Do I Need To Trademark Under State Law?

by Revision Legal
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Many are familiar with trademark registration under federal law. Some may not know that trademark registration is also available under state laws. In general, registering a trademark under state law is unnecessary, but there are some circumstances in which state trademark registration has value – when federal registration is not allowed and when your trademark might not be famous enough for protection under the anti-dilution provisions of federal law.

Why is State Trademark Registration Mostly Unnecessary? The Story of Burger King

The main reason why trademark registration under state law is generally unnecessary is that state registration does not give you priority in the whole state and state registration does not have priority.

The case of Burger King of Florida, Inc. v. Gene Hoots and Betty Hoots, D/b/a Burger King, 403 F.2d 904 (7th Cir. 1968) is a famous example. The plaintiff was the now-very-famous Burger King that is a national chain of fast food restaurants. The national chain began operating in Florida in 1953. As the court tells us, the national Burger King expanded quickly, with 15 restaurants by 1955 operating in Florida, Georgia, and Tennessee; another 14 restaurants within the next year in Alabama, Kentucky, and Virginia; another nine restaurants opened in the next year. In 1961, the national chain opened its first Illinois Burger King restaurant in Skokie. In 1961, the national chain registered the trademark “Burger King” under the Lanham Act. By 1967, the national chain operated more than 50 restaurants in Illinois.

By contrast, Gene and Betty Hoots operated only one Burger King restaurant that they opened 1957 in Mattoon, Illinois. They registered their trademark to the name “Burger King” in 1959 under Illinois law without knowledge of the national “Burger King’s” prior use of the same mark in Florida and the southeast.

Initially, the Hootses sued in state court for infringement of their state trademark. The national chain sued in federal court for infringement of their federal trademark. In the end, the federal court held that the federal trademark took priority over the state trademark. As such, the Hootses were prevented from using the “Burger King” mark outside of Mattoon, Illinois.

However, the Lanham Act, 15 U.S. Code § 1115 (b) (5), provides a so-called “limited area defense” to infringement if the users of the “junior mark” (like the Hootses) were continually using a mark in a local area, without knowledge of the “senior mark.” Because of this provision, the federal court ruled that the Hootses could continue to use the name “Burger King” for their local restaurant and that the national chain could not open one of their “Burger King” stores within a 20-mile radius. As reported a few years ago, that remains the status quo in Mattoon, Illinois.

As can be seen, having a trademark registered under Illinois law did not provide much protection against a litigant holding a trademark under federal law.

State Law Trademark Registration Where Federal Registration is Not Allowed

That being said, there are a couple of circumstances where state trademarks are needed. The first involves situations where federal registration is not allowed. At the moment, the most well-known example involves the cannabis industry. Recreational use of marijuana is fully legal in eight states and the District of Columbia. Those states:

  • Alaska
  • California
  • Colorado
  • Maine
  • Massachusetts
  • Nevada
  • Oregon
  • Washington

However, because recreational use of marijuana is prohibited by federal law, federal trademark registration cannot be obtained under the Lanham Act. This is the “unlawful use doctrine” under which the USPTO will deny registration for trademarks sought in connection with unlawful sale of products or services.

Under these circumstances, registration of a trademark under state law is essential. Thus, marijuana growers and retailers would be wise to have an aggressive registration plan to obtain registration under all of the state regimes where marijuana use is legal in some manner.

Growers and retailers would also be wise to use their marks in cross-state sales and distribution. And to be creative. As most know, a “trademark” is a word, phrase, symbol, design, or combination thereof, which identifies and distinguishes your goods/products (or services) from other goods/products. Do not forget that trademarks cover scents, the shape of a product’s packaging, and short musical “phrases” or unique sounds.

Dilution of Trademark Under State Law

There is a second reason why having a trademark under state law might be useful – dilution of trademark claims involving only locally or regionally famous marks. Under the Lanham Act, the owner of a trademark can sue for dilution. To do this, a plaintiff must show that the plaintiff’s trademark is famous and that the defendant’s use of the same mark (or a confusingly similar mark) causes a likelihood of dilution by blurring or tarnishing.

Note that under the Lanham Act, the senior mark must be “famous;” that is, “famous” nationally.

However, not all trademarks will be “famous” nationally and, as such, they will not support a dilution claim under the Lanham Act. A recent example is AEGIS Software, Inc., d/b/a San Diego Spirits Festival v. 22nd District Agricultural Ass’n, Case No. 15cv2956 BTM (BLM) (U.S. Dist. S.D. Cal. 2017). In that case, the court held that the “San Diego Spirits Festival” (“SDSF”) was not a “famous” mark as that term is used by the Lanham Act. The SDSF was/is a relatively new yearly festival in San Diego which offers specialty cocktails and liquors to the attendees. A competing festival called “Distilled: San Diego Spirit & Cocktail Festival” was started and SDSF sued under many theories including trademark dilution. However, since the plaintiff’s mark was not famous, the federal dilution claim was dismissed.

If your trademark is not “famous” nationally, then state trademark statutes can be used to protect your mark from dilution. A good example is Wedgewood Homes Inc v. Lund, 659 P.2d 377 (Ore. 1983). In that case, under the Oregon trademark statute, a home builder had used the mark “Wedgwood” for 25 years and it had become locally “famous.” The home builder successfully sued retirement apartment complexes for using the names “Wedgwood Downs” and “Wedgwood Place” which were not built or associated in any way with the homebuilder.  See also Florida International Univ. v. Florida National Univ., 830 F. 3d 1242 (11th Cir. 2016) (discussing “famous” in Florida under the Florida trademark statute; holding “FIU” was “famous” but that no confusion or dilution existed by defendant’s use of “FNU”).

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.

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