COMMON LAW TRADEMARK RIGHTS v. TRADEMARK REGISTRATION
In the United States, certain trademark rights are created whenever someone uses a mark in connection with a product or service. If a product is sold or a service is rendered in conjunction with the mark, then trademark rights or service mark rights attach immediately to the mark for the benefit of the entity using that trademark or service mark. This sounds great except that such rights are limited to the geographic area of product sales or the area where services are rendered, with some possible expansion for reputation or advertising. These types of rights are referred to as common law rights. Trademark registration is not required and is not available for common law trademark rights.
For example, if an entity uses a mark in Orange County but does not use the mark in commerce outside of the Orange County area then common law trademark rights are limited to the geographical area of Orange County. If the owner of the mark is successful within Orange County and plans to expand to areas outside of the Orange County area (e.g., San Francisco), then the owner must use the mark in those areas in order to acquire common law trademark rights in that geographical region.
The problem arises when a third party (i.e., a good faith senior user) has already used the mark or a mark that is substantially similar in the area outside of Orange County (e.g., San Francisco) prior to the entity’s expansion. This third party may have started using the mark after the entity but in terms of common law trademark rights, the common law trademark rights of the entity are solely in Orange County and do not extend outside of the Orange County area except in certain circumstances. The third party is the senior user of the mark in that geographical region. The entity cannot stop third parties from using and acquiring trademark rights in a different area even for the same mark and the same goods.
Another downside to relying upon common law trademark rights is that even though common law trademark rights can arise immediately upon use of the mark in commerce, in order to sue a third party for trademark infringement, the owner must prove the existence of common law trademark rights. See also, Edge Systems LLC v. Aguila, 635 F. App’x 897 (Fed. Cir. 2015). The proof is usually by way of documentary evidence showing sales in connection with the mark, advertising, press recognition, etc., in all geographic areas of interest which may over a long period of time be hard to retrieve, and thus, harder to prove during litigation.
FEDERAL AND STATE TRADEMARK REGISTRATION
State and Federal trademark registration processes usually solve the above two limitations with respect to common law trademark rights. State and Federal trademark rights arise through the trademark registration process which provides statewide trademark rights for state trademarks and countrywide trademark rights for federal trademarks. In a broad general sense, Federal trademark rights are preferred over state trademark rights, although a state trademark registration may sometimes be necessary to sue under some state laws. Moreover, the cost associated with Federal trademark registration is not significantly more compared to state trademark registration, especially when the national geographic scope of federal protection is considered.
FEDERAL TRADEMARK REGISTRATION
Federal trademark rights arise when the United States Patent and Trademark Office registers the proposed mark on the principal register. Also, upon federal trademark registration, the federal trademark rights relate back to the filing date of the trademark application for the Federal trademark registration. Beneficially, even though the trademark owner may use the mark in one location, the trademark owner can slowly expand into new geographical regions and stop third parties in those new geographical regions from using a similar mark even if the trademark owner’s use comes after the third party. If there is a senior user that used the mark before the filing date of the Federal trademark application then the senior user may have the right to continue using the mark in that geographical region. This involves a concurrent use proceeding which is complex and beyond the scope of this post.
Moreover, during litigation, the Federal trademark registration is a low-cost way to satisfy the initial burden of showing that one has trademark rights in the mark. Eventually, sales figures and other evidence must be introduced into the record to prove up certain remedies. Nevertheless, Federal trademark registration is a simple means to satisfy the initial burden of showing trademark rights. This is a significantly lower burden than having to collect and store documents related to the use of the mark in all geographical regions to prove up one’s trademark rights.
STATE TRADEMARK RIGHTS
State trademark rights also arise through a state registration process. In California, the state trademark application is processed with the California Secretary of State. A state trademark registration provides no enforceable rights in a different state. A state trademark application must be filed in each state in which state trademark rights are desired. Because of this, it may be more cost effective to seek Federal trademark rights when seeking trademark rights in multiple states.
Moreover, a number of states require actual use of the mark in commerce before the state trademark application can be filed. This is different compared to the Federal trademark registration process which allows for the filing of a trademark application based on an intent-to-use basis.
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