Legal framework

In the United States, trademarks are governed by federal and state law. The Lanham Act is a federal statute that governs the registration and enforcement of trademarks used in either interstate commerce or foreign commerce that has a substantial effect on US commerce. Each of the 50 states has statutes providing for registration and protection of trademarks used in that state. Both federal and state law protect unregistered or ‘common law’ marks. Federal and state trademark laws coexist in the United States. Courts generally interpret state trademark laws in a manner consistent with federal law.

The United States is a signatory to several international treaties relating to trademarks, including:

  • the Paris Convention;
  • the North American Free Trade Agreement;
  • the General Agreement on Tariffs and Trade;
  • the Agreement on Trade-Related Aspects of Intellectual Property Rights;
  • the Madrid Protocol; and
  • the Singapore Treaty on the Law of Trademarks.

Unregistered marks

In the United States, trademark rights are acquired through use, not registration. The first party to use an inherently distinctive mark in commerce acquires rights to the mark for the associated goods and services in the geographic market in which the mark was first used or has acquired recognition. There are two exceptions. The first party to file a federal intent-to-use application that later results in a registration obtains priority dating back to the date of filing. Thus, the applicant can obtain priority over someone who first used the mark after the filing date of the intent-to-use application. For marks that are not inherently distinctive, the first to acquire secondary meaning in the mark (rather than the first to use the mark) acquires priority.

Use required to acquire rights

To acquire rights in a mark, the applicant must make good-faith use of the mark in the ordinary course of trade (ie, not as a result of trade made merely to reserve a right in a mark). There is no bright-line rule for determining the use necessary to acquire trademark rights. The rule is flexible, in order to account for differences in the kinds of transaction made across different industries and for different types of goods and services. Use sufficient to support a claim of rights can also be established through prior use as a trade name or other use analogous to trademark use.

Registered marks

Trademarks used in either interstate commerce or foreign commerce that affects US commerce are eligible for federal and state registration. Marks used within a state only may be registered only in that state.

Types of federal registration

Two types of federal trademark registration exist. The Principal Register is for marks that are inherently distinctive or have acquired distinctiveness. The Supplemental Register is for marks that are not inherently distinctive (ie, descriptive marks), but that are capable of acquiring distinctiveness and that otherwise meet the requirements for registration.

Benefits of federal registration

Registration of a mark on the Principal Register:

  • satisfies the burden of proof that the registrant owns the mark, that the mark is valid and that the registrant owns the exclusive right to use the registered mark in commerce for the goods or services specified in the registration;
  • serves as constructive notice of the registrant’s ownership and use of the mark;
  • achieves incontestable status after five years;
  • eliminates certain defences to claims of infringement and dilution;
  • can be relied on to prevent the import of infringing goods;
  • enables the registrant to file suit for infringement of the mark in federal court;
  • may be cited against applications for registration of confusingly similar marks; and
  • entitles the registrant to use the ‘®’ designation.

Registration on the Supplemental Register:

  • enables the registrant to file suit for infringement of the mark in federal court;
  • may be cited against applications for registration of confusingly similar marks; and
  • entitles the registrant to use the ‘®’ designation.

Applicants for federal trademark registration

To apply for a trademark registration, the applicant must be the owner of the mark – that is, the party which applies the mark to goods or services that it offers or intends to offer, either directly or through a licensee. Applicants may be natural persons, entities, nations, states or other governmental bodies.

Power of attorney

Power of attorney is not needed to file a trademark application unless the applicant or registrant is already represented by a qualified practitioner and a new qualified practitioner wishes to act with respect to the application or registration. In that case, the new qualified practitioner must file a new power of attorney or revocation of the previous power, signed by the individual applicant or registrant or someone with legal authority to bind a juristic applicant or registrant (such as a corporate officer).

Protectable and unprotectable marks

A trademark can be anything capable of distinguishing the source of goods and services from those of others, including words, symbols, slogans, three-dimensional (3D) shapes, colours, sounds and trade dress. Marks must be inherently distinctive (eg, fanciful, arbitrary or suggestive terms) or have acquired secondary meaning (eg, descriptive terms that have acquired a special significance such that consumers associate the term with a single source). The following cannot be federally registered:

  • immoral or scandalous matter;
  • deceptive matter;
  • matter that may disparage, falsely suggest a connection or bring into contempt or disrepute;
  • any flag, coat of arms or other insignia of the United States, any state or municipality or foreign nation;
  • matter protected by statute or convention (eg, the Red Cross or Olympics);
  • the name, portrait or signature of a particular living individual or deceased US president, without consent;
  • generic, merely descriptive or deceptively misdescriptive terms;
  • geographically descriptive or misdescriptive terms; and
  • names that are primarily merely surnames.

