What are the Advantages and Disadvantages of a Common Law Trademark?
When building a brand, protecting your intellectual property is vital. For many, the first step is establishing a trademark—whether through common law rights or federal registration. A common law trademark is the easiest to attain, but is a common law trademark enough protection for your brand? While a common law trademark may provide some protection, it often offers limited reach and significant challenges when attempting to enforce it. To better understand why relying solely on a common law trademark could be a risky strategy, we'll explore the concept, its enforcement challenges, and the limitations of the protections it provides. We'll also share practical examples showing why registered trademarks are a smarter route for robust legal coverage.
What Is a Common Law Trademark?
A trademark is a symbol, word, phrase, or design that distinguishes the goods or services of one business from those of another. You can think of it as your brand identity (or "goodwill" or reputation) that you have established by the notoriety of your commercial activity, and what sets you apart from others, who may offer similar goods and/or services to your own. A common law trademark arises automatically when a business begins using a unique mark or logo in commerce. You do not have to take any special steps nor fill out any special paperwork to establish a common law trademark. It is enough that you use that symbol, word, phrase, or design (or combination thereof) in the marketplace. Unlike federally registered trademarks, common law trademarks are governed by state laws and rely on actual use rather than a formal registration process. Common law trademarks are often called a "poor man's trademark" and have a long history in the United States, dating back to the Colonial Era (since the US did not establish a federal trademark protection statute until much later).
Two key concepts of importance to a common law trademark are: a) when you first started to use that trademark in commercial activity; and b) what geographic region did you establish your commercial presence under that trademark. Common law rights are geographically confined to the area where the trademark is actively in use. For example, if a local deli owner in Dallas is the first to use a specific name or logo, they might automatically have some trademark rights in that specific market area—but no protections beyond it. If you are the first to use that same name or logo in another market area, you likewise attain common law rights in that geographic area (and can co-exist with the Dallas deli, in that neither of you can prevent the other from using the name) Meanwhile, federally registered trademarks provide exclusive, nationwide rights under the oversight of the U.S. Patent and Trademark Office (USPTO). The geographic reach of a federal trademark registration is the entirety of the United States, whether or not you have previously conducted commercial activity in that entire geographic region.
For more discussion of Common Law Trademarks, see our other Blog article - https://www.iveticlaw.com/what-is-a-common-law-trademark
Advantages of Common Law Trademarks
When it comes to the advantages of a common law trademark, they all revolve around the manner in which a common law trademark right comes into existence.
- Cost Savings: Unlike federal registration, claiming a common law trademark requires no filing fees. You can attain common law rights without a lawyer.
- Ease of Establishment: Businesses earning goodwill through consistent use of a mark can establish common law rights automatically.
- No Administrative Burden: There are no applications, lengthy processes, or legal complexities involved in acquiring such rights.
- Use of the TM symbol: Just like with a State Trademark, a common law trademark owner is entitled to use the â„¢ symbol alongside their name/logo to denote their claim
Another advantage of common law trademark rights - if your use predates someone else's federal trademark registration, they cannot force you to cease operations or change your name (at least, not within the geographic region that you already service).
Disadvantages of Common Law Trademarks
Despite these benefits, relying on common law trademarks alone can create significant hurdles in enforcing your rights and fully protecting your brand. As previously mentioned, common law trademark rights are tied and limited to the geographic area that you are servicing (and potentially the logical expansion into nearby areas). This gives rise to the possibility of others using that same or a similar trademark elsewhere for their business, even if it is competing with yours.
With the advent of the internet, if you are selling online, it is hard to easily define nor limit your activities to a geographic region. While common law trademarks worked in the pre-internet days, where a store was a brick and mortar location, servicing a surrounding area (and thus another store in another area with the same name was not a competitor), the internet has changed things. Going back to our example, if the deli owner in Dallas is selling salami in a physical store, the actions of another deli with a similar or identical name in another state is not really harming the business. However, in the internet age, if the deli owner in Dallas is selling salami via their online shop, the actions of another business using that same name (perhaps for the sale of cheaper salami online) can have a significant effect.
Another key disadvantage of a common law trademark - it is only defensible if you are the first to use it. Our deli owner in Dallas could have a wonderful first several years of sales and profits, only to find out that the rights are trumped by someone else who was smart enough to obtain a federal trademark registration for the same or similar name just a few weeks prior to the grand opening of the Dallas deli. Since federal trademarks reign supreme over common law rights that lack priority, our Dallas deli entrepreneur may be forced to close down or rebrand.
