Acquiring Trademark Rights
Adoption & Use of a Mark
Recall that copyright ownership begins with the creation of an original work. Trademark works a bit differently. Simply coming up with a business name, a snazzy logo, or a catchy phrase is inadequate to establish trademarks rights.
EXAMPLE: Henry, a professional plumber, wants to leave his job and start his own business. He has come up with the name “Henry’s Hot & Cold Co.” and designs a logo where the “H” in his name is formed by pipes. So long as the name and logo only sit on paper in his desk at home, he has no trademark rights in either (although he does have rights in copyright).
In order to establish trademark ownership, one must make bona fide use of the mark in commerce.
1. For goods,
- The mark must be placed on the goods, or their containers, tags or labels.
- The goods must be sold or transported in commerce.
2. For services,
- The mark must be displayed in the sale or advertising of the services.
- The services must be rendered in commerce, or rendered in more than one state.
In Procter & Gamble Co. v. Johnson & Johnson, Inc., 485 F. Supp. 1185 (S.D.N.Y. 1979), Procter & Gamble (P&G) sued, claiming that Johnson & Johnson infringed on their marks. P&G had a “minor brands program” which had made use of the marks in question for about 10 to 15 years. See P&G at 1190. The court found that P&G’s attempt to warehouse marks by such minimal use failed to meet the standard required for ownership of those marks.
EXAMPLE: Henry isn’t quite sure about the name and logo he has selected for his company. He therefore comes up with 3 alternatives. For each potential name and logo, he makes a flyer and hangs the flyers at local supermarkets. Although he never leaves his employer to start his business, he keeps hanging the flyers for several years. This is likely inadequate to secure any rights in the marks.
Of course, there is some room for research and development. A mark can be warehoused for a short time, if there is a reasonably well-formulated plan to use the mark on particular products (or services) and develop them, especially if the artificial maintenance doesn’t last long. If the warehousing is done with an anti-competitive intent, however, that will also be considered by the court. See P&G.
EXAMPLE: Henry is quite certain about using the name “Henry’s Hot & Cold Co.” for his new plumbing company. However, he is unable to start up in earnest until he has enough money for a van and a full set of tools (currently, his employer provides these). He has discussed the matter with his wife and a mortgage broker, and they intend to put a second mortgage on their home in order to finance the business. The planned closing date for the mortgage is 2 months from now, since the bank needs time to appraise the property and the closer’s schedule is quite full. Between now and then, minimal use is likely enough to preserve Henry’s rights in the mark. This token use could be sufficient.
For an interesting case on the issue of commerce, you might also read
Ownership of a Mark & Priority
So nobody has the rights to a mark until it is used in commerce as defined by
As a general rule, the first to use the mark will be the “senior” user with the right to enjoin use by the “junior” user. This, however, brings us right back to the issue of what constitutes a use in commerce…as not just any use will do to establish priority.
EXAMPLE: On January 15, 2016, Henry begins using the name “Henry’s Hot & Cold Co.” in association with his plumbing service in Boston, Massachusetts. On March 1, another Henry starts using the same name in nearby Milton, Massachusetts. The first user of the service mark may be able to prevent any and all future users from using a similar mark.
Farah’s initial use of their similar mark, however, was also insufficient to establish priority. Rather than use the mark in commerce, Farah took a dozen pair of pants bearing the mark and shipped them to its distributors. Because this was an “internal” sale, it did not rise to
"Secret, undisclosed internal shipments are generally inadequate to support the denomination "use." Trademark claims based upon shipments from a producer's plant to its sales office, and vice versa, have often been disallowed." -
Blue Bell at 1265(citations omitted).
Ultimately, a later use by Farah allowed them to establish priority and therefore ownership of the mark. But it is interesting that both companies failed to make proper “use in commerce” of the marks on their first attempts.
In a somewhat different case,
One final note: in addition to the issues discussed here, concurrent use of the same mark by different parties in different areas can cause trouble. Two good cases which discuss this are
Intent to Use §1051(b)
There is a problem with the token use of marks as seen in the example of Henry’s business labeled #3 above. The problem is that in order to help Henry establish trademark ownership, earlier courts have created a legal fiction. In most other countries, token use will not suffice to establish mark ownership, even when there is a real, short-term plan to get the business started (see discussion on Procter & Gamble above). In 1989, the days of token use ended, and the “intent-to-use” provision was passed.
Although we will not start our discussion of registered trademarks until the next section of this chapter, it is appropriate here to discuss
“bona fide intention, under circumstances showing the good faith of such person, to use a trademark in commerce….”
The remainder of
EXAMPLE: Having read ahead to Subchapter 3 of this Chapter, Henry knows there are distinct advantages to registering his mark. Because he is still waiting to close on the second mortgage, he can use
§1051(b) to request registration even though he hasn’t yet started to provide his services to anyone (as he still lacks a van and tools). By doing this, Henry can avoid making trips to the supermarket to hang his flyers; not only does he not need to provide his services, but he doesn’t even need to start using the mark yet! All as allowed by §1051(b).
EXAMPLE: After filing his intent-to-use application, Henry tells a friend all about the business idea. His friend likes the name so much that he decides he’d like to start a plumbing business using Henry’s mark, despite being named Alfred. Alfred offers to buy Henry’s mark for $10,000. Unfortunately, until Henry uses the mark in commerce and files a statement of use, he cannot sell it to Alfred or to anyone else.
Note that once rights in a mark are established those rights can be sold, licensed, or otherwise transferred in a number of different ways.