This article is written by Shreya Patra. This article covers the exclusive rights under trademark, the conditions under which it is and isn’t awarded, the defensive and offensive use of incontestability, the scope of trademark (explained through common law market penetration rule, dawn donut rule, tea-rose or the rectanus doctrine), scope of concurrent use, the effects of federal registration of the trademark (constructive notice and freezing of junior user’s market, Concurrent Lanham Act Registration (First User’s Rights, Class categorization, Correction of the Register by the Federal Courts), dilution, cybersquatting, keyword advertising, etc. 

It has been published by Rachit Garg.

Table of Contents

Introduction

When it comes to protecting a business’s brand, one of the most important steps that a business can take is to register its trademarks with the US Patent and Trademark Office (USPTO). This gives the business exclusive rights to the use of the mark for their goods and services. But what exactly are these exclusive rights, and how far do they extend? This article will aim to answer this question by exploring the scope of exclusive rights under trademarks in the US.

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A trademark is a form of intellectual property that seeks to protect the brand identity of a business. It is usually expressed as a word, name, phrase, logo, symbol, design, image, or a combination of these elements. In the US, trademarks are governed by the Lanham Act. This Act provides exclusive rights to the owners of registered trademarks, granting them the right to prevent others from using the mark or a confusingly similar mark in their goods and services.

One of the popular couples, Megan Markle and Prince Harry, had a podcast named Archetypes. This was an original podcast and had only Megan on it, along with other  guests who discussed several things that intimately covered their personal struggles. The couple, through Archewell Audio, filed for the exclusive use of this podcast trademark in March 2022 before the United States Patent and Trademark Office. They were denied the trademark on the grounds that this trademark already exists with Archetypes LLC, which obtained its exclusive use way back in 2015.

Thus, it becomes important to set some boundaries as to what can be granted exclusive rights under trademark law. The scope of exclusive rights under a trademark in the US is quite broad and includes several different areas. These include incontestability, territorial scope of trademark rights, dilution, cybersquatting, and keyword advertising. Each of these areas will be explored in detail in the following sections.

Incontestability

Incontestability is a legal principle that prevents a registered trademark from being challenged on certain grounds. This means that the trademark is protected from challenges that would otherwise render the mark invalid. In order for a trademark to qualify for incontestability, it must have been in continuous use for at least five years and must have been registered with the USPTO.

Incontestability acts as conclusive evidence to show that the registered mark is valid, that it is still in use in business even after five years, and that the registrant still holds ownership of the mark. It also ensures that the registered mark is not canceled before five years. However, what still remains to be questioned is the ability of the registrant to prove that the exclusive rights associated with it are confusing. 

In order to claim incontestability, the owner has to present before the United States Patent and Trademark Office a declaration. This declaration is elaborated under Section 1065 of  Title 15 of the United States Code, i.e., the Lanham Act. This declaration is not mandated to be filed, but doing so strengthens the chances of preventing any trademark infringement and protects the trademark. This declaration is signed by the owner, which provides their affirmative consent as to the fact that they want to claim for incontestability, subject to the satisfaction of certain conditions.

Conditions for declaration of incontestability

The following conditions are to be fulfilled in order to allow a claim for incontestability:

  1. They have been using the trademark continuously for five years

The trademark in question has to be used continuously for a period of five years.. The calculation of the date to determine if the five year continuous use is satisfied can be tracked from the starting date, which is the date of registration or publication.

  1. They are the owners of such a trademark 

The individual or entity involved in the process of making such a claim for incontestability must be the true and actual owner of the trademark. He or she should hold ownership of the trademark in order to be awarded the incontestable right. 

  1. The trademark is registered under the principal register

A principal register is defined under Section 1051 of Title 15 of the United States Code. Any trademark can get a spot in the federal registers, also known as the principal register, as long as they pay the required fee and file their respective application through the United States Patent and Trademark Office. 

A spot in the principal register enables the trademark owner to avail of several benefits, which include issuing notice to any potential copiers of the said trademark, the ability to sue any such individual(s) or entity(s) that are engaged in copying the said trademark, and providing immunity to the said trademark after it has successfully been in use for five continuous years. It is subject to additional conditions, like the applicant being required to provide the status of their citizenship and their address of residence to the United States Office, along with the fact that they are the true and actual owners of the trademark. 

Not all marks are qualified to be registered under the principal register; the trademarks that do not qualify for it are placed in a secondary register, which is known as the Supplemental Register. A Supplemental Register contains all those marks that have failed to qualify under the Principal Register due to the lack of uniqueness or the lack of association of such trademarks with a specific source.

Information under the declaration of incontestability

The declaration of incontestability is to contain a detailed list of different kinds of information related to the trademark, in the absence of which the incontestability right would not be granted to the trademark owner. The information is as follows:

  1. The registration number of the trademark
  2. The date of registration of the trademark
  3. A filing fee amounting to $200 for that trademark
  4. The following statements:
  • Either from the date of publication [Title 15 United States Code Section 1062 (c)] or the date of registration, the said trademark has been in continuous use for a period of five years in commerce related to the goods and services it deals in and is still currently in use
  • There have been no legal claims that would draw suspicion on the ownership of the trademark of the owner or suggest any obstacle in the owner’s right to get the trademark registered or keep the registration.
  • The said trademark has no legal cases or proceedings that are pending before the United States Patent and Trademark Office or any other court of law

Attestation of signature and date of statement declaring that the information provided is true and accurate to its contents 

If the declaration of incontestability passes the requirements of the United States Patent and Trademark Office, then the applicant is granted incontestable rights. Such rights permit the owner to prevent third parties from challenging various aspects of the trademark, like the trademark’s validity.