Challenges of Enforcing Common Law Trademarks
Unlike registered trademarks, enforcing common law rights requires overcoming various hurdles. These challenges can complicate legal disputes and make it difficult to prove ownership of the mark. Below are three primary challenges you may encounter:
1. Proving Ownership
One of the fundamental challenges of enforcing a common law trademark is proving that you are the rightful owner of the mark. Since there is no formal database or registration record, you will need to provide evidence of consistent and prior use of the trademark in commerce.
For example, imagine two businesses in different states claim the same mark (let's assume it is the Dallas deli owner and another deli entrepreneur who opens up shop in nearby Ennis, Texas). What if the business Ennis, Texas (with a population of 20,000) was in existence first, but never really sold to out of towners and has been using the name locally for several years, but without a formal registry, they need detailed documentation—such as receipts, ads, and dated usage—for proof. Without sufficient evidence, courts may struggle to determine rightful ownership.
2. Geographic Limitations
Common law trademarks only provide protection in the geographical areas where the trademark is actively used. This means that if another business in a different state begins using the same trademark, you may not have any legal recourse to stop them as long as they operate outside your market.
A bakery in Boston, for instance, might not be able to prevent someone in Seattle from using an identical name or logo. Even if the second party eventually expands closer to the original business, the lack of registered trademark rights places the first bakery at a serious disadvantage. Federal registration eliminates these boundaries, offering coast-to-coast protection.
As previously mentioned, the geographic limitation is particularly problematic if your goods/services are marketed and sold online.
3. Lack of Public Notice
Public notice is a critical aspect of trademark enforcement. A registered trademark appears in the USPTO's searchable database, serving as a warning to other businesses to avoid using the mark. Common law trademarks, however, have no equivalent system. This lack of visibility increases the likelihood of unintentional infringement, leading to disputes that could have been avoided if the mark had been federally registered.
For example, companies that unknowingly infringe on a common law trademark may argue that they didn't have access to an official database showcasing those rights. This significantly weakens enforcement efforts in court.
Limited Protections Offered by Common Law Trademarks
Beyond the enforcement challenges, common law trademarks suffer from limited legal protections compared to their registered counterparts. Below are some of the most noteworthy limitations:
1. Absence of Nationwide Rights
Federal registration with the USPTO grants exclusive trademark rights across the entire United States, regardless of specific markets. Conversely, common law trademarks are restricted to regions, offering limited safety as brands expand nationally or online. In today's interconnected economy, where businesses often cross state lines via e-commerce, the lack of nationwide protection is a significant drawback.
2. No Right to Use the ® Symbol
The ® symbol is reserved exclusively for marks registered with the USPTO. This symbol provides powerful notice to the public that a trademark is federally protected. Without it, consumers and competitors alike may perceive common law trademarks as having less legitimacy or value. The ™ symbol, which can be used for unregistered trademarks, doesn't carry the same weight and may diminish the mark's credibility in legal conflicts. For more regarding these two symbols, check out our prior Blog Article - https://www.iveticlaw.com/understanding-trademark-symbols-the-difference-between-and
3. Fewer Legal Remedies
Registered trademarks afford access to significant legal remedies not available for common law marks. With a registered trademark, a business can file lawsuits in federal court, claim statutory damages, and even seek compensation for attorney fees in some cases. For common law marks, these remedies are typically unavailable, rendering enforcement more complicated and costly.
4. Risk of Someone Else Registering the Trademark
Perhaps the most alarming risk of relying solely on common law protection is that someone else could register the same trademark federally. Once registered, the federal trademark owner gains priority over common law rights, even if your use predates theirs. This could lead to costly legal disputes, rebranding challenges, and even the potential loss of your mark.
Case Study in Common Law Trademark Enforcement Challenges
To illustrate the difficulties of relying on common law trademarks, consider the following scenario, which is actually real-life, not a hypothetical. By now, likely everyone reading this article is familiar with a certain brand of fast food restaurants, called "Burger King." Burger King is not just a nationwide chain of restaurants; it is global, with locations in over 100 different countries. For purposes of this analysis we will refer to this entity as the Florida Burger King, because that is where it began its operations, in the 1950's.
