By Christopher Simmons, Law Clerk, Webb & Wolf
The following memorandum was prepared to answer the questions: What is an intent-to-use application? And, What constitutes trademark infringement.
Trademarks Generally
A “trademark” is a distinctive mark, symbol, or emblem used by a producer or manufacturer to identify and distinguish his goods from those of others. Ownership of trademark requires combination of both appropriation and use in trade, and thus, neither conception of mark nor advertising alone establish trademark rights at common law, but rather ownership of trademark accrues when goods bearing mark are placed on market.
Rights in trademarks are not gained through discovery or invention of the mark, but only through actual usage. 2 McCarthy on Trademarks and Unfair Competition § 16:11 (4th ed.). Trademark priority is not granted to the person who was first to conceive of the idea of using a given symbol as a mark. Id. To acquire ownership of a trademark, one must actually use the designation as a mark in the sale of goods or services. Id. No trademark rights accrue to someone who merely selects a designation without actual use of it in the advertising or sale of goods. Id. Trademark rights grow out of use, not mere adoption. Id. The mere fact that a party conceived the idea of a trademark and discussed it with others does not establish priority as of the date of those events. Similarly, no priority of use is created as of the date that a party announced to a few persons that he intended to use a certain designation as a mark.
An idea person who wants to stake out rights in a concept for a new mark should make use of the federal intent-to-use system, which will create a national priority right as of the date that the intent-to-use application was filed, assuming that the designation is in fact eventually used as a trademark and the registration is granted. Id.
Intent-to-use (ITU) Trademarks
Section 1(b) of the Lanham Act was amended by Trademark Law Revision Act of 1988 to allow for the filing of a trademark application by an individual with “a bona fide intention, under the circumstances showing the good faith of such person” to use the mark on the goods or services listed. The U.S. Trademark Association’s official commentary to the TLRA observed that although the Act contains no precise definition of bona fide intent to use, a requirement of “good faith” is a precondition to such registration. See U.S.T.A., “The Trademark Law Rev. Act of 1988,” comment on § 1(b) at p. 43 (1989).
An intent-to-use application cannot mature into a registration before the applicant actually uses the mark in commerce. 15 U.S.C. § 1051(d). “While an intent-to-use application does not, by itself, confer any rights enforceable against others, it does give an applicant the right to engage in the statutorily prescribed application procedure. See WarnerVision Entm’t Inc. v. Empire of Carolina, Inc., 101 F.3d 259, 262 (2d Cir.1996) (because an intent-to-use applicant has the right to engage in use so as to complete registration, a court may not enjoin that use to protect the rights of a rival who began use after the intent-to-use filing date).” Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 18-19 (D.C. Cir. 2008). An intent-to-use applicant prevails over any opposer who began using a similar mark after the intent-to-use filing date. Id.
An example may help illustrated how an ITU trademark is used to reserve the right to use of a trademark:
If party Alpha files an ITU application to register and has not yet used the designation as a mark and thus not yet obtained its registration, then Alpha has as yet no trademark rights to assert in court against party Gamma, who began use of a similar mark after the date of Alpha’s application. Lanham Act § 7(c) states that the priority position of the ITU applicant is only “contingent” on achieving the status of registration. Until then, the applicant’s priority over later users or applicants is merely incomplete and inchoate. However, unlike a court, the PTO Trademark Board will recognize contingent rights and permit party Alpha to oppose a junior application to register filed by party Gamma.
2 McCarthy on Trademarks and Unfair Competition § 16:2 (4th ed.).
The Trademark Review Commission Report has stated that:
An intent-to-use applicant should not be entitled to injunctive relief until it commences use. Without such use, applicant could not establish likelihood of confusion in the marketplace. Further, without use, applicant would not obtain the registration upon which its constructive use is contingent. Applicant could then not assert priority over a use commenced before applicant’s use but after its filing date.
