Trademark Rights – Where Do They Come From?

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Your client wants to make money by selling a product or rendering some service – or maybe some new century combination of both now commonly referred to as SAAS (“software as a service”). In any event, your client will want the relevant consuming public to be able to readily spot its product or service in our crowded, noisy 21st century marketplace. In other words, your client will want a brand (trademark) – a distinctive and protectible brand – for its products or services. How exactly does a client establish legally protectible rights in a trademark?

In the United States, there are two ways to initiate a claim to a trademark, but both ultimately require “use” of the mark before those rights are perfected. In the case of a trademark, such “use” means that the mark be placed on the goods (like JEEP on a vehicle), on containers for the goods (like KIBBLES ‘N BITS on a dog food bag), or on tags or labels affixed to the goods (like the LEVI’S tab sown onto the back pocket of your jeans). In the case of a service mark, where there is no physical product upon which to place a mark, “use” means that the mark is used in connection with the rendering of the services (such as displaying XFINITY on the sides of service trucks or the use of UBER on the icon for an app and in the app itself). In addition, the rights in a mark acquired by such use are generally limited to the goods and/or services sold under that mark.

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1. COMMON LAW TRADEMARK RIGHTS

The use of a mark as described above creates common law trademark rights for the user (like your client), without regard to whether the mark is registered. However, common law rights are limited to the geographical area in which your client has actually used the mark. Your client’s geographical expansion of rights in that mark may be further limited if a third party, not knowing about your client’s mark, obtains a federal registration for the same mark or a confusingly similar mark. Once that third party’s registration is granted, your client’s rights in its common law mark are confined to the geographical area where your client has actually used the mark as of the third party’s federal application filing date. As a result, use by your client beyond that defined geographical area may constitute infringement of that third party’s national trademark registration.

2. TRADEMARK REGISTRATION

Before your client actually uses a mark as described above, it can stake a claim to that mark by filing a federal intent-to-use trademark application for its intended goods and/or services. Your client’s rights will then start from that application’s filing date, although “use” of the mark (again, as described above) is required before a federal registration will be granted and those rights are perfected. In this case (for federal registration), that use must be in commerce that may be regulated by Congress (interstate or foreign commerce).

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While rights protecting the owner of a mark are available at common law (and even under state registration statutes), federal registration provides a number of important advantages, including:

  • Registration (on the Principal Register of the U.S. Patent and Trademark Office) provides constructive notice to all others, so that no subsequent user can adopt the mark in good faith.
  • Registration allows the owner to use the federal registration symbol ®.
  • Registration on the Principal Register of the Patent and Trademark Office is prima facie evidence of the registrant’s exclusive right to use the mark.
  • A mark becomes “incontestable” once registered on the Principal Register for five years (except if the mark is later abandoned, the registration was obtained by fraud, or the mark becomes generic). An “incontestable” mark is immune from most legal challenges to the validity of the mark.
  • A registered mark is recordable with U.S. Customs to exclude importation of goods bearing a mark that would infringe the registered mark.
  • Investors and bankers like to see that a company seeking funding (or for sale) has actively protected its intellectual property, including its brands, by federal registration. Federal registration enhances the value of a client’s “intangible assets” on its balance sheet.
  • Registration allows listing of your client’s mark in the “Amazon Brand Registry” program to better control the use of that mark in Amazon’s electronic marketplace.

The takeaway here: if you know your client is already using a mark “in commerce,” encourage your client to seek federal registration for that mark. If your client has selected a mark but is not yet using it (once again, “use” as described above), your client should file a federal intent-to-use trademark application as soon as possible to begin to establish its rights in that mark. Z. Peter Sawicki James L. Young 

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