EMERGENCY ONE, INCORPORATED, d/b/a American Eagle Fire Apparatus Company, Incorporated v. American Fireeagle, Limited

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
EMERGENCY ONE, INCORPORATED,
d/b/a American Eagle Fire
Apparatus Company, Incorporated,
Plaintiff-Appellee,
No. 99-2253
v.
AMERICAN FIREEAGLE, LIMITED,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
W. Earl Britt, Senior District Judge.
(CA-96-831-5-BR)
Argued: June 9, 2000
Decided: September 28, 2000
Before MICHAEL and TRAXLER, Circuit Judges, and
BUTZNER, Senior Circuit Judge.*
_________________________________________________________________
Vacated and remanded by published opinion. Judge Michael wrote
the opinion, in which Judge Traxler joined.
_________________________________________________________________
*Senior Judge Butzner heard oral argument in this case but did not
participate in the decision. The opinion is filed by a quorum of the panel
pursuant to 28 U.S.C. § 46(d) (1994).

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COUNSEL
ARGUED: L. Lawton Rogers, III, ROGERS & KILLEEN, Alexan-
dria, Virginia, for Appellant. Christopher Brennan Wilson, GRIPPO
& ELDEN, Chicago, Illinois, for Appellee. ON BRIEF: Patrick D.
McPherson, Mark C. Comtois, D. Joseph English, ROGERS & KIL-
LEEN, Alexandria, Virginia, for Appellant. Darlene K. Alt, GRIPPO
& ELDEN, Chicago, Illinois; Hugh Stevens, EVERETT, GASKINS,
HANCOCK & STEVENS, L.L.P., Raleigh, North Carolina; Jennifer
L. Sherman, FEDERAL SIGNAL CORPORATION, Oak Brook, Illi-
nois, for Appellee.
_________________________________________________________________
OPINION
MICHAEL, Circuit Judge:
Emergency One, Inc. (E-One), a manufacturer of fire trucks and
rescue vehicles, brought this trademark infringement suit against
American FireEagle, Ltd. (AFE), a competing manufacturer of fire
trucks. E-One alleged that AFE's AMERICAN FIREEAGLE mark,
a bald eagle superimposed over an American flag, infringed E-One's
rights in its AMERICAN EAGLE mark, also a bald eagle superim-
posed over an American flag. AFE defended on the ground that
E-One had abandoned its mark. It also counterclaimed that E-One's
renewed use of the AMERICAN EAGLE mark, after AFE had begun
using its AMERICAN FIREEAGLE mark, was an infringement of
American FireEagle's common law trademark rights. Pre-trial stipula-
tions narrowed the case to a single issue: Had E-One abandoned the
AMERICAN EAGLE mark? If yes, E-One was infringing AFE's
rights; if no, AFE was infringing E-One's rights. The issue was ulti-
mately submitted to a jury, which found that E-One had not aban-
doned the AMERICAN EAGLE mark.
AFE appeals, arguing (1) that it was entitled to judgment as a mat-
ter of law, (2) that the district court erred in excluding certain evi-
dence, and (3) that the district court failed to instruct the jury properly
on the law of trademark abandonment. Because we agree that certain
of the district court's instructions to the jury were inadequate, we
vacate the judgment (and injunction) and remand for a new trial.
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I.
E-One is a fire and rescue truck manufacturer located in Ocala,
Florida. In 1989 E-One bought American Eagle Fire Apparatus Co.
(American Eagle), a Gainesville, Florida, fire truck manufacturer
started by former E-One employees in 1985. The purchase price for
American Eagle was $6.5 million, though only $1.6 million was attri-
buted to the company's tangible assets. The balance was attributed to
good will, including the value of the AMERICAN EAGLE trade-
mark. Company officials at E-One believed that American Eagle's
excellent reputation in rural markets, combined with the inherent
patriotic appeal of its bald eagle and American flag trademark, would
enable E-One to increase its sales to rural fire departments.