77 Trademark Rep. 375, 403 (1987), reprinted in USTA, The Trademark Law Rev. Act of 1988 43 (1989). This is consistent with Fila v. Diadora, 141 F.R.D. 74 (N.D. Ill. 1991).
ITU Applicants Can Provisionally Rely on Filing to Oppose Another’s Application
For example, assume that ITU applicant Alpha, who filed its application last year (but has not yet used its mark), opposes the application of an allegedly conflicting mark by party Zeta, who filed its application this year but had its application published first. Alpha’s inchoate “mark” has neither been registered nor used so as to presently trigger the bar of Lanham Act § 2(d). However, the Trademark Board has held that an ITU applicant like Alpha can rely upon the constructive use provision of Lanham Act § 7(c) to provisionally establish its priority offensively for purposes of Lanham Act § 2(d). 3 McCarthy on Trademarks and Unfair Competition § 19:31.10 (4th ed.).
In this hypothetical, if there is no likelihood of confusion caused by the conflicting marks, the opposition is dismissed. Id. But if there is a conflict found, the Board would find that Alpha has provisional priority. Id. Zeta’s application would be suspended, pending Alpha’s use of its mark and registration. Id.
Although registration with the Patent and Trademark Office is considered to be prima facie evidence of the right to the exclusive use of a trademark, priority of use, not registration, determines who actually owns a particular mark or name. Thus, ownership of a trademark is not governed by a race to the Trademark and Patent Office, but by a “race to the marketplace.” 47 Am. Jur. Proof of Facts 2d 643 (Originally published in 1987).
ITU Application Process
After filing an application, an examining attorney will be assigned in approximately three months. The attorney may issue a letter explaining any reasons for refusing registration. If there are no refusals or additional requirements, the examining attorney will approve the mark for publication in the Official Gazette. This begins a 30-day period in which the public may object to the registration. If no opposition has been filed, the application will enter the next stage of the process. The USPTO will issue a Notice of Allowance about 8 weeks after publication. This indicates that the mark has been allowed, but it does not mean that it has been registered. Within 6 months of the issue date of the NOA, the person who filed must: (1) submit a statement of use; and (2) begin using the mark in commerce; or (3) submit a six-month request for extension of time.
Used In Commerce
There is little case law with respect to what constitutes bona fide intent to use a mark in commerce. However, in order to prevent the intent to use amendments from being abused, the Lanham Act was also amended to clarify that “use in commerce” means “the bona fide use of the mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” 15 U.S.C. § 1127.
Based on the legislative history behind the TLRA, the test of “bona fide” intent has been interpreted to require “objective” evidence of circumstances showing “good faith.” Caesars World, Inc. v. Milanian, 247 F. Supp. 2d 1171, 1191-92 (D. Nev. 2003).
Section 1127 defines “use in commerce” as “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” 15 U.S.C. § 1127. In connection with goods, a mark will be considered in use in commerce if it is placed on the goods or their containers or on documents associated with the goods or their sale, and the goods are sold or transported in commerce. Macia v. Microsoft Corp., 152 F. Supp. 2d 535, 539 (D. Vt. 2001).
It is also important to note that under the “Dawn Donut” rule, there will be no likelihood of confusion for a court to enjoin unless and until the registrant with constructive use priority is likely to enter the trade territory of the junior user. That is, merely receiving its registration and perfecting its prior ity by “use” somewhere in the United States does not automatically entitle the registrant to a preliminary or permanent injunction. The product may be only locally sold and advertised and the registrant may have made use only in the New England states and the junior user may be confined to the state of Washington. 3 McCarthy on Trademarks and Unfair Competition § 19:30 (4th ed.).
Trademark Infringement Generally
Likelihood of confusion is the cornerstone of trademark infringement. If this likelihood exists, then confusion as to the source of a good or service probably exists among a substantial number of reasonable buyers. One of the primary purposes of trademark law is to prevent this likelihood from occurring. Edwin S. Clark, Finding Likelihood of Confusion with Actual Confusion: A Critical Analysis of the Federal Courts’ Approach, 22 Golden GateU. L. Rev. 393 (1992).