Procedures

Federal registration

Once an application is filed with the US Patent and Trademark Office (USPTO), the application will be assigned to an examining attorney for review, usually within three to five months of filing. The examining attorney will determine whether the application complies with the formal requirements for applications, such as identifying:

  • the mark;
  • the correct class(es) and the goods and services; and
  • the filing basis (eg, use of the mark in commerce, intent to use the mark in commerce or a foreign application or registration).

The examining attorney will also examine the application for substantive deficiencies, including whether the mark is distinctive and whether it conflicts with any prior federal application or registration.

If the examining attorney identifies any basis for refusing registration, he or she will issue one or more office actions identifying the basis for refusal. The applicant has six months from the date of each office action to amend the application or resolve the issues. The six-month deadline cannot be extended, but the applicant may file a petition to revive an application unintentionally abandoned within two months of the notice of abandonment.

If the examining attorney does not identify any basis for refusing registration or determines that the applicant has overcome any deficiencies, he or she will approve the mark for publication.

If the examining attorney determines that the applicant has not overcome the deficiencies, he or she will issue a final refusal. The applicant has six months from the date of final refusal to appeal to the USPTO Trademark Trial and Appeal Board (TTAB). The applicant may also file a request for reconsideration with the examining attorney, but this does not affect the term for appeal. Accordingly, any request for reconsideration should be filed with the appeal.

Opposition

Any party which believes that it would be injured by federal registration of a mark may oppose the application within 30 days of publication of the mark. The opposing party may seek an initial 30-day extension, which will be granted for any reason, or a 90-day extension, which will be granted for good cause. An opposing party which obtains an initial 30-day extension may seek an additional 60-day extension on a showing of good cause. An opposing party which obtains a total extension of 90 days may seek an additional 60-day extension on consent of the applicant or a showing of extraordinary circumstances. The extensions cannot exceed a total of 180 days from publication.

The opposition is commenced by filing a notice of opposition. Among other things, oppositions can be based on:

  • prior conflicting trademark rights;
  • descriptiveness;
  • lack of distinctiveness;
  • deceptive matter; and
  • dilution.

The sole issue decided by the TTAB is whether the mark that was applied for will be registered. The TTAB cannot grant an injunction prohibiting the applicant from using the mark or award damages or attorneys’ fees.

An opposition proceeding is similar to civil litigation in the United States in that the parties are entitled to broad discovery of any information or documents relevant or reasonably calculated to lead to the discovery of admissible evidence. Unlike in civil litigation, after discovery, the TTAB does not conduct a live trial. Rather, the ‘trial’ is conducted on paper and may be followed by a hearing. An opposition proceeding can last several years. However, using accelerated case resolution (which prohibits extensions of deadlines), the opposition proceeding takes just 16 to 18 months. The losing party may seek reconsideration, appeal the decision to the US Court of Appeals for the Federal Circuit or seek review of the TTAB decision de novo by a federal district court.

Registration

After publication, an unopposed application for a mark that is based on use in commerce, a foreign registration or an extension of protection of an international registration to the United States will be granted registration by the USPTO. The time from filing to registration is approximately four to six months if no office actions are issued.

For unopposed applications based on the applicant’s intent to use the mark in commerce, the USPTO will issue a notice of allowance approximately two months following publication of the application. The applicant has six months from the date of the notice of allowance either to:

  • submit a statement of use and specimen showing the mark in use in commerce; or
  • request a six-month extension to file a statement of use.

A total of five extension requests may be filed. If the applicant does not file a statement of use or extension request within six months of the notice of allowance, the application will be abandoned.

Maintenance of registrations

To maintain the registration, the registrant must file documents attesting to the use of the mark in commerce – or establishing excusable non-use – between the fifth and sixth anniversary of registration. The registrant may also file a declaration of incontestability. Registration must be renewed every 10 years. Failure to file maintenance documents will result in cancellation and/or expiration of the registration. There is a six-month grace period after the deadlines, contingent on payment of an additional fee.

Cancellation of registrations

The USPTO will automatically cancel registrations when maintenance documents have not been timely filed. Moreover, any party which believes that it will be damaged by an existing registration may seek its cancellation. The cancellation proceeding is initiated by filing a petition to cancel. A cancellation proceeding filed within five years of registration of the mark may be based on any grounds that would have prevented initial registration. A cancellation proceeding filed after the fifth anniversary of registration is limited to certain grounds, such as claims of abandonment or fraud or claims that the mark has become generic.

Searches

The USPTO database can be searched online at no cost. The USPTO does not conduct searches on behalf of applicants before filing. The USPTO database includes live and dead federal trademark applications and registrations. It does not include state trademark registrations or common law uses. However, commercial providers provide more comprehensive searches.

