Use Based v. Intent-To-Use Trademark Applications

There are at least two types of federal trademark applications. The first is a use-based trademark application, also known as a section 1(a) application corresponding to the section of the law that authorizes the application. The second type is an intent-to-use application also known as a section 1(b) application.

A use-based application is one where the applicant is already using the mark in commerce at the time when the application for federal trademark registration is filed. Use of the Mark in commerce can include shipping or selling the goods with the mark or rendering services after advertising those services with the Mark.

Intent-to-Use Based
An intent-to-use application is one where the applicant has not used the mark in commerce or business at the time that the application is filed. The intent to use application allows the applicant to reserve a trademark that they intend to use before actually using it.

This allows the applicant to stake a claim to rights in a name (or other mark) while doing the work that is required to bring the product or service to market. Many preliminary matters such as purchasing supplies, designing logos, designing graphics, designing packaging, and so forth may need to be completed before the product or service can be put on the market. Such activities might require a substantial lead time between the time when the trademark is selected and the time when the products or services are provided. Therefore an intent to use application allows an applicant to reserve a mark so that they do not have a problem running into others who are attempting to register the same or similar name while there working on their product/service start up activities.

A use-based application is for those already using the mark and an intent-to-use application is for those who plan to but are not yet using the mark.

What Happens After A Federal Trademark Application is Filed?

TrademarkApplicationFiled-001Generally an applicant should not be too concerned with how long it takes to obtain a federal trademark registration at the United States Patent and Trademark Office. Once your trademark application is filed, later filed applications by others are less of a concern. Further, in the United States, trademark rights accrue based not only on registration but also on use. Therefore simply by using your trademark in commerce you can begin to generate common law rights which you can assert even before you obtain a registration. This article will explain the process and the general timing of events after an application is filed.

Trademark Office Approval Is No Guarantee of Freedom to Use Mark
Approval of a trademark application by the U.S. Patent & Trademark Office (USPTO) does not guarantee that the use of the mark is clear, e.g. that your use will not infringe another’s trademark rights. This is true because, as mentioned above, a trademark user can generate common law rights by use alone, and the USPTO will not search for common law trademark usages that are not registered. Only a comprehensive trademark search can reveal information sufficient to provide advice regarding whether your use of a mark is clear.

If you’re concerned about another filing a trademark application before you begin using your trademark, you can file an intent-to-use trademark application. After the intent to use application is filed, you can begin using your mark without waiting for the trademark registration to issue. In fact there is almost no trademark reason to wait, after an application is filed, for a trademark registration to issue before using your mark. This is true because the USPTO’s granting a registration, as provided above, is not a bulletproof clearance for you to use your Mark. In certain circumstances a court can reverse the trademark office’s decision to grant a trademark registration if a prior trademark user has superior rights. If you need clearance assurance you should have a comprehensive trademark search conducted.

Filing to First Office Action or Allowance
After your trademark application is filed you should expect to hear back from the trademark office whether there is an objection or refusal to your application or whether it will be allowed within three to six months. Current USPTO stats provide the average time to first office action (first response from the USPTO) or allowance after filing is about three months.

Refusal or Objection
If there is a refusal or objection the USPTO will provide that to you in writing in the form of a Office Action. The Office Action will explain the time period in which a response is required. Generally a six-month time frame from the date of the Office Action is allowed for filing a response. A response can be filed earlier.

Refusals or objections provided in an Office Action maybe due to relatively simple formalities, such as the USPTO requiring a change to the description of goods/services provided in the application. In other cases refusals are based on an allegation by the Trademark Examining Attorney that your mark conflicts with another prior registered mark. Refusals based on an alleged conflict with another mark tend to require more involved responses than those regarding application formality issues.

If you receive a refusal or a rejection, the time until you receive a registration, if you’re successful in overcoming the refusal or objection, depends on how long you wait to file a response and how long the Trademark Office takes to consider and reply to your response. Further, in some cases it may be necessary to reply to multiple Office Actions issued by the trademark office or occasionally to pursue an appeal, all of which take more time.