Instances where an incontestable trademark can face a suit

However, an incontestable trademark is not absolutely immune from facing any legal suit. However once incontestability is established, the trademark may face a suit if the defendant successfully establishes any of the following:

  1. The incontestable right provided to the trademark was obtained through fraud.
  2. The mark has been abandoned by the owner.
  3. The goods related to the trademark in question do not provide an authentic source of origin.
  4. The mark is generic in nature, and there is nothing unique about it.
  5. The infringing trademark has been registered before the incontestable trademark.
  6. The incontestable trademark is reserved or prohibited as per Title 17.
  7. The infringing trademark is the name of the owner, who is already using it for their business activities.
  8. The trademark in dispute obstructs the antitrust laws in the United States.

In the case of Park’N Fly v. Dollar Park and Fly (1985), the plaintiff, here Park’N Fly, filed a suit against the defendant, Park and Fly, on the grounds of trademark infringement, which it owned. The plaintiff dealt with the parking lots near airports across several stars and also represented their mark through their logo along with a registration in their name through the United States Patent and Trademark Office. When the plaintiff found the conjoint name similar to the one it is holding under the use of the defendant, they immediately filed a suit seeking an injunction against the defendant. The defendant was dealing with a similar business of parking with a similar name in the state of Oregon. The Court took into consideration the arguments that both the plaintiff and the defendant put forth before it. The District Court ruled that the mark was generic in no way. It also found additional evidence that supported the claim that the similar nature of the mark generated confusion. 

The defendant took another step by filing a counterclaim stating that the nature of the plaintiff’s mark was generic. The defendant also put forth the point that the purely descriptive nature of the mark makes it unenforceable, and the Court must take proper action on this matter. The Court of Appeals reversed the decision and stated that the plaintiff (here Dollar) cannot use an incontestable trademark and enjoy it for their offensive use. Thus, Park and Fly was not available for use by the plaintiff (here Dollar). The Supreme Court of the United States issued a certiorari in this matter. It was held that the descriptive nature of an incontestable trademark is not grounds for challenging it in court. The Court referred to Section 33(b) of Title 15, which contains the defenses to filing suit against an incontestable mark and does not include descriptiveness as a ground. 

Mechanics

It becomes important to understand the mechanics of incontestability in order to determine the scope of claims under it. Incontestability is a two-step process. The first, the trademark owner must take is to ensure that the trademark is registered with the USPTO. Once the registration is approved, the trademark owner can file a petition for incontestability with the USPTO. The petition must include evidence that the trademark has been in continuous use for at least five years. Once the petition is approved, the trademark is declared incontestable. The trademark owner is granted the following rights once the trademark is declared incontestable:

  1. Provides a greater scope of protection to the trademark owner
  2. Provides immunity to the trademark from legal action
  3. Prevents third parties from questioning the trademark on the grounds of its validity and ownership
  4. Provides the owner with exclusive rights to make use of their incontestable trademark, free from the above-described burdens

The incontestable provision held to block out any potential infringement or use by third parties by acting offensively and defensively as described below:

Defensive use of incontestable registrations

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The main benefit of incontestability is that it prevents third parties from challenging the validity of the trademark. This is especially useful in cases where the trademark is being used in a potentially infringing manner. By obtaining incontestability, the trademark owner can be assured that the trademark is legally valid and that any infringement claims will be successfully defended. The defensive use of incontestability provides the owner of the trademark with a barrier of protection from any individual from enjoying themselves towards the continued use of the trademark. But this right does not specifically bar others from using this trademark. The other defenses of incontestability can be summed up as follows:

  1. Defenses laid down under Section 1115(b) of Title 15 (refer here)
  2. Any fair use by the defendant, provided it is in good faith

In the case of Park’N Fly (1985), the defensive use of incontestability was used in order to prevent the third party from making use of the trademark by enjoining it to theirs during the continued tenure of use or to ensure the registration was canceled. This case failed to draw a line of distinction between the defensive and offensive use of the trademark. This confusion also stems from the fact that the act does not contain any explicit differentiation between the defensive and offensive uses of the trademark. However, it can be understood that Section 15 of Title 17 refers to the defensive use of the incontestability, while Section 33(b) of Title 17 refers to the offensive use of the incontestability. This case, however, destroyed any distinction that was to be present between defensive and offensive use of incontestability.

Offensive use of incontestability

In addition to providing defensive protection for the trademark, incontestability can also be used offensively. This can be done by asserting a claim of infringement against a third party who is using a mark that is similar to the incontestable trademark. This gives the trademark owner the ability to prevent third parties from using a confusingly similar mark and also gives them the opportunity to seek damages for any infringement that has occurred. Section 33(b) of Title 17 contains the concept of the offensive use of incontestability. It can be used by the trademark owner in any action of infringement that he or she faces, and mere descriptiveness does not stand as a ground for challenge of the same.