Enforcement

Trademark enforcement in the United States can be expensive and time consuming. As a result, trademark owners often enforce their trademark rights through informal means, such as cease-and-desist letters and negotiation of a settlement. If a trademark owner cannot successfully enforce its rights through informal means, the primary method for enforcement is through a civil action.

Civil action

A trademark owner can bring a civil action to enforce trademark rights in federal or state court. If the trademark owner files in state court, the case may be removed by the defendant to federal court under certain circumstances. The trademark owner can proceed with the action only in courts that can exercise personal jurisdiction over the defendant and where venue is proper.

Causes of action and defences

The most common causes of action in trademark cases in federal court are:

  • trademark infringement – based on use of a mark in commerce that is likely to cause confusion with respect to a federally registered mark;
  • unfair competition – based on use of a mark that is likely to cause confusion with respect to a registered or unregistered mark;
  • trademark dilution – based on use of a mark that is likely to dilute the distinctiveness of a famous mark by blurring or tarnishment;
  • trademark counterfeiting – based on use of a mark that is essentially the same as a federally registered mark on goods covered by the registration; and
  • cybersquatting – based on registration, use or trafficking in the domain name containing the trademark of another with the bad-faith intent to profit therefrom.

Affirmative defences include fair use, laches, estoppel and acquiescence.

Injunctive relief

The court may grant injunctions based on principles of equity, preventing violation of a mark. The court may also order seizure of counterfeit goods. In addition, the court has authority over the defendant’s trademark registration, including the power to order cancellation.

Monetary remedies

The court may award damages for trademark infringement subject to principles of equity. The prevailing rights holder is not automatically entitled to recovery of damages, but is generally entitled to recover damages that it actually suffered from the infringement. The court may increase the award up to three times the actual damages. The rights holder may also be able to obtain an award of the defendant’s profits if the infringement was wilful. The court may increase or decrease an award of profits if it finds the award inadequate or excessive. In cases involving wilful infringement using a counterfeit mark, unless the court finds extenuating circumstances it must enter judgment for the greater of three times such profits or damages. Alternatively, the court may award statutory damages of up to $2 million for trademark counterfeiting. Punitive damages are not available under federal trademark law. The court may award reasonable attorneys’ fees to the prevailing party in exceptional cases. In all cases, the prevailing party may recover costs, but costs are limited.

Ownership changes and rights transfers

Trademarks may be assigned, licensed or pledged as security. For an assignment of a trademark to be valid, the trademark must be conveyed along with the goodwill it symbolises. The assignment of a mark that is the subject of federal registration or application must be in writing. The assignment of a federally registered or applied-for mark should be recorded in the USPTO within three months of the date of the assignment. Otherwise, it is void against a subsequent purchaser giving value who has no notice of the prior assignment.

Trademarks may be licensed on an exclusive or a non-exclusive basis, but the licensor must exercise quality control over the licensee’s use of the trademark. Licensing without quality control results in a naked licence, which can lead to the loss of trademark rights. Merely including a quality control provision in a written licence agreement is insufficient. The licensor must make a good-faith effort to exercise quality control over the licensee. The licensee’s use of a licensed mark inures to the benefit of the licensor.

A trademark may be pledged as security for a loan or other indebtedness. To perfect a security interest in a federally registered trademark, the security interest must be recorded at the USPTO. Different rules apply for perfecting a state trademark registration or common law mark.

Related rights

In certain circumstances, overlapping rights may simultaneously protect a particular trademark. For example, state law rights of publicity protect the exclusive right to use a person’s name, voice, signature, likeness and persona for commercial purposes. In any application to register a mark that appears to refer to an individual’s name, the USPTO requires both a statement as to whether the mark refers to a living individual and proof of the consent of that individual, if he or she would be associated with the mark by the public.

A trademark may also qualify for copyright protection under the Copyright Act if it demonstrates sufficient original and copyrightable expression. The advantage of copyright protection is that liability is premised upon the copying; likelihood of confusion need not be proved. Because copyright protection does not extend to titles and short phrases, word marks typically will not qualify for copyright protection. However, logos, 3D marks, sound marks and audiovisual marks could potentially qualify.

The unauthorised use or infringement of another’s trademark may also violate and give rise to liability under state unfair trade practices laws. These laws, and the manner in which they are enforced, vary from state to state. In some states, a private right of action is recognised. In others, the law can be enforced only by the state’s attorney general.

Online issues

The general laws prohibiting trademark infringement, unfair competition and dilution apply to the Internet. Whether use of another’s mark online (eg, in sponsored advertisements) constitutes trademark infringement depends on whether the use creates a likelihood of confusion. Federal law prohibits cybersquatting, which is defined as the registration, use or trafficking of domain names containing the trademark of another with the bad-faith intent to profit therefrom.

Flavia Campbell

Sean Garrison

Michael J McCue

This article first appeared in World Trademark Review. For further information please visit www.worldtrademarkreview.com.