What if your service business has a location only in one state? What if your business sells goods only in one state?Â Do such business have the opportunity to obtain a federal trademark application?
The owner of a barbershop attempted to register the name of the barbershop “Shear Perfection,” but the Trademark Trial and Appeals Board refused to register the mark. The Board said that the barbershop was a purely local business and the applicant did not show that it provided services “in commerce.” In re Conti, 220 USPQ 745 (TTAB 1983).
There is a limitation on the federal government’s power to register trademarks based on the Constitution, which can impact the contents of a trademark application. In order to determine the first use in commerce date for a trademark application, it needs to be determined whether the use is “in commerce.” The “in commerce” requirement can be a difficult requirement to apply correctly.
The “in commerce” requirement exist because the source of the federal government’s power to register trademarks comes from the Commerce Clause of the U.S. Constitution. The Commerce Clause in Article I, section 8Â of the Constitution, provides “Congress shall have the power …Â To regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”
Many trademark resources don’t explain, or adequately explain, this “in commerce” requirement. The reason for this is that it is complicated and difficult to explain the boundaries of this constitutional requirement. So they just gloss over it. I won’t do that. I’ll attempt to explain it here. But, as I said, the “in commerce” requirement can be difficult to apply. In some cases it is easy and in some cases it is hard. If this is your first trademark application, or if you have not handled many trademark cases, or if you haven’t repeatedly referenced the leading trademark treatise,Â McCarthy on Trademarks, and the TMEP over the years, you might get it wrong. You might get it wrong in a manner that will never matter, or you might get it wrong in a manner that will result in your trademark application being refused or your trademark registration being canceled.
How could getting it wrong not matter? When the actual first use date is after the first used date claimed in the application (i.e. the claimed date is too early) but before the date of the filing of the application (for a section 1(a) use application) or filing of a statement of use (for a section 2(a) intent-to-use application), some courts and the TTAB have found the challenger failed to show the falsity was fraudulent. Health Net v. Mid-America Health Network, Inc., No. 93,163, 2000 TTAB LEXIS 40 (TTAB 2000), Travelodge Corp. v. Siragusa, 228 F. Supp. 238 (N.D. Ala. 1964); See McCarthy Â§Â 19:52. Therefore the challenge failed.Â Nonetheless, you don’t want to chance it. You don’t want to give any potential opponent a bone to chew on. You want to get the date right.
If the actual first used date is after the application is filedÂ (for a section 1(a) use application) or after the filing of a statement of use (for a section 1(b) intent-to-use application), then the resulting registration can beÂ lost.Â
Before continuing with this post, first read the prior post on the uses that qualify as a “first use” in commerce.
What does “in commerce” mean?Â Section 45 of the Trademark Act (Lanham Act), 15Â U.S.C. Â§1127, defines â€œcommerceâ€ as â€œall commerce which may lawfully be regulated by Congress.â€ Section 901.03 of the Trademark Manual of Examining ProcedureÂ (TMEP)Â discusses the commerce that may be lawfully regulated by congress. Three types of commerce under the definition: (1) interstate, (2) territorial, and (3) between the US and a foreign country.
Territorial commerce is commerce within a territory of the United States (e.g., Guam, Puerto Rico, American Samoa, or the United States Virgin Islands) or between the United States and a territory of the United States.
Whether a use is a use in interstate commerce can be difficult to determine. AsÂ explained in my prior post,Â a mark is used in commerce with goods when:
- (A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and (B) the goods are sold or transported in commerce.Â
A mark is used in commerce with services when:
- the mark is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.
InterstateÂ Use:Â Out-of-State Sale or Shipment
Looking at the “in commerce” portion of that requirement, the easiest and clearest case of a use in interstate commerce is a sale or shipment of the goods from one state to a customer in another state.Â This is a use in commerce because the goods have been sold or transported between states and Congress has the power to regulate commerce between states. Similarly, in the service context, the rendering of services from one state to a consumer in another state should be a use in commerce because the services are being rendered between states.
Intrastate Use (In-State): Directly Affecting Commerce
A purely intrastate (within one state) use does not qualify as a use in commerce. However, these purely intrastate situations are probably rare. Congressional power to regulate commerce has been interpreted broadly. The trademark rules provide “if intrastate use directly affects a type of commerce that Congress may regulate, this constitutes use in commerce within the meaning of [the Trademark] act.” TMEP 901.03. Here are some examples of in-state uses that qualified as a use in commerce:
- Mark used to identify restaurant services provided at a single location in-state qualified as a use in commerce where the Â restaurant services were rendered to interstate travelers. Larry Harmon Pictures Corp. v. Williams Restaurant Corp.,Â 929 F.2d 662, 18 USPQ2d 1292 (Fed. Cir. 1991).