Territorial scope of trademark rights

In the US, trademark rights are territorial in nature. This means that the trademark owner’s exclusive rights are limited to the geographical area in which the trademark is used. This limits the scope of exclusive rights to a particular jurisdiction. 

In order to understand the territorial scope of trademark rights, we have to understand the rules, rights, and registrations associated with them, which are elaborated below as follows:

Common law Market Penetration Rule

The common law market penetration rule is the principle that a trademark owner’s exclusive rights are limited to the geographical area in which the trademark is being used. This means that a trademark owner’s rights do not extend beyond the area in which the trademark is being used. In order to better understand this, we have to first understand what different rules and doctrines are present, which also helps determine its scope. The trademark law that is currently applicable in the United States is a combination of two laws. The first law is the federal trademark law, which is applicable to federally registered trademarks. If the trademark is not registered federally, then the common law would apply instead. 

Scope of concurrent use Common Law Rights

The common law market penetration rule also applies to cases of concurrent use. This means that if two parties are using the same or similar marks in the same geographic area, then each party’s rights are limited to the area in which their mark is being used. This prevents one party from asserting exclusive rights to the mark for the entire geographic area. We can better understand the scope of the common law rights for concurrent use through two doctrines. These are, namely, the Dawn Donut Rule and the Tea-Rose or Rectanus Doctrine, which are as follows:

Dawn Donut Rule (Franchisee Federal Trademarks and State Operators)

The Dawn Donut Rule was established nearly half a century ago. The rule evolved in the case of Dawn Donut Company v. Hart’s Food Stores, Inc., (1959), there was a tussle between the federally registered trademark and a third-party locally operated as to which mark would prevail. The plaintiff, Dawn, was engaged in the donut and other baked goods business and had registered his trademark under Federal law.

There was confusion due to the similarity of the mark, and that would lead to confusion amongst consumers. It clarified that, even though the franchise trademark is provided nationwide protection under a federal registration of the trademark, it does not exempt them from facing a suit from state based franchise operators holding similar marks as they have a local base as their business. That is, if a federal trademark operates nationwide but a similar state-based franchise is operated in a local state and they have no intention to cause harm or infringe the federal trademark and have no plans to expand their business to that state, then the state trademark would prevail. But in order for the federal registration trademark owner who wishes to prevent infringement, to do so, they would have to prove the following before the Court:

  1. That its operation extends to that local state and/or
  2. That the federally registered trademark has future plans of expanding to that local state

In the Court of Appeals, the plea of the plaintiff was dismissed as there was nothing to support the fact that there would be any sort of confusion caused to customers if both the marks continued to operate simultaneously. The plaintiff also showed no signs of expanding its business to the defendant’s place of business, which could be one of the reasons for confusion. Subsequently, the counterclaim by the defendant and the injunction against them were both not entertained by the court.

In the case of Burger King of Florida, Inc. v. Hoots (1968), a locally operated restaurant was sued by Burger King, which had the same name. It all began in the year 1959. In the small area of Mattoon, Illinois, a restaurant run by the Hoots family carrying the name Burger King operated its business there. The plaintiff, Burger King, noted the operation using its name by the defendant, Hoots, and filed a suit in order to enforce and protect the rights associated with their trademark. Thus, the issues were as follows:

  1. Even though the defendant’s restaurant is not associated with the plaintiff’s Burger King but carries the same name as it, would it be possible to operate in its local area given they hold the registration in Illinois?
  2. To what extent does the Illinois registration extend to and define the area under such registration?
  3. What is the extent of the rights to the trademark available to the federally registered Burger King?

As far as the first issue is concerned, since the defendant holds the registration for Burger King in the state of Illinois, it can continue to operate in the area in which it is dealing as usual, even though it holds the same name as the plaintiff’s trademark, which has a federal trademark registration. The Court defined the extent of its operations in Illinois in the second issue.

As far as the second issue is concerned, the Court stated that even though the plaintiff holds the registration for Burger King in the state of Illinois, it does not extend to all of the state of Illinois. It is only limited to the district of Mattoon in Illinois. Additionally, the plaintiff’s Burger King can operate its chain only beyond 20 miles of Mattoon in Illinois. Anywhere else in Mattoon, Illinois, the defendant and its subsequent owners and not anyone else had the right to operate due to priority use. The closest chain of the plaintiff’s Burger King is located about 25 miles away from Mattoon, in Illinois. 

As far as the third issue is concerned, the Court ruled that priority and geographical location are important factors in determining the extent of rights to a federally owned trademark. A federal trademark confers on the owner a greater extent of rights that span across all the states in the United States. And therefore, registering and filing for the same limits the scope of infringement and provides nationwide protection. 

Thus, the distinctness of their base of operations, ranging from the entirety of the United States for one holding federal registration and the other holding a similar name operating in a specific territory, makes it possible for them to operate simultaneously. Therefore, it becomes important for the owner of the trademark to present strong evidence in support of the idea that they are planning to expand their business to that local state, or else the local operator might use the Dawn Donut Rule to their advantage. 

It would be presumed that the trademark has failed to act against the local operator after a significant amount of time has passed or that they have not conducted any business in that state, so no claim of infringement can be made. They can do so by showing their agreements stating operations are carried out in that local state or by showing that the discussion to operate in that local state has been stalled due to the local state operator’s business there using a similar mark.

