Hotel Dispute Gets An Extended Stay in Puerto Rico: First Circuit Case Illustrates the Limits of an Incontestable Registration

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
Contact

Gran-Melia2    Melia

In the U.S., a senior user of a trademark can block a junior user within the geographic area of prior use, even if the junior user is the party with an incontestable U.S. federal registration.  This is perfectly illustrated in a recent First Circuit decision.

The Dispute

Hotel Meliá, Inc. (HMI), the defendant-appellant in the case, has been operating Hotel Meliá in Ponce, Puerto Rico for over a century, but with no federal registration.  The plaintiff-appellees were various affiliates of Sol Meliá, S.A., a public Spanish company, which owns and operates one of the largest hotel chains in Europe, along with several hotels in the U.S., all using the name Meliá.  Sol Meliá obtained several MELIA-formative trademark registrations in the U.S. in the 1990s.

In 2007, Sol Meliá renamed a large, luxury resort  it operated in Coco Beach, Puerto Rico from “Paradisus” to the “Gran Meliá.”  Countering lawsuits followed, and eventually a federal district court judge in Puerto Rico granted a motion for summary judgment filed by Sol Meliá.  Even though many of the traditional likelihood of confusion factors favored HMI, the district court held that the two marks could “co-exist within Puerto Rico without causing substantial confusion to the reasonable consumer.”  He concluded that HMI would continue to use the Meliá mark, but only within Ponce, and that Sol Meliá was free to use the mark everywhere in Puerto Rico (and elsewhere throughout the U.S.) except for Ponce.

The First Circuit Ruling

The First Circuit reversed this ruling, holding that there were genuine issues of fact regarding the scope of HMI’s prior rights.  The court noted that “[t]he reputation of an upscale hotel that has been attracting guests for more than a century is unlikely to be limited only to the city where it is located.”  The court noted that the record in the case was “sparse,” and hinted strongly that the district court should re-open discovery before trial.

“Incontestable” Registrations

As this case illustrates, the term “incontestable” can be a bit of a misnomer, or at least convey a false sense of security.  An incontestable registration does indeed create a presumption that the holder is entitled to exclusive use of the mark throughout the U.S., and severely limits the ability of another party to cancel, contest or otherwise challenge the registration.  However, Section 15 of the Trademark Act (15 U.S.C. § 1065) also provides that the holder’s rights are limited “to the extent, if any, to which [its] use . . . infringes a valid right acquired under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration.”  This is why HMI’s rights prevailed.

Prior Common Law Rights

This case also illustrates the perils of expanding into a new territory for companies with well-established international brands.  Both the district court and circuit court opinions are consistent with Sol Meliá having engaged in a gradual expansion of a well-known international brand, with no ill intentions whatsoever; but this messy and no doubt expensive litigation will continue, with HMI now having increased leverage as a result of the First Circuit’s analysis.

One interesting question is whether Sol Meliá’s counsel conducted a full, common-law trademark search before assessing the risks of re-naming its Puerto Rican luxury facility in 2007.  Such searches cost more than searches of federal and state registries, but they can avoid the risk of a protracted litigation such as this.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP - Trademark, Copyright & Unfair Competition | Attorney Advertising

Written by:

Foley Hoag LLP - Trademark, Copyright & Unfair Competition
Contact
more
less

Foley Hoag LLP - Trademark, Copyright & Unfair Competition on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!