Common law trademarks

Common law trademarks can shield against Federal trademarks
Common law trademarks can sometimes shield against Federal trademarks

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”.

International Trademarks: Madrid Protocol

Madrid Protocol countries
Madrid Protocol countries (US color or darker is “in”)

For US companies, the Madrid Protocol can be a low-cost and time efficient way of getting international trademark protection.

The internet makes it almost trivial to sell products and services internationally.  But how do you manage the IP for these products and services? The legal system has been lagging here. Although the 1970’s (pre-internet) PCT system simplifies the process of filing international patents, the underlying international patent system still remains cumbersome and expensive.  In the end, you still have to hire local law firms in each country and work with the local patent offices.

What is the situation in trademarks?  Almost reasonable!  This is because, in the early post-internet era, the international trademark system got a major upgrade, called the Madrid Protocol. So if you are a startup wanting to protect your trademark rights internationally, the Madrid Protocol is a reasonable and cost-effective way to do so.

The Madrid Protocol is a 1996-era refinement of an earlier 1891 Madrid trademark agreement.  The US and over 90 other countries (EU included) are presently members (see the darker countries on the world map), with Canada expected to join in the 2017 to 2018 timeframe.

The main advantage of the Madrid Protocol is that the applicant needs to only file once in the WIPO Madrid system in order to apply for trademark applications in a variety of different countries (such as the entire European Union at a single time).  The application fees, at least by patent standards, are reasonable (e.g. about $1600 to apply for full EU coverage).  This system minimizes the hassles and expense of hiring local law firms and dealing with local trademark offices in each country.

There are a few catches – the applicant must be associated with a Madrid subscribing country, so US based companies can do this; but Canadian companies — not quite yet.  You can’t start from scratch – rather you should have at least one national trademark application pending (and preferably issued), to form the basis of your Madrid application.  US applicants, for example, can use their pre-existing US trademark to file for Madrid coverage through the USPTO. The USPTO will check this Madrid application, and then forward it to the WIPO office in Geneva, Switzerland.

Some other cautions — in the event that your original national trademark application fails within the first five years after filing, your other Madrid filings will likely also fail. Additionally, the various local countries that you designate do have the right to refuse your trademark on an individual basis within the first 12-18 months after filing.

So additional research before filing is recommended.  At a minimum, check the Madrid ROMARIN database for conflicts. Check if your US trademarks might be “generic” or otherwise inappropriate in your Madrid target countries.  Madrid Protocol filings must be renewed every 10 years, so remember to put this on your long-term calendar as well.

The hidden complexity of trademarks

Registered Trademark
Registered Trademark

Trademarks help protect providers of products and services from unfair competition. An example of unfair competition is when company “A” sells a product or service, and business competitor “B” sells a competing product or service in such a manner as to confuse company “A” customers into accidentally buying from company “B”.

Three general principles of trademark law can be summed up as “don’t try to trademark the normal names of a product or service”, “a trademark only has meaning in the context of a particular class of product or service”, and “use it or lose it”.

Trademarks that too closely resemble the normal name of a product or service will be rejected as being “generic“. By contrast, a trademark that is “fanciful”, — that has no obvious correlation to a product or service, will often be accepted. Trademarks falling in between these two extremes, which may be “descriptive” of the underlying product or service, often will be put on probation in a “secondary trademark register” for 5 years. After 5 years of use in trade, absent objection by outsiders, the descriptive name can then be granted full trademark status on the “primary trademark register“.

Note that the word “Trademark” has the word “trade”. This begs the question, trade in what? Under trademark law, products and services are shoehorned into a limited number of different trademark classes. Although recycling the same names within a class is generally not tolerated, the same names can often be reused for alternate products or services between classes, so long as there is not confusion. The USPTO generally examines trademarks on a per class basis.

Trademarks are granted on a “use it or lose it” basis. Although it is possible to reserve trademarks (at least fanciful trademarks) for up to a few years on an “intent to use” basis, ultimately to get the trademark, you need to provide proof that the mark is actually being used in commerce by submitting a “specimen”. This is often a photograph of sales receipts, website purchase pages, and the like, showing that the trademark name is actually being used in real trade.

There are many other complexities of trademark law as well. Searches can be tricky, because the underlying legal standard for trademark infringement is “possibility of confusion”, and not “the same spelling“. Thus merely avoiding other trademarks with identical spelling is not enough. Alternative spellings, word prefixes, word suffixes, and other name variations can often cause problems if potential customers might be confused.