The Court simply assumes that the consumers would not have any confusion as the trademarks operate in different territories as their bases.

Though it is not mandatory, there are 14 states that require mandatory registration of the franchise, which are: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. This is done to ensure that state operators do not infringe on the federal trademark in any manner. 

In case the federal trademark owner has come to realize that the state operator has committed any infringement of his mark, then the federal trademark can provide a notice through a demand letter to that person and assert the following:

  1. The federal trademark owner holds superior rights to the trademark
  2. The federal trademark owner has the right to impose injunctive relief 
  3. The federal trademark owner has the intent to expand the territory of their business to the area where the alleged infringer operates 
  4. The federal trademark owner has the option to proceed with litigation if the infringer does not comply with the notice issued in prior

The Tea-Rose or the Rectanus doctrine

Additionally, it becomes important to showcase priority use in that geographic location to ensure their right to operate in that state remains. For example, an older trademark may not be able to be successful in issuing an injunction to a junior trademark that operates in a territory that is remote to the territory of operation of the senior. This is known as the Tea-Rose or Rectanus doctrine. This doctrine is also known as the innocent local use rule. While the federal right allows for the mark to only be used by its owner, the common law evolved to allow the use of the mark in business that happens interstate and under the conditions of good faith. Before the creation of federal trademark law, common law and state law were in use. Thus cases were used to determine the territorial extent of protection of trademarks. This evolved in the following two cases:

Hanover Star Milling Co. v. Metcalf (1916)

Facts of the case

The case of Hanover Star Milling Co. v. Metcalf (1916) helped establish the Tea-Rose or  Rectanus doctrine. The plaintiff, here Hanover Star Milling Corporation, was engaged in the manufacture of flour, which it distributed under the name “Tea Rose.” The design of “Tea Rose” was identified with three roses present as a label on all the goods it distributed under the name “Tea Rose”. The plaintiff had already established their business in the state of Alabama, having dealt with the flour market there for the past twelve (12) years. As it had dealt with the flour business there, it had gained recognition and reputation as a brand name. It had also expanded from the state of Alabama to other states like Georgia and Florida. The plaintiff claimed that the defendant, Steeleville Milling Company, dealing with the same business of flour, used its (plaintiff’s) mark of the three roses on its (defendant’s) packages and goods that it distributed under its name. The defendant denied the claims put forth by the plaintiff that it was deceiving the customers in any manner. It also asserted that it did not infringe on any exclusive rights of the plaintiff. 

History of the parties to the case

The defendant alleged that way back in the year 1872, this name had been adopted and used in the form of a trademark by Allen & Wheeler, which operated in Troy, Ohio. Furthermore, Allen is the successor, and subsequently, the defendant, Steeleville, used it in 1899 for the past sixteen (16) years. The sale of flour in the State of Alabama can be traced back to the year 1899, when it used the name “Tea Rose”. 

Issues
  1. What is the territorial extent of the trademarks of both parties.
  2. Whether one of the trademarks is invalidated by the other.
  3. Has there been any trademark infringement.
  4. What is the role of prior appropriation here.
  5. Most importantly, whether a party is using a mark in one specific area that was used by another party in another geographic area. 
Decision of the District Court

The District Court is the first to examine the case. It first issued a temporary injunction against the defendant, restraining them from carrying out or using the trademark at issue,  after hearing the plaintiff’s plea, which was supported by arguments and evidence. The Court also asserted the fact that the intention of the parties is also relevant in order to determine if there was any misuse that supported the party to gain an unfair advantage, which was absent in this case. The Court also stated that no question of prior appropriation is to arise until and unless the party has taken steps to infringe on the other in order to destroy or cause harm to the reputation and position of the other. Subject to non-functioning Allen was not provided any legal importance in the case. Further, the Court stated that Steeleville’s first, continuous, and extensive use provided it with the unqualified right to expand its business without the obstacle of it being taken advantage of. The Court also held that no benefit was obtained by Hanover from Allen because Allen made no use of the mark in the territory where Hanover operated, that is, Alabama and other surrounding states.

Further developments in the City Court of Appeals

As the case went to the City Court of Appeals, it affirmed the same decision. The question of the territory of operation and the same mark was the point of dispute. It can simply be noted that the difference in the territories of operations of both marks and the absence of any mala fide intention make it impossible to seek any relief on this ground. And the Court thus passed the decision, reversing the decision of the District Court.

Basically, in this case, the identification of where the ownership originated becomes important because,  for example, there is a junior user. Since this junior user operates in a territory that is remote, it is highly improbable that any consumer would be confused between both of them.  

United Drug Co. v. Theodore Rectanus Company (1918)

Facts of the case

In the case of United Drug Co. v. Theodore Rectanus Company (1918), the petitioner alleged infringement by the defendant. In the year 1877, Ellen Regis created a compound medicine. She began to prepare and distribute it. This medicine was used in the case of dyspepsia, which is also commonly known as indigestion. It was also used to treat other ailments. To make her medicine unique and identifiable, she provided a name for it, which she used in its sale and distribution. It was in the year 1898 that she got the name “Rex” registered as a trademark as per the provisions of Massachusetts. Subsequently, the plaintiff, here United Drug Co.,  showcased their interest in this and purchased the trademark right along with the business from Ellen. This was one of the businesses they continued to deal with. 