If the USPTO does not issue a rejection or refusal or if you are successful in overcoming a rejection or refusal, then the USPTO will take an action based on the type of trademark application you have filed (use v. intent-to-use). If you filed a section 1(a) use-based application for registration on the primary register, then the USPTO will provide you with a notice that they will publish the application for opposition. Once the application is published for opposition anyone who believes they would be damaged by you receiving a registration has the opportunity to object to your application by filing an opposition. If no opposition is filed then the US PTO will take one of two courses depending on the type of application that is filed.

Registration or Notice of Allowance
If the application is a used based section 1(a) application then the USPTO will issue a certificate of registration within a few months after the end of the 30 day opposition period, if no opposition is filed. If the application is a section 1(b) intent-to-use application, then the USPTO will issue a notice of allowance within a few months after the end of the 30 day opposition period. The applicant will be given six months after the notice of allowance to file a statement of use proving that they are using the trademark in commerce. Extensions of time can be requested in six-month increments if the applicant cannot file a statement of use showing use of the mark within six months after the notice of allowance.

Currently it takes on average 10 months for a typical use-based trademark application to register and for a intent-to-use application to receive a notice of allowance. Your application could take longer or less time depending on if there is a refusal or objection or if the USPTO processes your application at a quicker or slower rate than average.

Should I File for a State or Federal Trademark Registration?

FederalTrademark_vs_StateTrademarkNow that you determined that you need to seek a trademark registration. The next question is what type of registration should you seek: a registration from your state or registration from the federal government? The answer is the federal government in most cases and here’s why.

State trademark registrations cost less. The government fees for state registration depend on the state but tend to be less than a federal registration. For example, an Illinois state trademark application has a $10 registration fee. Whereas a federal trademark application at the United States Patent & Trademark Office has a fee in the range of $275 to $325 per class of goods/services declared in the application.

Geographic scope
The scope of protection provided by state trademark registration depends on the state, but does not extend outside of the boundaries of the state. In contrast, a federal registration provides protection throughout the entire nation. So, while state trademark applications cost less you also get less protection.

Conflict with Federally Registered Marks
One problem with relying on a state trademark registration is that the U.S. Patent and Trademark Office (USPTO) will not check state trademark databases when reviewing applications for a federal trademark registration. Therefore, your state trademark registration will not block a party from obtaining a federal trademark registration on a mark that is the same or similar to yours. If someone has obtained a federal registration before you file and obtain a state registration, their federal registration will trump your state registration. Even if you obtain your state registration before a third party obtains a federal registration, your rights may be limited by the existence of the federal registration. The bottom line is that a state registration will not provide much benefit in the case of a conflict with a federal application or registration.

Problems with State Trademarks: the case of Burger King v. Hoots
The case of Burger King of Florida Inc. v. Hoots, 403 F. 2d 904 (7th Cir. 1968), shows how a state trademark registration will not hold up against a federal trademark registration, even if the state registrant is the first to use the mark within the state. In that case, Burger King (the well-known chain) sued Gene and Betty Hoots for operating a restaurant in Mattoon, IL under the name Burger King.

Hoots started their Burger King restaurant in Mattoon in 1957 and in 1959 they received a state trademark registration from Illinois, without knowledge of plaintiff Burger Kings’ prior use of the same mark. The plaintiff Burger King started in Florida in 1953 and was operating 29 stores in multiple states by 1957. The plaintiff Burger King filed a federal trademark application in September 1958 and received its federal registration over the Burger King mark in 1961. In the same year Burger King opened a restaurant in Skokie Illinois and had knowledge of the Hoots Illinois trademark registration at the time. Burger king continued opening restaurants and had 50 Burger King restaurants in Illinois in 1967.

Basically Hoots was the first to use the Burger King mark in Illinois and was first to register the mark in the State of Illinois.

The court found that the Hoots’ rights to use the Burger King mark were limited to the common law right in the geographic market area about their operation in Mattoon (20 mile radius around the Mattoon location). The court found that federal trademark law trumped state trademark law and the state law could not expand Hoots common law rights. The state registration did not give Hoots the right to operate anywhere in Illinois because that was beyond the area where the Hoots actually used the mark.

Even though Hoots was first to use the mark in Illinois, their state trademark registration was essentially worthless against a federal trademark that was obtained after they started using the Burger King mark in Illinois. This case shows the weakness of state trademark registrations.

