What is “Common Law” Trademark Protection and How Does it Work?

If you have ever searched for trademark rights, you have probably come across the term “common law rights” or “common law trademarks.” Before diving into how these rights work, it is helpful to start with the definition of a trademark. A trademark is a word, phrase, symbol, design, or a combination of these that identifies and distinguishes the source of goods or services of one party from those of others.

What is “Common Law” Trademark Protection?

Common law trademark rights arise from using a trademark in commerce and are trademark rights without federal registration. These rights are recognized under state law and court decisions. They provide businesses with limited protection in the geographic area where the mark is used, allowing a senior user to stop a junior user from adopting a confusingly similar trademark in the same market.

How Do You Establish Common Law Rights?

Common law rights are created through actual use of a trademark in commerce. The United States Patent and Trademark Office (USPTO) defines “use in commerce” as the bona fide use of a mark in the ordinary course of trade and not a use made merely to reserve rights. The USPTO provides the following guidance:

A mark shall be deemed to be in use in commerce:

• (1) on 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, and
• (2) on services when it 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. 

Mere token use or limited use with insiders will not create common law rights. For example, a handful of sales to family members will not qualify. By contrast, for industries with rare or expensive goods, such as yachts, one or two bona fide sales might be enough. For industries with frequent, low-cost transactions, such as restaurants, substantially more use is needed before common law rights arise.

What is the Scope of Common Law Protection?

Trademark rights are always limited in scope. For common law marks, protection only extends to the geographic area where the goods or services are offered. The Eleventh Circuit Court of Appeals explained that the scope of protection for common law marks “is coextensive only with the territory throughout which it is known and from which it has drawn its trade.” Tana v. Dantanna’s, 611 F.3d 767, 780 (11th Cir. 2010).

The internet has blurred geographic boundaries, but the core rule remains that a business must be actively selling its goods or services in a particular market to claim rights there.

Advantages and Disadvantages of Common Law Trademark Rights

Common law rights arise automatically and at no cost, which can be useful for businesses that are just starting out. However, they come with important limitations.

• The rights are confined to the geographic markets where the mark is used
• Enforcing rights is more difficult because common law marks do not carry the presumptions that come with federal registration
• A registered mark provides nationwide protection and priority against later users
• A registered mark that has been in continuous use for at least five years may become incontestable, which provides stronger legal defenses against junior users
  

The Eleventh Circuit in Tana highlighted this difference, noting that owners of registered marks enjoy nationwide rights and legal advantages that common law holders do not.

Conclusion

Common law trademark rights provide automatic protection once a business begins using a trademark in commerce. However, these rights are narrow in scope and more difficult to enforce than federal trademark rights. For some businesses, common law protection may be sufficient, but for most, federal registration offers stronger, broader, and more reliable protection. Because branding is a core business asset, securing federal registration is often the best way to ensure long term value and enforceability of a trademark.

To ensure your brand is fully protected, contact Jimerson Birr today.