What is Trademark Priority and Why Should I Care?

The general rule in the U.S. is that the exclusive right to use a trademark belongs to the first person to establish a trademark in that specific location.

Trademark priority is the way courts and businesses settle disputes over who has the right to a certain trademark. Essentially, it’s a legal definition that comes down to the idea of “first come, first served.”

The process of establishing trademark priority depends on many factors. However the general rule in the U.S. is that, between competing businesses in the same geographic market, the exclusive right to use the mark belongs to the first business that establishes trademark rights in that market.

Trademark lawyers usually refer to this rule as “priority of use.” The Trademark Trial and Appeal Board often uses priority as the basis for establishing trademark ownership in hotly contested cases.

Establishing Trademark Priority

While registering a trademark is an important step for any business, in reality the act of registering is more of a formality. Registering a trademark is simply a step in the process of establishing definitive rights over your trademark. In most cases, trademark priority is more important than trademark registration.

Under trademark law, a business that holds trademark priority, even if they aren’t registered themselves, may challenge any registered trademark that infringes on their local business.

Establishing trademark priority is actually a simple process. All you need to do is use the trademark in commerce before anyone else does. Lets take a moment to talk about what this entails.

“Using”

First, to satisfy the usage requirement, you need to use your trademark continuously. This means that you must use the trademark in your daily operations as a business. Your trademark use cannot be sporadic. If you do not consistently use your mark, the U.S. Patent and Trademark Office (USPTO) may consider it “abandoned.”

Abandonment occurs whenever you fail to us the mark for three consecutive years. If you don’t ensure that your trademark usage is continuous, someone else with a similar trademark may enter the market with your mark. In that case, their trademark could get priority over yours.

“In Commerce”

Second, the trademark must be used in the ordinary course of trade and business. This means that you don’t gain rights from simply claiming the trademark locally or registering it with the USPTO. Instead, you must actively use the trademark in the daily course of doing business. The USPTO defines this action specifically as “use in commerce.”

As an example, when trademarking goods you can meet the “use in commerce” requirement by simply packaging your good with a label or tag that uses the mark. Placing your name or logo onto your shipping boxes would count as using your marks in commerce.

If packaging your product is impractical, you can instead place the mark on documents associated with the good or sale. For example, a receipt or invoice would fit this requirement.

In the case of service marks, you must prominently display your mark either during the sale itself or in your advertising materials. A poster that shows your company name and logo would count as using your mark in commerce. 

Trademark Priority and Location

As stated before, trademark ownership and priority depends on when you started using the trademark in commerce. However, there are cases where the newer trademark may actually instead gain priority.

Often, the first person to use a trademark is called a senior user. Any subsequent users are typically called junior users. As we’ve covered, a senior user will almost always have priority over a mark within the geographic region that they actively use the mark.

Geographic Location

Make note of our emphasis on using the mark in a certain geographic location. This is important because trademark rights can be enforced through either common law (local) or federal registration (national). Priority rights can change depending on which laws and precedents you’re drawing from in your particular case.

Example: Business A has several shops around Chicago under the name “Store.” Business B is a national chain that also uses the registered trademark name “Store.” Business B, the national chain, wants to open some shops in the Chicago area. Meanwhile, Business A is thinking of opening a new shop in the nearby state of Ohio. Who has priority in each of these cases?

In the first scenario, Business A, the local “Store,” would defend their mark under common law. Because of this, they can bar the national chain from using the name “Store” in the Chicago area, and possibly even the whole state.

In the second scenario, Business B, the national chain, would defend their rights to the name under federal law. This means that Business A cannot expand their business with the use of the brand name “Store” outside of their local area, especially over state lines. Doing so would infringe on Business B’s registered trademark.

If you intend to use your trademark solely within your state, your trademark rights will be limited to your geographic region, and enforced through common law. However, if you use your trademark nationally, or intend to use it nationally, you should register your trademark with the USPTO. If you register with the USPTO, you can protect your trademark with federal law.

Common Law Priority vs. Federal Law Priority

Lets take a moment to dive into each of these priorities for a little more detail.

Common Law Priority

If you only use your trademark within a state or smaller locale, you cannot federally register your trademark. You must instead obtain, and enforce, ownership through common law rights.

To establish a trademark within common law, all you need to do is use the trademark in commerce. After using the mark in an area for the first time you gain priority rights for that specific geographic location.

If a person comes to this area with a similar mark, your trademark will automatically have priority over theirs. You can forbid them from using the mark in this location. Keep in mind, however, that this power only covers the geographic region where your goods or services are sold.

Additionally, if a person federally registers a trademark that is similar to yours, you will still have priority in your geographic region. However, that person may be able to use the mark anywhere else in the United States.

Federal Registration

After you make the decision to use a trademark in commerce, you should further establish your ownership by formally registering your trademark with the USPTO.

