United States: Could Your Service Mark Someday Appear on a Branded Product?

Last Updated: November 29 2017
Article by Mike Koplow and Anne Aikman-Scalese

Consider Adding Trademark Classes to Aid Enforcement of Brand Identity

In trademark law, marks come in two distinct flavors: trademarks that are used to identify the source of tangible products, and service marks that identify the source of services. As one example, colleges are in the business of providing education and commonly obtain federal service mark registrations directed to "education services."  The federal registration confers a presumption that the holder has an exclusive right to use the mark in connection with the identified services.

What happens, though, when a retailer – without a license from the school – begins to sell apparel that uses the college's federally-registered service marks and the college itself has never used its marks on apparel? Do the school's rights to its service marks stretch far enough to restrict others from selling clothing bearing the marks? That is the question presented in the recent Eleventh Circuit decision in Savannah College of Art and Design, Inc. v. Sportswear, Inc.

The court recognized, on a guttural level, that it feels wrong to allow a party to "take a free ride on another's registered trademark." Here, there was no doubt that Sportswear was selling made-to-order clothing online using Savannah College's "SCAD" and "SAVANNAH COLLEGE OF ART AND DESIGN" word marks. At the same time, it is a fundamental principle that trademark law does not grant a blanket monopoly to all possible uses of a mark. Savannah College had not used its marks for clothing goods and as a service mark holder, Savannah College only enjoys the presumption of exclusivity in relation to the identified services in its registered marks, in this case, educational services. So, under what theory could SCAD prevent clothing manufacturers from selling T-shirts without a license?

In this case, trademark law operates to preserve a delicate balance. Courts are concerned with protecting both the mark holder's interests and the public interest in avoiding confusion as to the source of goods and services. The college (and mark holder) expects protection of the goodwill and organizational identity it has built in its marks through years of continuous use. Public interest is served in the ability of consumers to distinguish between competing businesses that operate in vastly different fields while preventing a monopoly over all trademark classes where confusion as to source is unlikely due to various factors such as sales channels.

Use of a mark for services is different from use of a mark for goods. So different, in fact, many circuits have held that service marks do not extend to goods or products. In their view, stretching protection of a service mark to goods is simply not present in trademark law. Other courts hold that goods and services can be closely related and that certain goods can be an "area of natural expansion" for service mark holders. For example, if a business provides gourmet coffee restaurant service, it would be natural for that business to develop a gourmet coffee cup bearing its trademark as both a promotional and a revenue-generating endeavor.

The SCAD case involves an added wrinkle. Here, binding precedent in the 1975 Eleventh Circuit case of Boston Hockey found that professional hockey teams had an interest in their service marks against a manufacturer that made replica patches containing the service marks for attaching to clothing. This was despite the fact that the teams only had registered marks for services and did not have registrations for goods, apparel or promotional merchandise.

With this precedent  the Eleventh Circuit is now  left scratching its head as the court admits that the controlling Boston Hockey case "does not explain how or why this is so." Regardless, Boston Hockey "is in the books," as the court states in its opinion.  And although the court alludes to the idea that "there may be error in [that] precedent," the court does not have authority to disregard it. Perhaps the Eleventh Circuit panel was providing a subtle nod to higher governing authorities to revisit the issue, be they the Supreme Court, Congress or a full en banc review by the entire court.

Ultimately, the Eleventh Circuit vacated the lower court's summary judgment ruling that Savannah College failed to show it had enforceable rights that extend to apparel. The case was sent back to the lower court to apply Boston Hockey to the scope of Savannah College's service trademarks.

As a practice pointer, this case highlights the importance of mark holders finely scrutinizing the use of their marks and anticipating natural areas of expansion of their use. Through keen foresight and appropriate intent-to-use trademark filings in additional classes, trademark holders may be able to avoid the expense and uncertain outcome associated with filing lawsuits for enforcement purposes.

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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Mike Koplow
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