Back in February of 2014, Walt Disney Co. (“Disney”) successfully upheld its cancellation proceeding of a registration for a rival PLAYDOM mark on the grounds that the owner, David Couture (“Couture”), was not using the mark when he applied for it. A cancellation proceeding is something a third-party institutes at the United States Patent and Trademark Office (“USPTO”) in order to cancel an existing mark. There are various grounds for doing so, including non-use of the mark, fraud, or the mark has become generic.
Some background here is helpful to understand the significance of this issue. Back when Couture filed his application in 2008 for “entertainment and educational services” relating to “concept and script development,” he filed it under a Section 1(a) claim of actual use instead of under a Section 1(b) intent-to-use application. The difference between these applications is that a Section 1(a) applicant is required to provide both a date of first use and a specimen—a document showing the mark used in connection with the goods and/or services in commerce. In contrast, a Section 1(b) applicant has not yet used the mark in commerce and, prior to registration, will be required to begin use and submit a specimen showing use in commerce.
The Lanham Act—the federal act governing the law of trademarks—defines use in commerce as:
Goods: when the mark is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods make sure placement impracticable, then on documents associated with the goods or their sale and the goods are sold or transported in commerce;
Services: when the mark is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.
Disney’s cancellation action was based on the notion that Couture had not actually rendered services under his mark in commerce, as of the date the trademark application was filed. The Trademark Trial and Appeal Board (“TTAB”) agreed, finding “Respondent had merely posted a website advertising his readiness, willingness and ability to render said services.” This, according to the TTAB, is not use in commerce as contemplated by the Lanham Act. The entire decision by the TTAB can be found here.
In March of this year, the Federal Circuit affirmed the TTAB decision to cancel the trademark registration for the PLAYDOM mark. The Federal Circuit specifically affirmed the TTAB’s interpretation of the definition of “use in commerce.” Essentially the Federal Circuit stated that, “[o]n its face, the statute is clear that a mark for services is used in commerce only when ‘it is used or displayed in the sale or advertising of services and the services are rendered.’” This means, according to the Federal Circuit, that being able to render services is not sufficient use to meet the minimum standard for supporting a trademark application. Rather, the services must actually be rendered.
Why does this decision matter?
This decisions matters for several reasons. First, as pointed out by Couture in his request to the Supreme Court, this decision is contrary to various other decisions on the same issue. In fact, according to Couture, the Second Circuit has found the exact opposite in terms of what constitutes use in commerce. Couture also points out “[T]his Federal Circuit’s ruling opens up the possibility of a litany of litigation” and has established an “overly-narrow” standard for “use in commerce.”
Not only has the Federal Circuit’s holding created a patchwork of how the law will be interpreted, but it has also created a real practical issue for smaller companies trying to obtain their trademarks. First, it creates uncertainty around using websites as evidence of use. For services, advertising your goods generally should be considered enough to show use, so long as the applicant is in the position to offer the services it is advertising. By requiring someone to show they’ve actually rendered services, this creates a potential for delaying the time period when someone can apply for a trademark. Additionally, considering so much of commerce is occurs online, the Federal Circuits’ decision calls into question use in commerce in the Internet age.
How you can avoid this issue
If you are unclear as to whether or not your use of the mark you wish to register meets a now ill-defined rule “use in commerce,” there is a good way to get around this:
Rather than file a Section 1(a) application, considering filing a Section 1(b) application. This allows you to still make your claim in a name and have time to begin sufficient use for your application. You should note that a Section 1(b) application comes with additional expenses, but the expenses may be worth it in the long run. The Section 1(b) application allows an application to submit a specimen and, if necessary, submit substitute specimens should the USPTO reject the initial specimen as not showing actual use of the mark.
The Supreme Court, unlike other appellate courts, is in a position where they can choose whether or not to hear a case. We should know soon whether the Supreme Court will hear the case and provide a decision that will remedy the inconsistencies between the Federal Circuits’ decision and prior decisions by other district courts on the same matter.
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