What is a Common Law Trademark?

A common law trademark is established through the actual use of a mark in commerce rather than by formal federal trademark registration through United States Patent and Trademark Office. In other words, common law trademark rights are established by opening a business and providing goods and services to consumers under a business name or brand - e.g., opening a donut shop called Dawn's Donuts and selling donuts to customers. Business names, logos, and phrases that are regularly used can be considered common law trademarks. In the United States, common law trademark rights are acquired by being the first to use the mark in connection with goods or services in a particular geographic area. These are unregistered trademarks that still carry rights recognized by the state and federal courts and can be enforced against others who subsequently use a confusingly similar mark in the same area.

Establishing Common Law Trademark Protection

To establish common law trademark rights, you must use the trademark in commerce. This process begins when a business or individual uses a distinctive mark to identify their goods or services and distinguish them from those of others. The key factors in establishing these rights are distinctiveness, use, and recognition in the marketplace.

Continuous Bona Fide Use in Commerce

The mark must be actively used in the sale or advertising of goods or services. This use must be bona fide and not merely token or for the purpose of reserving a right in the mark. Proof of use, such as sales receipts, advertisements, and other business documents, can support a claim of common law rights. Common law trademarks underscore the principle that trademark rights arise from actual use, not merely from registration.

Distinctiveness and Consumer Recognition

Recognition in the marketplace is also crucial. The mark must become associated with the goods or services in the minds of consumers in the area where it is used. Distinctiveness means the mark must be unique enough to identify the source of the goods or services. Offering a common service with a bland name, rather than a brand name, is not distinctive and will not garner consumer recognition. For example, if you open a mechanic shop called Downtown Mechanics, your mark will not establish strong consumer recognition or strong trademark rights. However, if you name a fun name like Grease Monkeys, it will be much more memorable and distinct in the mind of the consumer. In order to have enforceable trademark rights, the mark must be distinctive.

Generic terms and descriptive terms should be avoided because they provide little to no trademark rights. For example, if you name your bakery "pastry shop", the name describes exactly the business services, and is thus generic. A name like Tasty Bakery would be considered descriptive because "tasty" is descriptive of the pastry offerings in the bakery.

Trademark Law Requires Continuous Use of Distinctive Marks

If the foregoing requirements are satisfied, the user of the trademark can claim common law trademark rights, which provide legal grounds to prevent others from using confusingly similar marks within the same geographic area where the trademark is used, thus protecting the goodwill and reputation associated with the mark.

Common Law Trademark Rights

Exclusive Use in the Geographic Area: Common law trademark rights grant the holder exclusive rights to use the mark within the geographic area where the trademark is being used and has acquired distinctiveness amongst consumers. This means the trademark holder can prevent others from using a confusingly similar mark within that specific market area.

Right to Prevent Confusion: The trademark owner can prevent others from using a trademark or service mark that is likely to cause confusion among consumers as to the source of the goods or services. This protection helps maintain the trademark's goodwill and ensures that customers are not misled.

Right to Bring Infringement Claims: Common law trademark owners can bring infringement claims under state law. Many states have statutes and common law principles that provide remedies for trademark infringement, including injunctions, damages, and sometimes attorney's fees. The specific remedies available depend on the state's laws.

Federal Lanham Act Claims: While common law rights are primarily protected under state law, trademark holders can also bring claims under the federal Lanham Act. Section 43(a) of the Lanham Act provides a cause of action for false designation of origin, which can be used to address unfair competition and infringement of unregistered marks. This federal cause of action allows common law trademark owners to seek relief in federal court, providing broader enforcement options.

Unfair Competition Claims: Common law trademark rights can be the basis for bringing unfair competition claims because they protect the goodwill associated with a trademark used in commerce. If another party uses a confusingly similar mark, it can mislead consumers and harm the original trademark holder's reputation and business. Such unauthorized use can be considered unfair competition, as it takes advantage of the established market presence and consumer recognition of the original mark.

Disadvantages of Common Law Trademark Protection

A common law trademark has limitations and disadvantages in comparison to a federally registered trademark. Unlike federally registered marks, unregistered marks do not provide nationwide protection or the benefits associated with federal registration, such as a presumption of validity and the potential to recover treble damages and attorney's fees. These limitations can significantly affect the scope and enforceability of trademark rights.

Limited Geographic Scope: One of the primary disadvantages of common law trademarks is their limited geographic scope. Common law rights are generally confined to the area where the mark has been used and gained recognition. This means the trademark holder does not have exclusive rights to the mark outside of this area. In contrast, federally registered marks grant nationwide protection, allowing the owner to enforce their rights across the entire United States, regardless of the specific areas of use.

Lack of Presumptive Rights: A federally registered marks provide presumptive evidence of the trademark's validity, ownership, and the exclusive right to use the mark in commerce on a national scale. This presumption can be crucial in legal disputes, making it easier for the trademark owner to prove their case. Common law trademarks do not offer these presumptions, requiring the owner to provide more extensive evidence of their rights and the mark's distinctiveness and market presence.

Reduced Enforcement Mechanisms: Enforcing common law trademark rights can be more challenging and costly. While a common law trademark holder can bring infringement actions under state laws and unfair competition claims under the Lanham Act, they are not able to bring trademark infringement claims under 15 U.S.C. § 1114, claims for statutory damages for counterfeiting, claims for enhanced damages for Willful Infringement, or dilution claims without a federal registration. Federal trademarks provide these enforcement mechanisms to trademark owners and provide an advantage over common law trademark holders.

