One of the greatest disservices the U.S. Patent and Trademark Office (“USPTO”) ever did is make the average citizen think they need merely fill out a form on a website to obtain all the intellectual property rights and protections possible. They do not explain the limits of a registered trademark. Furthermore, they fail to advise that the questions and information requested in an application came from statutes and regulations. Even worse they do not advise that the courts interpret and enforce the statutes and regulations creating a whole body of law which may not lead to the results expected by the average person.
Consider the following commonly held belief. Once one has a federal trademark registration, they can never be sued for trademark infringement. Right? Wrong. Trademark law does not work that way. Even having a registered trademark does not guarantee that you have the right to use your trademark under all circumstances or in all places.
THE PRIORITY CONCEPT
The most important concept in trademark law in the United States, is priority. If you were using the trademark first in a particular geographic area, then even somebody with a trademark registration cannot stop you from continuing to use your trademark in that particular area. The prior user, however, has every right to prevent the owner of the trademark registration from advertising and selling its products or services in the prior user’s territory, and the prior user can file a lawsuit for trademark infringement if the owner of the registration ignores the rights of the prior user. So how does one determine if a mark has priority?
GETTING PRIORITY
The one who is the ‘First to Use’ of a trademark (the use that has priority) acquires rights in that mark if the mark is inherently strong and if the trademark follows other common law principals. Inherent strength is not something that is automatically present in common words, phrases or designs. If the trademark is made up of the key words that only describe the product, components, customers, uses or other words or phrases that one would type into an internet search engine box, the trademark may not be a trademark at all but just a collection of words. A trademark that is made up entirely of descriptive words may not acquire any common law rights because one user cannot take those words out of circulation for other people to use to describe the same products or services and cannot claim them for exclusive use.
WHEN DOES ONE GET PRIORITY?
The date when a business obtains common law rights in a trademark (sometimes known as “trade identity rights’) depends on the distinctiveness of the mark. “A business will obtain rights in the mark upon first use only if the mark is inherently distinctive. If the mark is not inherently distinctive, a business may still obtain ownership rights in the mark when the mark attains a secondary meaning.” Coach House Restaurant, Inc. v. Coach and Six Restaurants, Inc., 934 F.2d at 1559 (C.A.11 (Ga.), 1991). Even if someone uses something as a trademark, “if it is not distinctive, the user does not have a trademark because he has no existing trademark rights.” Otto Roth & Company, Inc. v. Universal Foods Corporation, 640 F.2d 1317 (Fed. Cir. 1981). This is an important defense to any lawsuit by a “mark” owner claiming common law rights. But also note that these matters are decided by courts after the parties have gone to great expense.
SECONDARY MEANING OR ACQUIRED DISTINCTION
Potential trademarks that are not distinctive or would not be awarded rights for other reasons such as primarily being a surname may acquire distinctiveness. Potential trademarks that start out weak because they are descriptive may acquire additional trademark rights called “secondary meaning” or “acquired distinction” after a period of time if a number of other factors are present. Again the “period of time” is a question of fact for a court to decide. There is no chart to follow.
USE OF SURNAMES AS A MARK
Whether consent to registration of a surname is required depends on whether the public would recognize and understand the mark as identifying a particular living individual. A consent is required only if the individual will be associated with the goods or services, either because: (1) the person is generally known or so well known in the field relating to the goods or services that the public would reasonably assume a connection; or (2) the individual is publicly connected with the business in which the mark is used. Krause v. Krause Publications, Inc., 76 USPQ2d 1904 (TTAB 2005), aff’d per curiam, No. 2007-1364, 2007 U.S. App. LEXIS 28399 (Fed. Cir. Dec. 7, 2007). Car dealerships may be an example of this as they often have names like Joe’s Chevrolet. Often they are local, but there are dealerships in New York City which have or had dealerships in Miami so they may be more than just local. Register marks such as “Elvis” and “Michael Jackson” are different.
WHEN IS SECONDARY MEANING ACQUIRED?
