Westchester Women's Bar Association

Trademark Use on the Internet

Who Has Priority on the Internet: A Senior Common Law User or a Junior Federal Registrant?

This is an interesting question that should be explored. There has been a scant amount of case law on this issue and yet it is a practical matter encountered by many in the business world. See Dudley v. Healthsource Chiropractic, No. 6:07-cv-6631 (W.D.N.Y August 7, 2012), where the Court addresses this issue and suggests a practical solution. In today's marketplace maintaining an Internet presence is critical regardless of whether you run a small business or a large business. Yet the scope of protection for common law trademark use is largely undefined on the Internet. One of the reasons the area remains gray is that the historical concept of common law rights is based on consumer recognition ("goodwill") of a particular mark in certain geographic areas. Geographic areas could be more easily defined before the Internet Age. In fact, before the Internet this was an analytical problem that could be resolved with identifying geographically distinct areas, now a formula for resolving common law rights on the Internet must be created.

Common law rights are evaluated based on several factors including volume of sales, volume of advertising, market share, growth trends, and the zone of expansion. It is necessary to consider the nature of the business and the geographical locations of the consumers of the business. In the past, the courts have allowed concurrent use of similar marks for similar goods and services if the geographic areas where the two parties were conducting business were either distinct or remote. However, the question now arises should there be concurrent trademark use on the Internet?

The creation of a website and the rendering of services or the selling of goods through the website does mean that you have developed good will and a reputation in each of the fifty states, but of course it is possible that nationwide trademark rights can develop overtime. Let's review how the issue was addressed in Dudley v. Healthsource Chiropractic, supra. The Plaintiff (Dudley) sued the defendant (Healthsource Chiropractic, Inc.) for trademark infringement among other claims. The Plaintiff established his chiropractic practice in 2003 under HEALTH SOURCE CHIROPRACTIC and established a reputation in several counties in the state of New York and claimed priority of use in those counties and on the Internet.

The Defendant filed a federal intent-to-use application for HEALTHSOURCE CHIROPRACTIC for chiropractic services among other services, on November 25, 2005 without the knowledge of the plaintiff's use of the mark. The Court held that the Plaintiff was the senior user and had established common law rights in certain counties in New York. However, the Plaintiff's rights were frozen as of the date of registration of the Defendant's application. Regarding the Internet use the Defendant argued that allowing a common law user to have exclusive rights to use his mark on the Internet would undermine the rules providing for benefits and security of federal trademark registration. Likewise, the Court reasoned that to allow the federal registrant exclusive Internet rights would undermine the senior common law user's rights.

The Court declared that neither party could claim exclusive rights to the Internet and that some concurrent use seemed necessary. The Court stated "[a] trademark owner cannot reasonably expect to have exclusive use of a term on the [I]nternet". In conclusion, the Court stated that because the Plaintiff could not establish exclusive rights in the Internet, the Plaintiff's claim for infringement was dismissed.

Although the Western District of New York and the Sixth Circuit Court have agreed regarding concurrent trademark use on the Internet, the Fourth Circuit Court hinted that it couldn't imagine concurrent use of common law trademarks on the Internet. In conclusion, as practitioners we are left with out clear guidance on the issue. We will continue to monitor the federal courts looking for additional holdings, dicta, and guidelines. In the interim, we can certainly take away some general rules to guide our clients on trademark use on the Internet by advising them to use disclaimers when appropriate on their websites, to maintain records for volume of sales, volume of advertising, market share and growth trends, and on the number of unique visitors for the website and not to extend concurrent use into another party's territorial zone of use (especially not in bad faith). If you have questions concerning trademark use on the Internet, kindly contact our offices via telephone or email to schedule a courtesy consultation.

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