Notice and Deterrence: Federal registration places the trademark in the official records of the US Patent and Trademark Office, providing constructive notice to others of the mark's existence. This can deter potential infringers who conduct trademark searches before adopting a new mark. Common law trademarks do not benefit from this official notice, making it more likely that others might inadvertently use a similar mark, leading to potential conflicts.

Incontestable Trademark Registration: An incontestable trademark registration is a federal trademark that has been registered and continuously used in commerce for at least five years with no adverse decisions or pending legal challenges to the owner's trademark rights. Incontestable status provides conclusive evidence of the trademark's validity, the registrant’s ownership, and the exclusive right to use the mark in commerce. This makes it significantly easier for the owner to enforce their rights in legal proceedings and avoid challenges to their rights. An incontestable trademark can only be challenged on very limited grounds, such as the mark becoming generic, fraud in obtaining the registration, or abandonment. This provides a strong defense against attempts to cancel the trademark, offering greater security and stability for the owner of an incontestable federal trademark.

Use of the ® Symbol and Constructive Notice: The Lanham Act permits only federally registered trademarks to use the registered trademark symbol ®. This symbol provides public notice of the registration and can act as a deterrent against infringement. Common law trademarks can use "TM" or "SM," but these symbols do not result in the constructive nationwide notice that the registered trademark symbol provides. Using the ® symbol provides the owner of the trademark nationwide notice of their rights. Constructive notice is a legal concept under which all persons in the US are deemed to be on notice of the federal when the symbol is applied to the registered goods or on the promotional materials for the registered goods or services (e.g., website, advertisements, product/service literature, etc.). The ® symbol should be displayed prominently alongside the registered trademark, typically in the upper right-hand corner, lower right-hand corner, or immediately following the mark. Constructive notice eliminates the defense of "innocent infringement." An alleged infringer cannot claim that they were unaware of the trademark existence or its registration status and may be liable for damages from the point of their initial use of the trademark.

International Protection

Federally registered trademarks can serve as a basis for seeking foreign trademark registrations in other countries under international treaties, such as the Madrid Protocol. Common law trademarks do not offer this advantage, making it more difficult and expensive to secure international trademark protection.

Should You Pursue a Federal Trademark Registration

Common law trademarks offer certain protections, but they are inferior to the rights provided by a federal registrations, which provide broader, more robust, and more easily enforceable rights that can be crucial for maintaining and defending a brand. A state trademark registration may also be available through the state's Secretary of State's office. However, state trademark registrations typically have significantly fewer protections than a federal registrations, and they do not have nationwide reach.

It should be noted that a federal trademark application cannot be submitted for some unregistered trademarks. There are specific criteria and requirements that must be met in order to register your trademark. The primary reasons why a common law mark may not qualify for federal registration:

Interstate Commerce Requirement

To be eligible for federal registration, a trademark must be used in interstate commerce, meaning it must be used in connection with goods or services that are sold, transported, or promoted across state lines or that otherwise have an impact on interstate commerce. This is a requirement because the constitutional authority for the USPTO to issue trademark registrations is based on the federal government power to regulate commerce between the states. This use in commerce requirement is not black and white. There is quite a bit of nuance in this interpretation of this requirement. For example, a restaurant located in one state only operates in that state. However, if is located on the interstate highway, for example, it likely serves many interstate travelers and "affects" interstate commerce. Such a restaurant would likely be able to properly file a federal trademark application to register its name.

Lack of Distinctiveness

Generic Marks: Marks that are generic and directly describe the product or service itself cannot be registered.

Descriptive Marks: Marks that are merely descriptive of the goods or services are also generally not registrable unless they have acquired secondary meaning. For example, "CREAMY" for yogurt would be considered descriptive and not inherently distinctive.

Immoral or Scandalous Content

Immoral or scandalous marks that consist of immoral, deceptive, or scandalous matter, or that disparage individuals or groups, are not registrable. Although this criterion has been subject to legal challenges, it remains a consideration for the USPTO.

Federal Trademark Application Process

If your mark is eligible, you should register your trademark with the United States Patent and Trademark Office. The benefits of a federal trademark registration far exceed the costs of obtaining and maintaining the registration. If your business is successful, you want exclusive rights in your business name and/or brand name. The exclusivity provides strength to the brand and allows your to build your reputation with your customers without consumer confusion with copycat brands or competitors.

The process of pursuing a trademark registration should begin with finding an experienced trademark attorney. Many attorneys are willing to file federal trademark applications because it is an apparently simple process. However, the skill is not applied in the filling of federal application forms. The experienced trademark attorney conducts due diligence in advance of the application to determine the strength of the mark, potential infringement issues, and whether there are any potential infringers. A trademark search is essential for this process. The trademark search should include an examination of both the federal register (the database of registered marks) and unregistered use of similar marks (a common law trademark search). The common law trademark search is a complicated process that requires the skill and expertise of experienced professionals. The trademark search is the foundation on which your trademark protection is built and it should not be taken lightly. Ideally the search is conducted before you adopt and commit to a mark.

Once the search is complete, the trademark attorney will assist with the proper filing of the trademark application, making sure that a proper specimen is filed, that the goods or services are properly identified, that the filing strategy for the mark or marks is optimized, and that all formalities are observed. These steps are critical to successfully file applications to register your trademark.

Conclusion

If you are able to properly pursue a trademark registration you should. A common law trademark carries some enforceable rights and protections, but they are inferior to those of a trademark registration. If you are planning to start a business or brand, you should contact an attorney that specializes in this area of intellectual property law. They can help you with selecting a proper mark that can be an asset to your business on which you build your reputation and relationship with consumers. You do not want the mark you initially select to become a liability. Facing infringement claims and/or having to involuntarily change your mark down the road can be a major disruption.