Local Businesses and the Internet
If your business is strictly local, you might be considering a state trademark registration. One such example of a strictly local business might be if you have a restaurant and you have no plans to create a chain of restaurants that extended outside of your state. Before the rise of the Internet, the approach of seeking only state trademark protection on strictly local business had more merit (however it still had the risks of conflict with Federal marks listed above).

But now virtually every business has a website that is accessible from anywhere in the world. Therefore if you have a strictly local business and people are searching for your business on the Internet, it’s possible that your business name or trademark will conflict with another business located in a different locale. In other words, the presence and searching on the Internet creates the possibility that strictly local businesses will run into trademark conflicts online that they wouldn’t otherwise encounter. Some search engines attempt to provide search results based on the searcher’s location, however relying on the search engine algorithms to protect your brand is not recommended.

Border issues
Businesses located near the border of their state can also run into problems. State trademark rights do not extend beyond the boundaries of the state. So, if your business is located close to the boundary of your state and another business starts up across the boundary in another state, but close by, your state trademark registration will not be effective to stop them.

State trademark registrations are generally inexpensive but provide few benefits. Therefore if you’re interested in protecting your brand you should consider filing a federal trademark application if your circumstances allow.

Seventh Circuit Questions Usefulness of Trademark Surveys

CrackerBarrelThe Cracker Barrel Old Country Store (CBOCS) is a well known chain of restaurants. Kraft is a well-known manufacturer of food products sold in grocery stores, including a variety of packaged cheeses. Some of the packaged cheeses are sold under the trademark “Cracker Barrel.” Kraft sued CBOCS when it discovered that CBOCS planned to sell food products, such as packaged hams, in grocery stores under its logo, “Cracker Barrel Old Country Store.” Kraft Foods v. Cracker Barrel Old Country Store, No. 13-2559 (7th Cir. 2013).

Kraft objected only to the sale of products under the mark “Cracker Barrel Old Country Store” in grocery stores. It did not object to the sale of such products in the CBOCS restaurants or online. The district court granted a preliminary injunction prohibiting CBOCS from selling food products under the Cracker Barrel Old Country Store mark in grocery stores. The Seventh Circuit Appeals court agreed and upheld the injunction.

The 7th Circuit strongly questioned the usefulness of surveys in trademark lawsuits. Generally in a trademark dispute the question is whether there is a likelihood that the consumer would be confused to believe that the product/service of the junior user originates from the same source as the senior user’s product/service. One piece of evidence that a party may put forth is a survey of relevant consumers for showing whether confusion is likely.

Expensive Surveys
The problem with survey’s, aside from the issues identified by the Court, is that they can be expensive. An expert must be hired. The expert must plan a survey relevant to the case. The survey must be conducted. Then the expert must prepare a report with conclusions from the survey. Then the other party has the right to depose and otherwise attack the survey and its conclusions. All of the expert cost associated with surveys can total from $20,000 to over six figures depending on the case.

The Opportunity to Forgo Surveying
The court’s negative view of the value of surveys, as explained below, is helpful for litigants with limited budgets. If a litigant can dispense with the need to conduct surveys, the litigant can reduce costs substantially. Yet, forgoing evidence that could be supportive of the party’s position is always a risk. However, a party may decide to forgo a survey, particularly in the 7th Circuit in view of this Kraft Foods case.

General Problems with Surveys
The court started off with an overview of the problems with relying on surveys in trademark cases. The court stated that “Consumer surveys conducted by party-hired expert witness are prone to bias.” Citing several academic articles, the court continued, “There is such a wide choice of survey designs, none foolproof, involving such issues as sample selection and size, presentation of the allegedly confusing products to the consumers involved in the survey, and phrasing of questions in a way that is intended to elicit the surveyor’s desired response— confusion or lack thereof—from the survey respondents.”

Further referring to the academic articles, the court stated, “Among the problems identified by the academic literature are the following: when a consumers is a survey respondent, this changes the normal environment in which he or she encounters, compares, and reacts to trademarks; a survey that produces results contrary to the interest of the party that sponsored the survey may be suppressed and thus never become a part of the trial record; and the expert witnesses who conduct surveys in aid of litigation are likely to be biased in favor of the party that hired and is paying them, usually generously.”

The court concluded that generally, “All too often experts abandon objectivity and become advocates for the side that hired them.” This makes logical sense. A party will not hire an expert to give them a conclusion that damages the party’s position.

