United States: A Tale Of Two Hats: Trademark "Use In Commerce" Expanded In A Potentially Game-Changing Decision

Last Updated: December 1 2016
Article by Joshua S. Jarvis

Our readers no doubt understand that trademark use is the basis for trademark protection in the U.S. But all use is not created equal, and sometimes it's not so easy to tell whether a trademark is actually used in a manner sufficient to qualify for federal trademark registration. A recent Federal Circuit decision promises to make this determination a little bit easier.

The U.S. Lanham Act and the Basics of Trademark Use

The question of whether a trademark is used to a sufficient degree to qualify for federal registration isn't as easy as it sounds. In the case of goods, a trademark is legally "used" when it is used in the ordinary course of trade and (a) placed on goods, or their containers, tags, or packaging, or a point of purchase display, and (b) the goods are sold or transported in commerce. See 15 U.S.C. § 1127. So, for instance, an advertisement on a website for your XYZ" brand gyros doesn't constitute use sufficient to support federal registration, but use of the XYZ" mark on a shipping box filled with gyros and shipped across state lines does the trick. The statutory standard has been applied differently to different types of goods and fact patterns, and use of a mark on services has a different standard entirely (use in advertising is sufficient for service marks), but suffice it to say that things can get complicated.

"Use in Commerce"

In order to register a trademark at the federal level, the Lanham Act requires that the mark be used "in commerce," that is, in commerce "which may lawfully be regulated by Congress." Traditionally, courts and the United States Patent and Trademark Office (USPTO) have interpreted this to mean that branded goods must be shipped across state lines (or imported from abroad), or that goods shipped thusly be sold in connection with a point-of-purchase display bearing the mark. In other words, purely intrastate trademark use, such as shipping a branded product to a customer in-state, historically has not qualified as "use in commerce" regulable by Congress, and is therefore insufficient to support a federal trademark registration.

There are, naturally, some situations where the interstate/intrastate question isn't as easy to answer. For instance, what if one is selling branded goods at a single location to an out-of-state customer? This is a particularly interesting question because it has long been accepted that a single-location restaurant with at least some out-of-state customers is providing restaurant services "in commerce" sufficient to support federal registration. See Larry Harmon Pictures Corp. v. Williams Restaurant Corp., 929 F.2d 662 (Fed. Cir. 1991). But the analogous question with the sale of branded goods — even at that same restaurant! — hadn't been authoritatively resolved before now.

A Tale of Two Hats

The U.S. Court of Appeals for the Federal Circuit recently answered this question with a resounding "yes" in Christian Faith Fellowship Church v. Adidas AG, No. 2016-1296 (Fed. Cir. 2016). Adidas brought a cancellation action with the USPTO Trademark Trial and Appeal Board (TTAB) against two registrations, for the marks ADD A ZERO and a corresponding logo, owned by the Christian Faith Fellowship Church. Adidas argued, among other things, that the marks were not used "in commerce" as of the applications' filing dates back in March 2005. Because the applications were based on use in commerce, failure to use the marks as of that date would render the resulting registrations void. The Church, which is located in Illinois, proffered evidence that, as of the 2005 filing date, two hats bearing the marks were sold within Illinois but to a customer hailing from Wisconsin. The TTAB, rejecting the Church's argument that the intrastate sale of branded goods to an out-of-state customer constituted "use in commerce" under the Lanham Act, granted the cancellation petition. The Church appealed.

Looking to contemporary U.S. Supreme Court decisions broadly interpreting the scope of the Commerce Clause to apply to local activities, starting with Wickard v. Filburn, 317 U.S. 111 (1942), and its own trademark decisions including Larry Harmon Pictures Corporation v. Williams Restaurant Corp., the Federal Circuit reversed, holding that the transaction in question, "taken in the aggregate, would cause a substantial effect on interstate commerce and thus it falls under Congress's Commerce Clause powers." Further, and overturning longstanding TTAB precedent, the Church was not required "to present evidence of an actual and specific effect that its sale of hats to an out-of-state resident had on interstate commerce," or even show that the hats were destined to travel out of state. Therefore, the mark was deemed to have been used "in commerce" for Lanham Act purposes, and the case was remanded to the TTAB to evaluate Adidas' other grounds for cancellation.

Is Everything Now "Use in Commerce"?

So it's clearly the case now that the sale of branded goods in the ordinary course of business to out-of-state customers constitutes "use in commerce" for the purposes of federal registration. But some are suggesting that the Federal Circuit goes much further — that it's not unreasonable to read the decision as effectively rendering all sales of branded goods — even purely local commerce where no out-of-state customers are known to be involved — use in commerce. Citing the Supreme Court's Commerce Clause decisions in Wickard (holding that local growth of wheat, even for personal use, could be regulated because similar activities taken in the aggregate could have a "substantial economic effect" on interstate commerce) and Gonzales v. Raich, 545 U.S. 1 (2005) (holding that Congress has Commerce Clause authority to criminalize the purely local production and use of homegrown cannabis irrespective of its legality under relevant state law), the Federal Circuit noted that "'the de minimis character of individual instances' arising under a valid statute enacted under the Commerce Clause 'is of no consequence.'" It therefore seems a reasonable possibility based on the court's application of Wickard and Raich that the same result would have been achieved in this case even absent the out-of-state purchaser element of the fact pattern, because even the intrastate use "taken in the aggregate," would affect interstate commerce enough to satisfy constitutional muster. The court favorably quoted Wickard:

[E]ven if . . . activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as "direct" or indirect.

Id. at 125.

If this broad reading is accurate, then the decision marks something of a sea change for use sufficient to support federal registration. Nevertheless, caution is in order when filing a use-based federal application, or a Statement of Use, because it's difficult to say how the TTAB will apply this decision. In other words, I would want to be reasonably certain that there's active use with an interstate nexus at least as minimal — e.g., sales to a single out-of-state customer — as that presented here. At least until there's more guidance on the topic, it would be unfortunate to make filings based on a potentially overly broad reading of this decision and end up with a trademark registration being declared void ab initio.

To view Foley Hoag's Trademark and Copyright Law Blog please click here

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
12 Oct 2018, Other, Boston, United States

The New England Electricity Restructuring Roundtable has been meeting bimonthly since 1995 to discuss current topics related to important changes in the electric power industry in Massachusetts and throughout New England.

Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Stites & Harbison PLLC
Stites & Harbison PLLC
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Stites & Harbison PLLC
Stites & Harbison PLLC
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions