Think that a Federal US trademark applies throughout the US? Not always. Welcome to the murky world of common law trademarks.
Under trademark law, certain types of legal rights, often called “common law trademark rights”, automatically (without any registration) go into effect as soon as someone starts using some sort of distinctive mark (word, logo) to identify a product or service that they are selling in commerce.
Common law trademarks are murky because it is often hard to determine who first used a particular mark to sell a particular product or service at a particular geographical location.
Sounds strange? To better understand common law trademarks, think back to an earlier era when long distance communication was poor and most commerce was local. In earlier eras, Federal and state-level trademark registration systems were either non-existent or impractically hard to use.
Occasionally different merchants, located in geographically different areas and unaware of each other, would innocently start using confusingly similar marks for their local products and services. The problem might go undetected for years until one merchant eventually expanded into another’s geographic area. Customers would then get confused, and the merchants would file lawsuits.
It wasn’t fair to strip an innocent merchant of all rights to their mark. As a compromise, at least for merchants who had been clearly acting in good faith, the courts would often award each merchant exclusive local trademark rights to their respective marks. As a result, under common law, different merchants, operating in geographically different areas, could even legally use the same trademark.
Communications and transportation improved, and the need for a Federal level trademark system became apparent. However Congress faced some problems: 1) due to Constitutional limitations, they believed that they lacked authority to phase out the older, state-level, common law system; 2) it wasn’t even a good idea to phase-out the older system because it was still very important to commerce. Congress’s solution was to acknowledge that the older system would continue to operate and to make the newer Federal trademark system “backward compatible” with the older common law trademark system.
The net effect is that although a Federal trademark normally gives exclusive rights throughout the US, there are some limited common law trademark exemptions or defenses, such as 15 U.S. Code § 1115 (b)(5) and (6).
Consider a merchant (company) who didn’t register a Federal trademark, but who was otherwise innocently using their mark in geographic region “A”. Assume that this use was prior to the Federal trademark filing of a confusingly similar mark by another merchant, previously only selling in geographic region “B”. Under 15 U.S. Code § 1115 (b)(5) and (6), the merchant in region “A” can argue “common law rights”, and with adequate proof keep using this mark in region “A”. The Federal trademark holder (the other merchant) will otherwise have full US rights outside of region “A”.