As luck would have it, around the same time in the 1950's (actually, a few years after the Florida Burger King began operations...in Florida), a small mom and pop style restaurant in the central Illinois town of Mattoon rebranded as "Burger King" (after previously doing business as "Frigid Queen"). The Mattoon Burger King was successful and began a second location outside of Mattoon. The Mattoon Burger King even filed for and obtained a State of Illinois Trademark registration for "exclusive" use of "Burger King." In the meantime, the Florida Burger King was also successful, and began expanding, including opening up restaurants in Illinois, at which time it became aware of the Matton Burger King. By that time, the Florida Burger King had filed for and obtained a federal trademark registration, but only after the Mattoon Burger King had already begun operations (but before the Mattoon Burger King opened a second location).
Costly litigation ensued (and lasted for years - approximately 6 years) between the Florida Burger King and the Mattoon Burger King (in both Illinois state and federal court). It is fair to assume that both sides expended a quire considerable amount of money in that litigation. Both sides can claim victory, but both sides also lost something, due to the interplay of common law and federal trademark rights.
As a result of the litigation, the Mattoon Burger King was granted exclusive rights to the name "Burger King" within a 20-mile radius of Mattoon, Illinois (ie, where it had been geographically located and active before the Florida Burger King had filed for its federal trademark registration. However, the Mattoon Burger King lost its "exclusive" rights to the rest of Illinois (as promised by their State of Illinois trademark registration) becuase they had not commenced commercial activity outside of Mattoon prior to the federal trademark of the Florida Burger King. Similarly, the federal trademark application of the Florida Burger King was deemed constructive notice to the Mattoon Burger King that the Florida brand had prior use and claimed rights in Illinois, so that the second Mattoon Burger King Location (outside Mattoon but started after the Florida Burger King filed its US trademark application) was not protected. Thus, the dreams of expansion for the Mattoon Burger King were curtailed significantly, as any expansion was limited to Mattoon, an area of approximately 16,000 residents.
This lawsuit thus demonstrates several key aspects about common law trademark rights, and the difficulties of trying to rely on them as protection. It also demonstrates that regardless of whether you win or lose, if you engage in litigation, it can go on for several years, and cost significant money, which you may or may not have to spend.
The Florida Burger King, even though it started operations first, and was prolific and successful in Florida, could NOT stop the Mattoon Burger King from using the same name in Mattoon (even though the Mattoon entity started a few years later), even with its federal trademark registration, because it did not file for federal protection until after the Mattoon Burger King began operations. Further, even with a federal trademark registration, though it could operate elsewhere in Illinois, the Florida Burger King is forever banned from opening a franchise within 20 miles of Mattoon, Illinois. Had the Mattoon Burger King opened up a second restaurant just about a dozen miles further from Mattoon (prior to the Florida Burger King's US federal application), it could have blocked the Florida Burger King from a lucrative market, at the University of Illinois main campus in Champaign-Urbana, Illinois. (as the "20 miles" exclusion zone would have covered that region, as downtown Mattoon is about 44 miles from downtown Champaign)
Why Registering a Trademark Is Essential
The shortcomings of common law trademarks underscore the importance of registering your trademark with the USPTO. Federal registration provides:
- Nationwide Rights to your trademark.
- Public Notice, preventing others from inadvertently infringing.
- Stronger Legal Remedies, including statutory damages.
- Exclusive Use of the ® symbol.
While the cost and effort of registering a trademark may seem like hurdles, they are far outweighed by the benefits of secure, nationwide protection that simplifies enforcement and bolsters brand strength. Again, the aforementioned real-world example of the dueling Burger Kings is a prime example of how messy, complicated and difficult it is to enforce common law or state trademark rights, and why a federal trademark registration reigns supreme when it comes to trademarks. (However, timing is key, and the prior owner of common law rights can frustrate even your federal rights).
Final Thoughts
Common law trademarks can be a practical starting point for protecting your business's intellectual property. However, their limited protections and significant enforcement challenges leave your brand vulnerable over the long term. Without federal registration, you risk losing your trademark rights to competitors who can claim stronger, nationwide protections.
If you're serious about safeguarding your business and brand identity, registering your trademark (at the federal level) is a step you can't afford to skip. Consult with an experienced trademark attorney to ensure your rights are fully secured and your brand is well-protected in today's competitive marketplace. Our office has assisted clients from across the US and over a dozen other countries with the trademark process (including every phase of that process ). As a result, we have a wealth of knowledge and experience about the process that we can employ to assit you in attaining your trademark rights.Contact us for a free initial consultation!
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