Wells Fargo acquires the ABD Insurance company in 2007. It starts migrating the ABD name into the Wells Fargo name. By 2009 it’s letting various insurance licenses (and the trademark registration) and such under the ABD name lapse, and advising employees to use the Wells Fargo name exclusively. In 2011, a former ABD employee (and son of the founder) starts using the ABD name on a new (competitive) company. By mid-2012, he’s hired away up to 75 former-ABD Wells Fargo employees.
Wells Fargo sues. In addition to alleging various tortuous interference, trade secret and other business torts, it sues for trademark infringement, arguing that the ABD mark still appears on various Wells Fargo materials. ABD alleges abandonment. Wells Fargo proffers post-2009 use of the ABD mark on materials despite its announced name-change.
Held: While it is correct that actual use of a trademark will trump statements of intent to abandonment, all of Wells Fargo’s post-2009 use of the ABD mark was either of a historical nature (“We used to be ABD Insurance”) or of a residual nature (as in forgetting to update brochures). While sale of residual inventory of goods has been held to be trademark use, it has to be accompanied to current active use of the trademark, which was not the case here. Wells Fargo motion for preliminary injunction denied.
Practice pointers: Apparently the residual goodwill in the ABD mark was sufficient that it was worth fighting over four years after ‘retirement.’ Maintain the trademark registration (or file an ITU!)! And re-branding announcements should be worded that the former brand will not be abandoned, but will go on to brand emeritus status. And then use it for real, a little.
43(B)log comments here, making the point that this is an outlier to the tendency that the bad faith actor tends to lose.