In the year 1833, a man named Theodore Rectanus created a medicine that is also known as a purifier of blood. He requested the permission of the respective authority to name it “Rex”, which is also the name for Kentucky. Subsequently, Theodore sold the rights and business to a company owned by the respondent, Theodore Rectanus Company. In the year 1911, the petitioner was informed that the use of “Rex” that the petitioner was using was being used by the respondent and was attributed to the preparation of medicine. The petitioner instantly sought legal remedy and consequently filed a complaint before the District Court on the grounds of unfair competition and trademark infringement. 

Issues
  1. Did the defendant, drug manufacturer Rectanus Company, infringe on the trademark of the plaintiff, United Drug Company?
  2. Who would continue to be the user of the trademark? If both are valid, what is the extent of territory of their operation?
Decision of the court

The appellate court held that the petitioner, United Drug Company, could continue to use its trademark in the territory that was confined to its base of operation; this was very distant from the territory in which the respondent contended to be operated. Furthermore, the Court also affirmed that the petitioner claimed that any other party might have made use of the rule of innocent local use and subsequently built up its trade and earned money from it for the sale of goods of similar nature, as in this case the respondent was alleged to have done. The Circuit Court of Appeals affirmed the same decision of the lower appellate court. 

Thus, through both cases, the Doctrine of Tea Rose or Rectanus, a junior can continue to operate when both users are confined to geographically different territories and both are different non-competitive users, given that the intention of the junior user is bona fide. The question that remains to be answered is which party is entitled to make use of the rights of the trademark and the scope of territory of the party in such matters.

Under the common law, the rights to the trademark are obtained by the party when it is put to actual use. A specific trademark can be limited to one person or user in any given area. In the exercise of the exclusive right that one party holds, it might prevent others from using it in its defined area or territory to ensure its protection. The owner of the trademark also has to continue to grow by expanding its business to other territories while keeping in mind that it is the first user of the trademark in those territories it is expanding to.

Effects of federal registration 

Federal registration of a trademark is another way to extend the scope of exclusive rights. In addition to providing constructive notice of the trademark to put a stop to its use, and registration with the USPTO also freezes the junior user’s market. This means that the junior user cannot expand their use of the trademark beyond the geographic area in which they are already using the mark. 

Constructive Notice

A constructive notice, in general legal parlance, signifies that a notice has already been received by a person or an entity. A constructive notice is one of the legal rights available to the trademark owner once federal registration is done. They can exercise without any interruptions. A constructive notice is simply a legal notice that is given instead of giving an actual notice. As per Section 1072 of Title 15 of the United States Code, the Federal Registration, that is, the registration of the trademark in the principal register, operates as a constructive notice, and that also acts as a sort of public announcement of the claim of ownership by the registrant of that trademark.

Under Section 902.21 of Title 36 of the Electronic Code of Federal Regulations, information relating to the public or concerned with the public must be published in the Federal Register, which would act as a constructive notice in itself given that the Federal Register’s director provides his consent for the same, as far as presidential documents, proposed rules and regulations, interim rules and regulations, final rules and regulations, executive orders, and other documents are considered.

As a result of this provision contained in the Lanham Act, the respondent or claimant cannot take the plea that they had no knowledge of the mark being registered and used, and it replaces the requirement of this plea with the existence of bad faith instead. At the same time, a constructive notice plays a role in the proceedings by allowing for oppositions, if any, from the public to the claim by the registrant, which is part of the registration process of the trademark. 

If we were to consider the extent and scope of the territory of use of the trademark, the absence of notice and prior use does not bar the new user from exercising the rights of their trademark in its own area of operation. In this case, determining the priority use becomes essential, and for that, the public use and active use, along with the different types of use, become important to establish. 

In the case of Strippit, Inc. v. Coffee (2009), the plaintiff, here Strippit, accused the defendant, here Keith Coffee, of trademark infringement. The defendant made use of the name of the plaintiff without the permission of the plaintiff on their website. In this case, the plaintiff took the plea that the defendant had complete knowledge of the trademark rights enshrined under Section 1072 of Title 15 of the United States Code. All the pleas were deemed valid, and thus the defendant was made liable to pay damages for the violations caused. In determining the extent of harm caused, it became important to consider the fact that the infringer has the intent and willfulness to continue infringement as well.

Freezing the Junior User’s Market

Another effect of federal registration is the freezing of the junior user’s market. The first person to use the trademark right might also face the consequences of freezing the market due to the presence of a second or older user in that specific area. In the case of Burger King of Florida, Inc., v. Hoots (1968), the rights under the common law were frozen, that is, the rights of the older, first and federally registered user were frozen from operation anywhere beyond 20 miles off of Mattoon, Illinois, where the Hoots family operated as per the decision of the Court.

