Establishing Rights

• Jurisdiction: Maryland

IV. ESTABLISHING RIGHTS

A. Use as the Essential Element

A mark must be used to establish rights. Merely talking about or preparing to use a trademark, except in specific situations³² is insufficient to create trademark rights. The moment a trademark springs into being is the moment a person or entity actually uses the brand in the offering of goods or services.³³ This concept is relevant not only for whether a trademark exists, but also for determining who owns the mark and who has priority of use—a critical determination in an infringement situation, when it is necessary to establish rights as a senior user. Because a person or entity has to use the mark, at that initial spark of life, the mark must latch on to that user, so contests between different entities claiming ownership out of the same events are decided based on who actually used the mark.³⁴

B. Common Law Rights

Using a mark establishes trademark rights in the territory where the brand owner has customers. These "common law" rights are just as strong as rights gained through federal registration and are protected under the federal statute. It is a common misunderstanding that trademark rights only exist if there is a federal registration. As discussed below,³⁵ the most significant downside of relying only on common law rights is that those rights exist only in the territory where the owner has customers, and there is no national priority of use created as there would be with registration. However, if the use will be local, or the user does not plan expansion from its initial territory, it is not always necessary to obtain registration.

C. First in Time

1. Actual use

Once use has been established,³⁶ rights of a party to a trademark in a particular territory are based on first use of that mark,³⁷ even if the second user is unaware of the first. So long as the first user has not abandoned the mark³⁸ that user will always be able to base priority on its date of first use. An owner may have different priority dates in different territories,³⁹ or may have one priority date throughout the entire United States based on federal registration.⁴⁰ Note that a federal registrant obtains rights and priority of use subject to any previously existing local usage, so is a "junior user" compared to any prior local user.⁴¹

2. Tacking

An early date of first use is so crucial that a mark's value is enhanced by its early use in commerce; that date can become a focal point in a transaction or dispute. So long as the transfer of a trademark is properly documented and passes the goodwill to the transferee,⁴² the date of first use by the transferor flows to, and thus benefits, the transferee. This notion of "tacking" an earlier date allows the transferee to stand in the shoes of the prior owner and have priority over all other users over which the transferor would have priority; the transferee of a trademark does not start the calendar running on its own first use. Whether tacking actually occurs is a factual issue to be decided by the jury, or the court if no jury is demanded.⁴³

3. Reserving priority: intent to use application

Although using a mark in commerce is always a necessity for protection, filing a federal trademark application based on an intent to use the mark can establish priority rights in a mark at some point in the future, so long as actual use eventually occurs.⁴⁴

D. First in Territory

An owner's rights extend only to where the owner has sold its product or offers its services. Thus, it is possible to have priority in a trademark in one part of the country, but have no rights—and be the junior user—in a different part of the country. Different entities can offer the same goods or services in connection with the same mark so long as they are in different territories and so long as no likelihood of confusion results. Territoriality even permeates federal registration, where two previously distant users can each obtain registration for their similar marks, based on the notion of "concurrent use."⁴⁵ Determining the breadth of an owner's territory is crucial. If the owner is a dry cleaner, its territory may be a few square miles around its location. If the service is a restaurant, the territory could be the town and surrounding area. If the service is an airline, it likely has nationwide priority even without registration. One use frequented by vacationers from around the country might have broader reach than one use in a quieter location.

E. Monkey Wrench Added by Internet

The Internet has disrupted trademark law. Trademark law had relied on the notion that a mark used in one territory can co-exist with the...