What is a Common Law Trademark?

A common law trademark is a trademark used with the offer or sale of products and services.  Most trademarks start out as common law trademarks and then the owner later decides to register them federally.  Until they become federally registered, trademarks have fewer protections and more limitations than registered marks, and they are more difficult to enforce.

Nonetheless, common law trademark protection can still be enforced and helpful in certain situations.  I have successfully wielded common law trademarks for clients many times to stop competition from someone who is cutting into their business.

What is a common law trademark?

In the United States, trademark rights are almost always based on use.  Except for a very few situations, if you don’t use a trademark, you cannot have rights in that trademark.  That means you can’t stop others from using the trademark or a confusingly similar variation of it.

When you start using a trademark – let’s say you run a food truck or own a clothing company – you will begin to develop common law trademarks.  Just by using the mark, by wrapping your food truck with your name, or sending customers home with branded to-go containers, or putting your logo on your hangtag, or running a website that advertises your clothes, you develop common law trademark rights.

And that is really all you need to do develop common law rights: just use your business name as you normally would.  Your state law will then recognize that you have rights in that name.  You can use the TM symbol if you’d like to let everyone that you consider the name to be your trademark.

How is it different from a registered trademark?

While common law trademark protection exists by virtue of your mere use of the trademark in connection with the sale of goods or services, a registered trademark is something for which you have to file an application with the federal government.  Once you do register your mark, you can use the ® symbol instead of the TM symbol.

The United States Patent and Trademark Office maintains a record of all the registered trademarks in the US.  Once registered, a trademark is given national rights.  This is a major difference.  Common law trademark rights are much more difficult to acquire nationally.  Because common law rights arise only through use and can only be enforced pursuant to state law, they develop geographically as you use the mark.

In other words, if you run a real estate brokerage and operate in Arizona, you will develop common law rights in Arizona, but not in Nevada.  If you later expand into Nevada, you’ll develop rights there.  But if you never expand further, you won’t ever have common law rights in any other states.  That means that someone else will be free to use your name in those states.

Because a registered trademark is enforceable nationally, so long as you have used your trademark somewhere in the US, you have rights across the entire US, even in states and locations that you have not entered yet.

How do I establish a common law trademark?

It is about as easy as can be.  Just start using the trademark.  As you use your trademark in your advertisements and on your products and services, you will develop common law trademark rights.  And as you expand that use geographically, your rights will expand geographically, too.

One caveat: consider performing a trademark search first.  If someone else has a similar name, they may be able to prevent you from using yours.

What are the limitations of common law trademark rights?

Common law trademark rights are set by state law.  Therefore, I can’t tell you what the rights and limitations are in your particular state.  If you are in Arizona, feel free to call me at 602-281-6481 and we can talk about your particular situation.

However, because they are created by state law, they are also limited by state lines.  Common law trademark rights generally will not extend beyond the borders of the state in which you are using your trademark.  So you may not be able to enforce your rights in another state, even if someone is using the exact same name for the exact same service.

Last year, I ran into this situation.  I’ll describe here it with different names and locations.  A client here in Arizona had a company with a name, which we will call ABC Co.  There was another company with a very similar name – let’s say ABCD Co. – operating in New Mexico doing essentially the same thing my client was doing.

ABCD Co. received a few calls asking for ABC Co.  The owner of ABCD Co. was a hothead and sent my client a cease and desist letter and a lot of profanities and threats.  Unfortunately for him, ABCD Co. did not have a registered trademark, which meant his company did not have national rights.  Without national rights, you have to fall back on common law rights enforcement.

I pointed this out.  I also pointed out that while ABCD Co. may have been operating in New Mexico for a few years, it had no active business in Arizona.  We asked opposing counsel for proof of sales activity, jobs, work orders, receipts, advertisements, etc. – anything to show that ABCD Co. had been reaching into Arizona and using its trademark here.  They couldn’t provide anything.

So we called their bluff; they couldn’t follow up.  While we were doing this, however, we filed a federal trademark application for my client’s mark.  ABCD Co. filed a federal application, too, but they were late to the party, and ours beat theirs by a few weeks.  Since trademark applications are normally reviewed on a first-filed basis, we had priority in line.

My client’s trademark is now issued, and they have national protection on the mark.  ABCD Co.’s trademark application was refused in light of my client’s application.  That means that ABCD Co. now cannot expand its use beyond New Mexico, while my client can expand across the country (except for New Mexico).

This is an example of how the limitations of a common law trademark can prevent over-enforcement but also how one party can leverage a common law trademark to block another party with a better long-term game plan.

How do you strengthen common law trademark rights?

There are a few ways to strengthen common law trademark rights.

First, in Arizona at least, you can file for a state trademark registration.  This doesn’t really strengthen your rights, but it does result in an officially-issued certificate which can be persuasive when dealing with less-sophisticated parties.

Second, you can expand your geographic use of your trademark.  While a common law trademark is limited by state borders, you can develop common law rights in multiple states by using your trademark in multiple states.  You’ll build a sort of patchwork of rights in this way.

Third, you can expand the products and services you offer under your trademark.  This will expand the breadth of your trademark and possibly enhance your ability to claim a competitor infringing.

Fourth, the best way to strengthen your common law trademark rights: file an application and prosecute it successfully to obtain a federal registration of your trademark.  Federal registration offers a number of benefits beyond national protection.  One of the primary benefits is a passive one: once the Trademark Office receives your application, it will refuse to register anyone else who files for a trademark that is similar to yours.

Summary

There are a lot of other nuances to common law trademarks, especially regarding how they can interact or conflict with other marks.  This article can’t touch on all the issues that can arise with common law marks.  If you have a case of local trademark infringement, or you want to consider taking the next step of federally registering the trademark you have been using in your area, or you have other questions about common law trademarks, feel free to contact Phoenix trademark attorney Tom Galvani at 602-281-6481.