This is the first installment of a three-part blog about governments embroiled in trademark litigation. What do the National Park Service, the State of Michigan, and Baltimore City have in common as 2017 begins? Each is fighting with commercial entities in federal court and in the U.S. Patent and Trademark Office (PTO) over trademarks, registered or to be registered.
Two of the government entities (the National Park Service and the State of Michigan) contend the PTO screwed up granting registrations in the first place and are trying to cancel registrations. The third (Baltimore City) seeks to obtain federal trademark registrations for itself. To this end, the City is asking the court to enjoin a creative marketing company, a former partner, from opposing trademark registrations in the City’s name.
Trademark litigation produces complications for governments that are required to act fairly and impartially in fulfilling their statutory obligations, free of the self-interest that drives most commercial entities.
National Park Service and the Yosemite-Related Marks
As the National Park Service (NPS) closes its 100th anniversary year (2016), it remains entangled in litigation with DNC Parks & Resorts at Yosemite (Delaware North). From October 1, 1993 to February 29, 2016, Delaware North was the concessioner that provided accommodations, facilities, and services with Yosemite National Park (Yosemite). The trademark issues are (1) whether the NPS is obligated under the concession contract with Delaware North to require the successor concessioner to purchase intangible property that Delaware North used at Yosemite, specifically including thirty-five registered trademarks and services marks, and (2) what is the fair value of the marks to be paid to Delaware North by the new concessioner.
Yosemite is in central eastern California, three hours’ drive from Sacramento, and it is famous for its granite cliffs, waterfalls, giant sequoias, and biological diversity. It became a national park in 1809, the third national park to be established. Yosemite covers 748,000 acres, most of it wilderness. Visitors in recent years average about 4 million per year, and they enjoy camping, hiking, horseback riding, ice skating, golf and many more year-round activities.
Since the beginning of Yosemite, private companies have provided visitor services. Curry Company and its successors in interest were the earliest concessioners, and Curry used trademarks and service marks at Yosemite, some registered by the PTO. In 1993, Delaware North followed Curry, and Delaware North was required to pay for the fair value of the operating assets of Curry Company by buying all the company stock for $61.5 million and assuming $30 million in pension liabilities.
Delaware North claims that it used at least thirty-five trademarks and service marks in providing service to visitors at Yosemite. Included in this number are seven registrations obtained by Delaware North during term of the 1993-2016 concession contract on words with historic associations with the land and its original inhabitants:
- YOSEMITE NATIONAL PARK, March 13, 2003;
- THE AHWAHNEE, October 7, 2003;
- THE AHWAHNEE, March 7, 1989;
- CURRY VILLAGE, February 11, 2003;
- WAWONA, July 22, 2003;
- BADGER PASS, June 3, 2003; and
- BADGER PASS, December 29, 2009.
NPS contends that it never gave Delaware North approval to obtain these registrations.
In 2014, when the end of Delaware North’s concession contract was approaching, things had changed. The new values attached to intellectual property over the past twenty years significantly increased the fair value of Delaware North’s intangible assets. The concession contract between NPS and Delaware North states:
The Secretary will require such successor, as a condition to the granting of a contract to operate, to purchase from [Delaware North] such possessory interest, if any, and such other property, and to pay [Delaware North] the fair value thereof. (§13 of the Contract).
Delaware North gave notice to NPS in July 2014 that the fair value of its operating assets at Yosemite, including trademarks and service marks, was $98.6 million, an amount that NPS realized would discourage new bidders. In response, NPS issued a prospectus for a new concession contract that reduced the scope of allowed visitor services. In the prospectus, NPS estimated that Delaware North’s property was worth only $22.5 million. Delaware North objected. NPS ignored the objections and proceeded with the contract award process. In December 2014, Delaware North provided to NPS an appraisal of the marks and other property and offered to submit to binding arbitration over the value of the assets. NPS did not accept, contending that Delaware North’s intellectual property was worth only $3.5 million and that the new concessioner would be obligated to negotiate with Delaware North over the value of assets, not NPS.
On June 16, 2015, NPS awarded a new concession contract to an Aramark subsidiary, Yosemite Hospitality, LLC.NPS did not share with Aramark the property appraisal submitted by Delaware North, despite Delaware North’s instance that NPS do so. There were discussions for several more months about Delaware North, NPS, and Aramark exchanging their respective appraisals, but agreement was never reached. In January 2016, Delaware North offered NPS and Aramark a royalty-free license to use the Yosemite-related marks, which NPS did not accept.
On September 17, 2015, Delaware North filed suit in the Court of Federal Claims. Delaware North alleges the NPS breached the concession contract when it did not require Aramark to buy for fair value Delaware North’s tangible and intangible property used at Yosemite.
After suit was filed, Delaware North did negotiate with Aramark over the purchase of property used at Yosemite. Aramark bought Delaware North’s tangible property, one trademark, and two copyrights. Aramark refused, however, to buy Delaware North’s thirty-five trade names, trademarks, service marks, many of which Delaware North had been required to purchase from Curry in 1993. The reasons for Aramark’s refusal are that NPS disputes their value and the pendency of the Delaware North suit against NPS.
IP is now the overriding issue in the case. NPS answered the suit, giving relatively little attention to the contract provision that NPS must require the new concessioner to buy Delaware North’s property used at Yosemite. NPS contends, simply, that the provision does not apply to intangible property. Instead, NPS is pressing that the marks were not registerable in the first place and that Delaware North’s has inflated the value of the Yosemite-related marks.
In February 2016, NPS opened a new litigation front at the PTO. NPS petitioned the PTO under §14 of the Trademark Act to cancel the seven Yosemite registrations obtained by Delaware North during the concession contract or, in the alternative under §18 of the Trademark Act, to transfer ownership of these registrations to NPS. In the Petition, NPS argues that the marks falsely suggest a connection to the National Park Service, have goodwill only because of their location in Yosemite, and will be abandoned by Delaware North’s non-use when it is no longer the concessioner.
All good arguments, but to no avail at the Trademark Trial and Appeal Board (TTAB). Delaware North moved to suspend the cancellation proceeding pending final determination of the action in the Federal Court of Claims, and the TTAB granted the motion. The Director of the PTO denied NPS’ petition to reverse the TTAB, noting that the federal courts have the power to cancel registrations and to grant other relief relating the registrations.
NPS most recent litigation move is to bring Aramark into the Court of Claims action. This could force Delaware North to accept a significantly lower price from Aramark for the outstanding property items. Delaware North opposes NPS’ motion, and briefing is underway. The Court’s Scheduling Order has the parties doing discovery and dispositive motions through August 31, 2017. No hearing or trial date is in sight.
With all this litigation, here’s a reality check: (1) Yosemite seems to be doing just fine without Aramark using the marks owned by Delaware North. A check on the website travelyosemite.com did not show any current use of thirty-five marks that Aramark refused to buy. Only the historic name “Yosemite National Park” and an image of Yosemite mountain connote a connection to an unpurchased mark on the Delaware North list. (2) Delaware North has to recognize that passage of time and non-use have lowered the value of the marks. (3) Why is NPS allowing private contractors to obtain trademark and service mark registrations on publicly-owned land and assets? The images and marks that have been trademarked arguably belong to the public. Perhaps legislation is needed, but at a minimum, NPS should monitor trademark applications and oppose registration of marks based on and related to national parks. (4) The negotiations, long-sought by Delaware North and now required by the Court, should be based on the public interest in protecting national parks from commercial exploitation.
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