The U.S. Court of Appeals for the First Circuit, in affirming a grant of summary judgment, held that neither the plaintiff’s intra-corporate transportation of goods bearing a disputed trademark from its U.S. offices to its U.K. offices, nor its subsequent sales from the U.K. into the Middle East, established trademark usage under the Lanham Act. General Healthcare Ltd. v. Qashat, Case No. 03-1968, 2004 U.S. App. LEXIS 7126 (1st Cir. Apr. 13, 2004). Because the plaintiff had abandoned whatever common law rights it may once have enjoyed in the United States, its action for cancellation of the defendant’s trademark registration was rejected.

From 1982 until approximately 1989, an unrelated third party used the mark KENT CREME BLEACH in the Middle East on a personal care product to lighten body hair. When the original user of the mark went out of business, both parties stepped in to adopt the identical mark for the same products. General Healthcare (GH) did so after purchasing rights in the name from the widow of the original user. Qashat adopted the mark through his company, Kent International Products (KIP), after a search revealed that the original user had gone out of business and abandoned its U.S. trademark application. KIP subsequently obtained U.S. trademark registrations for the word mark KENT CREME BLEACH and related trade dress. Ten years after learning of KIP’s adoption of the KENT CREME BLEACH mark, GH sought to cancel KIP’s U.S. registration based on its alleged prior rights.

The crucial issue was whether GH continued to use the mark in the United States after acquiring rights from the first user. A trademark owner who fails to use a mark for three consecutive years without good cause may be deemed to have abandoned its rights.

The First Circuit agreed with the district court that GH’s intra-corporate shipment of its KENT CREME BLEACH product from the United States for assembly in the United Kingdom did not constitute use of the trademark under the Laham Act. The Court noted that the transportation of trademarked goods from an entity’s U.S. office to one abroad does not give rise to trademark rights because U.S. consumers are not exposed to the mark and, as a result, no goodwill in the mark is generated. The Court further found that product sales from the United Kingdom to purchasers in the Middle East do not establish use in commerce under U.S. trademark law because wholly foreign sales are beyond the purview of the Lanham Act. Thus, in light of GH’s lack of rights in the disputed mark, KIP’s reasonable belief that the mark was available upon filing of its trademark application, and GH’s delay in bringing its action, the First Circuit affirmed the district court’s grant of summary judgment.

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