Registration is not necessary to acquire trademark rights, but it provides important benefits. United States federal law recognizes both common law trademarks and marks that are registered with the United States Patent and Trademark Office. This post provides an overview of some of the benefits of registering a mark.
Common Law Trademark Rights
Without registering a trademark, the user of a mark acquires common law trademark rights that extend to the territories in which the mark is used and has acquired consumer recognition. The territorial extent of common law trademark rights is based on a company’s market penetration, which is indicative of how well known a mark is among consumers.
There is no bright line test to determine when a mark has been used enough to establish common law rights in a given geographical territory, but federal courts typically consider factors such as the length of use of a mark, sales volume, number of customers, growth trends, and the amount and extent of advertising in the territory.
Even applying these factors, the territorial scope of common law trademark rights is highly debatable and can cost significant time and money. Trademark battles among common law markholders have increased in recent years with the proliferation of on-line businesses, which often create overlapping trade territories.
State Trademark Registration
While state registration of a mark provides notice of a claim of trademark rights (and may provide a presumption of trademark ownership and validity, and a state statutory cause of action for infringement), it does not give the registrant the preemptive right to use the mark throughout the state. The trademark rights of a state registrant are limited to common law rights, and thus extend only to the territories/markets in which the mark is used and has become known.
A federal registration grants the registrant a right of priority, nationwide in effect, in connection with the goods/services covered by the registration, against any other person who commences use of a confusingly similar mark after the filing date of the trademark application. 15 U.S.C. §1057(c). This nationwide right of priority exists regardless of where the registrant actually uses the mark.
Here’s an example of how nationwide priority can work: Assume two parties independently (without knowledge of the other) adopt the mark FRESH START for convenience stores – one operating in the southeastern U.S. and the other operating on the west coast.
Each party has common law rights to the FRESH START mark in its respective territory of use, and can prevent the other party’s convenience stores from coming into its territory.
But if the west coast party later secures federal registration of FRESH START, then it will have priority rights to use that mark for convenience stores throughout the U.S. except in the territory of use already established by the southeastern party as of the date of the federal registration.
So, while the southeastern party retains the right to operate FRESH START convenience stores in the southeastern U.S. (to the exclusion of the west coast party), it cannot expand its store locations under the FRESH START mark outside of that territory.
The west coast party, with its federal registration, has the preemptive right to use the FRESH START mark in all other parts of the U.S., thereby allowing substantial room for unfettered expansion. By federally registering its mark and acquiring nationwide priority rights, the west coast party has eliminated future common law trademark battles with parties who adopt use of confusingly similar marks in geographically remote areas after the filing date of its trademark application.
The owner of a federal registration also enjoys the benefit of a presumption of the validity of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the mark in connection with the goods or services covered by the registration. 15 U.S.C. §§ 1057(b) and 1115(a). Any user of a conflicting mark has the burden in court to rebut these presumptions.
If you have questions about your trademark rights, Goodell DeVries can help. Contact Donna Thomas, Esq. at 410-783-3522 or firstname.lastname@example.org.