In this ‘Intellectual Property Application Series,’ I’ll be discussing common law trademarks. I’ll explain what a trademark is, what a common law trademark is and what is involved in obtaining and maintaining a common law trademark . This and more will help explain why a common law trademark is an important tool, which protects both businesses and consumers.
A trademark is a type of intellectual property that uniquely distinguishes and identifies the source of a good. Trademarks assert an owner’s right to use a specific word, phrase, logo/symbol, design, or a combination thereof, in the market. Importantly, trademarks also convey an indication of the uniform quality expected of the goods/services it identifies. This is also known as the “good will” of the trademark. In general, trademarks are secured by a company to advertise and distinguish their products from those offered by other companies.
The word “trademark” is generally used as an umbrella term to include both trademarks and service marks. More specifically, trademarks protect those marks that indicate the source of a good, rather than the source of a service. The protections provided, under either a trademark or service mark, vary slightly. This is because they are specific to the classes of goods/services they protect. Common Law rights extend to both trademarks and service marks.
The word “trademark” is also generally used as an umbrella term to include both commonly protected and formally protected trademarks/service marks. The protections provided by a trademark and the obligations to maintain those protections vary based on the type of trademark rights governing the mark. Formally protecting a trademark would involve filing an application to register the mark federally and/or filing an application to register the mark in individual U.S. states.
Federal Trademark Registration:
To obtain federal registration, an official Application for Federal Registration of a Trademark is filed with the United States Patent and Trademark Office (USPTO). An application for federal registration undergoes the most rigorous of trademark prosecution procedures. The federal trademark prosecution process involves a review of the federal trademark application, to confirm adherence to the government filing requirements. Also during the prosecution process, the mark itself is examined to confirm it qualifies for federal protection, in accordance with strict government rules. Once the examination process is completed and the application is accepted, a formal Federal Certificate of Registration is issued and the mark is considered protected under federal trademark laws.
Only marks in current use in interstate commerce can be granted federal registration and protection. If a mark is not currently being used to market products/services, but there is a true intention to do so, the USPTO does provide the option of filing an intent-to-use based application. This option allows for an earlier application filing date and potential priority over competing marks, which could be crucial in a legal conflict over the trademark.
State Trademark Registration:
To obtain registration in a specific state, an official Application for Registration of a Trademark or Service Mark must be submitted to the relevant Secretary of State’s Office. To qualify for state registration and protection, the mark must be in current use in commerce. Unlike federal registrations, no option is provided for filing an application with only an intention to use the mark.
The trademark prosecution procedures for state trademark registration are not as rigorous as those for a federal trademark application. Even so, the application must meet the filing requirements of the Secretary of State’s Office and strict filing procedures must be followed. These requirements and procedures vary based on the Secretary of State’s Office in question. The trademark itself must meet the statutory requirements for registrations, governed by the Secretary of State’s Office with which registration is sought. Once the state trademark prosecution process is completed and the application is accepted, a formal State Certificate of Registration is issued by the relevant State’s Office. Once officially registered, the mark is considered protected under state trademark laws.
Common Law Trademark:
Marks used by a company in commerce, but not registered federally or with a state, are protected under common law rights and are referred to as common law trademarks. A common law trademark distinguishes and identifies the source of a good, just as registered trademarks do. One important difference is, common law trademarks and state registered trademarks are governed by state laws, while federally registered trademarks are governed by federal laws. All trademarks assert one’s right to use a specific word, phrase, logo/symbol, design or a combination thereof in commerce.
According to the Lanham Act, which governs trademark law in the U.S., from the moment a mark is used by a business in commerce, it is automatically protected as a common law mark. Specifically, the first individual to use a mark in commerce, in connection with marketing and exchanging goods for legal tender, is awarded the common law trademark rights to the mark, as used. This is different from some international trademark rules, e.g. China, which base rights to a trademark on a first-to-file, rather than first-to-use basis. Common Law rights do not extend to any country in which trademark laws are based on a first to file ruling.
The process of obtaining common law rights to a mark is relatively simple, in that it does not require the formal prosecution of a trademark application or official substantiation. As such, the rights conveyed and the protections offered to a common law trademark are limited, compared to those provided by a federally registered trademark. Specifically, common law rights are limited in the scope of protection provided under the state laws, which govern them. In addition, use of common law trademarks are limited and can be geographically restricted from expanding into other markets. Due to the unofficial nature and limitations, enforcing common law trademark rights may also prove difficult.
Federal registration of a trademark provides the broadest rights and the greatest protections available to trademarks. However, a common law trademark claim may be more suitable in certain situations. If a mark is only used in a small geographic area and not being used in interstate commerce, a trademark only qualifies for common law rights.
