Time and Trademark's Excellent Adventure -- Prior Use
The powers of the state versus the federal government have been debated since Jefferson and Madison. The debate spills over into so many areas of personal and business life and trademarks are no exception. The Lanham Act and the Supremacy Clause would be the presumptive guides in any state versus federal trademark conflict. Obviously the Supremacy Clause sets a Federal registration in the top spot in the trademark pyramid. But there is an important exception to that Federal power that would make James Madison quite giddy, especially since trademark rights are conferred with usage and not necessarily registration.
The ground rules for trademark rights seem fairly simple, like an expanding circle. Usage of a mark grants common law rights and protection within the area or region that mark is being used. State registration expands those rights statewide and federal registration is the nationwide giant monster of rights and protection. Although where a mark is being used matters, it is WHEN a mark is used that provides the exception to federal supremacy.
An unregistered user of a mark might have superior rights to a federal registration holder in a particular area if the unregistered user can prove prior use. The prior unregistered user’s rights are limited, however, to the area/region where the mark is used. So a prior user can keep a federal mark holder out of an area or region but at the same time the federal mark holder has the prior user boxed in, unable to expand or use that mark out of the area where it is already established. The prior user’s mark is an island surrounded by the federal mark.
The prior use rights expand with a state trademark registration. A state trademark registration may not be superior to a federal trademark registration but it could establish prior use. Since state trademarks generally have a quicker turnaround time for approval, the owner of a state trademark could plant their flag first. If the date of use of the state trademark precedes the use of a federal trademark then the state trademark owner could keep use of that mark in the state or states registered, essentially keeping the federal trademark holder out of that state (15 USC §1065). Obviously, with any trademark conflict, results may vary.
Remember, the state registration or unregistered use only permits you to use the mark in that state, area, or region. A federal trademark holder could easily cry foul if goods or services were to be sold or ship outside of that prescribed territory. That is a serious limitation on sales or expansion, not to mention the restrictions on internet sales or promotion.
The most important thing in this exception to federal supremacy is proof of prior use. Without that proof, there may not be any rights to a mark even with a state registration. If a state trademark holder’s use is not prior to the federal trademark holder’s mark, then the state trademark holder would have to cease use of the mark the moment the federal holder requests, “request” being a kind word for a cease and desist letter.
So federal trademark protection is Godzilla and state/common law trademark protection is … Frankenstein. Yeah, your state/common law protection is nice. It is intimidating and quite large. But the other guy blocks out the sun and BREATHES FIRE!!! Your choice.