In NetJets, Inc. v. IntelliJet Group, LLC, the Sixth Circuit offered important interpretations, regarding trademark infringement, of both federal law and Ohio common law on trademarks. In a careful and deliberate analysis that in part affirmed, reversed, and remanded the district court’s holding, the Court offered a view into what trademark holders, and alleged trademark infringers, can expect in cases where allegations of infringement are met by counterclaims challenging mark validity.
The Plaintiff, NetJets, is a private aviation company specializing in a host of different aviation services, including partial ownership of private airplanes, aircraft-leasing services, private-plane-management services, and the sale of used airplanes. In the 1990’s, the company developed a software program called IntelliJet to assist it in its operations. It applied in 1995 to register the trademark for INTELLIJET with the USPTO. The application was approved, and the company continued to expand, develop, and use the product, until 2002 when it filed a “declaration of use and incontestability,” pursuant to 15 U.S.C. §1065, which was also accepted by the trade office. The Defendant, IntelliJet Group LLC, was founded in 2005, and offers referrals to customers looking for aircraft management and leasing services. It is, in other words, a broker for private jet services. NetJets asserted trademark infringement claims against IntelliJet under both the Lanham Act and under Ohio common law. IntelliJet counterclaimed against NetJets with an assertion that the trademark was void ab initio, as the INTELLIJET label had not been used commercially when the initial application was filed.
After the district court granted summary judgment to the defendant on all counts, the Sixth Circuit reversed in part, affirmed in part, and remanded on the rest. It reversed the district court’s grant of summary judgment for the defendant on the counterclaim for cancellation of the mark as void ab initio. It remanded for the district court to address the argument that NetJets abandoned its mark through non-use. And it affirmed the district court’s grant of summary judgment on all other claims.
The district court had focused on sections 1065 and 1115(b) under the Latham Act. Under §1065, a trademark becomes incontestable once it has been used continuously in commerce for five consecutive years subsequent to the date of registration. The idea behind the provision is to provide some certainty regarding the enforceability of trademarks. Once incontestability has been established, §1115(b) limits the counterclaims that companies such as IntelliJet can raise when accused of patent infringement. IntelliJet’s counterclaims was that the INTELLIJET label was void ab initio, or not in use at the time of registration, because it was not used in commerce at the time of filing, but merely as internal software of NetJet. That defense is not included in the enumerated defenses of §1115(b). The District Court ruled that INTELLIJET never achieved incontestability under §1065, and thus IntelliJet was not limited to those defenses named in §1115(b). As such, it could press its claim that the INTELLIJET trademark was void ab initio.
The Sixth Circuit expressly declined to reach a decision on this issue of incontestability under §1065. Rather, it turned to the jurisdictional requirement of §1064, which the district court had not explored. That provision limits the ability to challenge a mark that has already been registered for five years. Where five years since registration has passed, infringement defendants like IntelliJet may only assert an enumerated list of counterclaims, in which void ab initio is not included. The Court reasoned that Congress was unlikely to specifically enumerate a list of permitted counterclaims to allegations of trademark infringement after five years, only to allow trademark defendants to move beyond that list. Taking a plain reading meaning of the statutory language, it ruled that because more than 5 years had passed, IntelliJet could no longer assert its void ab initio claim.
Next, the Sixth Circuit agreed with the district court that NetJets was not entitled to rights in INTELLIJET as a service mark under Ohio common law. The record, held the court, simply did not support the conclusion that INTELLIJET software was a service in and of itself. Rather, the software appeared to be a mere conduit, a “tool used to assist in the provision of NetJet’s aviation services.”
Finally, the Sixth Circuit addressed NetJet’s claims for common law trademark infringement and false designation of origin under 15 U.S.C. §1125. The district court had held that there was no likelihood of confusion, and thus granted summary to IntelliJet. The Sixth Circuit reviewed each of the eight traditional “Frisch factors” from the case Frisch’s Rest., Inc. v. Shoney’s Inc., 759 F.2d 1261, 1264 (6th Cir. 1985). The Court made clear that each of these factors needn’t be weighed equally, and that the circumstances of each case would necessarily assign varying degrees of importance to each. It proceeded to walk through each factor, reviewing the record and the district court’s reasoning. In the end, it found that “the realities of the marketplace suggest that the markets between NetJets and IntelliJet’s products are so distinct, and the consumers so sophisticated, that there is no likelihood of confusion.”