Professional Expert Witnesses
Turing the the survey in the Kraft Foods case, the court noted that Kraft’s Expert, Mr. Poret, appeared to be “a professional expert witness.” The court said that it would not hold this against him. However noting that Poret appears to be a professional expert witness implies a negative connotation. This appears especially evident when read in context with the court’s citation to academic literature to support the proposition that too often become advocates for the side that hired them.

Kraft Survey Problems
The Poret survey was conducted online via email. Poret emailed photos of CBOCS sliced spiral hams to 300 american consumer of whole-ham products and then asked in the email whether the company that makes ham also makes other products, and if so what products. About a quarter of the respondents said the company makes cheese. However the court was not convinced by this result noting that consumers could have guessed that the company makes other products because many companies have multiple product lines. Then the consumer could have guessed that the company made cheese.

Next, Poret showed “a control group of 100 respondents essentially the same ham, but made by Smithfield—and none of these respondents said that Smithfield also makes cheese.” The court noted that “Poret inferred that the name ‘Cracker Barrel’ on the ham shown to the 300 respondents had triggered their recollection of Cracker Barrel cheese, rather than the word ‘ham’ being the trigger.” The court found that the relevance of this conclusion was obscure. The court stated, “Kraft’s concern is not that people will think that Cracker Barrel cheeses are made by CBOCS but that they will think that CBOCS ham is made by Kraft, in which event if they have a bad experience with the ham they’ll blame Kraft.”

Validity of Online Surveys Questioned
Also the court question the validity of online surveys when drawing conclusions about products purchased in person in a store. The court said, “it’s very difficult to compare people’s reactions to photographs shown to them online by a survey company to their reactions to products they are looking at in a grocery store and trying to decide whether to buy.” The court continued, “The contexts are radically different, and the stakes much higher when actual shopping decisions have to be made (because that means parting with money), which may influence responses.” Online surveys are less expensive than in-person in-store surveys. However, this opinion counsels away from using online surveys when the products at issue are purchased in-person in a retail location.

Side-by-Side Statististical Sales Data Also Questioned
The court proposed using statistical sales data as an alternative to a survey. But then concluded that such statistical sales data would likely lack reliability necessary to support a basis to refuse “granting preliminary injunctions in trademark cases.” The proposed statistical data process would involve analyzing the actual sales of the two products at issue in the real world. “…in some of [the stores] Kraft Cracker Barrel cheese would have been displayed side by side with CBOCS hams plus similar meat products sold at comparable prices, while in other stores the cheese and hams would have been displayed in different areas of the store, and still other grocery stores would have carried CBOCS hams but not Kraft Cracker Barrel cheese.” The court stated that by examining the greater sales, if any, that “CBOCS hams obtained by proximity to the Kraft Cracker Barrel label, an expert witness might be able to estimate the extent of consumer confusion.” The greater boost in sales in those CBOCS hams in proximity to the Kraft Cracker Barrel cheese, the greater likely association of the CBOCS hams with the marker of the Cracker Barrel cheese. Still the court discounted this method in this scenario, stating, “nor have we such confidence in the reliability of such a study that we would think it an adequate basis for refusing to grant preliminary injunctions in trademark cases.”

Expert Testimony on Buying Habits And Consumer Psychology Suggested
There was one type of evidence that court would consider. The court noted that testimony of “experts on retail food products about the buying habits and psychology of consumers of inexpensive food products” would be illuminating in trademark cases. The court cited an academic article providing that “neither courts nor commentators have made any serious attempt to develop a framework for understanding the conditions that may affect the attention that can be expected to be given to a particular purchase.”

The courts criticism of trademark surveys is a benefit to litigants on a limited budget. While forgoing potentially favorable survey evidence is a risk, the opinion in this case provides authority for calling into question the other party’s survey conclusions.

Trademark Application Problems: Wrong Owner Named

While the United States Patent and Trademark Office (USPTO) provides online forms that appear to make it easy to file a trademark application, there are several portions of the application that can trip up an inexperienced applicant. One of those areas is the owner portion. The USPTO requires that the correct owner of the trademark be specified in the application to register the trademark. This sounds easy but in many cases it is not, as will be shown below.