- In state sale of imported wines by importer constitutes a “use in commerce” where the goods sold had labels supplied by the importer and that were shipped to the importer in the United States from a foreign country.Â In re Silenus Wines, Inc.,Â 557 F.2d 806, 194 USPQ 261 (C.C.P.A. 1977).
- An automotive service station located in one state was rendering services in commerce because services were available to customers traveling interstate on federal highways.Â In re Gastown, Inc., 326 F.2d 780, 140 USPQ 216 (C.C.P.A. 1964).
- Billiard parlor services satisfy the “use in commerce” requirement where the applicant’s billiard parlor services were advertised out of state.Â United States Shoe Corp. v J. Riggs West Inc, 221 U.S.P.Q. 1020Â (TTAB 1984).
- Hotel located in only one state rendered hotel services in commerce where it rendered services to out-of-state guests, had offices in many states, and advertised in national magazines.Â In re G.J. Sherrard Co., 150 USPQ 311 (TTAB 1966).
- A retail department store located in one state provided department store services in commerce where the mark was used on credit cards issued to out-of-state residents, and on advertisements and catalogs shipped to out-of-state customers.Â In re Federated Department Stores, Inc., 137 USPQ 670Â (TTAB 1963).
The McCarthy trademark treatise, by J. Thomas McCarthy, provides regarding the scope of activities that affect commerce so as to qualify as a use in commerce:Â “If Congress has the power to control racial discrimination at local establishments [under the Civil Rights Act] that (1) serve interstate travelers or (2) sell products which come from out of state [which Congress does], then Congress has equal power to control and register marks used to identify the goods sold buy such establishments.” McCarthy on Trademarks Â§Â 19:123 (2014). Further, McCarthy notes that (1) Congress sought to give trademarks the greatest protection that can be given to them, and (2) that the U.S Supreme Court said the interstate commerce coverage of the Lanam Act has a “sweeping reach.” Id.
McCarthy concludes, “there appears to be no statutory or Constitutional barrier to holding that local sales are made ‘in commerce’ for trademark registration purposes if the sales are either made to interstate travelers or the sale involves purchase of parts, materials, or products from out of state.”Â Id.Â This isÂ McCarthy’s opinion. But a court and the Trademark Office are not required to agree with McCarthy’s opinion. Nonetheless, McCarthy’s position appears reasonable in light of the caselaw.
TheÂ Larry Harmon Pictures Corp. case noted above held that the use in commerce requirement is satisfied by the service of out-of-state customers in a single-location restaurant.
In one Supreme Court case, the court found that the Commerce Clause permitted Congress to regulate (under the Civil Rights Act) a local restaurant that was not frequented by interstate travelers, where the restaurant received about $70,000 of food from out of state. Â In another case, the Court found that the activities of a private recreational club affected commerce merely by the rental of supplies from out of state, playing of photograph records from out of state, and servicing an unknown number of out-of-state customers.
McCarthy concludes that “If Congress has the power to control racial discrimination at local establishments which either (1) service interstate travelers or (2) use products, a substantial portion of which move in interstate commerce, then Congress has equal power to control and register marks used to identify the services rendered by such establishments.” McCarthy on Trademarks Â§Â 19:105 (2014). Again, this is McCarthy’s opinion and it appears reasonable.
When there’s no advertising out-of-state and no showing of out-of-state clients, it may be difficult to show a use in commerce for services. TheÂ In re ContiÂ barbershop case, discussed at the beginning of this post, is an example where the applicant did not show out-of-state advertising and did not show out-of state clients.
It is possible that the outcome of the Conti case might have been different if the applicant showed some out-of-state advertising. In a different case, the Board found that a billiard hall was rendering services in commerce because, while it was operating only in one state, it advertised out-of-state inÂ New York.Â United States Shoe Corp. v J. Riggs West Inc, 221 U.S.P.Q. 1020Â (TTAB 1984).
If you are not making sales or shipments, or rendering services out-of-state, then you need to look closely at your in-state sales or services to be sure that they directly affect commerce.
Photo credit to Roy Luck under this creative commons license.