Shortly after the purchase, E-One's president, Ted Fries, spoke to
American Eagle's employees in Gainesville, Florida. Among other
things, Fries said that E-One intended to continue building American
Eagle fire trucks to satisfy existing orders, but that the company ulti-
mately intended to build E-One products in Gainesville. Fries also
said that E-One "wouldn't be building American Eagle branded prod-
ucts forever out of Gainesville." Between 1989 and June 1992 E-One
built about thirty-five to forty fire trucks to satisfy American Eagle's
back orders as well as some new orders that E-One accepted after the
purchase. Although the trucks were built according to American
Eagle blueprints and in keeping with American Eagle style, some left
the factory bearing the E-ONE trademark, while others bore the
AMERICAN EAGLE logo and nameplate.
The Gainesville plant was closed shortly after June 1992, ending
the manufacture of fire trucks at that facility. However, E-One contin-
ued to provide exclusive warranty and repair services on American
Eagle trucks. In 1993 and 1994 E-One also refurbished or substan-
tially rebuilt old and damaged American Eagle trucks in a process
known as "recycling." E-One would remove the engine, rear axle,
transmission, and water pump from a used fire truck. Those compo-
nents (assuming they were serviceable) would be installed on a new
or rebuilt chassis. E-One would then construct a new American Eagle
style body for that chassis. As with the brand-new trucks, most left
the factory with the E-ONE nameplate. However, one recycled Amer-
ican Eagle truck left the factory in 1994 bearing the AMERICAN
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EAGLE nameplate and logo. Regardless of what mark appeared on
the truck itself, all invoices after the acquisition carried only E-One's
name.
By mid-1992 E-One was no longer manufacturing any new fire
trucks under the AMERICAN EAGLE brand. However, it promoted
the mark in various ways: by selling T-shirts, hats, tote bags, and
nameplates bearing the AMERICAN EAGLE logo in "The Fire
Locker" (a gift store at the factory), by distributing that merchandise
at trade shows, and by requiring that its security guards wear AMERI-
CAN EAGLE badges on their uniforms.
Despite its professed enthusiasm for the AMERICAN EAGLE
brand, E-One had no specific plans for use of the mark when it bought
the American Eagle company in 1989. E-One first considered using
the AMERICAN EAGLE brand on its rescue trucks, but decided that
the rescue and fire trucks were already so similar that no advantage
would be gained by developing a separate brand. Eventually, E-One
decided that the AMERICAN EAGLE mark would best be used to
represent a separate product line. It appears that E-One's caution in
deciding how to use the AMERICAN EAGLE mark stemmed from
a disastrous product launch several years earlier. The company was
wary of introducing a new line of trucks and particularly wary of tar-
nishing a valuable name by associating it with an inferior product.
In 1991 E-One introduced a low cost, limited option fire truck
under the E-ONE mark. Around mid-1993 the company considered
using the name AMERICAN EAGLE on those trucks, but instead
marketed them using the E-One name and descriptive slogans such as
"Budget Busters" and "Value and More."
In 1994 Michael Carter founded the defendant corporation, AFE.
Carter had worked for American Eagle as a draftsman but left a few
months after the company was sold to E-One in 1989. Apparently
believing that E-One had abandoned its rights to the AMERICAN
EAGLE mark, Carter designed a highly similar mark for AFE, a bald
eagle superimposed over an American flag. In February 1994 AFE
began using the eagle and flag mark in pre-manufacturing marketing
of its fire trucks. In the summer of that same year fire truck dealers
began to call both E-One and AFE with questions about the new com-
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pany, asking whether E-One had started a new company or distribu-
tion arm. E-One complained to AFE that its mark was confusingly
similar to the AMERICAN EAGLE mark. When AFE continued to
use the mark, E-One sent a letter accusing it of infringement. AFE
responded through its lawyers, asserting its belief that E-One had long
since abandoned any rights it had to the AMERICAN EAGLE name
and to the eagle and flag logo. In September 1995 E-One announced
that it would begin selling its low cost, limited option fire trucks
under the AMERICAN EAGLE brand.