So exactly when do potential trademarks attain “secondary meaning”? Common law trademark rights (where defined by state law, local law, case law or federal unfair competition laws) exist where trade “has taken place” that qualifies as trademark use which traditionally used to be in the isolated local geographic areas where the trade actually took place or where the mark was actually used. However, when someone from one state can order from someone in another state on a worldwide web and that product is shipped in interstate commerce to another state or the service is provided in another state, the concept of local trade is up for debate.
Does local even exist anymore? Use of internet web sites for selling throughout the U.S. may change the scope of where common law rights exist and how they can be protected and enforced. Further the common law rights are not limited to one state. A merchant may obtain common law rights anywhere the product or service is sold or purchased. Sometimes this means you can get a cease and desist letter at your small business in a small town on the East Coast from a big city West Coast business for using a confusingly similar trademark on the internet to promote a local business. Success can bring its own problems.
PROBLEM COMPLICATED BY TECHNOLOGY
The rights of common law prior users is an area of the law where technology has created new problems. Namely, the internet. If the user of an unregistered mark can prove in court its use through the entire United States it can prevent the registered owner from using the mark.
While ownership of a federal trademark registration provides many important benefits and protections, it does not necessarily establish who has the right to use a particular trademark in a particular part of the country. Prior users also have significant legal protections under the trademark law and can prevent owners of trademark registrations from using their trademarks under certain circumstances. So what is a business to do? The first option is to pick a unique trademark never used before. The name “Exxon” is a perfect example. Otherwise a trademark attorney must conduct a comprehensive trademark search (not just registered trademarks) before adopting and registering your trademark. The average person usually does not have the background legal understanding to conduct a comprehensive trademark examination. One thing is certain, a Google, Yahoo or similar searchs are not the sufficient.
A REAL BIG CONCERN FOR BUSINESSES!
The Anticybersquatting Consumer Protection Act (“ACPA”), 15 USC §1125(D) was intended to prevent ‘cybersquatting,’ an expression that has come to mean the bad faith, abusive registration and use of the distinctive trademarks of others as Internet domain names, with the intent to profit from the goodwill associated with those trademarks. The ACPA renders one liable to the owner of a trademark who, with “a bad faith intent to profit from that mark,” “registers, traffics in or uses a domain name” that is either identical or confusingly similar to a “distinctive” mark or is identical, confusingly similar or dilutive of a “famous mark.”
The ACPA has been effectively used to combat a number of wrongs. These include “cybersquatting,” which occurs when a registrant obtains a domain name containing another’s mark and offers to sell it to the mark holder for a tidy sum. The ACPA has also been used to prevent domain registrants from improperly profiting from the commercial use of another’s mark, such as by selling or displaying ads for products that compete with those of the mark holder at a domain containing the mark. “Compete” does not necessarily mean selling the exact same products. Similar and related products could also be found to “compete”. Courts regularly find “typo” domains — domain names that misspell the owner’s mark — to be confusingly similar and thus to trigger liability under the ACPA. Courts have also found confusing similarity in names such as “drinkcoke.org,” “mycoca-cola.com” and “pepsisays.com.” The ACPA has also been successfully used to prevent the tarnishment of a mark by its use in the domain of a Web site containing pornographic or other materials with which the mark holder does not wish his mark associated. In addition, the ACPA has been used to combat gripe sites — Web sites critical of the mark holder set up at a domain containing his mark.
If a violation of the ACPA is found, a court can “order the forfeiture or cancellation of the [offending] domain name or [its] transfer . . . to the owner of the mark.” §1125(D)(1)(c). The mark owner can also recover up to three times his actual damages and obtain injunctive relief. Actual damages include the profits the domain name registrant made from his use of the mark, as well as losses sustained by the mark holder as a result of the domain name registrant’s actions, such as lost sales or harm to the mark’s reputation. In lieu of actual damages, the mark owner can elect to recover statutory damages of between $1,000 and $100,000 per domain. The actual amount awarded is fixed by the court in its discretion. In “exceptional cases,” attorney’s fees can also be recovered.
BUSINESS GOODWILL
It is argued that goodwill is the main purpose – the more successful that a trademark is for helping consumers to make a positive connection between a product or service and who provides it, the more likely it is that someone will try to compete by taking the trademark or something confusingly similar to use it for themselves. Some businesses may do it intentionally: Why take the time to build goodwill when you can use a name that is already associated with goodwill? Some businesses may do it unintentionally: “Why should I verify that I have a right to use a name when I like the name, it costs money to verify that it is not being used already, and I already Googled it and nothing (or something unrelated) came up?” Both could lead to liability for damages.
