombie mark to a new owner is the trust and nostalgia consumers have for the discontinued brand; use of a nostalgic brand can save a great deal of money in advertising. A consumer’s purchase of the new product takes advantage of their mistaken assumption that it’s the same as the old product.
In fact, consumers are fooled by zombie brands in just the way trademark law is intended to prevent: mistaken source identification.
And the product isn’t the same as the original unless there’s an agreement with the former owner that provides a recipe, formulation, or product parameters. Zombie brands typically lack quality standards or even assistance from the prior mark owner.
Nothing in trademark law requires the zombie mark owner to imitate the original quality or ingredients or to reveal that it has no connection to the original mark owner. Perhaps the market will take care of that problem and disappointed consumers will simply stop buying the new and different version.
Generic names
The zombie mark deception problem seems to me to be analogous to making sure the use of generic names doesn’t mislead consumers. In 1938, for example, the US Supreme Court allowed the Kellogg Company to use the generic phrase “shredded wheat” for cereal, but had to “use every reasonable means to prevent confusion” with another user of that generic phrase.
In that case, the junior user used distinctive packaging to differentiate its shredded wheat from that of the original user. In the classic example of generic names, a fruit seller can use “apple” for its apples. But it couldn’t use a logo registered by Apple to do so.
An abandoned mark may be free for anyone to use, but the junior user may have to take precautions to prevent consumer confusion. In theory, a court could require disclaimers or notification of differences with the original product.
But, again, the issue in the case of zombie brands is that the senior user would lack standing to bring the claim because it had abandoned its rights.
Anne Gilson LaLonde is the author of Gilson On Trademarks, a multi-volume treatise on United States trademark law. She can be contacted at: trademarkbook@comcast.net
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