Incontestability precludes non-listed defenses, court affirms

NetJets Inc. v. IntelliJet Gp., LLC, No. 15-4230 (6th Cir.
Feb. 3, 2017)
NetJets is a private aviation company that specializes in
“fractional ownership” of private airplanes and related endeavors. NetJets’s
predecessor company developed a software program to “run [the company’s]
business,” and named the program IntelliJet. In 1995, it successfully applied
to register INTELLIJET in connection with the good of computer “software . . .
for managing the business of aircraft leasing and sales.” In 2002, the company
filed a “declaration of use and incontestability,” which was accepted by the
NetJets licensed the IntelliJet software to two external
companies, though one apparently stopped and the other was acquired by NetJets.
The company also uses the software to communicate with caterers and other
vendors. In early 2013, NetJets debuted an “owner’s portal,” allowing customers
to put their reservation requests directly into the IntelliJet software over
the internet; the portal features the INTELLIJET mark. NetJets discusses
IntelliJet on tours of the NetJets facility for customers and potential
customers, and in its own promotional literature, and the mark has been
mentioned in several trade press and general news sources.

Portal–see “powered by IntelliJet” at the bottom: good use?
IntelliJet was founded in 2005 and is primarily a broker for
private jet services, or helping customers buy or sell an aircraft. It offers
referral services for aircraft management and leasing services, but does not
perform these services itself. IntelliJet uses a sales-tracking software that
it has referred to as “IntelliShit.” In choosing the name, IntelliJet searched
the internet for other jet aircraft brokers, business names in Florida, and the
USPTO website. That last search turned up several registrations of
“IntelliJet,” including NetJets’s registration. IntelliJet’s principal Spivack
determined that the mark was “specifically for a software package,” and that
“being in the industry,” he knew the registered agent as “NetJets.” 
NetJets sued for trademark infringement and related claims;
IntelliJet counterclaimed for cancellation of NetJets’s trademark registration
on the grounds that NetJets abandoned it and that it was void ab initio. This
appeal was from the district court’s grant of summary judgment to
IntelliJet.  The district court reasoned
that NetJets’s mark was not incontestable and that the mark was void ab initio
because NetJets could not show that it was used in commerce at the time of its
registration. Nor could NetJets show that it had rights to the INTELLIJET mark
as a service mark under the Lanham Act or Ohio common law. Finally, the
district court also granted summary judgment on the basis that there was no
likelihood of confusion.
The court of appeals reversed the cancellation but otherwise
A mark may become incontestable if it is not successfully
challenged within five years of its registration. One requirement is continuous
use in commerce for “five consecutive years” subsequent to the date of the
registration, along with continued use in commerce. “Once incontestability is
established, only [the] . . . defenses enumerated in § 1115(b) can be
interposed in an action for trademark infringement.” Void ab initio, or non-use
at the time of registration, isn’t one of the defenses enumerated in § 1115(b).
 (And, unlike functionality, void ab
initio wasn’t implied from a “judicially created rule which predates the Lanham
Act”—even though use and nonfunctionality are both pretty important parts of
the common law.)  Thus, the court of
appeals held, it was not a proper defense to incontestability.  See University of Kentucky v. Kentucky
Gameday, LLC, 2015 WL 9906634, at *2 (T.T.A.B. 2015),(rejecting a void ab
initio claim because the claim was “not enumerated under Trademark Act Sec.
14(3), and is not available against a registration which is more than five
years old.”).
It seems to me that one could establish lack of continuous
use for any 5-year period at all over the life of the registration and defeat
incontestability; one simply can’t start with “void ab initio.”  It must be the case that it is valid to
challenge incontestability on the ground that the registrant failed to satisfy
the statutory requirements therefor; it’s just that distinctiveness is not one
of the statutory requirements, and apparently use at the time of registration
isn’t either—but five years of continuous use is.  Because §1064 barred IntelliJet’s void ab
initio challenge, the court of appeals said, it didn’t need to decide whether
the mark was actually incontestable under §1065; thus, the issue remains for
The court of appeals did affirm the district court’s
conclusion that IntelliJet wasn’t a service mark under Ohio common law, because
it was used as a mark for software as a good, not as a service mark. The
IntelliJet software is “the conduit through which NetJets provides its
services,” not the service provided by NetJets itself.
Likely confusion: IntelliJet is suggestive, and relatively
weak, “especially considering other federal registrations of the term and
additional third party uses of the same or similar terms.”  NetJets argued that incontestability made the
mark presumptively strong, but incontestability (if it existed) wouldn’t be determinative of strength.  The services were related but not directly
competitive.  Although the district court
reasoned that no one would confuse NetJets’s IntelliJet software with NetJets’s
aviation services, the question was about source confusion, not product/service
confusion.  Still, IntelliJet doesn’t
sell software that could be confused with NetJets’s software; relatedness
didn’t favor NetJets.  Similarity:
obviously favors NetJets.  There was no
evidence of actual confusion, which favored IntelliJet.  Marketing channels: both used the internet,
but the products were still marketed differently, and NetJets’s software wasn’t
marketed as a standalone product. 
Consumer care: the parties’ customers are highly sophisticated.
Intent: Use of a mark with knowledge of another’s rights can
be evidence of likely confusion.  But
here, IntelliJet knew of several
IntelliJet registrations, and there was no indication that it chose the name to
copy or compete with NetJets specifically. 
Likely expansion: Though NetJets argued that IntelliJet wanted to
compete with NetJets in areas such as chartering, leasing, and aircraft
management, it wasn’t appropriate to compare NetJet’s business as a whole with
IntelliJet’s services.  There was no
indication that NetJets intended to market its software separately, or that
IntelliJet intended to begin selling its own aviation software.

Based on this de novo review, the court of appeals found
confusion unlikely.

from Blogger

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