Trademark Use in Commerce – Here’s How It Works

TRADEMARK’S USE IN COMMERCE REQUIREMENT

Use in Commerce is defined in Section 45 of the Trademark Act as a “Bona Fide Use of a trademark in the ordinary course of trade.” What is “Bona Fide Use”? Unfortunately, these words do not have an absolute meaning although the USPTO has adopted somewhat of a, “You Know it When You See It” standard for making the determination. Fundamentally, demonstrating Bona Fide Use is a two-step process; 1. Showing that the trademark is in fact being used in conjunction with the sale of a good/service and; 2. Showing that the goods services are sold in Interstate commerce.

HOW TO USE A TRADEMARK IN COMMERCE

On a practical level, Bona Fide Use of a trademark will entail different manifestation of Use depending on whether or not the Applicant is filing the Mark for “Goods” or “Services”.

If the Applicant is filing for “Goods”, which is to say he/she is using the trademark in conjunction with the sale of physical items, the Applicant may place the Trademark directly on the product or on the product’s packaging, displays, tags or labels etc. If placing the trademark on the item or the packaging is impractical, then the trademark must be used on documents associated with the goods in connection with its sale.

If the Applicant is filing for “Services”, which is to say he/she is using the trademark in conjunction with the offering of a specific service, the mark must be used in a sufficiently obvious way with the marketing of the services so that consumers understand that the Mark is indeed tethered to the sale of the Services. For example, if a Child Psychologist were to name his company “Alpha Analysis” and wanted to obtain a trademark on this name in CL 044 for the services “Psychology for children and adolescents”, he would need to clearly list “Alpha Analysis” in his marketing materials (website, pamphlet, PDF’s Etc.)

TRADEMARK USE IN COMMERCE REQUIRES MEANINGFUL SALES

A central requirement in trademark law is that Use of the Trademark must entail Bona Fide Sales of the Goods/Services; Bona Fide Sales, meaning, of course a substantial number of sales. The idea here is that merely selling a single product does not establish the trademark as a source identifier worthy of conferring trademark rights to the applicant. After all, one sale of one product hardly cements in the mind of the consumer that the product originates from a single manufacturer, which is the crux of trademark doctrine. In the parlance of trademark jurisprudence, a single sale of a single product is considered “Token Use”, and therefore insufficient to warrant trademark protection.

Interestingly, prior to 1989, the PTO did in fact accept token use of a mark as sufficient to grant federal trademark rights. So, under this paradigm, selling your friend who lives in another state a single t-shirt (with the trademark on the tag of the shirt) would be acceptable to garner federal trademarks rights. However, subsequent to 1989, the Trademark Act no longer accepts Token Use as “Use in Commerce” and merely selling a single item would no longer satisfy the statutory definition of “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.”

Unfortunately, the USPTO has never provided an exact number of sales that must be achieved in order to satisfy the “Bona Fide use in the ordinary course of trade” requirement but a key standard is the degree to which the applicant exerts a “good faith effort to establish a trade”. Practically, the Courts look to whether or not a sale was made for the purpose of actually conducting business or satisfying the letter of the law so as to earn trademark rights. The latter are considered “Sham Transactions” and therefore would not satisfy the Bona Fide Use in Commerce Requirement. Here are some examples of what would be considered “Sham Transactions”.

1. A shipment of a single promotional item to a prospective client free of charge
2. Sale of several articles of clothing at only a nominal fee for promotional purposes
3. Providing accounting services at 100^th of the normal, market value price

Critically, even in the event that an applicant has in fact made a Bona Fide sale of the products, these sales cannot be too sporadic or nominal lest they fall short of the “in the ordinary course of trade” requirement. Remember, trademark law is chiefly concerned with the question of whether or not a Mark is a Source Identifier; when a consumer sees a trademark attached to a good or services, does he understand the source of that good or service. If the mark is only being used casually and sporadically, the answer (from the Courts and the USPTO at least) may be, no.

WHAT IS NOT A BONA FIDE USE IN COMMERCE

Remember, the standard is whether or not the trademark is a “bona fide use in the ordinary course of trade” under The Trademark Act. The Following is a short and non-comprehensive list of what will likely not meet the statutory definition:

1. “Sales” to family or friends;
2. A single shipment of goods;
3. A single sale of an item at a fraction of its market value;
4. An instance where the first set of sales is followed by an unusually long hiatus (unless this superficial abnormality is standard practice in the Applicant’s industry);
5. The labels used on the product were “handmade” rather than professionally rendered in a manner appropriate for the commercial character of the product;
6. The Applicant never sought to market or promote the goods

TRADEMARK USE IN COMMERCE REQUIRES THE APPROPRIATE “FORUM OF COMMERCE”

To be eligible for trademark protection in the United States, the commerce must be of a type that can be regulated by Congress; interstate commerce, territorial commerce, commerce within the District of Columbia, commerce with Indian tribes, or commerce between the U.S. and a foreign country are all regulated by Congress. Here, goods/services must either be shipped over State lines or rendered to clients across State lines, in furtherance of a sale. Under more limited and restricted circumstances, if the shipments of goods are promotional in nature and in furtherance of a potential sale, the Bona Fide User in Commerce requirement may still be met.

