THE LIMITS OF COMMON LAW TRADEMARK RIGHTS ON THE INTERNET

What are common law trademarks?

A common law trademark or service mark (collectively referred to in this article as a “trademark”) is a judicially created right that is governed by state law.  Generally speaking, common law trademark ownership is acquired by actual use or marketing in a given market. Common law trademarks can only be protected in the geographic area where goods or services (collectively referred to in this article as “goods”) are sold or have acquired customer goodwill. Additionally, actual and continuous use of a trademark is required to retain a protectable interest in a trademark. Tally-Ho Inc. v. Coast Community College District, 889 F.2d 1018, 1023-24 (11th Cir.1989).

When does an unregistered common law trademark trump the rights of a registered trademark?

The first to use a trademark in a particular geographic market is known as a “senior user”. A senior user can acquire rights to a trademark in a geographic market even if a trademark is not registered.  Generally speaking, an unregistered common law trademark may trump the rights of a registered trademark IF the common law trademark was the senior user AND has continuously used the common law trademark.

HOWEVER, generally speaking common law trademarks rights are LIMITED to the geographic market that the common law trademark has been used, is known by consumers or where the common law trademark may naturally expand.  Federal registration of a trademark by another user after a senior user has begun to use the same trademark has the practical effect of FREEZING the senior user’s enforceable common law trademark rights thereby terminating ANY right to future expansion beyond the common law trademark’s existing territory. Tana v. Dantanna’s, 611 F.3d 767, 780-81 (11th Cir. 2010).  As a result, it behooves common law trademark holders to register their trademarks.

How are the geographic limits of common law trademark rights defined when a trademark is used on the internet?

Determining trademark rights based upon a trademark’s use on the internet is a developing area of law.  The law is still struggling with how to define the geographic limits of a trademark used on the internet.  The tests for establishing the extent of trademark rights vary from jurisdiction to jurisdiction when a trademark is used on the Internet. For e-commerce cases, some courts have used a “zone of market penetration” test to determine if a trademark holder is entitled to trademark rights.  The market penetration test is a test that analyzes the following factors to determine the extent of a trademark’s market penetration: (1) volume of sales; (2) growth trends; (3) the number of people who purchased the party’s goods in relation to the number of potential customers; and (4) the amount of advertising. Adray v. Adry-Mart Inc., 76 F.3d 984, 989 (9th Cir.1995).

Other courts apply the “zone of natural expansion” test to determine if a trademark holder is entitled to trademark rights.  The “zone of natural expansion” test analyzes whether a senior trademark holder can successfully claim the junior holder is interfering with the zone of natural expansion of a trademark. Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193 (11th Cir.2001).  Courts have also found that the internet can be its own territory or market. See Big Time Worldwide Concert & Sport Club at Town Center, LLC v. Marriott Int’l, Inc., 236 F. Supp. 2d 791, 804 (2003); see also Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193 (11th Cir.2001).  However, while a consumer in any market may access the Internet, no court has held that having a website ALONE is enough use to convey nationwide geographic trademark rights.  Whether a common law trademark holder’s use on the internet is sufficient to establish common law trademark ownership rights will vary case by case and jurisdiction by jurisdiction.

The trademark attorneys at The Plus IP Firm have advised numerous clients regarding their common law and registered trademark rights.  If you have any questions regarding your trademark rights given the use of your trademark on the internet, the attorneys at The Plus IP Firm are available to answer any questions that you may have.  To schedule a free consultation, click HERE.  For more information about Derek Fahey, this article’s author, click HERE.

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