In the late 1950s – near the tail end of the baby boomer birth year bracket – the USA had just started construction of the nationwide interstate highway system, all telephones had rotary dials, there was no cable/satellite TV, to buy food you went to the grocery store and likely paid cash, and if you needed a prescription drug you had to see your doctor and then pay a visit to your local pharmacy.
Today, everyone has a smartphone. Whether via Apple or Android, the entire country and its products and services are just a few clicks away. From anywhere in the USA, you can conduct commercial transactions that were impossible 20 years ago. You can order products for home delivery from a seller anywhere in the country without even knowing who or where that seller is (think: Amazon). You can order groceries, booze, and THC-laced products for delivery to your door. We can even order home delivery of prescription meds without having to personally appear in front of a doctor (at least for ED). Today’s commerce has virtually no geographical borders. Your client can sell its products to anyone, anywhere in the country – if the law allows commercial shipment of your client’s products (e.g., no explosives, nuclear materials, etc.).
FEDERAL TRADEMARK REGISTRATION
With that in mind, if your client is selling its products or services across state lines, it should obtain federal trademark registrations for its basic brands.
The owner of a federal trademark registration enjoys several significant legal presumptions: the mark is valid, the registrant owns it, and the registrant has the exclusive nationwide right to use that mark for the products and services listed in that registration. The existence of that registration also constitutes constructive notice of the registrant’s claim of ownership in the registered mark.
THE DAWN DONUT RULE
While all of this sounds great, there is a geographical limitation on a registrant’s ability to enjoin others from using its mark (or a similar mark). In general, when two parties want to use the same mark in the same geographical area, the first user has superior rights over those of the second user.
In the 1959 Dawn Donut case, the U.S. Second Circuit Court of Appeals held that while a federal trademark registrant has nationwide rights, the registrant can only enforce those rights where it conducts business or where it has made plans to conduct business. The court stated (emphasis added):
[I]f the use of the marks by the registrant and the unauthorized user are confined to two sufficiently distinct and geographically separate markets, with no likelihood that the registrant will expand his use into defendant’s market, so that no public confusion is possible, then the registrant is not entitled to enjoin the junior user’s use of the mark.
Given the way we conduct business today (i.e., online), this 65-year-old Dawn Donut Rule would seem sort of irrelevant. It is not uniformly applied by all courts, but this concept remains a key factor to be considered when it comes to trademark clearance and enforcement. This is the case despite the borderless internet, our increased mobility, and our enhanced commercial interconnectivity.
It all comes down to the issue of whether the junior user of the mark will create a likelihood of confusion in the relevant geographic marketplace. If no such likelihood of confusion can be established, the junior user can keep using the mark in that market even though it may be federally registered by another. Once the registrant enters the junior user’s geographic market (or has concrete plans to do so), however, then it becomes more probable that there will be a likelihood of confusion, and the registrant may be able to enjoin the junior user from continued use of the mark.
TAKEAWAY
For brand selection, be original.
For brand enforcement, select your battlefields with care.
