3. Which business was using the business name first?
If after looking at the two questions above you’ve determined that the other business shares your market, then you need to determine who was using the business name first. Trademark rights are established on a first-come, first-serve basis. You want to be the first business to have used the mark so that you can establish yourself as the senior rights holder. If you started using the business name before the other guy, then you’re in great legal shape (assuming you can prove it!). On the other hand, if the other guy used the business name first, then you’re pretty dang screwed.
4. Who registered the business name first?
This question is related to the third factor, above. In a perfect world, before registering a trademark, you conduct a thorough search of your market to make sure that nobody other than you has been using the trademark. Thus, in the ideal world it would never be the case that you have registered the trademark, but someone else was using it before you. Because the first person to use the business name gets dibs on it, the trademark registry would be a completely accurate database of who owns what mark. Unfortunately, life is messy and sometimes people register trademarks that were being used by other businesses first.
If you start using the business name first, but the other business registered it first, then you still have the right to use the name, but only in the market you were operating in at the time the other business registered the name. Thus, you’re only sort of screwed. You basically have no right to expand your market. The business who federally registered the name has priority everywhere else and can prevent you from using the mark in new areas. Thus, it’s never too late to register your trademarks!
If the other company registers the mark before you even started using it, then you are very screwed. By registering the name, the other business puts you and everyone else on constructive notice that it owns the mark. Thus, you may find that a competitor has already registered, so settle the claim quickly and efficiently.
Problem Sets
Let’s run through some examples.
1. I do not have a federally registered mark, and neither does the other business with the same name.
Let’s assume that you own Trojan SEO, a search engine optimization company. You began your business by launching your website in October 2004. However, you didn’t get around registering your trademark. Lo and behold, in October 2004, another SEO started the company Three Trojans SEO. This other company with the similar name is also unregistered. Both companies provide SEO services in North America and primarily advertise for clients through their websites.
In this example, both businesses could be sort of screwed. There is clearly potential for consumer confusion because the names are similar and the businesses are operating in the same market. In situations like this, where neither can prove superiority, courts will ultimately adjust one of the marks to lessen the risk of confusion and allow both businesses to continue their operations with minimum of disruption. For example, the Court may order you to change your name to War Horse SEO.
There would be a very different result if either party could prove that it was the first to use the name. For example, if you were using Trojan SEO since 1997 and Three Trojans SEO didn’t start until 2001, you would have clear priority over them. You would be entitled to use the name Trojan SEO in that market.
2. Even though I was the first to use the mark in commerce, the other business federally registered the trademark before I could get to it.
Let’s assume that Three Trojans SEO has a website they started in 2001 and they federally registered the name at the same time. Your company, Trojan SEO, went online in 1997 and never registered anything. You’re the first in time, but how does that stack up against a federally registered trademark?
Well, chances are you will be allowed to continue to use the name in the marketing territory that existed at the time Three Trojans registered. However, you will not have priority in any markets beyond what you were using at the time Three Trojans registered the domain name. Your growth is capped.
Further, if you can prove that Three Trojans SEO knew that you were using the name Trojan SEO before it started using Three Trojans, you will be in a very strong position. Willful infringement is punished severely. Three Trojans SEO might have to cancel its trademark registration if it willfully infringed your trademark.
3. My competitor began using and federally registered the business name before me.
If Three Trojans SEO both registered the mark and was using it before Trojan SEO, then it can force Trojan SEO to stop using the similar name. It may even be entitled to an award of damages. In this situation, you’re very screwed. Get out of this situation as gracefully as possible.
4. Both businesses, operating in overlapping markets, registered the same or similar names.
Very rarely, two businesses operating in overlapping markets will register similar marks. It’s not supposed to happen, but things slip through the cracks. It usually takes either an administrative proceeding with the Patent and Trademark Office (“PTO”) or a lawsuit to resolve the situation. The outcome is difficult to predict and usually depends on how the situation developed in the first place. Unless you have deep pockets for litigation, you should think very carefully about reaching a negotiated settlement as quickly as possible to keep costs low.
5. The other business filed an “intent to use” application before I used the mark.
If you’re putting together a business plan and have found a business name you want to use, it is a good idea to file an Intent To Use application with the PTO. If you file an Intent To Use and someone starts to use the same or similar business name before you launch, your rights are protected. Thus, “intent to use” applications are an important part of putting together a viable business plan and protecting your interests during the process.
Conclusion
In summary, friends, the first thing you need to determine is whether you are competitors with the business who holds the conflicting mark. If you are competitors, then you have more analysis to do. If you’re not competitors, then there isn’t much to worry about. Trademark is designed to prevent consumer confusion. If there is no chance for consumer confusion, then you have very very low risk.
If you determine that you are competitors, then you need to find out who began using the mark first and who registered the mark first. The best case scenario is that you both used and registered the mark first. Alternatively, the next best thing is that you have used the mark first. This will secure your right to use the mark in the market you were using before the other business registered the mark.
If you determine that your competitor has both used and registered the mark before you, then you should probably focus on reaching a negotiated settlement as quickly as possible. You’re basically screwed. Sorry.
I hope this post gives you some guidance in evaluating trademark infringement threats. We still have a lot to discuss about trademark, including domains names, cyber-squatting, the various forms of dispute resolution available, and the registration process.
Thanks so much for your kind attention. I look forward to your questions and comments.
Best Regards,
p.s. If any of you have worked with an attorney who has a good grasp on technology issues that you would recommend, please email or private message me his or her contact information. I receive a lot of requests for referrals to attorneys for cyber law issues. I would like your help in finding excellent attorneys from all over the world to refer people to. Thanks for your help!