Common Law Trademark Clearance Search:
One of the first steps to selecting a trademark is to investigate the mark and confirm if it is uniquely distinctive. For this, a clearance search is performed to compare the potential mark to currently published/used marks. A search can be attempted by an individual, but a formal search is conducted by a patent attorney, patent agent, or a person who specializes solely in these types of searches. The USPTO even has some advice about hiring a private trademark attorney.
To conduct a formal clearance search, an experienced professional uses specialized tools and databases to compare the potential mark to the millions of published applications and marks listed on both the federal Principal and Supplemental Registers. These applications are found in the database of the Trademark Electronic Search System (TESS) of the USPTO and in the state specific Secretary of State Office databases. A complete search would also include an internet search for common law marks used in online commerce.
A clearance search is performed as part of the due diligence process, before a trademark is used by a business to market their goods. Finding out if a mark is already in use or registered, could prevent a company from being sued for unintentional infringement of another’s mark. Avoiding a trademark litigation could not only save time and money, but also a company’s reputation.
Even the most in depth search may not find every similar mark that is being used in commerce. If a trademark dispute should arise, one factor considered is if appropriate steps were taken to avoid infringement of an existing mark. In this way, common law rights may supersede federal trademark rights in the case where a proper clearance search was not performed. Likewise, any claim to a trademark, registered or unregistered, can be put at risk if there is no proof that a proper clearance search was performed, prior to using the mark in commerce. Inversely, proof that an official clearance search was performed, prior to using a mark, can support a defense that an accusation of infringement was, at the least, not malicious.
Common Law Trademark Requirements and Use:
After a chosen mark has passed a clearance search, the next step to secure common law rights is to use the trademark in commerce, in connection with the specific goods they represent. Common law rights can only be claimed if a mark is in current use. More specifically, common law rights are not secured, until there is an exchange of funds for the good(s) advertised by the trademark.
Once common law trademark rights are claimed, those rights must be maintained through proper use of the trademark. To maintain the rights provided by a common law trademark, the trademark owner must continue to use the same trademark in connection with the goods initially associated with the mark. Overtime, consumers will hopefully begin to associate a company’s trademark with that individual company and as the source of their particular marketed goods. The goodwill of a trademark can be established and grow as consumer recognition, and their association of the brand with trusted products, solidifies.
To help with consumer association of a company’s trademark as the source of that company’s marketed goods, the standard “TM” symbol is appropriate to use, when displaying a common law trademark. Proper use of the TM symbol signifies to the public that the common law mark is in use. The use of the TM symbol does not confer legal rights, as common law rights do not provide an assumption of ownership. This is because common law trademarks are not held to a standard involving a formal prosecution or registration process. Without enduring these formal processes, a trademark cannot be verified as representing a unique and distinctive mark, which has not previously been used in the marketing and distribution of goods.
Common law trademarks are not permitted use of the registration symbol (®), which indicates federal registration. It is a violation of federal law to use the (®) federal registration symbol, if a federal trademark Certificate of Registration has not been issued for the mark. If the owner of a common law trademark attempts to federally register their mark, the premature use of the official registration symbol can be grounds for refusing to register the trademark.
Proper use of a trademark preserves the rights provided under the Lanham Act and the opportunity to file suit in state courts. Common law trademark rights come with responsibilities and obligations for the trademark owner, in order to maintain those rights. If the trademark is not properly monitored and protected by an owner, the rights to the mark can be put at risk or lost completely.
Common Law Trademark Rights:
Common Law trademarks are protected under the individual state law, in which the mark is geographically used. State laws, in general, defer to federal law. Common law rights are quite limited, compared to state registrations. Compared to federal registrations, which offer an assumption of ownership throughout the entire nation, among other advantages, common law rights are still further limited.
The rights provided under common law only extend to the geographic area in which the mark is used. Limitation to a geographic area could prevent a company from expanding the use of their mark and their business into other geographic areas. A company in a different geographical area, that currently uses and/or has registered a confusingly similar mark, would limit that market.
If the owner of a common law mark discovers a potential infringement of their mark, the trademark owner has the right to bring suit in the relevant state court, in order to protect their trademark. However, since the rights provided under common law only extend to the geographic area in which the mark is used, the owner of a common law trademark cannot enforce their mark outside of that geographic area. This means that if a confusingly similar mark is found being used in another area, common law rights cannot be used to claim infringement and file suit in a relevant state court.
Multiple uses of a similar mark, in connection with similar goods, can cause confusion with consumers in the physical market. This is especially the case with the online market, where consumers may not easily distinguish the difference between two similar uses of a mark. When a trademark owner cannot properly enforce their rights, the strength of the mark can be weakened. A mark is only as strong as the association, made by consumers, with a company’s trademark as the source of the goods it advertises.
Common Law Trademark Monitoring and Surveillance:
Owners of trademarks, whether registered or unregistered, should conduct routine market surveillance to ensure that others are not using, misusing or damaging the mark. Market surveillance includes, for example, routinely searching the marketplace for generic use of the mark and counterfeit goods.
