Many companies utilize the Internet as a means for advertising or selling its products. However, it is a common misconception that your Internet presence provides your nationwide common law trademark rights. Trademark rights are acquired through actual use of a mark being used on products or in connection with services within a geographic area. The geographic area in which a common law trademark is enforceable depends on its zone of actual goodwill. This zone of goodwill is considered the area in which consumers identify your mark with your company. This zone of actual good will is made up of the zone of market penetration and zone of reputation. The zone of market penetration is the area in which consumers have actually purchased your products or utilized your services. The zone of reputation is the area where consumers have not purchased your product/services but are aware of your mark and its use in connection with your goods/services.
Registering your trademarks with the U.S. Patent & Trademark Office should be one of the first steps for all new companies (that’s of course, after conducting a comprehensive trademark search). However, allocating the necessary funds to adequately protect its trademarks may be a tricky endeavor for a new startup company. Frequently, companies with limited budgets only have enough money file a single trademark and thus, must decide whether it is best for them to file a trademark application for their business name or logo. Before making a decision, it is extremely important to consult a trademark attorney since every mark is different and requires its own legal analysis. However, there are a few general factors that should be considered in the decision-making process.
When registering a trademark, applicants are frequently instructed by the Trademark Examiner to disclaim an element of their mark in order for it to be registered on the Principal Register. In fact, the U.S. Patent & Trademark Office has reported that approximately 29% of first Office actions contain a disclaimer requirement. The trademark examiner usually requests that the applicant amend the application to include the following disclaimer:
“No claim is made to the exclusive right to use [disclaimed component] apart from the mark as shown.”
Conducting a trademark search before using a trademark in commerce should be a no-brainer for all companies looking to develop a successful and long-lasting brand. Unfortunately, it is not uncommon for a startup to create and fall in love with a company/brand name without conducting a proper trademark search only to then find out the mark is already being used by a prior user with superior rights.
Unlike many other countries, the United States has what is called a first-to-use trademark system. That means that the first entity to use the mark within a territory acquires a right of priority to use that mark over all subsequent users in that location. Under common law, the first user (a.k.a. “senior user”) has superior rights to use a mark within a territory, regardless whether or not it has been federally registered with the U.S. Patent & Trademark Office (“USPTO”). In fact, if a subsequent junior user registers an identical or similar mark with the USPTO, the prior senior user still has exclusive priority to use the mark in its territory as well as its zone of natural expansion. Nowadays, when it is very common to sell products and services over the Internet, that territory could be large and thus extensively limit the use of the junior user’s mark, even if it has been federally registered.
Recently, the South Austin beer emporium, Whip In, has been contacted by representatives at Dogfish Head Brewery to stop using their federally registered trademark, “Namaste” in connection with a line of beers sold under the name “Namaste Brewing Company.”
In a blog post written on Dogfish Head’s website, they state that:
A trademark battle royale has hit Austin, Texas and it doesn’t look like this legal fight will end anytime soon. Umami Burger, a West Coast hamburger chain with 15 locations nationwide with plans to open more 13 more restaurants this year have filed a lawsuit for trademark infringement against Umami Mia Pizzeria, a newly opened Italian restaurant and pizzeria in Austin, Texas. The burger joint is alleging that the mark, Umami Mia Pizzeria, used by the Austin, TX restaurant is likely to cause confusion with their “Umami Burger” mark, which is registered with the U.S. Patent & Trademark Office (USPTO). Additionally, Umami Burger requested the court to issue a preliminary injunction to prevent the Austin, TX restaurant from using the word “umami” and change their name immediately.