As the ability to maintain control over the business’s trademarks is based on seniority, it is imperative to immediately act to protect the business’s trademark rights to avoid being geographically constrained. The failure to do so can result in limits on enforcement and remedies and in other business’s adopting the same or similar trademarks. Beneficially, obtaining governmental recognition of trademark rights generates assets which can be valued, sold, or pledged as security for further funding. Steps can be taken now to protect those brands.
The trademark must meet minimum requirements of distinctiveness and seniority of use. The first to use a distinctive trademark in a geographic area in connection with specific goods or services is the owner of those trademark rights. A trademark may refer to a distinctive mark used to identify a source as applied to goods (most accurately, a “trademark”) or as used or displayed in the sale or advertising of services (a “service mark”). A trade name, which is the name of the business or company, is outside the boundaries of a trademark. A trademark may be a word, design, composite of the two, sound, color or even smell. The trademark must be distinctive so that it serves as an indicator of source, such as a term which is coined, or arbitrary in connection with the goods/services, or at least suggestive of them, or has acquired a secondary meaning for an otherwise descriptive term. A term merely descriptive of the goods/services and terms generic of the goods/services can never function as a trademark.
Speed of registration is key. Trademark registration provides constructive use against competitors according to the issuing governmental body. Registration of a trademark with the Texas Secretary of State, which must be predicated on actual use of the trademark in the State, affords registrant the exclusive right to use the trademark in commerce in the State of Texas in connection with the goods or services specified in the certificate, subject to any conditions and limitations stated in the certificate. While the registration does not affect the common law rights of another who used in the trademark in the State of Texas prior to registration, no junior users can acquire any common law rights against the registrant. Likewise, the registration on the Principal Register at the United States Patent & Trademark Office (“USPTO”) provides constructive use of the trademark in connection with the listed goods/services as of the application’s filing date against any uses commencing thereafter and applications filed thereafter based on actual or intended use in the United States (so excluding an application having a non-US priority date prior to the application’s filing date). An application can be filed with the based on actual use in interstate commerce, an intention to commence such use in interstate commerce in the near future, or based on a non-US application or registration.
The seniority of the use, including constructive use date, is critical to determine who must cease use. The owner of a trademark has the authority to seek to enjoin a junior user’s in the geographic area which would cause an appreciable number of potential purchasers of the business to likely be confused as to the source, affiliation, sponsorship, approval, or connection between the business and the junior user’s goods/services based on a fact intensive assessment. If the accused infringer is junior in the business’s primary geographic area, but the accused infringer senior outside that geographic area and there is a likelihood of confusion, the business could win the battle for that primary geographic area, but lose other geographical areas, up to the balance of the United States.
Registration and maintenance are straightforward. The process begins with an assessment of distinctiveness, identifying if the governmental body will reject to some or all of the trademark as lacking distinctiveness. This may be a cursory search of the USPTO records for clear impediments followed by a deeper examination of governmental records and business uses. Barring a clear impediment, an application can be filed which identifies the applicant/owner, the trademark, the goods/services associated, or to be associated, with the trademark, and the filing basis – actual use in interstate commerce for all goods/services listed, intent to use in interstate commerce for the listed group, or actual or prospective foreign rights. Unfortunately, the USPTO is not reaching applications for 8-11 months, at which any issues will be identified. Assuming no issues remain after communications with the USPTO or are ultimately resolved on appeal, the application will be published in the Official Gazette for any third parties to act in the thirty days thereafter. If no third parties administratively challenge following that publication, the application will proceed to registration if predicated on actual use or an issued foreign registration or will proceed to allowance, wherein the applicant will be permitted up to six windows of six months, with timely extensions filed, to provide evidence of use in commerce and details regarding such use, after which the application will proceed to registration. Thereafter, the registration is maintained by ongoing use. Continuing use avoids the registration becoming susceptible to attack for non-use or abandonment. Continuing use likewise provides the evidence needed in years 5, 9, 19, 29, etc., necessary for the requirement maintenance filings, wherein some of the goods/services listed can be removed for non-use, but no new goods/services added. A new application, parallel to the existing one(s) can address additional uses.
Registration affords benefits worth the cost. Because the trademark is already registered, any attempt by a junior user to register a similar trademark will be rejected if it is likely to cause confusion as to source, affiliation, sponsorship, approval, or connection. As a recognized property, the registered trademark may be sold or may be the subject of a security interest. Should an enforcement action be necessary, registration provides a constructive use date, which can resolve the seniority of use issue without resort to further evidence. The certificate of registration is rebuttable evidence of ownership of the trademark to a judge or jury. Depending on the regime – state or federal – the remedies available may be enlarged where the trademark at issue is registered.
The first step in moving toward registration is for the business to identify the trademarks it uses or plans to use and associated goods or services. Assessment of potential protection and the preparation of the application can then be undertaken.
James E. “Jim” Hudson III is a shareholder in the firm’s Intellectual Property Law Group. For more information contact Jim here.