A year later E-One brought this suit for trademark infringement
against AFE. AFE defended on the ground that E-One had abandoned
its rights to the mark by discontinuing use with an intent not to
resume use in the reasonably foreseeable future. AFE also counter-
claimed, alleging that it had acquired the rights abandoned by E-One
through adoption and use of its own mark. The parties stipulated that
E-One obtained the AMERICAN EAGLE mark when it purchased
that company and that the AMERICAN EAGLE and AMERICAN
FIREEAGLE marks are confusingly similar. Thus, the only issue was
whether E-One had abandoned the mark. After a five-day trial the
jury found in favor of E-One, and the district court issued an injunc-
tion against AFE's further use of the AMERICAN FIREEAGLE
mark. The district court denied AFE's renewed motion for judgment
as a matter of law. AFE appeals.
II.
AFE makes two main arguments on appeal. First, it argues that it
was entitled to judgment as a matter of law on the issue of abandon-
ment. Second, AFE argues that the trial court failed to instruct the
jury properly on the law of trademark abandonment. We reject AFE's
argument that it was entitled to judgment as a matter of law. How-
ever, we agree that certain of the district court's instructions to the
jury were inadequate. Accordingly, we vacate the judgment and
injunction in favor of E-One and remand for a new trial.
A.
AFE begins by arguing that it was entitled to judgment as a matter
of law on the issue of abandonment. AFE contends that E-One's own
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evidence proved that it had discontinued use of the AMERICAN
EAGLE mark for at least three years before it introduced its own line
of AMERICAN EAGLE trucks. According to AFE, three years of
non-use results in a statutory presumption of abandonment, and
E-One failed to rebut that presumption. The district court concluded
that E-One only had to produce evidence of its continued use of the
mark or its intent to resume such use in order to rebut the presump-
tion. According to the district court, E-One rebutted the presumption
by producing evidence that it had continued to use the mark on cloth-
ing and promotional merchandise, in the recycling and repairing of
American Eagle fire trucks, and on the uniforms of its security per-
sonnel. We hold that promotional use of this type or incidental use in
recycling and repair is not the "use" required to preserve trademark
rights under the Lanham Act. Nonetheless, we conclude that E-One
rebutted the statutory presumption by producing evidence that it
intended to resume use of the mark on fire trucks. Consequently, AFE
was not entitled to judgment as a matter of law.
Under the Lanham Act a trademark is abandoned when"its use has
been discontinued with intent not to resume such use." 15 U.S.C.
§ 1127. Thus, a party claiming that a mark has been abandoned must
show "non-use of the name by the legal owner and no intent by that
person or entity to resume use in the reasonably foreseeable future."
Stetson v. Howard D. Wolf & Assocs., 955 F.2d 847, 850 (2d Cir.
1992). Non-use for three consecutive years alone, however, consti-
tutes prima facie evidence of abandonment. See 15 U.S.C. § 1127.
Proof of three consecutive years of non-use thus creates a presump-
tion -- a mandatory inference of intent not to resume use. See Cer-
veceria Centroamericana, S.A. v. Cerveceria India, Inc., 892 F.2d
1021, 1025-26 (Fed. Cir. 1989); Saratoga Vichy Spring Co. v. Leh-
man, 625 F.2d 1037, 1044-45 (2d Cir. 1980). Once the presumption
is triggered, the legal owner of the mark has the burden of producing
evidence of either actual use during the relevant period or intent to
resume use. See Cerveceria Centroamericana, 892 F.2d at 1026;
Roulo v. Russ Berrie & Co., 886 F.2d 931, 938 (7th Cir. 1989);
Societe de Developments et D'Innovations des Marches Agricoles et
Alimentaires -- SODIMA -- Union de Cooperatives Agricoles v.