Amendment and Correction of the Registration Certificate

The federal registration provides the trademark owner with the certificate of registration, which contains the details of the trademark and the owner. There are instances where there might be an error in the information provided in the certificate; in those cases, an application has to be filed under Section 7. Under this provision, changes that are immaterial can be requested. As under this section, only three options are available to the owner to exercise, which are as follows:

  • Surrendering the registration of the trademark
  • Issuing of a new certificate due to changes in the name of the owner or address of the owner
  • Any amendment or correction related to the information that is printed out on the registration certificate

If the mistake was caused by the United States Patent and Trademark Office, then the same is to be recorded and disclosed. The nature and fact of the mistake that has been caused have to be stated in a printed copy. The printed copy shall be issued to the applicant free of charge, and it shall be attached to the registration along with the corrected form of the registration. The corrections that have been made and the certificate that has been issued must comply with the provisions of the United States Patent and Trademark Office and would have the same applicability as that of any other federally registered trademark.

If the mistake has been made by the applicant, then the applicant is required to show that the mistake was due to the bona fide mistake of the applicant, and if the appropriate authority, the United States Patent and Trademark Office, may excuse it. But the discretion lies with the director to accept the fault on the part of the applicant; if he accepts it, on his authorization, a certificate of correction is issued, and a fee that is prescribed may be charged to the applicant. 

If the owner wishes to make material changes, he would have to go through the different provisions contained in Section 1609.10(A) of the Trademark Manual of Examining Procedure (TMEP), which are different from the Section 7 form. 

Concurrent Lanham Act Registration: First User’s Rights and Correction of the Register by the Federal Courts

Concurrent use of trademarks remains one of the problems that surround it. Concurrent use happens when the first, older user makes use of their trademark. But it is later discovered that their mark was used by a second user who had no authorization to use the same, nor did the first user have knowledge of the same. 

The first user would claim that they have already established a business, and they cannot remove their trademark from their business and claim priority for the same. At the same time, the second user claims that they had no knowledge that the mark was already in use by a senior first user.  Thus, a lawsuit is likely to arise in such matters, and it becomes important to ensure that both sides are heard in the exercise of fairness.

In cases where two parties are concurrently using the same or similar marks, the Lanham Act allows the first user to register their mark with the USPTO. This gives the first user exclusive rights to the mark in the geographic area in which they are using the mark. The federal courts can also be used to correct the USPTO register in cases where the first user’s rights are being infringed.

First User’s Rights

In the United States, an interesting concept is followed. The rights of a trademark do not exist with the first person who has filed it; rather, they exist with the first person who uses it. The trademark concept in itself is heavily based on the protection of the one who has made use of the mark rather than the one who has filed first for it. In order to better understand this, we can focus on the definition of a trademark. 

A trademark is an identifiable mark that helps to distinguish the goods used as services under that trademark from other such goods. And therefore, it becomes essential to determine in the line of business who was the first to use the mark rather than the first to register the mark. Many nations that are  the first to register hold the right to the trademark, but this does not apply to the United States. 

The concept of trademark law in the United States presumes that the person who has made use of the mark in the business is the rightful and authorized owner. One might then wonder if that filing can be put off, but that is not the case. Once the user becomes the first to use the mark, they should file at the United States Patent and Trademark Office to prevent the second user from obtaining the registration of the mark under law and ensuring their application is examined first. 

Heinz Company Brands LLC v. Real Good Food Company 

In this case, the plaintiff, here Heinz Company, filed an action for infringement of trademark and counterfeiting of trademark, among other actions, against the defendant, here Real Good Food Company. 

Facts

The plaintiff, Heinz, came to own several trademarks under its name after registration. One of which is the mark called “Popper”. This mark, called ‘Popper,” is used to sell several different kinds of goods and beverages, which are mostly frozen appetizers. It was registered under federal law and is still in use. The plaintiff licensed the mark to several other licensees and got several investment offers. It has become a brand name and enjoyed fame. Soon after, the plaintiff noted the defendant infringing on its mark, even though the plaintiff is the first user in this matter. 

The defendant infringed the mark by selling the same or at least similar goods on the market. The plaintiff took the plea that the defendant had knowledge of the existence of the mark but continued to do so. The defendant took the plea that they had the license from the plaintiff to do so, and this is to be addressed by the court. 

Issue

  1. Whether there is trademark infringement among the other actions claimed.
  2. Is the plaintiff the first user of the mark?
  3. Did the defendant receive a license from the plaintiff that would dismiss most of the claims that it is facing?

Held

It was held affirmatively that there has been trademark infringement and trademark counterfeiting, among other actions for which the plaintiff is claiming compensation. The plaintiff is indeed the first user of the mark in this case. There was no proof to show that the defendant procured the license from the plaintiff, so this was not investigated further, and thus the issues were not dismissed. Both parties, Heinz and Real, decided to settle the claims with one another for all the damages they caused one another. 

Correction of the Register by the Federal Court

Even though the common law is mostly not prevalent in use and the federal law, Lanham Act, is in force and use, the courts still continue to use old cases and old doctrines based on such cases. There must be a much greater extent of contemplation in order to determine the effect and extent of the rights of the trademark that are available to an owner. These rights should be available to them in case there is a violation.

They can use the medium of the courts to determine the violation and claim the extent of damages determined by the court. If any errors are made, then the registration made through the United States Patent and Trademark Office can be corrected by the directions or orders of the Federal Court. This correction is necessary to ensure that accurate information is maintained in the records of the United States Patent and Trademark Office and that other related documents are in order. 

