A great question in which I cannot provide a meaningful answer without knowing additional facts. Many reputable attorneys offer a free consultation. My suggestion is to contact a few so the additional facts can be filled in and you will have an accurate answer. Best wishes.
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With that many questions, you need to see an IP lawyer for a consultation. It sounds like sour grapes over a trademark or servicemark you abandoned a dozen years ago. There is a statutory presumption of abandonment from a 3 year period of nonuse, so you are way past that. You no longer have a business license, and yet you claim to do business? Sounds like a real uphill battle you have. And it sounds like you would face a strong determined opponent if they are so heavily invested in the mark. Reminds me of a legal principle called substantial change of position due to detrimental reliance. You are largely to blame for the other party being in the position they are due to their understandable reliance on your inaction for many years.
Sure you can oppose, and perhaps if you fight you can get something from the nuisance value involved, but you are more likely to spend more than you make unless you have the right attorney doing this in the best way to maximize your claim.
You need to move rather quickly if you move at all on this as any delay now is likely to be magnified in adverse effect due to the long prior period of inaction.
Your first step is to get a consultation to see if you have enough activity on the mark to even mount a reasonable case at Opposition. You would likely have to get past summary judgment and it's not clear you could. You need a trademark litigator to review this and let you know. I don't hold out much hope for you, but without a review I cannot be sure.
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.
Trademark opposition petitions involve litigation, and this is no small undertaking, all for a name you stopped using many years ago, although you "always tried to keep it active" and "still use the name to sell stuff online," which is very unclear. You're also looking ahead and wondering how to defend yourself if you're the one that gets sued by them to force you to turn over the domain name that's now "cybersquatting" on their trademark which may soon get a registration.
It's cheap and easy to hang on to a domain name fir sentimental reasons, and no domain name registrar asks you any touch questions about your actual use, they just accept your $15 per year and your ownership can continue. But the scenarios you've thrown out there, however, require exactly that inquiry into actual use.
As my colleagues have noted, you've got the issue of abandonment of your "common law" trademark rights, and your competitor's cler intention is use the TM, so it's time to see your own TM counsel to sort out the best course of action.
Avvo doesn't pay us for these responses, and I'm not your lawyer just because I answer this question or respond to any follow-up comments. If you want to hire me, please contact me. Otherwise, please don't expect a further response. We need an actual written agreement to form an attorney-client relationship. I'm only licensed in CA and you shouldn't rely on this answer, since each state has different laws, each situation is fact specific, and it's impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue.
If you have continued to use the name in commerce continuously despite letting your business license lapse, you may be deemed the "senior user" compared to this other company. If so, then there has been no abandonment and you can a least theoretically attempt to oppose the trademark application (or seek cancellation of the issued trademark when that happens). But it is not enough to show that you are the senior user of a trademark that has not been abandoned---you also will have to show that this other company's use creates a likelihood of consumer confusion or dilutes the value of your trademark. Unless this company competes with you in the same industry and geographic area for the same customers, you probably won't be able to show consumer confusion. And even if you avoided abandonment, your mark is not sufficiently famous to allow you assert that this other company's use will dilute the value of your trademark or tarnish its image. Thus, your chances of prevailing in an opposition or cancellation proceeding seem remote. You won't be able to stop this company from registering and using the name.
On the other hand, assuming that you are not found to have abandoned the trademark, I doubt that this other company will be able to stop you from using it, at least in the industry and geographic vicinity in which you have operated. Trademark rights arise from use in commerce, not registration, and as the senior user you are "grandfathered" at least in the industry and geographic vicinity in which you operated. You may even decide that it is worthwhile trying to register the trademark as the senior user.
In situations like this, you face a substantial risk that whatever you do could lead to expensive litigation. That is why I am a strong advocate for companies in your situation to engage your competitor (at least for use of the mark) in a negotiation that would allow both companies to continue to use the trademark and co-exist. Such cross-licensing arrangements can be rather complex, but they also can save you from costly and frustrating litigation. My strong suggestion is that you retain IP counsel to attempt to negotiate a cross-license that would allow both companies to co-exist peacefully. Who knows---there may even be a way for the companies to cooperate with each other and boost the success of both of them collectively. Please feel free to call if you would like a further free consultation on this.
You have not stated that you continued to sell goods under the name, only that you used the domain name to sell goods. If the name is only used in the URL, and not prominently displayed elsewhere on the webpage(s), it does not qualify as trademark use, even if the words in the domain name are distinctive
The first thing you need to do is have a trademark attorney look at your name and determine if it can be protected as a trademark. Next you need to determine if anyone else has used or is using the same or similar mark. Then you can explore whether it was and has continued to be used properly to maintain protection.
You absolutely need an attorney helping you through this.