Federal courts rely predominantly on the Restatement of Torts approach when analyzing likelihood of confusion. The Restatement analysis examines an infringement claim by applying a scheme of four factors. “Thus, courts decide if confusion is likely by critiquing: (1) the degree of similarity between the competing marks in appearance, pronunciation of any words used, verbal translation of the pictures or designs involved, and suggestion; (2) the actor’s (i.e. alleged infringer’s) intent in adopting the similar mark; (3) the relation in use and manner between the goods and services marketed by the actor and those marketed by the other mark owner; and (4) the degree of care used by purchasers in relying on or choosing between similar marks.” Id.
Trademarks are for the benefit of consumers and internal transactions are insufficient to establish trademark ownership. Blue Bell, Inc. v. Farah Mfg. Co., Inc., 508 F.2d 1260, 1265 (5th Cir. 1975). Trademarks help the public select goods. Inherently weak trademarks do not ordinarily enjoy the wide latitude of protection afforded owners of strong marks. However, a mark which is initially a weak one may, by reason of subsequent use and promotion, become stronger marks and receive more protections. Standard Int’l Corp. v. Am. Sponge & Chamois Co., 394 F.2d 599, 600 (C.C.P.A. 1968).
The provisions for registration do not create a trademark right, but merely provide for the registration of marks, the right to which has accrued from actual use. The lack of registration of a trademark does not prevent a plaintiff claiming trademark infringement from acquiring proprietary rights to the use of its mark, as trademark protection does not depend upon registration, but rather upon usage of the mark. Although the owner of a trademark need not register it in order to use the mark in connection with goods or to seek to prevent others from using the mark, those trademark owners who do so are afforded additional protection not provided by the common law. 87 C.J.S. Trademarks, Etc. § 197.
To prove infringement, a plaintiff must show “(1) its marks are registered; (2) the defendants used the marks in commerce without SI’s consent; and (3) that the defendants’ unauthorized use is likely to confuse consumers or deceive the public.” S Indus., Inc. v. Stone Age Equip., Inc., 12 F. Supp. 2d 796, 803-04 (N.D. Ill. 1998).
Registration
Registration establishes a rebuttable presumption that the mark was first used on the filing date. Id. (citing Zazu Designs v. L’Oreal, S.A., 979 F.2d 499, 504 (7th Cir.1992)). However, “the registration of a trademark is no evidence of ownership and a plaintiff’s right of recovery in an action for infringement is dependent upon the length and extent of the use of the trademark and its ownership and adoption by plaintiff with a resulting secondary meaning which distinguishes plaintiff’s products.” Automatic Washer Co. v. Easy Washing Mach. Corp., N.D.N.Y.1949, 9 F.R.D. 335, 82 U.S.P.Q. 95.
Used in Commerce
“Use” under the common law means that the mark was attached to a product sold to the public. Zazu Designs. 979 F.2d at 503; Blue Bell, 508 F.2d at 1265. The use must be continuous and bona fide to impart ownership—de minimus sales, a few shipments, or pre-marketing tactics that attempt to “reserve” the mark will not do. See Zazu, 979 F.2d at 503, 505 (“Only active use allows consumers to associate a mark with particular goods and notifies other firms that the mark is so associated;” “reserving a mark is forbidden”; dispensing a few sample products is a “pre-marketing maneuver” that is insufficient to confer trademark rights); Allard, 146 F.3d 350, 358 (single use in trade must be “followed by continuous commercial utilization” to establish trademark rights) (quoting Blue Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260, 1265 (5th Cir.1975)); Diamond, 991 F.Supp. at 1018 (“It is axiomatic that the right to a distinctive mark belongs to the person who first continuously uses the mark to identify or distinguish goods or services in commerce.”). Likewise, the mere intent to use a mark is insufficient. Zazu, 979 F.2d at 504; Allard, 146 F.3d at 356. In any given case, the amount of activity that constitutes “use” depends on the facts. Lucent Information Management, Inc. v. Lucent Technologies, Inc., 986 F.Supp. 253, 258 (D.Del.1997). The guiding principle is that the activity be “sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.” Blue Bell, 508 F.2d at 1266. S Indus., Inc. v. Stone Age Equip., Inc., 12 F. Supp. 2d 796, 805 (N.D. Ill. 1998).
