Dell, Inc. Attacks Netbook

Dell, Inc. has been on a lot of people’s black list lately, primarily because of the decreased quality of customer service over the past several years. Now Dell is on Psion Teklogix, Inc.’s black list as well. Dell just filed an action with the U.S. Trademark Trial and Appeal Board (“TTAB”) to have Psion Teklogix’s trademark registration for the mark NETBOOK cancelled.

What is remarkable about the case is that Psion Teklogix’s registration has “incontestable” status. Incontestable status is commonly obtained by continued use of the registered mark during a period of five years. After five years of registration, the Registrant can file what is referred to as a Section 15 filing. Incontestability does not mean that a registration cannot be contested, but once this status is obtained, the grounds on which the mark may be cancelled are severely limited.

Apparently, Psion Teklogix sent cease-and-desist letters to Dell and a number of other laptop manufacturers requesting that they stop using the term NETBOOK for small inexpensive computers. Dell then filed a Petition for Cancellation with the TTAB requesting that Psion Teklogix’s NETBOOK registration be cancelled. Grounds for the Petition include abandonment, fraud, and genericness. Dell’s allegations of abandonment and fraud are related. Dell is alleging that Psion Teklogix did not use the NETBOOK mark for a period of three years. Basically, Dell is asserting that Psion Teklogix had discontinued use of the NETBOOK mark such that the mark went abandoned. The fraud allegation relates to the discontinued use.

Fraud on the United States Patent and Trademark Office (“USPTO”) is basically a knowing misrepresentation or concealment of a material fact. Between the fifth and sixth year after registration, a Registrant has to file a declaration representing that the registered mark has been in continuous use for the previous five consecutive years in connection with the goods listed in the registration. So Psion Teklogix would have had to make that representation when it filed its five year declaration and its request for incontestability. If, as Dell alleges, the mark had not been in use for three years at the time that declaration was made, then that would be a strong case for fraud.

In recent years, the USPTO has been more willing to find fraud to invalidate trademark registrations. However, in most of these cases, the fraud related to descriptions of goods that were broader than the actual goods on which a registered mark had been used. This has been seen as a USPTO attempt to clean up some of the overreaching trademark registrations on the registers. Until the facts come out, it will be difficult to predict whether Dell can be successful on its abandonment and fraud claims.

Dell’s claim of genericness, though, may be an uphill battle. Dell will need to provide survey evidence that the term NETBOOK has basically become a common term for a laptop; it is not enough for NETBOOK to be descriptive or suggestive of the goods. Consequently, this is a difficult, although not impossible, claim for Dell to prove.
Psion Teklogix could consider a number of strategies. While a TTAB proceeding may be cheaper, the TTAB cannot issue an injunction or grant damages. Psion Teklogix may consider bringing an action in a U.S. District Court for trademark infringement and a declaration that the NETBOOK registration is valid. Psion Teklogix is a Canadian company. While it cannot bring the action in Edmonton, Alberta, where Dell apparently laid off about 900 employees, Roseburg, Oregon may be a strong alternative. There are probably plenty of ex Dell Call Center employees there with time to be on a jury.

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