Often a company develops a brand and secures trade mark protection only to later receive notice from an entity claiming ownership of an identical mark in a limited geographical location. The question is then how the presumptive rights of nationwide exclusivity conferred on the owner of a US trade mark registration interact with the prior non-registered common law rights of a third party in a limited area.
The fact that a party has obtained a federal trade mark registration does not automatically eliminate another party's prior non-registered, common law rights. The party that was first to adopt the mark (the senior user) can seek to overcome the registrant's prima facie presumption of nationwide exclusivity by taking steps to ensure the right to use the mark in the specific geographic location in which it has established rights. This creates a limited exception to the exclusive nationwide rights conferred by a US registration. US trade mark law does, on the other hand, reward the party who obtains a federal registration by "freezing" the geographic territory covered by the senior user's common law rights as of the date the so-called junior user obtained its trade mark registration. The senior user may maintain its limited trade mark rights but be constrained against future expansion.
The concept of defining the respective territorial rights of concurrent trade mark owners turns on a question of fact, namely how to define the location in which the non-registered senior user has developed goodwill in its mark. The territorial scope of a trade mark and its good will are typically defined in terms of the area from which customers are drawn, the geographic extent of advertising and the nature of the goods or services offered. Courts have traditionally established boundary lines based on commercial markets rather than state lines. For localised businesses, courts have often limited the territory of goodwill to a specific radius based on miles.
Modern technology has given companies the ability to access distant geographic markets and to expose customers in diverse locations to their trade marks. However, the fact that a party has a web site which can theoretically be accessed on computers outside of a particular location or, for that matter, operates accounts on national social media, does not, itself, constitute evidence that a trade mark has attained any goodwill outside of the specific location in which the party operates.
Given that a party that is using a particular mark can later find itself cut off from expanding the territory in which it offers goods or services should provide ample motivation for parties to make federal trade mark filings. Similarly, parties that obtain trade mark registrations should be cautioned that there may be specific geographic exceptions to the otherwise national scope of their rights based on the existence of a more senior localised business.
|Karen Artz Ash
||Bret J Danow|
Katten Muchin Rosenman LLP
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