07/08/19

The Good Faith, the Bad Faith and the Ugly


The Good Faith, the Bad Faith and the Ugly

Katherine Hunziker

If a person1 has a federally registered trademark, that person enjoys all the rights and protections provided by the Lanham Act across the country, excluding areas in which another person was using the mark prior to federal application. A federal registration confers constructive notice of priority throughout the country beginning at the time of application. Thus, an owner of a registered trademark can enjoin any subsequent user from using that mark. An unregistered trademark owner, however, has common law rights to their mark, but only in the areas in which it is being used in commerce and known by the relevant public. As a result, the first to use the unregistered mark (the senior user) cannot claim priority over a subsequent remote use of the mark by another person (the junior user) who adopted the mark in good faith.

The issue addressed here arises when one or both of the users of the same or similar unregistered mark expand into one another’s territory. Of course, the senior user can not enjoin the junior user without first proving that he has a protectable mark and that the junior user’s use of the same or similar mark is likely to cause consumer confusion. Thus, once the junior and senior user expand, and their respective uses of the marks are likely to cause consumer confusion, the junior user can raise the affirmative defense provided by the Tea Rose-Rectanus doctrine. Once the junior user has established that she adopted the mark in good faith, the senior user may not oust the geographically remote junior user, regardless of the fact that the senior user was the first to adopt the mark. 

The common law doctrine of good faith adoption stems from two Supreme Court cases decided in 1916 and 1918. In both cases, the Court was called upon to decide whether the senior user was entitled to enjoin the national junior user regardless of the fact that the junior user was the first to use that mark in that area. From these decisions came the “Tea Rose-Rectanus” doctrine. The doctrine states that:

(1) The territorial scope of an unregistered mark is limited to the territory in which the mark is known and recognized by relevant consumers in that territory.

(2) The national senior user of an unregistered mark cannot stop the use of a territorially “remote” good faith national junior user who was first to use the mark in that “remote” territory.

The practical result of these two cases, and those that have come later, is that the national senior user does not have priority over the national junior user throughout the entire United States. Conversely, a junior user has the right to exclude the senior user from expanding into his area so long as the junior user adopted the mark in good faith. While this is a well established and universally accepted defense to trademark infringement, the circuit courts are split on what the Supreme Court meant by “good faith” adoption. Those circuits that have been called upon to determine this answer have generally fallen into two categories: knowledge only and knowledge plus intent. The remaining circuits have yet to choose a side.

100 J. Pat. & Trademark Off. Soc’y 671 (2019)

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