Class categorization 

It is highly probable that there is concurrent use of marks across classes of registration of trademark. Trademarks have different classes of categorization. And the protection that is awarded is on the basis of the classes. This is the Nice Classification (NCL), established as a result of the Nice Agreement in 1957. The purpose of the Nice Classification is to categorize goods into different categories to extend the protection further. The Nice classification is administered by the World Intellectual Property Organization (WIPO). 

For example, any footwear brand like Nike, as per the Nice Classification, falls under Class IC 025. If Nike were not such a famous brand, it would be permitted to use its name simultaneously to sell goods of a different class after registering for that class of trademark, say drilling equipment named Nike under Class 8. However, due to its fame, this concurrent use may not be permitted. This concurrent use is not permitted for brands that are famous, as it would create confusion amongst consumers. 

Dilution

Dilution is another form of protection available to trademark owners. Dilution occurs when a mark is used in a way that weakens the mark’s distinctiveness. This can occur in cases where the mark is used in a non-trademark context or if the mark is used in an advertising campaign that is not directly related to the trademark owner’s goods or services. The Lanham Act provides trademark owners with the ability to protect their mark from dilution. This includes the ability to seek injunctive relief, damages, and even the destruction of any materials that are diluting the trademark.

Many countries provide for dilution protection in some way or another. For the United States, it is available in the form of the Federal Trademark Dilution Act, which is Title 15 of the United States Code, in Section 1125(c)(2). Often, dilution occurs when a similar non-popular trademark or trade name uses a famous  trademark or trade name, and as a result of this association,society is confused about the famous trademark or trade name, which ultimately dilutes it. Dilution can lead to two different harms. These harms can be categorized as follows:

Dilution by blurring

Dilution by blurring occurs when a famous trade mark or name is weakened due to its association with a similar, often not famous, trade mark or name. The provisions for dilution by blurring are contained in Section 1125(c)(2)(B) of Title 15 of the United States Code. In order to determine whether or not there has been dilution by blurring, the following are to be considered:

  • The extent of similarity between the trade mark or name that is famous and the one that is not.
  • The extent of distinctness that exists is the mark of famous nature.
  • The extent to which the exclusive rights associated with the famous mark are being used by the owner of that mark.
  • The level of recognition and fame the famous mark holds in the public. 
  • Whether there was any intention to create such an association or relation between the famous and not famous mark or trade name. 
  • Any other actual association between the famous and not famous trademark or trade name.

Dilution by tarnishment 

It is contained in Section 1125(c)(2)(C) of Title 15 of the United States Code. It occurs when the association of a  not famous trademark or name with a famous trademark or name causes harm to the famous mark’s reputation and fame and ultimately tarnishes the trademark.  

There are certain exceptions contained in Section 1125(c)(3) of Title 15 of the United States Code, wherein it would not be considered dilution by blurring or dilution by tarnishment. The exceptions to dilution by blurring or dilution by tarnishment are as follows:

  • Fair use of the famous trademark or trade name, which includes the promotion and advertising that helps consumers compare it with other similar goods and services; and any identification, commentary, parody, etc., on the owner’s famous mark or the goods and services it provides.  
  • Any form of report on news or commentary on new
  • Making use of the mark for non-commercial purposes. 

Cybersquatting

With the increasing use of the internet and the cyber world dominating all spheres of our lives, it becomes essential to understand what cybersquatting is and the effect it has on us. Cybersquatting is a form of trademark infringement in which someone registers a domain name that is identical or confusingly similar to a trademark. This is done in an attempt to profit from the goodwill associated with the mark. 

In cases of cybersquatting, it is quite clear that it is the ill will and invention of the infringer to take advantage of the famous mark’s domain name. It can be used to extract money out of a domain name, use illegal methods to bring down the reputation and fame that the famous brands built over the years, or cause irreparable damage to the mark’s owner and business. 

The trademark owner can file a suit if the following conditions are satisfied:

  • The trademark is distinct when it is registered for the first time as a domain name
  • The alleged infringer had a mala fide intention of using the domain name to his advantage to generate profits and/or to cause harm to the reputation and irreparable harm to the owner or its business
  • The domain name of the infringer is similar to that of the domain name of the owner
  • The domain name of the the owner is registered under the federal law for trademarks, which includes that it is distinct, and the owner also holds the first user rights in commerce 

Under the Anticybersquatting Consumer Protection Act (1999), an owner can sue the infringer, that is, in this case, the registrant of the domain name, with a lawsuit for the possession of the domain name with a malafide intent. It provides for statutory damages awarded to the plaintiff if he successfully proves his claims to be true. The damages range from $1000 to $100,000 for every domain name. The court awards damages on the basis of the facts and circumstances of the case. The Lanham Act provides trademark owners with the ability to seek injunctive relief, damages, and even the transfer of the domain name to the rightful trademark owner.

Under Section 1125(d)(1)(B)(iv) of Title 15 of the United States Code, the provisions of safe harbor are contained. The safe harbor provisions state that an individual would not be held liable for cybersquatting if the Court determines that there was truly a fair and lawful use of the domain name. The Anticybersquatting Consumer Protection Act (1999) also contains provisions for safe harbor. The bad faith requirement laid down under the Anticybersquatting Consumer Protection Act is that there is a bad faith intention to generate and earn profits. And, this generation of profits is through using a domain name or mark that is either identical or similar or has federal protection being a Red Cross mark or any name, seal, emblem or badge, which is not permitted as per law.

