Supreme Court rules bankruptcy alone is no excuse for trademark non-use

The Supreme Court ruled that a company's bankruptcy declaration does not automatically constitute a valid reason for failing to use a registered trademark for three consecutive years. The decision clarifies that subjective internal factors, such as poor business performance or fear of legal disputes, cannot shield a trademark from cancellation.

In the case reviewed, a bankrupt partnership sold its trademark rights to another corporation but failed to complete the ownership transfer before the buyer filed for cancellation due to non-use. The court determined that the mere onset of bankruptcy proceedings was insufficient to prove an unavoidable external obstacle prevented the mark's use.

Legal authority over the assets transferred to the court-appointed bankruptcy trustee upon insolvency, making the trustee the proper benchmark for judging whether non-use was justified. The ruling noted that the trustee could have sought court approval to continue limited business operations to maintain the trademark but made no such application. Because the trustee did not apply for permission to operate, the court found no evidence that external forces beyond the trustee's control prevented the trademark's use on designated goods.

The court found no justifiable reason for the prolonged non-use and upheld the grounds for cancellation. Trademark registration requires active usage unless objective external forces make commerce impossible.