• Trademark Ownership: Use & Registration

    Trademark Ownership: Use & Registration

    In order to protect or seek registration of a trademark a person must prove ownership of the mark. Under both the common law and the Lanham Act, the first person to use a mark in commerce establishes ownership in a mark. Use in commerce is a legal term and is established by showing actual or constructive use of a mark in connection with the sale of goods or services. While the general rule is that the first to use a mark its owner, this rule is subject to some limitations if the senior and junior users are in geographically remote areas. The first to use rules are also modified when the junior user registers the mark before the senior user. Registration of a mark grants certain rights and benefits like the presumption of validity and ownership in the mark. There are, however, certain threshold requirements to registration including some restrictions or bars to registration of certain kinds of marks.

    The general rule of ownership in trademarks is based in an old property law theory called priority of appropriation. Historically, a person gained ownership of un-owned property, like wild animals, by being the first person to gain control over it (capturing or trapping in the case of wild animals). Trademarks are a limited type of property and, because of the common or un-owned nature of words or logos (and other valid trademark subject matter), the law grants ownership to the first person to gain control over the subject matter of the mark. In other words, a person must ‘capture’ the trademark from the wild world of symbols or words that could distinguish their goods and services from those of others’.

    Ownership or control over a mark is established through use of the mark in commerce. The term ‘use in commerce’ is legal shorthand for adoption of a mark and use in connection with the sale of goods or services such that the public would recognize the mark as signifying the source or origin of the goods or services. ‘In connection’ means that the mark is affixed to or closely associated with the goods or services. Establishing use in commerce is a factual inquiry which takes into account the actual use of the mark (selling, transporting, and advertising), the association the public has with the mark, the incorporation and widespread use of the mark, and the level of notice provided to other potential users of the mark. None of these factors is dispositive in the inquiry, and sufficient evidence of use is determined according to the customary practices of the particular industry.

    The Lanham Act provides a second means of establishing ownership and priority of appropriation. A party may file an “Intent to Use” application which asserts that the filing party has a good-faith and bona fide intent to use the mark in commerce. The party must subsequently actually use the mark, as outlined above, and then file a statement of actual use within 6 months (extensions may be granted for up to 30 months). The effect is to grant constructive use starting from the date the application was filed. In other words, even though the party had not actually used the mark at the date of filing, a court is bound to consider them as having done so. This means that even if another party actually uses the mark before the filing party, but their actual use is after the date the first party filed, the filing party is still said to be the first user. While the “Intent to Use” application is technically distinct from a regular registration application the end result is identical to the culmination of the regular registration process.

    There are certain conditions under which more than one party can be using the same or similar marks in commerce. Under the common law, where two parties are independently using the same mark for the same goods in different markets, prior appropriation is inconsequential so long as the second adopter is not acting in bad faith. In this circumstance bad faith includes acting inimically toward the first user’s interests, looking to capitalize on the first user’s good will, or looking to forestall the first user’s expansion. This doctrine limits the senior user’s rights when their market expands into the market of a good-faith junior user, and a senior user’s rights must give way to whatever rights the had previously been acquired there in good-faith by their competitor.

    Under the registration regime of the Lanham Act this doctrine is somewhat changed. If a senior user has a registered mark then no junior user has a right to use it in any market where the senior user is operating, regardless of whether the use was in good-faith. If a junior user registers the mark before a senior user, the senior user has a right to use the mark in the geographic market they had been serving at the time the junior user applied for registration. This means that a senior user whose market base had expanded during the pendency of the junior user’s registration application would be forced to constrict their market and give way to the junior user’s priority.

    Apart from the ownership rights that stem from registering a trademark, registration provides other benefits. Another such benefit of registration is the presumption of validity that comes with a registered mark. When a party applies for registration the Patent and Trade Office (PTO) examines the mark for validity to see if it is protectable subject matter and distinctive. If the PTO approves registration the trademark is thereafter presumed to be valid, and a party asserting otherwise bears the burden of proving by a preponderance of the evidence that it is not. This can be very expensive because validity can frequently depend on proof of public perception, evidence of which sometimes requires time-consuming and costly opinion surveys.

    The benefits of registration are tremendous, but not all marks may be registered. Marks which are primarily geographic in nature are barred from registration, as are marks that are deceptive, and registration is also denied to marks which are scandalous, or disparaging. A mark which is primarily geographically deceptive may not be registered under the Lanham Act. A mark is primarily geographically descriptive when it is perceived by potential purchasers as describing the geographic origin of the goods. Geographic terms are registrable if there is no logical connection between the geographic term and the goods (i.e. if the mark has no relationship to the actual geographic source of the goods, like “Dutch” for paint or “European” for health spas).

    The geographic terms restriction is actually a special subset of the larger restriction against deceptive marks. Deceptive marks may not be registered, but merely misdescriptive marks may be registered if they acquire a secondary meaning. A misdescriptive mark is a term which:

    1) Is misdescriptive of the character, quality, function, composition or use of the goods; and
    2) it is likely prospective purchasers will believe that the misdescription actually describes the goods.

    A term becomes deceptive if, in addition to the above, the misdescription is likely to affect the consumer’s decision to purchase the goods.

    Finally, marks that are scandalous or disparaging in nature may not be registered. A scandalous mark is one that gives rise to an offense to the conscience or moral feelings which causes a shock to the sense of truth, decency, or propensity. Despite the high-handed tone of this language, marks are basically only excluded for being scandalous in cases of sexual obscenity or flat verbal vulgarity. Whether a mark is disparaging is determined in light the goods or services identified by the mark in connection to the context of the marketplace. Generally, disparaging marks make reference to a specific group in a recognizable manner. Whether the general population considers the mark disparaging is irrelevant. Only the perceptions of a substantial composite of those referred to, identified or implicated in some recognizable manner by the involved mark are relevant to the analysis. The factual inquiry into whether a mark is disparaging involves looking at the views of the relevant group (as stated above), the connotations of the subject matter in question, the relationship between that matter and the elements that make up the mark, and the manner in which the mark appears in the marketplace. Even though the only the perception of the targeted group is relevant, the actions of the general population can be probative of whether a mark is perceived as disparaging by target group (though courts are somewhat divided on this issue).
  • Ask a Legal Question