A common law trademark or service mark (collectively referred to in this article as a “trademark”) is a judicially created right that is governed by state law.  Generally speaking, common law trademark ownership is acquired by actual use or marketing in a given market. Common law trademarks can only be protected in the geographic area where goods or services (collectively referred to in this article as “goods”) are sold or have acquired customer goodwill. Additionally, actual and continuous use of a trademark is required to retain a protectable interest in a trademark. Tally-Ho Inc. v. Coast Community College District, 889 F.2d 1018, 1023-24 (11th Cir.1989).

When does an unregistered common law trademark trump the rights of a registered trademark?

The first to use a trademark in a particular geographic market is known as a “senior user”. A senior user can acquire rights to a trademark in a geographic market even if a trademark is not registered.  Generally speaking, an unregistered common law trademark may trump the rights of a registered trademark IF the common law trademark was the senior user AND has continuously used the common law trademark.

HOWEVER, generally speaking common law trademarks rights are LIMITED to the geographic market that the common law trademark has been used, is known by consumers or where the common law trademark may naturally expand.  Federal registration of a trademark by another user after a senior user has begun to use the same trademark has the practical effect of FREEZING the senior user’s enforceable common law trademark rights thereby terminating ANY right to future expansion beyond the common law trademark’s existing territory. Tana v. Dantanna’s, 611 F.3d 767, 780-81 (11th Cir. 2010).  As a result, it behooves common law trademark holders to register their trademarks.

How are the geographic limits of common law trademark rights defined when a trademark is used on the internet?

Determining trademark rights based upon a trademark’s use on the internet is a developing area of law.  The law is still struggling with how to define the geographic limits of a trademark used on the internet.  The tests for establishing the extent of trademark rights vary from jurisdiction to jurisdiction when a trademark is used on the Internet. For e-commerce cases, some courts have used a “zone of market penetration” test to determine if a trademark holder is entitled to trademark rights.  The market penetration test is a test that analyzes the following factors to determine the extent of a trademark’s market penetration: (1) volume of sales; (2) growth trends; (3) the number of people who purchased the party’s goods in relation to the number of potential customers; and (4) the amount of advertising. Adray v. Adry-Mart Inc., 76 F.3d 984, 989 (9th Cir.1995).

Other courts apply the “zone of natural expansion” test to determine if a trademark holder is entitled to trademark rights.  The “zone of natural expansion” test analyzes whether a senior trademark holder can successfully claim the junior holder is interfering with the zone of natural expansion of a trademark. Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193 (11th Cir.2001).  Courts have also found that the internet can be its own territory or market. See Big Time Worldwide Concert & Sport Club at Town Center, LLC v. Marriott Int’l, Inc., 236 F. Supp. 2d 791, 804 (2003); see also Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193 (11th Cir.2001).  However, while a consumer in any market may access the Internet, no court has held that having a website ALONE is enough use to convey nationwide geographic trademark rights.  Whether a common law trademark holder’s use on the internet is sufficient to establish common law trademark ownership rights will vary case by case and jurisdiction by jurisdiction.

The trademark attorneys at The Plus IP Firm have advised numerous clients regarding their common law and registered trademark rights.  If you have any questions regarding your trademark rights given the use of your trademark on the internet, the attorneys at The Plus IP Firm are available to answer any questions that you may have.  To schedule a free consultation, click HERE.  For more information about Derek Fahey, this article’s author, click HERE.

The post THE LIMITS OF COMMON LAW TRADEMARK RIGHTS ON THE INTERNET appeared first on E-Council Global.

First, it is a bedrock principle of service mark and trademark law that the first user of a service mark or trademark owns the trademark or service mark if conflicts arise with rival claimants.  I will use the word “mark” to collectively refer to the term service mark and trademark.  Once the basic rights in a mark are acquired upon its initial use, a business may supplement or extend those rights by registration of the trademark.  Registration of a mark with the United States Patent and Trademark Office has several advantages (which will not be discussed in this article).  However, an unregistered mark may still have rights by common law trademark law.

Section 33(b)(5) codifies the benefits that a common law trademark owner may have. Section 33(b)(5) of the Lanham Act states the following:

(5) That the mark whose use by a party is charged as an infringement was adopted without knowledge of the registrant’s prior use and has been continuously used by such party or those in privity with him from a date prior to (A) the date of constructive use of the mark established pursuant to section 1057(c) of this title, (B) the registration of the mark under this chapter if the application for registration is filed before the effective date of the Trademark Law Revision Act of 1988, or (C) publication of the registered mark under subsection (c) of section 1062 of this title: Provided, however, That this defense or defect shall apply only for the area in which such continuous prior use is proved;

Section 33(b)(5) is a defense for a defendant or an accused infringer that has been unknowingly using a mark in a geographic area different from the geographic area of the registered mark.  For section 33(b)(5) to apply, the accused infringer would have to be unknowingly and continuously using the mark in a different geographic area before the registered mark’s owner filed an application to register the mark. Take the following example:

A begins use of a mark in a one geographic area.  Then B begins use of the same mark in a different geographic area in good faith, without knowledge of A’s use. Both A and B would have common law rights to the mark in their respective territories. Then A applies for and obtains a federal registration for the mark.

Under Section 33(b)(5), in the example above, B retains rights only in the territory in which it was the prior user up to A’s application date.