Another dimension of some uncertainty for the ITU applicant who obtains registration is the possibility that a junior user may build up some equities which a court would recognize and put in the balance in framing a decree. For example, assume that, while Alpha filed an ITU application for BLUEBIRD for mineral water, thirty days later party Omega searched, but did not find the application because it had not yet been entered on the data base. Thus, Omega first uses in good faith BLUEBIRD for mineral water from a spring in northern California, putting a good deal of resources into an advertising campaign for three years, until Alpha’s ITU application is granted as a registration, based upon real, but small scale use of BLUEBIRD for mineral water from a spring in Vermont. Three years later, a restaurant in San Francisco orders a case of BLUEBIRD mineral water from Alpha in Vermont. Alpha sues Omega and asks for a preliminary and permanent injunction against any and all use of the mark. While Alpha clearly has absolute calendar priority under Lanham Act § 7(c) over Omega, it is believed that a court might well struggle to so frame the injunction as to balance the equities by permitting Omega to retain some benefit of its good faith investment in advertising the disputed mark. Each such situation will be highly fact-specific. 3 McCarthy on Trademarks and Unfair Competition § 19:30 (4th ed.).
Unauthorized Use Likely to Cause Confusion
To prevail in a trademark infringement suit, the plaintiff must demonstrate a likelihood, not the mere possibility, of confusion. August Storck K.G. v. Nabisco, Inc., 59 F.3d 616, 619 (7th Cir.1995). The likelihood of confusion must be assessed “with reference to the realities of consumer behavior in the relevant market.” Dorr–Oliver, Inc. v. Fluid–Quip, Inc., 94 F.3d 376, 381 (7th Cir.1996). In the 7th Circuit, the analysis proceeds according to a seven factor-test: (1) the marks’ similarity in appearance and suggestion; (2) the similarity of the products; (3) the area and manner of concurrent use; (4) the degree of care likely to be exercised by customers; (5) the strength of the plaintiff’s mark; (6) actual confusion; and (7) the defendant’s intent, if any, to “palm-off” its product as someone else’s. Rust Environment & Infrastructure, Inc. v. Teunissen, 131 F.3d 1210, 1216 (7th Cir.1997) (citations omitted). No single factor is dispositive, and the relative weight afforded each will vary among cases. Dorr–Oliver, 94 F.3d at 381. S Indus., Inc. v. Stone Age Equip., Inc., 12 F. Supp. 2d 796, 813 (N.D. Ill. 1998).
Close Infringement Cases
The ultima ratio in cases of doubt as to trademark infringement is the principle that, as between a newcomer, who by provoking confusion has nothing to lose and everything to gain, and one who by honest dealing has already achieved favor with the public, any doubt should be resolved against the newcomer; the field from which the newcomer could have selected his or her own distinguishing mark to indicate the origin of the product is practically infinite. A boundless choice of words, phrases and symbols is available to one who wishes a mark to distinguish a product or service from those of others. Where a defendant selects from this practically unlimited field a trademark confusingly similar to the mark publicly associated with the plaintiff’s product, then it would appear that the defendant made the particular choice in order to trade on the plaintiff’s established reputation. In this regard, the most successful form of copying is to employ enough points of similarity to confuse the public with enough points of difference to confuse the courts. Nutro Products, Inc. v Cole Grain Co. (1992, 2nd Dist) 3 Cal App 4th 860, 5 Cal Rptr 2d 41, 92 CDOS 1374, 92 Daily Journal DAR 2233; 47 Am. Jur. Proof of Facts 2d 643 (Originally published in 1987).