CONTESTING THE INCONTESTABLE
Common law rights can be used to stop someone else’s use of a mark. A common law mark may be able to successfully oppose a confusingly similar federal registration or cancel a federally registered trademark if the trademark is used to compete in the same or similar products or services in the same geographical area if the alleged common law trademark owner can show prior use (or senior use) of the mark. The Lanham Act (trademark legislation from 1946, as amended) provides that a registered mark, even if it has become incontestable, still may be challenged “to the extent, if any, to which the use of a mark registered on the principal register infringes a valid right acquired under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration under this chapter of such registered mark.” 15 U.S.C. 1065 as quoted in Advance Stores Co. Inc. v. Refinishing Spec. Inc., 188 F.3d at 411 (6th Cir., 1999).
A challenge to a registered mark by an unregistered mark could be in a USPTO opposition or cancellation or in a state or federal court based on a common law right. Furthermore, in addition to the common law, many states have specific statutes to protect its citizens’ right to marks. Or a trademark could be challenged through the Anticybersquatting Consumer Protection Act. So “incontestable” marks can be challenged.
THEN WHY REGISTER A TRADEMARK?
So if a registered trademark does not provide immunity from suit why not just stick with common law rights? Enforcement can be difficult from both sides. Trying to enforce a common law right may mean one lawsuit after another. Stopping one person from using your name may cost more than a federal registration would have cost in the first place and when you have stopped the first person you still just have a common law right that you are going to have to keep enforcing on a piecemeal basis. If a mark was first used by someone else but is later made a federal registration of the mark by a junior user (not first user), the junior user will have a much easier time stopping the first user. Remember the common law first user has a higher burden of proof since the federal registrations have presumptive rights. The first user will have to challenge the registered mark. Also only registered trademarks may qualify for recording with the Customs Service to protect against import infringements.
LIMITS TO COMMON LAW RIGHTS
Common law trademarks do not enjoy the advantages of federal registration which include being protected more thoroughly from infringement and counterfeiting trademarks. What if one can’t get federal registration? Marks that do not qualify for federal registration may not qualify for common law protection for the same reasons: federal laws are based on the same or similar common law principles. The history of an attempt at obtaining a registered trademark may provide a defense against a lawsuit by a common law owner.
Likewise, having a federal registration does not protect a business from being challenged by a senior user of a common law trademark. Take special note that USPTO trademark examiners do not examine potential trademarks for possible infringement by state or common law marks. The USPTO only looks at other USPTO federal registrations for potentially conflicting marks.
CONCLUSION: WHAT IS A BUSINESS TO DO?
The answer is quite simple. Research the existence of possible common law unregistered marks before using a trademark, building a website, or investing in a new business. The overwhelming majority of small business owners had no clue about the contents of this article or the possible losses to their businesses and investments. Large companies do undertake a proper
“due diligence” to reduce the chances of facing litigation over trademarks. They use trademark lawyers who understand the concepts and dangers to advise them. But, they do not use those websites that promise to market one’s patents to manufacturers or those that offer help in merely filling out a trademark application at what sounds like a cheap price.

Clayton J Joffrion, J.D., LL.M. is an attorney in New Orleans, LA and is admitted to practice in Louisiana, Florida, federal agencies and commissions, and the United States Court of International Trade. He has been a member of the bar for over 22 years. Please learn more about him at the link below.

Article published in The Florida Bar Journal. Please follow the link for the entire article.
Patent Protection article

The act authorizes the Florida Secretary of State to appoint International Attorney – Notaries. The power of the new international notary will be to authenticate instruments including the particulars and capacities to act of transacting parties, confirmation of the full text of the instrument, the signatures of the parties (or legal equivalent), and to affix the signature and seal of the Florida International Attorney – Notary.

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Learn more about the electronic commerce, the United Nations efforts, authentication differences, international cybernotaries, international authority and the protocol here.