The Uniform Domain Name Dispute Resolution Policy also known as UDRP, provides the owners to file for claiming the right and ownership of a domain name that seems to be identical or similar to their business name or their trademark. This is to prevent any bad faith use of the domain name. In order for the complaint to prevail, it is important to establish that the domain name is similar, there is bad faith use of the similar domain name, the similar mark is registered and this registrant has no actual interest or rights in this domain name.

The World Intellectual Property Organization or WIPO, remains to be the one of the important organizations that settles issues related to cybersquatting. WIPO’s observations on cybersquatting played a huge role in understanding the extent of damage caused by cybersquatting. The COVID-19, proved to be a bane for cybersquatting as there was a 11% rise in such reported cases. The growing number of such cases is definitely a cause for concern. In the United States, many people were diverted from the original .gov website of the White House to the .com website due to the common .com being registered and cybersquatting. 

Keyword advertising

Keyword advertising is a form of internet advertising in which advertisers purchase keywords that are related to their goods or services. This allows the advertiser to display their ads when someone searches for the keyword. Keyword advertising also happens when a bid takes place for certain terms, and these are used to attract more customers and generate traffic and/or views on that website.

In the case of U.S. and Plaintiff States v. Google LLC (2020), the Department of Justice and eight other states filed against Google for using its dominant position illegally and advertising trademarks. While Google’s policies do not permit the use of the trademark as an advertisement if you do not hold the ownership to it, however the extent of compliance to such policies still remains to be in question. The case is still ongoing an in discussion, 

In the case of 1-800-Contacts, Inc. v. Federal Trade Commission (2021), a complaint was filed by the administration against the commission. In this case, there was a bid held for the 1-800 contact numbers. The Federal Trade Commission, noting the happenings of the event, filed a suit. It was alleged by the Federal Trade Commission that allowing such an agreement to take place would result in harm that directly affects the competitors, the competition in the market, and the consumers, as well as the search engines.

In the case of Multi Time Mach., Inc. v. Amazon.com, Inc. (2015), the plaintiff, here Multi Time, filed against the defendant, the multi-billion dollar business, Amazon. The suit was filed due to the fact that when the plaintiff searched for Amazon products on the Amazon website, only the competitors products showed up, and thus it needed to be clearly labeled. The Court held otherwise and stated that any prudent consumer would be able to distinguish this fact, and there is no confusion that is being caused to the consumers. 

The Lanham Act provides trademark owners with the ability to protect their marks from keyword advertising. This includes the ability to seek injunctive relief, damages, and even the transfer of the keyword to the rightful trademark owner.

Conclusion

Trademark owners have a variety of rights available for them to use once they fulfill the basic registration requirements under the United States Patent and Trademark Office. But there is another category of special rights that are granted to them, known as exclusive rights. One of these exclusive rights is the right to incontestability, which is available to those owners who have registered their trademarks in the principal register. It enshrines them with the ability to be immune from any lawsuits. 

Additionally, the federal registration of the trademark allows the owner to exercise their rights in relation to issuing constructive notice (by means of registration), freeze the market for the junior user, and also make amendments and corrections to the trademark that has been registered. Also, there are first user rights, according to which the first use of the trademark automatically grants the right to the trademark.

Furthermore, the trademarks have their own distinct territories in which they are required to operate. A federally registered mark might not be able to enter the state market if a state mark similar to it is already running there and there is no bad faith or intention to cause harm and/or create confusion as to the federally registered trademark. 

Frequently Asked Questions (FAQs)

What are trademarks? Who can be referred to as a  trademark owner?

A trademark can simply be said to be a mark, a word, a symbol, a phrase, or anything that acts as an identifier to associate the product with that specific company. A trademark is an intellectual property, and it is regulated in the United States by the United States Patent and Trademark Office. Furthermore, the one who holds the rights, control, and authority over the kind and type of goods and services produced under the trademark is known as the trademark owner. 

What are the exclusive rights available to trademark owners, and how can they be defined?

Trademark owners subsequent to registration with the United States Patent and Trademark Office can avail of more benefits in addition to registration benefits. These include the right to incontestability (the trademark remains free from facing any legal suit and can be challenged on certain grounds only), the territorial scope of the trademark (same/similar mark cannot operate in the same territory; senior and older users have priority until and unless the junior and newer users can show the use has been made with bona fide intention), 

Why do we need to understand the scope of exclusive rights to trademarks?

Trademark law has evolved over the years. From using state and common law when there was no federal law to having federal law, the scope and extent of such rights have changed. It is pertinent to understand the scope of such rights to ensure that no infringement takes place in future activities by any business. It is also important for the trademarked business to keep a check on the activities that could possibly use its mark, and this could be a reason for the loss in market share, customer base, and reputation as well. 

How can we categorize the scope of the exclusive rights?

The scope of exclusive rights can simply be categorized as follows:  

Federally registered trademarks have priority of use all over the nation, but their use in a local territory may be interrupted by a new and local user registered under the state law, given that it does not operate in that area and has no plans of expanding to that place, and that there is no ill intention or harm to the federally registered trademark or by the local trademark user. However, if the trademark is not federally registered, then the common and state laws would apply. That is, the trademark registered under state law or the one that is first to use it would be granted the right of use in that particular area.

References

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