International Yogurt Co., 662 F. Supp. 839, 845 (D. Or. 1987). The
ultimate burden of proof (by a preponderance of the evidence)
remains always on the challenger. See Rivard v. Linville, 133 F.3d
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1446, 1449 (Fed. Cir. 1998); Cerveceria Centroamericana, 892 F.2d
at 1026.1
Both "use" and "intent not to resume such use" have somewhat spe-
cialized meanings in the context of the Lanham Act."Use" means
"the bona fide use of a mark in the ordinary course of trade, and not
made merely to reserve a right in a mark." 15 U.S.C. § 1127. See also
Exxon Corp. v. Humble Exploration Co., 695 F.2d 96, 99-102 (5th
Cir. 1983). Thus, neither promotional use of the mark on goods in a
different course of trade nor mere token use constitute "use" under the
Lanham Act. See Imperial Tobacco, Ltd. v. Philip Morris, Inc., 899
F.2d 1575, 1582-83 (Fed. Cir. 1990) (promotional use of mark in
sales of whiskey, pens, watches, sunglasses, and food did not consti-
tute use of mark for cigarettes); Silverman, 870 F.2d at 47-48 (spo-
radic licensing of mark for non-commercial purposes was not a use
under the Lanham Act); Humble Exploration, 695 F.2d at 99-102
(token sales of small quantities of goods with "Humble" trademark to
selected purchasers who knew that they were receiving Exxon mer-
chandise were not "uses" under Lanham Act). In addition, for a mark
to be "used" on goods it must be "placed in any manner on the goods
or their containers or the displays associated therewith or on the tags
or labels affixed thereto, or if the nature of the goods makes such
placement impracticable, then on documents associated with the
goods or their sale." 15 U.S.C. § 1127.
Here, the testimony of E-One's own witnesses at trial established
that the company discontinued use of the AMERICAN EAGLE mark
_________________________________________________________________
1 Effective January 1, 1996, Congress amended § 1127, changing the
period of non-use that establishes a prima facie case of abandonment
from two years to the present standard of three years. See Uruguay
Round Agreements Act § 521, Pub. L. No. 103-465, 108 Stat. 4809
(1994). We need not decide whether the two-year or three-year standard
governs this case. Assuming that AFE made its prima facie case by dem-
onstrating the required period of non-use, only the burden of production
shifted to E-One. E-One satisfied that burden of production by presenting
evidence of its intent to resume use. At that point, any presumption
deriving from the proof of the prima facie case dropped out, and AFE
was obligated to prove both discontinued use and intent not to resume
use.
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by mid-1992 when it ceased production of new AMERICAN EAGLE
fire trucks. E-One's uses of the mark in the succeeding three-and-one-
half years on products other than fire trucks failed to satisfy the statu-
tory requirement of "bona fide use of [the] mark in the ordinary
course of trade, and not made merely to reserve a right in [the] mark."
15 U.S.C. § 1127. See also Imperial Tobacco, 899 F.2d at 1582-83.
Exclusive repair and recycling services like those offered by E-One
might be sufficient commercial use of the mark to prevent abandon-
ment, but only if E-One used the mark on the repaired or remanufac-
tured goods or "on documents associated with the goods or their sale."
15 U.S.C. § 1127. Cf. Coup v. Vornado, Inc., 9 U.S.P.Q.2d 1824,
1825-26 (T.T.A.B. 1988). The evidence at trial was that only one
recycled American Eagle truck left the factory with an AMERICAN
EAGLE mark attached, and invoices for all repair and recycling ser-
vices bore only the E-ONE mark. One recycled American Eagle truck
with an AMERICAN EAGLE nameplate over the course of three
years is no more than a token use which, standing alone, is legally
insufficient to disprove abandonment. See Humble Exploration, 695
F.2d at 99-102.
We therefore conclude that AFE demonstrated that E-One had dis-
continued use of the AMERICAN EAGLE mark for three years and
that E-One failed to rebut that presumption by producing any evi-
dence of the use required by the Lanham Act. However, the case does
not end there because E-One did produce evidence that it intended to
resume use of the mark on fire trucks. E-One's continuous promotion
of the brand by using it on hats, T-shirts, tote bags, and souvenir
nameplates is evidence of some intent to resume use of the mark. In
addition, E-One executives testified that they actively considered
using the AMERICAN EAGLE mark on fire trucks between 1992 and
1995. That testimony was corroborated by an E-One business plan
from 1993, which identified the AMERICAN EAGLE mark as one
of four possible brand names for a new line of trucks. This evidence
of intent to resume use was sufficient to satisfy E-One's burden of
production. The evidence also created a triable issue of fact, preclud-
ing judgment as a matter of law.
AFE contends, however, that E-One's own representatives admit-
ted that their plans to resume use of the mark were indeterminate. At
the time of acquisition and at all times up until 1995, E-One had no
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specific plan to use the AMERICAN EAGLE mark. It is true that the
owner of a trademark cannot defeat an abandonment claim, as well
as the purposes of the Lanham Act, by simply asserting a vague, sub-
jective intent to resume use of a mark at some unspecified future date.