Section 33(b)(5) may be very helpful to owners of unregistered marks.  However, keep in mind that Federal registration of the mark by A has the practical effect of FREEZING B’s rights thereby terminating ANY right to future expansion beyond B’s common law trademark’s existing territory.  While, registration of a mark is not legally necessary, the examples briefly discussed in this article illustrate the importance of registering a mark to protect of your brand. The trademark attorneys at The Plus IP Firm have advised numerous clients regarding their common law and registered trademark rights.  If you have any questions regarding your trademark rights given the use of your trademark on the internet, the attorneys at The Plus IP Firm are available to answer any questions that you may have.  To schedule a free consultation, click HERE.  For more information about Derek Fahey, this article’s author, click HERE.

While the above is not and should not be considered legal advice, since circumstances vary, ScaleUPCheckUP monitors these rapidly developing issues, as enforcement of the law switches into high gear. Instead, the foregoing is intended as an overview and not legal advice, nor does it create an attorney-client relationship. However, contacting an attorney to steer through the maze of bureaucracy to register and defend a mark may very well be necessary to consult an attorney.

ScaleupCheckup ’s blog, website, newsletter and other forms of communication contain general information about legal and related matters. The information is not legal advice and should not be treated as such. You must not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider.

The post Section 33 (b)(5) Defenses For Common Law Trademark Owners appeared first on E-Council Global.

Are you looking at your balance sheet and seeing that your business is worth $250,000, and wondering how and why after so many years of hard work t isn’t worth more?  Well, you know, it may very well be worth A LOT more. You may not realize the fortune or potential fortune in the company you have created, nurtured and grown.

Many business owners often overlook the goodwill of their businesses and the immense value that has become associated with use of the business’ goods, services, and public image – the “brand.”  This type of asset is known as a trademark (for product-based businesses) or as a service mark (for service-oriented firms). From here on out, we’ll refer to them as simply trademarks.

Trademarks identify a business. They represent the source originating power of the mark in the mind of the consuming public. Trademarks are seldom thought of as consumer protection, but the main question concerning an infringing mark is whether it causes consumer confusion.  In other words, if another business uses a name, logo, or style, like yours, that could spell trouble to your bottom line, and you may lose your right to protect your marks by not protecting them. By doing nothing, you are telling the “offender” that it’s okay to copy or infringe upon the trademark that you paid to create.

There is no legal requirement to register a trademark with the U.S. Patent and Trademark Office; however, there are several important reasons to do so. First, registration can validate the mark in the eyes of the public. Second, even though the registration process may take 9 months to a year or more, the registration is retroactive to the original application date. Which means if you file for a mark at any time before another company does, it establishes you/your mark first. It is known as “first use,” the ultimate decider of trademark rights. So, in the world of trademarks, it’s a race to file the application, not just getting the application approved. Translated to terms that make more sense, “first use” means the mark claims continuous use in commerce.

Filed applications and ultimate registration, therefore, establish a powerful legal right.  it is important to note that while first use is important for new companies, business names and logos often gain trademark rights by a history of usage, regardless of registration.

If you don’t use your mark (even a registered one), you risk abandoning it. If you fail to renew a mark, you face abandoning it. Also, if you know a competitor is using a similar mark, but you don’t police it, you could lose your right to the mark regardless of whether it is registered. Yet just having a registration announces to the world that you own it and wards off potential infringers. it is one of the things that helps to establish your “brand image” in the marketplace.

The type of trademark name you have is also important.  If your mark merely describes your goods and services, you may have a hard time acquiring trademark rights either on your own or through the registration process.  Names that are “arbitrary” or “fanciful” are the strongest, unless you have used the mark for a very long time.

For example, Kleenexis a trademark of a facial tissue brand.  It slightly suggests its purpose, but if you asked a person on the street who never heard of the brand to tell what it is, he/she would have a hard time identifying what it.

For a business called Joe’s Dry Cleaning, the mark would be weak, because the same person on the street would tell you it’s a dry cleaning business.  No one person can hold the rights to the term “dry cleaning” or everyone with a dry cleaner would be excluded from the market.

Made up names are often stronger because they are not common words we use every day.  Look at Google and eBay, both made up and both strong names. And both have a specific meaning in the marketplace that is attached to the underlying brand.

Remember that a skilled trademark attorney can tell you about the strength of your specific mark under various circumstances.

Internationally, the United States and many other countries have joined the Madrid Protocol treaty. This development made it much easier for domestic and foreign businesses to register a mark in multiple countries with one application, vastly streamlining the previous process by filing country by country.

Back to where we started:  When you look at that balance sheet, know that your business is likely worth a lot more. There is value in good will, in name recognition, in customer service, etc.  How much value can you give to your business name and logos? It can be virtually limitless. If you decide to sell, that goodwill, gained by use of your trademarks, should drive the price tag higher.

Note:  Businesses based outside the United States opening branches or operations in the United States must realize that any trademark rights acquired abroad do not automatically transfer to the United States.  Consultation with an American trademark lawyer is the best route.

Samuel C. Gold, Esq., has practiced trademark law for nearly 15 years. Mr. Gold has been a member of the Florida and Wisconsin bars since 2002. He is also admitted to practice before several federal courts, including the U.S. Supreme Court.

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The foregoing is intended as an overview and not legal advice, nor does it create an attorney-client relationship.  However, contacting an attorney to steer through the maze of bureaucracy to register and defend a mark may very well be necessary to consult an attorney.

ScaleUPCheckUP’s blog, website, newsletter and other forms of communication contain general information about legal and related matters. The information is not legal advice and should not be treated as such. You must not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider.

The post ScaleUP The Value of Your Business with a Trademark appeared first on E-Council Global.