Intrastate commerce (a New York Applicant selling a good/service to a consumer within the State of New York) is not an eligible basis for trademark registration – with one exception. When commerce in one state affects a type of commerce regulated by Congress, the Trademark Act can be applied. In the travel industry, for example, a hotel operating in one State can entice customers to travel to its location from another state to utilize its services. This also applies to franchises that could be independently owned but operating in more than one State.

Companies which provide services online in many ways have much more flexibility in this regard as the internet by definition is “interstate”. By way of example, Jooble is a large and robust company which provides its services to customers in multiple states and would indeed have a relatively simple time demonstrating Use in Commerce.

TRADEMARK USE IN COMMERCE: GOODS AND/OR SERVICES MUST BE LAWFUL

Under the Lanham Act, regardless of whether the trademark applicant is seeking protection for a good or service, the use in commerce must be lawful. Without lawful use, trademark priority cannot be established. For example, a pharmaceutical company selling a product without proper FDA Approval could lose its trademark protection since selling a product without proper licensing is not deemed lawful use.

Similarly, and perhaps most notoriously, cannabis trademarks cannot be registered. Cannabis, as we know, is a Schedule 1 Drug under the Controlled Substance Act. Thus, because Cannabis cannot be sold legally in interstate commerce, one cannot obtain a trademark on for example, the name (e.g. Purple Kush) of new strain of Cannabis.

Notably, Cannabis companies still intent on gaining Federal Trademark protection may pursue the strategy of developing an auxiliary product that does not contain any of the controlled substance, cannabis. For example, an edibles company that sells cannabis infused cookies may also produce regular cookies and file a trademark on its brand name in connection with the sale of the innocuous baked good. This Trademark may serve as an umbrella of Trademark protection for the cannabis infused gummy bear the company sells at a later date.

TRADEMARK USE IN COMMERCE: DATE OF FIRST USE

The date of first use in commerce is determined by the date when the trademarked goods were first sold or transported or the services were first rendered in connection with the trademark. This is not limited to the sale of goods and services. A good or service can be deemed in use when it is advertised. Determining the date of first use in commerce is fluid across industries. If a trademark application is filed on the basis of use in commerce, the applicant can amend the date to a later date, but it cannot be past the application filing date.

NON-USE OF A TRADEMARK IN COMMERCE: ABANDONMENT

Remember, the USPTO only wants to award trademark rights to those trademark holders who are ACTIVELY using the trademark in commerce. In the event that the trademark holder ceases to use the Mark in commerce, the trademark is said to have gone “Abandoned”. The Trademark Act defines “Trademark Abandonment” as the cessation of use “with intent not to resume such use”. Critically, the same standard of “Use” applies in determining “cessation of use” as is required for the original registration of the trademark; “bona fide use in the ordinary course of trade, and not made merely to reserve a right in the mark.” So if the trademark holder is no longer selling the goods/service in a meaningful manner in the appropriate domain of commerce, the mark is said to have gone abandoned.

Still, it is important to note that Courts are typically remiss to quickly and without great cause strip a trademark holder of his/her rights. The majority rule dictates that proof of abandonment be demonstrated by “clear and convincing” evidence while the PTO is generally more lax in their proclivity to declare a mark abandoned, requiring only a “preponderance of the evidence.” According to The Trademark Act, non-use for a period of three consecutive years may be considered prima facie evidence of abandonment and places the burden of challenging the evidence on the trademark holder.

However, just because a fairly long period of non-use has been established, the trademark holder does not necessarily and or automatically lose his rights to the mark. In the event, for example, that the trademark holder can produce a legitimate reason for the otherwise lengthy suspension of use, the owner may retain his rights to the mark. This is especially the case if the trademark is sufficiently cemented in the minds of the general public as belonging to the trademark holder.

The Following is a short and non-comprehensive list of what may constitute a legitimate reason for the suspension of use of the Trademark:

1. Trademark holder’s inability to garner sales of a very expensive good in a highly restricted mark, despite the owner’s demonstrable effort
2. Bankruptcy
3. Negligence of an employee in properly tethering the trademark to the product
4. Labor strike resulting in trademark holder’s inability to produce the product
5. Government Regulations resulting in trademark holder’s inability to produce the product

Ultimately, the key take away of this article should be that what the USPTO cares about the most is continuous and sustained use of the Trademark. The classic adage of, “if you don’t use it, you lose it”, has never been more appropriate and relevant than in trademark jurisprudence. If you want to retain your rights to the trademark, you must properly maintain your use of the Trademark in commerce.

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