See Silverman, 870 F.2d at 46-47. Once the challenger shows discon-
tinued use, the owner must produce evidence of intent to resume use
"within the reasonably foreseeable future." Id. at 46. See also Roulo,
886 F.2d at 938. Requiring the owner to have an intent to use the
mark in the reasonably foreseeable future ensures that valuable trade-
marks are in fact used in commerce as the Lanham Act intends, rather
than simply hoarded or warehoused. See Roulo, 886 F.2d at 938;
Silverman, 870 F.2d at 46; Humble Exploration, 695 F.2d at 102-03.
Of course, what is meant by the "reasonably foreseeable future"
will vary depending on the industry and the particular circumstances
of the case. Cf. Defiance Button Mach. Co. v. C & C Metal Prods.
Corp., 759 F.2d 1053, 1060-61 (2d Cir. 1985). Because fire trucks
have very long lives (often twenty to thirty years), the mark stays visi-
ble, and the good will value of the mark persists long after production
of trucks with that mark has ceased. Thus, it might be reasonable for
a fire truck manufacturer to spend five or six years considering the
reintroduction of a brand, even though the same passage of time
would be unreasonable for a maker of a more ephemeral product, say
potato chips. E-One produced evidence that because American Eagle
had made a product very similar to E-One's, it was necessary for
E-One to develop a new product line to avoid duplication. E-One also
produced evidence that its delay in reintroducing the mark was attrib-
utable to its skittishness after an embarrassing experience introducing
another brand. Finally, E-One produced evidence that it had paid a
substantial sum of money for the AMERICAN EAGLE mark only a
few years earlier. Under these circumstances, we cannot say as a mat-
ter of law that E-One had no intent to reintroduce the mark within the
reasonably foreseeable future. That question was a proper one for the
jury. AFE thus was not entitled to judgment as a matter of law on the
question of abandonment.
B.
AFE next argues that the district court committed a number of
errors in its instructions to the jury. Specifically, AFE contends that
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the trial court committed prejudicial error in refusing to give seven of
AFE's proffered instructions: (1) that the intent to resume use must
be intent to resume use in the reasonably foreseeable future, (2) that
the only relevant trademark use is use in the ordinary trade of selling
fire trucks, (3) that use of a trademark for fire trucks requires that the
mark be affixed to the truck, (4) that a public announcement that trade
under a mark will cease and subsequent non-use result in abandon-
ment, (5) that use of a mark merely for the purpose of reserving a
mark is not use in the ordinary course of trade, (6) that proof of non-
use of a mark for two consecutive years shifts the burden of persua-
sion to the trademark owner, and (7) that prolonged cessation of use
justifies an inference of abandonment and the inference strengthens
with the duration of the non-use.
We review de novo whether the district court's instructions to the
jury were correct statements of law. See Hardin v. Ski Venture, Inc.,
50 F.3d 1291, 1293-94 (4th Cir. 1995). In reviewing the instructions
here, we are mindful that "[d]istrict courts are necessarily vested with
a great deal of discretion in constructing the specific form and content
of jury instructions," and they are not required to "accept all the sug-
gested instructions offered by the parties." Id. "So long as the charge
is accurate on the law and does not confuse or mislead the jury, it is
not erroneous." Id. at 1294. Applying these standards of review, we
conclude that the majority of AFE's claims of error are without merit.
However, the trial court's failure to give the first and second instruc-
tions listed above requires us to set aside the judgment and remand
for further proceedings. Because all of the instruction issues raised by
AFE are likely to come up again at a second trial, we will address
each of them.
1. Whether intent to resume use for purposes of trademark aban-
donment means intent to resume use in the reasonably foreseeable
future. It does. As we have already pointed out, discontinued use of
a mark results in abandonment unless the owner of the mark has an
intent to resume use in the reasonably foreseeable future. See Roulo,
886 F.2d at 938; Silverman, 870 F.2d at 46. At some point, even a sin-
cere intent to resume use is so vague that it extends beyond the "rea-
sonably foreseeable future." Where that point lies, however, is an
intensely factual question that depends on both the nature of the
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industry or market in which the mark is used and the particular cir-
cumstances of the trademark owner.
