IKEA Loses Its Trademark Highlighting The Lesson — Use It Or Lose It

Home furnishing giant IKEA has lost its brand name and trademark in Indonesia.  Indonesia’s highest court ruled that the IKEA trademark is owned by the local company PT Ratania Khatulistiwa.  PT Ratania uses the acronym IKEA for “Intan Khatulistiwa Esa Abadi,” which refers to the rattan industry.  The court rendered its decision last May, but it was only recently published.

IKEA was founded in 1943 in Sweden by 17-year old Ingvar Kamprad.  IKEA is an acronym for the founder’s name and the name of his farm (Elmtaryd) and his hometown (Agunnaryd). The company has since become a world-wide brand of Inter IKEA Systems, B.V.  The company registered its IKEA trademark in Indonesia in 2010.

But apparently the company did not actually operate a store in that country until late 2014.  In the meantime, local company PT Ratania registered its IKEA trademark in 2013.  PT Ratania then sued IKEA Systems when the first IKEA store in Indonesia was under construction in mid-2014.  The lower court ruled

that PT Ratania owned the trademark and name, and ordered IKEA Systems to stop all use of its brand name.  IKEA Systems appealed to Indonesia’s Supreme Court in 2015.  The Supreme Court affirmed in favor of PT Ratania, finding that IKEA Systems had not made any commercial use of the trademark for more than three years and therefore IKEA Systems’ registration could be cancelled under Indonesia’s trademark law, leaving the senior trademark rights falling to PT Ratania.  Essentially, Indonesia’s Superior Court found that despite its 2010 registration, IKEA Systems had abandoned its trademark by failing to commercially use it for more than three years.

Other companies not doing business internationally might not consider this IKEA decision in Indonesia as relevant to them.  However, the simple and obvious, and often ignored, lesson here is that for a business to be secure in its trademark rights it must actually use its trademark.  One of the most common ways for a business to lose its trademark, in the US and around the world, is to stop using it with no clear intention to resume use – known as abandonment. Companies may discontinue use of trademarks thinking they might resume use at a later date, believing their rights are secure because they have registrations in place.  But parking trademarks behind registrations without actual commercial use is dangerous.

An example closer to home is that of a fast-food company that lost its trademark in 2015.  For forty years Del Taco, LLC, a California-based company, ran a chain of restaurants under the trademark NAUGLES. The company obtained a US trademark registration for NAUGLES for restaurant services. Del Taco closed its last restaurant in 1995, but continued to merchandise a line of clothing under the NAUGLES trademark.  A local entrepreneur, Christian Ziebarth, pounced in 2010, launching his own NAUGLES-branded restaurant chain.  Ziebarth then petitioned to cancel Del Taco’s trademark registration.  Del Taco tried to argue that its use of NAUGLES for its clothing line was sufficient for continued support of its registration for restaurant services.  The Trademark Trial and Appeal Board (the “TTAB”) disagreed.  The TTAB found that abandonment was clear because Del Taco for a significant number of years had not actually used the trademark for restaurant services.  Del Taco further argued that it maintained an intent to resume use of its trademark because it had done some advertising in 2009 about a new NAUGLES menu, despite the fact Del Taco no longer had any restaurants.  The TTAB rejected that argument as well.  The TTAB’s decision highlights another important rule of trademark use: once a trademark is abandoned, it cannot be revived – abandonment is forever, at least as to the original owner.  And the first party to pick up and commercially use an abandoned trademark obtains the rights to it.

A business should also consider the abandonment principal when planning to rebrand or re-design its marks.  If not done properly, the company might severely compromise its established trademarks.

The essential touch-stone rule: your brand name and trademark rights entirely depend on your actual commercial use, and continued use.  Therefore, use it or lose it.

—Steven Mancinelli