Federal Evidence Review

In trademark infringement litigation, a presumption of trademark abandonment applied under FRE 301 when a party showed nonuse of the trademark “for 3 consecutive years” and the trademark owner did not produce any evidence that could support a reasonable jury finding “the nonexistence” of the presumed fact of abandonment, in ITC Ltd. v. Punchgini, Inc., 482 F.3d 135 (2d Cir. Mar. 28, 2007) (No. 05-0933-cv), cert. denied 552 U.S. 827 (2007)

In civil litigation, parties often seek the advantage of a presumption, from which proof of an underlying fact makes a presumed fact “so probable that it is sensible and time saving to assume the truth” of the inferred fact from the proved fact, until it has been rebutted. See NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 788-789 (1990) (“Presumptions normally arise when proof of one fact renders the existence of another fact ‘so probable that it is sensible and timesaving to assume the truth of [the inferred] fact ... until the adversary disproves it.”) (citation omitted). While presumptions can arise frequently in litigation, it is rare that the requirements of the evidence rule governing presumptions in civil cases -- FRE 301 -- comes to attention. In a one case, the Second Circuit provided an instructive example of the operation of FRE 301 in reviewing a district court’s grant of summary judgment for the defendant who defended against charges of trademark infringement with the claim that the plaintiff could be presumed to have abandoned the trademark.

In the case, plaintiff ITC, an Indian restaurant company abandoned the trademark “Bukhara” in the United States. Despite having the U.S. registration for the trademark, ITC had “not owned, operated, or licensed any restaurant in the United States using the “Bukhara mark” since 1991. Defendant Punchgini was a U.S. company that opened an Indian restaurant in New York under the name “Bukhara Grill”. Besides using the Bukhara name, the defendant’s restaurant also mimicked ITC’s logos, décor, and other elements of ITC trade dress. ITC Ltd., 482 F.3d at 144.

ITC filed a trademark infringement suit to which the defendant claimed that ITC had abandoned the Bukhara trademark, an affirmative defense. Following discovery, the defendant made a successful motion for summary judgment. ITC appealed the summary judgment, alleging that the trial court erred by not correctly applying the presumption of abandonment from a showing of three years of non-use of the Bukhara trademark plus an intent not resume use of that name. ITC Ltd., 482 F.3d at 145.

The Second Circuit affirmed the district court’s determination that ITC had abandoned the mark. The circuit noted that the propriety of the summary judgment for the defendant depended upon the trial court’s finding that ITC had abandoned its Bukhara trademark, which involved application of a presumption subject to FRE 301. Under the Lanham Act, which governs trademark infringement disputes, abandonment is an affirmative defense to a trademark infringement claim. A “party asserting abandonment bears the burden of persuasion with respect to two facts: (1) non-use of the mark by the legal owner, and (2) lack of intent by that owner to resume use of the mark in the reasonably foreseeable future.” ITC Ltd., 482 F.3d at 147-48.

Under this presumption applicable to abandonment under the Lanham Act, the nonuse of a trademark “‘for 3 consecutive years shall be prima facie evidence of abandonment.’ 15 U.S.C. § 1127.” The “prima facie evidence” showing establishes “a rebuttable presumption of abandonment.” ITC Ltd., 482 F.3d at 147-48 (citing Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980) (“whether the matter is appropriate for summary judgment depends on whether the period of non-use only creates a rebuttable presumption that disappears in the face of contrary evidence or permits the trier to infer intent to abandon, despite contrary evidence”)).

The circuit determined that FRE 301 guided the district court’s use of the presumption of abandonment. According to the circuit, the “role played by such a presumption is best understood by reference to Rule 301 of the Federal Rules of Evidence” and that “[a]lthough the term ‘presumption’ is not specifically defined in the Rules of Evidence, it is generally understood to mean ‘an assumption of fact resulting from a rule of law which requires such fact to be assumed from another fact or group of facts found or otherwise established in the action.’” ITC Ltd., 482 F.3d at 147-48 (citations omitted).

Under the trademark law, explained the circuit, “the statutory presumption of abandonment requires that one fact, i.e., abandonment, be inferred from another fact, i.e., non-use of the mark for three years or more. The significance of a presumption of abandonment is to shift the burden of production to the mark owner to come forward with evidence indicating that, despite three years of non-use, it intended to resume use of the mark within a reasonably foreseeable time.” ITC Ltd., 482 F.3d at 148. However, even if the defendant shows sufficient facts so that the presumption of abandonment applies, shifting the burden to the plaintiff to show non-abandonment, in the end the “ultimate burden of persuasion on the issue of abandonment … remains at all times with the alleged infringer.” ITC Ltd., 482 F.3d at 148. This is the scheme specified by FRE 301 for application of a presumption.

The Second Circuit noted that if the defendant was able to establish the presumption, it was up to the trial court to identify what must be shown in order to overcome the presumption. In the case of trademark abandonment, this standard was not a “heavy burden.” Rather, “[c]ourts and commentators are in general agreement that proffered evidence is ‘sufficient’ to rebut a presumption as long as the evidence could support a reasonable jury finding of ‘the nonexistence of the presumed fact.’” ITC Ltd., 482 F.3d at 148-49 (citing Wanlass v. Fedders Corp., 145 F.3d 1461, 1464 (Fed. Cir. 1998) (“Once the presumption of laches is applied, a prima facie defense of laches is made. With the presumption, the facts of unreasonable and inexcusable delay and of prejudice are inferred, absent rebuttal evidence. Once the presumption is established, the patentee may introduce evidence sufficient to support a finding of the nonexistence of the presumed facts.”) (citation omitted)).

In applying FRE 301 in this way, the circuit concluded that the defendant had presented sufficient evidence to give rise to the presumption of abandonment. The plaintiff had conceded the first element – non-use for 3 or more years. What was disputed was whether a “triable issue of fact exists with respect to its intent to resume use of the service mark in the United States.” On this point, the plaintiff had the burden of establishing that it had an intent to resume use some time during the three year period. The circuit found that the plaintiff failed to produce any evidence that could support a reasonable jury finding “the nonexistence” of the presumed fact of abandonment. The circuit affirmed the trial court’s finding that the plaintiff’s showing that it continued to use the mark, or planned to use the plaintiff’s use of the trademark outside the U.S. was not sufficient to show that it intended to use the mark inside the U.S. during the three year period of abandonment. As a result the plaintiff failed to show that a material issue of fact remained regarding its intent to resume use of the trademark in the United States. ITC Ltd., 482 F.3d at 150.

FRE 301 differs from other rules of evidence in its operation. To the extent it paves the way for admission of evidence, like other evidence rules, it does so by affecting whether evidence is relevant to determination of a case. Beyond this, the crucial aspect of FRE 301 is that it specifies the operation or the weight of the evidence presumed in a civil case. So often parties in a civil case are concerned with operation of a presumption, yet they fail to assess any advantage they might gain from the rule of evidence that governs use of civil presumptions -- FRE 301.