AFE tendered a correct instruction on the requirement that intent
to resume use is intent to resume use in the foreseeable future. The
district court refused that instruction and merely told the jury that "[a]
cessation of use of a mark with an intent to resume use on a related
product is not abandonment." Here, the evidence of E-One's intent to
resume use of the AMERICAN EAGLE mark in the reasonably fore-
seeable future is equivocal. On the record before us, a properly
instructed jury could have concluded that E-One had no plan to use
the mark at all until AFE arrived on the scene. However, that same
jury could have concluded that E-One intended to resume use of the
AMERICAN EAGLE name in the reasonably foreseeable future, but
was carefully waiting until it had the right product at the right stage
of development. Compare Rivard, 133 F.3d at 1449-50 (holding that
owner's halfhearted efforts over five years to open a beauty salon
using trademark, without ever doing so, showed no intent to use mark
during the period of non-use, particularly when the owner promptly
licensed three such salons upon learning that another party wanted to
use the mark), with Roulo, 886 F.2d at 938 (holding that trademark
owner's presence at a trade show was sufficient evidence of intent to
resume use in the foreseeable future). As a result, the district court
committed prejudicial error by failing to instruct the jury that intent
to resume use must be intent to resume use in the reasonably foresee-
able future. This requires a new trial.
2. Whether "use" for purposes of the Lanham Act refers only to use
in the ordinary course of trade for a particular product. It does. As
we have already discussed, the "use" required to preserve trademark
rights does not include mere promotional or token uses. See 15 U.S.C.
§ 1127; Imperial Tobacco, 899 F.2d at 1582-83; Humble Exploration,
695 F.2d at 99-102. Here, the district court gave the jury the follow-
ing instruction on use:
The use of a trademark is the bona fide use of the mark in
the ordinary course of trade and not merely a token use to
reserve a right in the mark. Use in the ordinary course of
trade includes uses that are typical in the particular market
or industry in which the mark is used. A bona fide use must
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be deliberate and continuous and cannot be sporadic or
casual.
AFE argues that this instruction permitted the jury to consider
E-One's use of the AMERICAN EAGLE mark on promotional goods
and its security guards' uniforms as trademark uses. We agree that the
reference to "uses that are typical in the particular market or industry"
was likely to confuse the jury and distract it from the only use that
is relevant to trademark abandonment: use on the goods (the fire
trucks) themselves or, if that was impracticable, on"documents asso-
ciated with the goods or their sale." 15 U.S.C.§ 1127. Consequently,
the jury could have found that E-One's promotional use of the mark
on T-shirts, caps, and the like was "typical" in the fire truck market
or industry. Such a finding, based on the district court's overbroad
definition of use, could have led the jury to conclude erroneously that
E-One never stopped using, and thus never abandoned, the AMERI-
CAN EAGLE mark. This instructional error on "use" also requires
that the judgment be vacated.
3. Whether use of a mark in connection with fire trucks requires
that the mark be affixed to the truck. AFE claims that the trial court
erred in refusing to instruct the jury that use of a mark on fire trucks
requires that the mark be affixed to the truck. AFE, however, did not
offer a correct instruction on the requirement that the mark be used
in connection with the goods. Instead, it submitted a proposed instruc-
tion that merely characterized the evidence.2 District courts are not
required to comment on the evidence, see Duke v. Uniroyal Inc., 928
F.2d 1413, 1421 (4th Cir. 1991), and we find no error in the court's
refusal to give AFE's proposed instruction. An appropriate instruction
is found in the language of the statute itself: a mark is used "when . . .
it is placed in any manner on the goods or their containers or the dis-
plays associated therewith or on the tags or labels affixed thereto, or
_________________________________________________________________
2 AFE's proposed instruction read:
In this case, the products are fire trucks and the trademark is cus-
tomarily placed on the grill and control panels of the fire truck
so that a customer will see the trademark at the same time that
he sees the fire truck and thus can distinguish one company's fire
truck from another company's fire truck even though the fire
trucks are similar or even identical.
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if the nature of the goods makes such placement impracticable, then
on documents associated with the goods or their sale." 15 U.S.C.
