On February 1, 2016, the U.S. District Court for the Northern District of California granted summary judgment to Macy's Inc. on its claim that Strategic Marks, LLC infringed eight trademarks related to department stores Macy's no longer operates.
Macy's used to own and operate regional retail department stores such as Marshall Field's, The Bon Marché, Hecht's, and numerous others. In 2006, Macy's converted these regional department stores to Macy's stores. Macy's now refers to the regional department store brands as its "Heritage Marks." In 2011, Macy's created the "Macy's Heritage Shop" on its website, which gave a brief description of each Heritage Mark and offered t-shirts bearing the Heritage Marks for sale.
Strategic is a business that revives "zombie" brands, or brands that have been abandoned. In 2010, it applied to register eight of the Macy's regional department store brands and subsequently developed a website, retrodepartmentstores.com. Like the Macy's Heritage Shop, this website provides a description of each brand and offers for sale t-shirts branded with the Heritage Marks. Macy's filed suit in December 2011.
Macy's filed a second suit in February 2015 when, just prior to the trial in the first litigation, Strategic expanded its website to include t-shirts with an additional twelve Heritage Marks. Prior to Strategic's expansion, Macy's had registered trademarks for eight of these twelve brands (Marshall Fields, I. Magnin, Burdines, Kaufmann's, Lazarus, Meir & Frank, Rich's, and Strawbridge's). Macy's moved for partial summary judgment on these eight marks. Strategic opposed on the ground that Macy's did not own valid rights in the trademarks because Macy's use of the marks was merely ornamental and thus did not constitute a bona fide commercial use. Strategic also argued that factual issues existed regarding whether its use of the marks created a likelihood of confusion. The Court found Strategic's arguments unpersuasive.
The Court first noted that use of a mark on t-shirts can qualify as trademark use if the particular use is source identifying. Here, the Court found it compelling that the Heritage Marks were arbitrary terms with "no other perceived significance" except for source, especially given that they are well-known and retain favorable consumer recollection. The marks were also followed by the "TM" symbol and used in the same font across different products.
The Court was not convinced by Strategic's argument that because Macy's no longer operates retail locations under these regional brands, the marks have been abandoned and may now be used by anyone. The Court noted that a Section 1127 claim of abandonment had not been asserted, and further stated:
Simply because a store has ceased operations does not mean that its proprietor or owner does not maintain a valid interest in the registered trademark of the business. A trademark can still exist and be owned even after a store closes. If an accused infringer uses the mark, a consumer may still be confused as to whether the owner of the trademark authorized or licensed the infringer.
The Court went on to find no factual dispute that Macy's offers products displaying the disputed marks for commercial sale on its website, and that Strategic's use of the marks created a likelihood of confusion.
The case is Macy's Inc. v. Strategic Marks, LLC, Case No. 11-cv-06198-EMC, 15-cv-00612-EMC (N.D. Cal. Feb. 1, 2016).
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