March 24, 2019, Vol. 8
by Marc Campsen

Trademarks: First-in-time, First-in-right – but where?

The United States Patent and Trademark Office (“USPTO”) governs the issuance of federally registered trademarks. Generally, once a mark is successfully registered with the USPTO, it confers nationwide rights on the mark’s owner to the exclusion of all other subsequent users even if the mark’s owner does not use the mark on a nation-wide scale. This permits the registered user to exclude the use of the same or substantially similar mark by all other users to avoid confusion in the marketplace.

However, a prior non-registered user of a mark will retain exclusive rights in the mark to use it in the areas where the non-registered user was using the mark in commerce prior to the mark owner’s federal registration. This is known as a “priority of use.” The limited but exclusive geographic area of use by the first-in-time user is known as the “zone of exclusivity,” and does exclude use by the registered mark owner in that area. The zone of exclusivity is determined by, among others, volume of sales and advertising in a particular area. In plain terms, the zone of exclusivity is the area in which a non-registered user has “popularized in the public mind” the mark in relation to the non-registered user. The non-registered user’s zone of exclusivity is fixed as of the date the mark is federally registered and cannot be subsequently expanded. In short, in limited circumstances, trademark law permits concurrent but non-overlapping use of the same or substantially similar mark by a registered and non-registered user.

Generally, a priority of use right is most commonly obtained by a first-in-time seller of goods using a non-registered mark in the geographic areas where it operates and in which it sells goods. The seller’s geographic operations relative to the mark will define the zone of exclusivity. For example, a local retailer using a particular mark in its name will likely obtain priority of use rights in the particular locality in which it operates to the exclusion of a subsequent registered mark user. Similarly, but on a larger scale, a manufacturer of goods using a non-registered mark – in its name or even in a particular item it manufactures – will likely have priority of use rights in any location in which it actually engages in manufacturing as well as in the areas it sells its goods.

In today’s e-commerce market, the traditional scope of non-registered mark recognition is undergoing a fundamental change because the internet allows potential national or even global sales reach and potential accompanying mark recognition – even for the traditional local retailer. Again, by example, a customer in California can now buy goods from a “mom-and-pop” store owner in Baltimore City with simply the click of a button. In that scenario, the local retailer has expanded its geographic business area from Baltimore City to another state across the country. However, a single or small number of internet-based sales, alone, cannot expand a zone of exclusivity because the traditional analysis utilizing volume of sales still applies. Rather, a non-registered user will need to establish significant internet-based sales into a particularly defined geographic area. Similarly, mere internet presence is insufficient to create national use of a mark through advertising in the absence of sales. Courts have determined that the internet is not a sales territory that can be divided. In this regard, when a prior non-registered mark user and registered mark user are concurrently using a mark, both will be permitted to use the internet for advertising without constraints but the non-registered user will still be limited to using the mark in commerce only within its zone of exclusivity.

In sum, the first-in-time user of a mark can maintain certain, limited rights in the mark even after it has been registered with the USPTO. In a potential boon for non-registered users, the internet has expanded exponentially the geographic areas in which a mark can be “popularized in the public mind” in relation to a non-registered user, which can greatly expand a zone of exclusivity for a first-in-time mark user prior to someone else registering the mark.

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About The Author:

Marc A. Campsen is an attorney at Wright, Constable & Skeen, LLP, where he focuses his practice primarily on litigating employment and business law matters. He is recognized as a Maryland Super Lawyer.

DISCLAIMER: The materials available on this blog are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem.

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