§ 1127. If this case proceeds to trial on remand, the jury should be
instructed on the requirement that the mark be used in connection
with the goods.3
4. Whether a public announcement that trade under a mark will
cease and subsequent non-use result in abandonment . AFE contends,
in essence, that E-One was estopped from arguing that it had any
intent to resume use of the mark by virtue of Fries's statement that
E-One "wouldn't be building American Eagle branded products for-
ever out of Gainesville." AFE relies on Hiland Potato Chip Co. v.
Culbro Snack Foods, Inc., 585 F. Supp. 17 (S.D. Iowa 1982).
Although the court did find estoppel in that case, it did so based on
an unequivocal statement that "the Kitty Clover brand name `will be
eliminated'" and that "`All items will be under the Hiland label.'" Id.
at 22. Fries's statement that E-One would continue making American
Eagle trucks in the immediate future, but not "forever," is not an
unequivocal statement of an intention to abandon the mark. The better
approach here is simply to consider Fries's statement as one of the
circumstances from which intent to abandon might be inferred. See 15
U.S.C. § 1127 ("Intent not to resume may be inferred from circum-
stances."); Hiland, 585 F. Supp. at 22 ("A public announcement of
intention to discontinue the sale of a product may be a circumstance
from which an intent not to resume may be inferred.").
The trial court properly instructed the jury that it was to determine
E-One's intent "from all the circumstances in the case" and that it was
"permitted to draw such reasonable inferences from the testimony and
exhibits" as is "justified in the light of common experience." Those
_________________________________________________________________
3 As we have already explained, failure to use the mark in connection
with the goods is only one element of an abandonment claim. A party
claiming abandonment must also show that the owner of the mark
intended not to resume its use. E-One offered testimony that some fire
departments prefer that the trademark be left off so they can decorate the
truck with their own paint, hardware, or emblems. At any retrial the jury
should be instructed that in any deliberation of whether E-One intended
not to resume use of the mark, the jury may consider evidence offered
by the company to explain its failure to use the mark.
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instructions were accurate as a matter of law and permitted the jury
to give appropriate weight to Fries's statement.
AFE's remaining three assertions of instruction error can be dealt
with summarily. The trial court instructed the jury that the use of a
trade mark does not include "token use to reserve a right in the mark."
In light of this instruction, we see no merit to AFE's argument that
the jury was led to believe that a trademark owner could reserve rights
in that mark without using it or having an intent to resume use. AFE
also claims that the jury should have been instructed that proof of two
years of non-use shifts the burden of persuasion to the trademark
owner. As we have already noted, however, proof of a prima facie
case of abandonment shifts only the burden of production to the trade-
mark owner. See part II.A., supra. Whether the owner has produced
evidence sufficient to meet that burden is a question for the court, not
the jury. See Lew v. Moss, 797 F.2d 747, 750 (9th Cir. 1986). Finally,
AFE argues that the jury should have been instructed that it could
infer intent not to resume use from a prolonged period of non-use and
that the inference becomes stronger as the duration of non-use
becomes longer. We agree that this is an accurate statement of the
law. See Restatement (Third) of Unfair Competition § 30 cmt. b.
However, we find no error in the district court's decision to give the
more general instruction that the jury was permitted to make reason-
able inferences that are justified in the light of common experience.
In sum, we hold that the trial court committed prejudicial error by
failing to instruct the jury (1) that in order to avoid abandonment a
trademark owner who discontinues use of the mark must have an
intent to resume use in the reasonably foreseeable future and (2) that
the type of use that is relevant to determining whether a trademark
owner has discontinued use is use in the course of trade in a particular
good.4
III.
For the reasons stated above, we hold that AFE was not entitled to
judgment as a matter of law on the issue of abandonment. Rather,
_________________________________________________________________
4 We do not reach AFE's argument that the district court erred in
excluding certain evidence.
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E-One produced sufficient evidence of intent to resume use in the rea-
sonably foreseeable future to satisfy its burden of production and
create a disputed issue of material fact. However, the trial court's fail-
ure to instruct the jury correctly on the meanings of the terms "use"
and "intent not to resume such use" in the Lanham Act requires that
we vacate the judgment and injunction. The case is remanded for a
new trial.
VACATED AND REMANDED
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