Federal registration has many benefits, including:

  • Right to use the mark nationwide (though it may be subject to any local priority users)
  • Nationwide constructive notice to others that the trademark is owned by you (“I didn’t know” is no longer a defense for infringement)
  • The USPTO will reject other applications that are too similar to yours
  • Your trademark becomes “incontestable” after 5 years (the strongest form of trademark protection)

There are two ways to federally register trademarks, each with their own implications. First, you can file an application based on your active use of the mark in interstate commerce. Second, you can file an application based on your intent to use the mark in interstate commerce.

Filing with an Active Mark

When filing an application for a trademark with the USPTO, you must provide a few specific things:

  • Proof of domicile and citizenship
  • The date of your first use of the mark
  • The date of the mark’s first use in commerce
  • A specimen showing the mark used in commerce
  • A sample drawing of the mark

Once you file the application, the USPTO will assign it a filing date. This filing date determines priority use among applications. In other words, the USPTO reviews applications in the order that they are received, and the application for a mark that is received first has priority.

The filing date is important because if an application for a similar mark is filed after your filing date, the USPTO will reject the other mark, or put it on hold, until your trademark has completed the registration process.

Assuming your trademark meets all other criteria, it will pass the application process and become a federally registered trademark. You will then have “priority” over that specific mark across the entire United States.

Filing under “Intent To Use”

If you are not, or cannot, currently use your trademark in commerce, you can still file for registration.

In this scenario you can register your trademark federally even if you aren’t using it outside your local area yet. This will allow you to expand nationally at some later date. However, the USPTO requires that you establish in good faith, and in writing, that you intend to use the mark in commerce in the near future. The USPTO calls this a “bona fide intention” to use the mark.

Unlike registering based on the mark actually being used, you are not required to show first dates of use and proof of use.

Once you use the mark in commerce across state lines, your priority date becomes the day you filed the application. Not the date of your actual first use.

However, none of this matters if you fail to prove that you used the mark. You must show evidence to the USPTO that you used the mark within six months of filing an intent to use application. Failure to do so could disqualify your application completely.

Testing Out a Few Examples

Priority is an interesting topic in trademark law because it often comes down to case-by-case decisions based on precedent. This is because of the many different local and federal factors which apply to priority cases.

For this reason, here are a few examples that can help establish a baseline understanding of how these different types of trademark principles interact. Keep in mind that these are extremely simplified examples that only broadly demonstrate the concept of trademark priority.

Common Law vs. Common Law

Let’s say that you are the first in your town to sell ceramic mugs under the mark “Magnificent Mugs.” You are the senior user of this mark, and have acquired priority in your geographic region.

If a competitor comes into your town and tries to sell mugs by the same name, you, as the senior user, can prevent them (the junior user) from selling their product in your local area. This is because there exists a reasonable likelihood that a customer would confuse the two businesses.

Now, lets say a person opens a shop called “Magnificent Mugs” in another state. Although you have priority use in your town, you cannot prevent them from opening up their shop, because you only have rights in your geographic region.

For a real-world example of Common Law vs. Common Law, see the case Natural Footwear Ltd.v. Hart, Schaffner & Marx, 760 F.2d 1383 (1985).

Common Law vs. Federal Law

Your business “Magnificent Mugs” is thriving in your small town now. However, recently you noticed a larger company, also named “Magnificent Mugs,” advertising on TV. After a quick search, you find out that they’ve already registered for a federal trademark with the USPTO.

While you still have priority in your geographic region as the senior user, this other, larger business now has the right to sell “Magnificent Mugs” everywhere else in the United States. Unless they abandon their trademark, you can never expand outside of your state. At least, not with the name “Magnificent Mugs.”

Federal Law vs. Federal Law

Thankfully, their business model left them bankrupt after a year of business they’ve stopped selling products altogether. Now, three years and a few weeks later, you can reasonably assume the trademark was abandoned (though you should still fully check that this is the case).

You can now submit an application to federally register “Magnificent Mugs” with the USPTO. After going through the application process, you now officially own that trademark. Further, you’ve established nationwide constructive notice that you own, and protect, the mark “Magnificent Mugs.”

If somebody else tries to use your mark, even in a geographic location you have not expanded to, you can file for infringement and force them to stop.

Why You Should Care About Trademark Priority

Establishing priority is one of the most important factors in protecting the marks associated with your business. The reason you should care about trademark priority is because if you ignore it, another business can snatch your name, logo, and even color scheme away from you. Without trademark priority, you have no legal way to protect the rights of your brand.

While many people enforce their trademark rights just fine through common law, federal registration can provide many additional benefits when it comes to priority.

As a small business, you need to be familiar with the concept of priority. This is especially true if you’re expanding your business to a larger geographic area.

In all of these cases, the advice of an experienced trademark lawyer can help save you time, money, and heartache. Hiring an attorney can also help you decide whether or not you should federally register your trademark. Further, they can help you protect your trademark in the future from infringement and abandonment.

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