United States: Expand Your Brand Into the U.S.

Last Updated: October 21 2004
Article by Kenneth D Suzan

This article originally appeared in the October 1, 2004, issue of The Lawyers Weekly.

Imagine a toy company in Toronto gearing up to globally market a mechanical marvel by Christmas. At the same time, a hotel in Montreal is readying a new Web site that is expected to be viewed by prospective American revelers planning their New Year’s Eve celebrations. Across the country, in Vancouver, a clothing manufacturer has grand plans to set a fashion trend next fall with its new line of clothing and accessories. All three Canadian companies have their eyes set on selling and advertising their goods and services in the United States and expanding their brands across international borders.

Central to brand expansion into the United States is the strategic development of a strong trademark/service mark portfolio that sufficiently protects the source identity of a company’s important intellectual property assets. Building such a portfolio in the United States carries significant benefits for Canadian companies. Competitors are likely to keep a close watch on marks used (or anticipated to be used) in a particular industry. Inclusion of a company’s marks in a government database accessible by anyone worldwide at USPTO.GOV should send a strong signal to competitors to avoid choosing a similar brand name that is likely to cause confusion in the marketplace. This advantage starts several weeks after filing an application as records of newly filed trademark and service mark applications are constantly added to the database at USPTO.GOV. Other benefits of registering marks with the United States Patent and Trademark Office include (1) nationwide trademark and service mark priority rights, (2) presumption of validity and exclusive rights to use the mark in the United States, (3) availability of "incontestable" status after five years of continuous use (a type of immunity from many types of challenges that can be filed by third parties against the registration), (4) reliance by the USPTO upon a federal registration in rejecting a third party’s application that is confusingly similar, (5) ability to use the registration symbol, "®", to give nationwide notice of trademark rights, (6) potential availability of recovering treble damages and attorneys’ fees in an infringement proceeding, and (7) ability to block the importation of infringing goods through the assistance of the U.S. Customs Service by recording the trademark registration details.

Before rolling out new products or advertising services in the United States, it is recommended that companies conduct a full U.S. trademark/service mark search. With the assistance of U.S. trademark counsel, companies should assess whether a particular brand name, slogan, or logo is available for use and registration in the United States. A thorough search should include research and analysis of pending and registered federal trademarks and service marks, state trademarks and service marks, common law marks, filings made pursuant to the Madrid Protocol, Internet domain names, and Web sites. Receiving the green light from counsel is only a preliminary step for brand expansion into the United States. Canadian companies seeking to conduct business in the United States should also consider registering their trademarks and service marks with the USPTO. The benefits of registration will likely outweigh the initial costs of obtaining the registration. Presently, the official filing fee charged by the USPTO is US$ 335.00 per class of goods or services listed in the application. It is possible to file a multiple class application covering a wide range of goods and services. Companies should also budget for legal fees and costs associated with the preparation and prosecution of the application.

Enjoying the benefits of a United States trademark or service mark registration may not be possible if a Canadian company is unable to demonstrate its priority rights in a particular mark in the United States. Use of a mark in Canada does not automatically confer priority rights in the United States. Therefore, the adage "timing is everything" can be considered a guiding principle for brand expansion into the United States. In order to secure valuable priority rights in the United States, it is essential that trademark or service mark applications be filed early on in the development of the product or service.

Canadian companies seeking to file applications to register marks in the United States may base their applications on use (shipping goods into or advertising and rendering services in the United States), intent-to-use (based upon a bona fide intent to use the mark in commerce), ownership of a Canadian or other non-U.S. registration, or ownership of a Canadian or other non-U.S. trademark application (trademark priority is accorded provided that the U.S. application is filed within six months of filing the Canadian or other non-U.S. trademark application). It is usually the case that a Canadian company with plans to expand into the United States will already own a Canadian trademark registration or a pending Canadian application for the same goods or services. Ownership of these intellectual property assets should be communicated to counsel in the United States before filing an application in the United States. Such information is helpful in determining the availability of basing trademark rights pursuant to Section 44 of the Lanham Act. Under this section, non-U.S. nationals may identify the non-U.S. application or registration, such as a Canadian application or registration, along with a statement that the applicant has a bona fide intention to use the mark in commerce on or in connection with the underlying goods or services. The advantage to such a Section 44 filing is that a Canadian company need not prove use of the mark in the United States in order to obtain a United States registration. Moreover, dates of use or trademark specimens are not required at the time of filing. It is important to note that the mark must be used in commerce with or in the United States after the registration issues in order to maintain the registration. Failing to do so places the registration at risk for cancellation.

Another strategic advantage offered under Section 44 of the Lanham Act is the ability to claim trademark priority rights in the United States based upon an earlier filed application in another country under Section 44(d). This option is only available if the U.S. application is filed within six months of the filing date of the non-U.S. application. For example, if an application is filed in Canada on October 1, 2004, the corresponding application must be filed with the USPTO no later than April 1, 2005 in order for the applicant to claim the earlier October 1, 2004 priority filing date in the United States. This earlier date could prove to be very helpful during trademark priority disputes with third parties with respect to priority rights in the United States. An applicant under Section 44(d) of the Lanham Act must still assert a bona fide intent to use the mark in commerce on or in connection with the underlying goods or services.

In the absence of Canadian or other non-U.S. applications or registrations, Canadian companies may also base their applications upon use in commerce or upon intent-to-use. Critical to brand development and expansion into the United States is the prompt filing of an intent-to-use trademark application when applicable. Under the intent-to-use system, no use need be made or shown in the United States at the time the application is filed. However, proof of use will be required to be filed after a Notice of Allowance issues. The Notice of Allowance can be expected to issue eleven or twelve months after the application is filed provided the USPTO has not issued an Office Action and third parties have not opposed the application. In addition, the Canadian company may seek extensions of time to prove use in commerce. Filing an intent-to-use trademark application requires the Canadian company to simply have a bona fide or "good faith" intent to use the mark in commerce in connection with its goods or services. Priority in the mark can be obtained before outlaying considerable funds for advertising, marketing, and packaging. It is helpful to keep records consisting of corporate minutes, business plans, contracts, receipts or other evidence should the company be required, for example, during litigation enforcing its trademark rights, to demonstrate that it had a bona fide intent to use the mark in the United States when it filed its application with the USPTO.

From start-ups eager to enter the American market, to companies that have successfully built brands that have spanned borders worldwide, it is critical to have a trademark strategy in place now and for the future. Making the necessary trademark filings today will likely serve pivotal roles in future opportunities for licensing and franchising, combating infringing and gray market goods at the border, and providing the best level of protection for a company’s valuable intellectual property assets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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