My first visit to an In-N-Out Burger restaurant was back in 2009, when my son was a student at Arizona State University. As I scanned the menu, he told me to order my burger “Animal Style” (with hand-leafed lettuce, tomato, a mustard- cooked beef patty, pickles and extra grilled onions, as I later found out).
Since I didn’t see “Animal Style” anywhere on the menu, I asked him why I would order that, and if I did, whether they would even know what I wanted. “They’ll know,” he said.
And they did know, because it’s on In-N-Out’s so-called “Secret Menu,” which the company says is no secret at all, just the way some of its customers like their burgers prepared. Or maybe it was actually a nod to “residential goodwill,” a somewhat-obscure trademark law term that describes the recognition that a trademark has with customers.
According to Eric Perrott, trademark and copyright attorney at Gerben Law Firm in Washington, D.C., U.S. trademark law is “use” based. “In a general sense, this means that once a trademark is in use in the marketplace, it builds recognition and protectable rights based on that recognition with consumers,” he said. “But while a trademark registration helps apply those rights on a nationwide basis, the principle still stands that if that underlying ‘goodwill’ no longer exists, then no trademark rights exist – this is trademark abandonment.”
In-N-Out Burger is arguing that this goodwill does indeed still exist where its burgers are concerned. On August 28, the popular West Coast burger chain filed a civil suit in the Central District of California, suing Smashburger for trademark infringement over its “Double Double” and “Triple Triple.”
The lawsuit claims Smashburger hijacked both marks when it introduced its new “Double Triple” burger, but Smashburger counters that In-N-Out stopped using the “Triple Triple” mark when the company rebranded the “Triple Triple” as the “3×3,” changed its menu accordingly, and thus abandoned the trademark over three years ago.
In-N-Out may have updated its menu, but there’s little doubt that patrons can still walk into any of the company’s 326 stores, order a Triple Triple, and get exactly that – three patties and three slices of cheese. Social media and in-store verbal usage of the Triple Triple mark has continued by customers – in other words, residual goodwill for the mark may still exist even though the rebranding occurred.So if a trademark is still being used and recognized, when can it be considered legally abandoned?
A trademark does not need to be written to be protected, and can be a word, phrase, symbol, design and even a scent or sound. Federal law says a trademark is abandoned “when its use has been discontinued with intent not to resume such use.” One way this can occur is when there has been no use of a trademark for three or more years. In this situation, a prima facie case of abandonment could be established; that is, a rebuttable presumption of trademark abandonment. Once a prima facie case is established, it is up to the trademark owner (in this case, In-N-Out) to prove that it has genuinely used the trademark in commerce.
Determining when a trademark has become legally abandoned is not usually easy, and customer recognition is usually a factor. “It speaks to the likelihood of consumer confusion,” said Arizona trademark attorney Ruth Carter. “If consumers associate a trademark with a particular brand, it would likely cause confusion if a similar brand used the same or a confusingly similar mark.”
Residential goodwill will likely come into play in In-N-Out v. Smashburger, although, according to Carter, goodwill alone is usually not sufficient to rebut a presumption of abandonment. “Removing a product from your list of offerings may be evidence of trademark abandonment, but it does not, in and of itself, constitute abandonment,” she said, “so actual use by In-N-Out or licensed use of the mark during the three-year abandonment period will likely need to be proven for In-N-Out to avoid abandonment.”
The purpose of trademark law is to prevent consumer confusion about the source and quality of the goods or services that they purchase. “The law doesn’t want a competitor to ride the coattails of a more established brand, which may make consumers confused about what they’re buying and where it came from,” Carter said.
“But conversely, the law doesn’t want a company to be able to sit on a brand that it is no longer using, either. If a trademark has not been used continuously in commerce for at least three years, it can be “abandoned” and another company could begin using the mark without penalty. The three-year break in use is sufficient to avoid consumer confusion about the qualities and source of the goods or services bearing the previously abandoned mark.”
Ultimately, this case might hinge on whether intermittent albeit continued use of a trademark establishes enough recognition and residual goodwill to allow a claim for trademark infringement. “It appears In-N-Out is trying to argue that, even if they haven’t used the phrase Triple Triple on its menu for three years, they’ve continued to use the phrase verbally, thus, the trademark has not been abandoned,” said Carter. To this argument, Smashburger seems to be saying – use it or lose it.
The lesson here seems to be that while it’s good to freshen up the menu once in a while, trademark holders should take care to actively promote, market and protect their marks before the change is made. A party who wants to use a seemingly abandoned trademark should start by doing research on the USPTO trademark database to see if the mark in question is designated “live” or “dead.” But if a mark is labeled “dead,” that doesn’t mean that the last owner of the live mark doesn’t have rights to the mark in question.
The party could also contact the last trademark owner of the trademark in question and inquire about its status. If the last owner is no longer using the mark, they may want to purchase any rights that may still exist in the mark. “It’s a way to avoid future problems,” said Carter.