McGuire-Sobrino v. TX Cannalliance LLC presents a mini-course on effective protection of business information. Cannalliance sued McGuire-Sobrino, a former contractor, for restricting its access to its website and other digital assets. The Fifth Court addressed

• Rule 683. The temporary injunction made adequately-detailed findings, which the Court quoted largely verbatim;
• Irreparable injury. Rejecting the argument that Cannalliance’s proof of irreparable injury showed only “a fear of possible contingencies,” the Court credited testimony of its managing member that “his inability to control Cannalliance’s digital assets and website is ‘crippling our ability to market and promote our events, to sell tickets to support the business’ and … ‘can smear the public perception and paint a bad picture of the ability to have control over our business.'”
• Likelihood of success. Cannaliance showed a likelihood of success on claims for conversion and trademark infringement; and
• Status quo. The injunction preserved the status quo by “returning the parties to their pre-September 26, 2019 status” (the date when Cannalliance showed it no longer had full access to its digital assets).

No. 05-19-01261-CV (Aug. 10, 2020) (mem. op.).

A trademark-user who establishes prior use of the mark can still lose his rights to it if he abandoned them. “A party trying to show abandonment must prove that the owner of the mark both discontinued use of it and that he did not intend to resume its use in the reasonably foreseeable future. Nonuse of a mark for a period of three consecutive years creates a rebuttable presumption that a mark has been abandoned without intent to resume its use.” (citation omitted).

In King Aerospace, Inc. v. King Aviation Dallas, the appellee contended that the relevant mark was abandoned after the appellant had a serious accident. “KAC contends it made a prima facie case of abandonment because Randall admitted he did not make any aircraft sales from 1993 until at least 2000. Although Randall testified he did not personally sell any aircraft while he was recovering from his near-fatal accident, he also testified his father, Sam, was conducting the business of the company during that time. Jordan testified that, while Randall was recovering, he helped Sam file monthly reports identifying what airplanes they owned, when they bought them, and when they sold them.” This evidence established use and defeated the intent requirement: “The fact that Sam continued the business of the company, and Randall resumed selling planes using the names King Aviation and King Aviation Dallas as soon as he was able to do so, is evidence of his intent to resume use of the marks.”  No. 05-19-00245-CV (April 30, 2020) (mem. op.).

In Premier Pools Management Corp. v. Premier Pools Inc., the Fifth Court found that a successful trademark plaintiff had established sufficient evidence of secondary meaning for the phrase “Premier Pools,” noting — in particular — the plaintiff’s proof about its advertising about and long use of the name, as well as the testimony of nine impartial witnesses about the issue of confusion. Similar evidence supported the findings for liability, damages, and disgorgement. The Court reversed the related declaratory judgment (and with it, the attorney’s fees award), finding that the “claim added nothing and provided access to no remedy that was not otherwise available . . . ” No. 05-14-01388-CV (Aug. 12, 2016) (mem. op.)

Way back in 1989, a latex products manufacturer named Ansell Healthcare Products registered a federal trademark for the phrase “Condom Sense,” which it used in advertising its Lifestyle condoms. A few years later, Ansell sought federal registration of Condom Sense as a service mark for a proposed chain of retail stores. But Ansell’s own retail stores never materialized, and it ended up licensing the mark to Condom Sense, Inc. (“CSI”), which had already opened up its own Condom Sense store in Dallas.

In 1997, CSI sold its original store on Greenville Avenue, including the right to use the Condom Sense name. That sale led to a series of competing claims over use of the name at multiple locations, including some inconclusive preliminary litigation. In 2005, Ansell — which had never used the mark itself, and which had been unaware of all the drama over its use in Texas — assigned CSI all of its interest in the federal service mark.  CSI then registered the mark in Texas, along with three related service marks that also used the Condom Sense name. CSI ended up suing the operators of the other Condom Sense stores, alleging trademark infringement under the federal Lanham Act, the Texas Trademark Act, and Texas common law. After a bench trial, the trial court ruled in favor of the competitors and cancelled registrations of both the federal and state service marks.  CSI and its owners appealed.

According to the court of appeals, CSI’s competitors were not entitled to cancellation of the state service mark even though the trial court found that CSI registered the mark fraudulently, i.e., while knowing that competitors were also using the Condom Sense mark.  Under section 16.28 of the Business & Commerce Code, the party asking the court to cancel the registration must be someone who was “injured” by the false or fraudulent procurement of the service mark registration, but the other Condom Sense owners had failed to submit any evidence that they were injured by it.  But the court of appeals sustained the trial court’s cancellation of the federal service mark, giving credit to testimony that Ansell’s licensing agreement with CSI had not been renewed past its original expiration date in 1999, and that the mark had therefore lapsed because Ansell had abandoned it. Finally, the court of appeals affirmed the trial court’s ruling in favor of the competitors’ laches and unclean hands defenses, holding that the evidence supported the lower court’s rulings that five years had been too long for CSI to sit on its rights before bringing suit, and that it had acted improperly in selling any rights to the Condom Sense name (in the 1997 sale of the original store) at a time when it was merely a licensee of Ansell’s mark.

Condom Sense, Inc. v. Alshalabi, No. 05-10-01024-CV