Individual and Partnership Owner Problems
Take the case of American Forests v. Barbara Sanders, 1999 TTAB LEXIS 529 (TTAB 1999). In this case, Barbara Sanders filed a trademark application to register LEAF RELEAF to be used with the goods of leaf bag equipment. The application named herself individually as the owner/applicant.

Later another company, American Forests, filed an opposition seeking to prevent Barbara Sanders from receiving a registration over LEAF RELEAF. American Forest alleged (1) that LEAF RELEAF was confusingly similar to its trademarks GLOBAL RELEAF and RELEAF and (2) that the application named Barbara Sanders as the applicant/owner but that Sanders did not have a bona fide intent to use the mark. The second issue is the focus of this article. During a deposition Barbara Sanders admitted that she intended to use the LEAF RELEAF, not by herself individually, but together with her husband. In other words she intended to sell products under the LEAF RELEAF together with her husband in a partnership and not on her own.

It is a general principle of law that when two or more people join together for the purpose of making a profit, they have formed a partnership. This can be true even if there is no written agreement between the two or more people. Further, Barbara Sanders used the word partnership to describe her and her husband’s affiliation regarding the products to be sold. Therefore, the proper applicant for the trademark application was the partnership comprised of Barbara Sanders and her husband.

Section 1 of the Trademark act requires that the application be filed in the name of the trademark owner. When the owner named on the application is not the person or entity that intends to use the mark or actually is using the mark, then the application is void and the registration will be refused. See also Trademark Manual of Examining Procedure § 803.06.

In the American Forests case, Barbara Sanders’ application was found to be void and Sanders lost the opposition and her application. The rule is rather strict. You see here even though Barbara Sanders was going to be using the mark (together with her husband), she was not the proper owner because it was actually a partnership between her and her husband that was legally recognized as intending to use the mark.

Start-up Owner Problems
Another situation where this issue arises is in start-ups. Often an entrepreneur will come up with a name for their company or product before the company (LLC or Corporation) is legally formed. Once a name is chosen early filing of an intent-to-use trademark application is encouraged so that someone else doesn’t file an application on the same or similar name and block you from using your name. However, if an entity is not yet formed, filing an application in the name of a non-existent entity is not a good idea. And, if the individual does not intend to sell products/services himself or herself before the legal entity is formed then, like in the American Forests case, the individual or individuals would not be proper applicants.

Who is the Owner?
A good question to ask to determine the owner is: who will receive revenue from the first sales? If it is a company, then the company should be the applicant. If the company is not formed, then it may be necessary to first have the company legally formed. Then a trademark application can be filed in the name of the company that will own, control, and realize revenue from the sale of products/services under the mark.

Exceptions for Minor Errors
Some exceptions exist that allow minor errors in the owner’s name to be corrected. However it is best to ensure the owner is properly named. You should contact a trademark attorney to determine whether errors in your case are correctable.

Circumstances of your company or start-up enterprise need to be considered in order to determine who should be named as the owner on a trademark application and whether other steps (e.g. forming the legal entity) are needed before a trademark application is filed.

Zynga Sues “Bang With Friends” Hookup App Maker for Trademark Infringement

Filed in the “good luck with a trademark fight based that name” department comes Bang With Friends, Inc. (BWF) and their casual sex app of the same name. The app is designed to discreetly connect a user with the user’s facebook friends who also have the Bang With Friends app and are interested in hooking up with them. The BWF website says “Your friends will never know you’re interested unless they are too.” Classy.

Not surprisingly, on July 30, 2013, Zynga filed a trademark infringement complaint against BWF alleging infringement of Zynga’s “with friends” trademarks. Zynga Inc. v. Bang With Friends, Inc., No. 13-cv-3517 (N.D.Cal., July 30, 2013). Below we’ll look at what can be learned about brand protection from this case, but first a background on the case.

A Caffeine and Alcohol Fueled All-nighter. According to the Complaint, the Bang With Friends app was created by “three twenty something men over the course of a night and with the help of ‘a lot of Red Bull and Vodka.’” The complaint is written–like any good complaint–to tell a story about the situation. Its not much legal significance that the app was developed through an all nighter fuelled by Red Bull and Vodka–but it lays a background for Zynga’s story and implies a level of outlaw wildness intended to support a showing of wrongful behavior. Yet, I imagine that a lot of software is written at night with the aid of caffeine–did anyone see The Social Network movie? Oh wait, bad example of innocent all-nighters, Facebook has been sued by others claiming its founder stole the idea for Facebook–who knows what actually happened.

