In a recent decision, CreArgi, Inc. v. USANA Health Sciences, Case No. 05-125305 (9th Cir. Jan. 17, 2007), the Ninth Circuit highlighted special considerations that companies in government-regulated industries must take into account when seeking trademark protection. Although trademark rights are typically established by use of a mark in commerce, the court in CreArgi followed the lead of the Trademark Trial and Appeals Board in holding that such use in commerce must be “lawful.” In CreAgri, the court affirmed the dismissal of plaintiff’s trademark infringement suit after determining that it had not established priority of use. The plaintiff, a pharmaceutical company, began selling a new product under the name “Olivenol” in the spring of 2001. More than a year later, the defendant filed an intent-to-use application to begin selling a series of nutritional supplements under the name “Olivol.” Nevertheless, the court determined that the plaintiff did not have priority because at all times prior to the defendant’s priority date, the plaintiff’s labels failed to comply with the labeling requirements of the Food, Drug, and Cosmetic Act by erroneously but unintentionally misstating the amount of the drug’s active ingredient.

Although this case was decided in the context of pharmaceuticals, the court’s holding has ramifications for any government-regulated industry. A similar rule has been applied in the context of a bank’s use of a service mark that did not comply with federal banking statutes, and also may apply, for example, to website operators whose content requires compliance with federal statutes, such as 18 U.S.C. § 2257. CreAgri also serves as an effective reminder that “use in commerce” is a term of art in trademark law and does not necessarily encompass activities that might otherwise appear sufficient to establish trademark rights.

Government regulations commonly include their own enforcement provisions that encourage compliance with their terms. However, the potential trademark effects of noncompliance may be lessened by filing an intent-to-use application in advance of the first use of a mark. As long as the proposed mark is otherwise registrable, and as long as the applicant makes a (lawful) use in commerce within the time set forth in the statute (up to three years in appropriate circumstances), an applicant will have established a priority date as of the date of the filing of the application—potentially rendering moot imperfect uses of a mark.