So — and please try to stifle your laughing here – I’m now teaching a law school class. Let me just say for the record that it is much more difficult than it looks! I have a renewed respect for my prior professors, and all my friends who teach law school. Sheesh, who knew?
I’m teaching an Intellectual Property Survey Course. This means everything that I put include under the IP umbrella: trademark, copyright patent, invasion of privacy (name and likeness misappropriation), unfair competition, etc. There is a lot to cover!
Currently we’re on the trademark section. Last week, in discussing the issue of “use in commerce” – a critical component to trademark law – generated the following question from one of my students:
“In the notes that follow Blue Bell it discusses what constitutes “use” for trademark law. It is broken up into bona fide use and use in commerce. However, in the 1988 Revision Act, use in commerce was defined to mean “the bona fide use of a mark in the ordinary course of trade.” Therefore, is the use in commerce best looked at as “where” the goods must be used. That is defined in the Lanham Act as. “commerce which may lawfully be regulated by Congress.” Where the bonafide use factors are “how” the goods must be used in order to sufficiently establish trademark ownership. Is this an appropriate way of looking at these two concepts?”
As a side note, this is the true problem of teaching bright students: they really make you stretch your thinking. I mean, I can’t really respond, “like I know!” And so I thought about it, and came up with this answer:
The Act of 1988 amended the prior law to add the phrase “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” The purpose of this was to eliminate the practice of making a “token use” solely to reserve rights in a mark.
Factors to consider when looking at whether there has been a “bona fide use of a mark in the ordinary course of trade” are: (1) the amount of use; (2) the nature or quality of the transaction; and (3) what is typical use within a particular industry.
The Senate Judiciary Committee report regarding this revision stated that the Committee intended the revised definition of “use in commerce” to be interpreted flexibly so as to encompass various genuine trademark uses, including those made in test markets. The idea is that while under the law prior to 1989, the PTO would accept a minimal use to support the filing, the 1988 revision was intended to require a use that went beyond a minimal “token” use made merely to reserve a purported right in the mark” and replace it with a legitimate use. By way of example, illegitimate transactions have included a single shipment of one jar of salt from one corporate officer to another for no charge; and sale of a few dollars’ worth of women’s sportswear to a cooperating company which immediately returned the goods to the seller. Likewise, even bona fide sales may not qualify as sales “in the ordinary course of trade” if they are too sporadic, casual, or nominal.
In some ways, it’s easier to say what will not qualify for a bona fide use. Here are some examples of factors that weigh against finding of a bona fide use:
(1) a single or infrequent shipments of goods that would typically be sold in larger quantities given industry standards;
(2) “sales” only to friends or family;
(3) a lack of concern as to whether the public has an opportunity to buy the product;
(4) the absence of promotional activities for which the mark was used;
(5) passing off of goods;
(6) a first use followed by no sales for a long period of time; and
(7) merely trying to block competitors rather than establish legitimate trade under the mark.
As we discussed, the “in commerce” requirement can be broad as it includes all commerce that can be regulated by Congress, e.g. not only interstate commerce. So for example goods/services will usually be deemed “in commerce” if they are offered to customers across state lines, or shipped over state lines (with the intent of selling them), and even when they are shipped intrastate with the knowledge that they may ultimately find their way beyond. Thus, in answer to your question, “the bona fide use of a mark in the ordinary course of trade” really comes down to both “where” and “how” the goods are sold.”
In addition to that answer, I also came across a recent (2013) case that seems to address this same issue and hopefully helps further clarify. In Scorpiniti v. Fox Television Studios, Inc., 918 F. Supp. 2d 866 (N.D. Iowa 2013), the Northern District of Iowa addressed the issue of whether a trademark had to be used in interstate commerce in order to qualify for protection under the “use in commerce” requirement.
That case involved a religious television program that sought and obtained a trademark for its show, “The Gate.” Fox Television, on the other hand applied for a mark in its show, “The Gates.” Fox’s show was a crime drama. Scorpiniti filed suit.
Given the overlap in the marketplace, e.g. make believe crime stories and supernatural-magical stories – ok, excuse my bias –, the plaintiff asserted claims of trademark infringement, false designation, and unfair competition under both state and federal law. Fox counterclaimed for cancellation based on non-use and fraud on the USPTO, ultimately moving for summary j.
The District Court granted Fox’s motion, basing its decision, at least in part, on its finding that Scorpiniti was not in fact using its mark, “The Gate,” in interstate commerce. The Court reasoned that the “use in commerce” requirement is met when (1) a mark is “used or displayed in the sale or advertising of services” and (2) either (i) the services are “rendered in commerce” or (ii) the services are “rendered in more than one State or in the United States and a foreign country and the person rendering those services is engaged in commerce in connection with the services.” In light of this, the Court held that because Scorpiniti broadcast its program only in Iowa (and even then without any charge to the consumer), the plaintiff had failed to use the mark in commerce.
Apropos to the foregoing, the Court opined that where a mark holder’s initial activities were “never intended to generate revenue” but instead were intended to “generate a market for services that had not yet been developed but would be offered in the future,” the mark holder did not use its mark in the ordinary course of trade. In other words, the Court deems a use as a token use only. The Court ruled that the lack of a commercial use and the limited geographic sue was insufficient for trademark protection at the time it filed its USPTO trademark application.
So based on this, what happens now? As for Scorpiniti, I suppose he can pray for reversal on appeal.
Jonathan Pink received his MFA from UCLA’s School of Film and Television (1988) and was an award-winning screenwriter before becoming an intellectual property and business lawyer. He leads Bryan Cave LLP’s Entertainment & Media Team as well as the firm’s Internet & New Media Team. He is a trusted advisor to business leaders for whom he provides strategic, legal and business advice. His clients include globally recognized media corporations, Internet companies, visual and performing artists, music publishers, record labels, writers, directors, motion picture producers and a broad spectrum of content creators. He has earned an international reputation for achieving client, company and shareholder goals by aligning legal activities with corporate results, expanding business opportunities, protecting intellectual property interests, managing risk and handling complex litigation in state and federal court. His experience includes cases involving copyright infringement, trademark infringement, patent infringement, misappropriation of name and likeness (rights of publicity), misappropriation of trade secrets, breach of contract, unfair competition, and fraud. He was lead defense counsel in a seminal case invalidating as unconstitutional Section 511(a) of the United States Copyright Act, and co-led the defense of Grammy Award winning, American hip hop artists in series of high-profile copyright infringement lawsuits. Mr. Pink is the author of more than three dozen intellectual property-related articles, and has provided commentary on intellectual property issues to ESPN’s Morning Show, NPR’s All Things Considered, and to the New York Times, the Los Angeles Times, and the Wall Street Journal. In August 2013, he became an adjunct professor at Western State University, School of Law. He can be reached at email@example.com.