Zynga’s Marks. In any event, Zynga is the maker of several social network based games with names having the term “with friends”, such as, Words With Friends, Scramble With Friends, Hanging With Friends, Chess With Friends, Matching With Friends, Gems With Friends, and Running With Friends. Zynga has several federal registrations of marks having the terms “with friends”. Zynga also has a registration over the mark “with friends.”

Who’s First.  Trademark rights accrue to those who first start using the Mark in commerce (in business). Zynga’s “Words With Friends” trademark application claims a first use date in 2009.  Zynga’s “with friends” trademark registration claims a first use date in 2010. According to the complaint the BWF app was launched in January 2013. Zynga likely wins the who’s first battle.

Media References and Recognition. BWF could attempt to show that many others use “with friend” term for apps and therefore Zynga does not own the mark. However, this path seems doubtful. Many times in lawsuits, professional surveys are conducted in order to assess the level and the extent that consumers recognize a given trademark as identifying a source of goods and services. In this case, media coverage has partially done the job of surveys showing such an association. The complainant cites national media coverage of the “Bang With Friends” app that compares it to the Words With Friends or other Zynga “with friends” applications based on the name. This is harmful to the BWF case because it shows that the public finds an association between Bang With Friends and Zynga’s “With Friends” applications. In other words, the public associates the “with friends” words with a source–Zynga–of the game applications previously having those words. This is an indication that Zynga has developed trademark rights (e.g. “secondary meaning” or “acquired distinctiveness”) in the name even apart from the federal registrations.

Given the widespread success and popularity  of the Zynga games having the “with friends” wording and the fact that Zynga was the first used the mark vis-à-vis Bang With Friends Inc., it is likely that Zynga has relatively strong trademark rights in the “with friends” mark. In other words, its likely Band With Friends will be changing their name relatively soon.

Oh no, I Can’t say “with friends” anymore? At this point in the discussion of many trademark cases, this question is often heard bantered: “So, now no one can say ‘with friends’ because Zynga owns it? That’s stupid.” — False. Zynga cannot prohibit all uses of the words “with friends.” Zynga’s rights, if proved, extend to protecting the use of “with friends” when that phrase is used as a trademark, e.g. when it’s used to identify a source of goods or services. Therefore if you say “I’m going to hang out with friends tonight,” you are not using the term “with friends” as a trademark instead you’re using it to describe the activities you are going to undertake. Think about this question: Do you think of the “words with friends” or related “with friends” apps that Zynga sells when this is said? Probably not. Are you trying to sell or promote a product or service? No. Therefore, this is not trademark infringement and Zynga can’t stop you from saying it.

App Developers Take Note: Brand Protection Is Important.  Zynga is doing with the term “with friends” what publisher John Wiley & Sons did with the “For Dummies” book series. Zynga’s choice of names for its apps and its brand strategy illustrates how a trademark, when used with an application that becomes successful, can help the developer transfer that success to subsequent applications. Here, Words with Friends, I believe, was the first app to use the term “with friends.” Zynga’s subsequent apps had names that carried the “with friends” term, which help tell its customers: “if you liked Words With Friends you might also like our next app ‘_______ With Friends.’ ” And after a while, Zynga doesn’t need to say that. Consumers know when they see an app having the term “with friends” that it’s from the source that previously brought them other apps that they enjoyed–e.g. Words with Friends. That’s the power of a strong brand.

Trademark Policing is Necessary. When a mark becomes popular an investment is needed in order to police it as Zynga has done in this case. Not only has Zynga incurred legal fees to file this suit against Bang With Friends, but according to the Complaint they’ve had to file oppositions at the Trademark Office to prevent others from registering similar marks. Stopping others from infringing your mark is generally known as trademark policing. It prevents others from misappropriating the goodwill that has been developed under the “with friends” marks. Further, if a mark goes unpoliced and many third-parties start using the mark, the trademark owner can lose rights in the mark because the mark no longer functions to identify a single source of goods/services. Therefore, trademark law encourages, and in fact requires, trademark owners to police their marks if they want to maintain the trademark rights they have developed.