QUESTION: What happens when a trademark is canceled due to default but owner still uses and protects it? There is a registered trademark that (take my word for it) has become generic. We were using the trademark and after 2 years, the trademark owner hired some mega trademark law firm to ramp up protection of the mark and started sending us C&D notices. We had (at great expense) a trademark survey done and submitted a TTAB cancellation based on genericness. Despite the registrant's and their attorney's email being correct, they never replied. As such they defaulted on the cancellation proceeding and TTAB cancelled the trademark. As we want to use the trademark in a generic sense what do we do now as the owner defaulted on the TTAB procedure. We have evidence and the survey but what to do with it? Use the mark and let them sue us?
ANSWER: If you use the owner's mark, even after cancellation or expiration of the owner's federal registration, you run the risk of infringing the owner's trademark rights.
A person who believes he/she has been "damaged" by a trademark registration can petition the Trademark Trial and Appeal Board (TTAB) to cancel the registration. One basis for cancellation is that the mark is generic. For example, "aspirin", "escalator" and "flip phone" are generic names.
Another basis for cancellation is nonuse or abandonment of the mark.
In the above situation, it seems that the TTAB did not actually decide that the mark was generic. Rather, the owner failed to respond and was found in default. Therefore, the owner's mark was cancelled.
However, trademark rights do not wholly depend on federal trademark registration. In other words, even in the absence of federal registration, or where a federal registration is cancelled or expired, there can be trademark rights.
One can have common law trademark rights from the use of a trademark. These common law rights do not require registration. In addition to common law and federal rights, one may also have state trademark rights from a state registration of a mark.
But trademark rights are based on use the mark. If the owner does not use the mark, the owner may be deemed to have abandoned the trademark. If the trademark has been abandoned, then someone else can freely use the trademark.
Therefore, if the above owner who federal registration was cancelled is still using the mark, the owner may be able to sue for infringement. That would be true, even if you believe the mark is invalid because it is generic. A court would have to decide that issue.