The trademark owner is solely responsible for monitoring and enforcing their rights, but third parties can be enlisted to assist. To ensure that a mark is being monitored correctly, Thrive IP® stands ready to assist in forming these trusted relationships and maintaining communication. Additionally, if infringement is found, our team is here to help guide you through the task of trademark enforcement.
Common Law Trademark Enforcement:
Once a trademark owner becomes aware of an alleged infringement, action must be taken. To claim infringement, the trademark owner must believe another mark is simply confusingly similar to their own. Exact similarity is not required to claim infringement. In order to properly protect the rights to a trademark, the owner must take action to enforce those rights, or risk losing them. Since the rights provided under common law only extend to the geographic area in which the mark is used, the owner of a common law trademark cannot enforce their mark outside of that geographic area.
A potential remedy to an alleged trademark infringement, may be to send a simple Cease and Desist letter to the infringing party. This action gives notice to the infriger of the claimed trademark rights and requests the party to cease use of the protected mark. Further measures can be taken, including filing a civil suit with the relevant state court, if the infringing party is not responsive to the initial effort to enforce the trademark rights.
While it is not a legal requirement, having an experienced legal team behind a cease and desist notice can help avoid the potential for the tables to turn. A simple cease and desist notice can be justification for a defamation complaint, claim of extortion, or even material for a counter suit. An experienced legal team can also assist in researching infringement and assist in filing Opposition Proceedings or Cancellation Proceedings against an infringing mark.
Common law rights may be limited, but they can still be used to preserve one’s rights to a mark, even prevailing over a federal principal or supplemental trademark registration. In a trademark dispute between a federally registered trademark and an unregistered common law trademark, the outcome generally lies in proving which mark was used in commerce first. This can be more difficult to prove, with only a common law claim to a mark.
To prevail over a federally registered trademark, there must be verifiable proof that a common law trademark has an earlier date-of-first-use in commerce. The proof of use in commerce must also show the use of the mark in connection with the goods offered. However, proving prior use of the mark and the date-of-first-use of the mark in commerce, may be difficult, since no official record or filing procedure is required to initiate common law trademark rights. Contrastingly, federal registration of a mark provides a public record of the date the mark was first used in commerce, evidence of that use, and proof of ownership of the mark.
Proving infringement of a trademark, protected by common law rights alone, can have limited benefits. In comparison to federally registered trademarks, the protections provided are significantly limited. To take advantage of the added benefits of federal registration, an owner of a common law mark could file an application for federal registration with the USPTO, before an infringement suit is filed.
Having a federally registered trademark on the Principal Register, rather than a non-registered common law mark, gives the trademark owner additional rights. Only the owner of a federally registered trademark has the right to recover profits, sue for statutory damages, cover legal costs, and receive triple damages for willful infringement. While federal registration provides greater protection over common law rights, a federal registration can still potentially be cancelled, if the owner of a common law trademark can prove first use of the mark.
Third parties, e.g. common law trademark holders, have the right to begin formal Cancellation or Opposition Proceedings against a federal trademark. These actions are an appropriate response, if it is believed that the federal mark is confusingly similar and its use or registration would damage a previously existing mark. Other reasons for filing for Cancellation are if the mark is no longer being used, the use of the trademark becomes synonymous with the product, i.e. it becomes generic, the mark was obtained fraudulently, or if the trademark is believed to be functional in nature.
Common Law Trademark – An Important IP Tool:
Common law trademarks are important in their ability to protect businesses and consumers alike. They provide a business with legal backing to protect their identity, reputation, and the goodwill associated with a company and its trademarks. While federal registration gives a trademark owner the strongest protection for their mark, common law rights still give a trademark owner with important, but limited state rights.
The rules that govern trademarks enable businesses to compete efficiently and fairly. Government trademark rules establish a standardized system for businesses competing in the market. Government guidelines for addressing trademark disputes are also integral to the success of the trademark system.
In addition, the laws governing trademarks help protect consumers from deceit by counterfeit products or fraudulent companies. Trademarks do this by signifying the goodwill and identity of a company. Consumers depend on trademarks conveying the goodwill of a company, as this establishes an expected level of quality and/or trust. The proper use of the trademark symbol (™) is the best way to communicate to consumers that a legitimate trademark is in use. If businesses could not prove and protect their reputation via trademarks, it could be the consumer that pays the greatest price.
Don’t leave a matter as important as your intellectual property to chance. Willing help in the form of an experienced legal team is here and is just a call away. Thrive IP® patent attorneys are located in Charleston, SC; Greenville, SC; Knoxville, TN; Alexandria, VA and Smithfield, VA. Please contact us if you have an interest in filing a trademark application or pursuing other intellectual property services.