Federal Circuit Court Decision Clarifies Meaning of “Use in Commerce” Requirement for Trademark Matters

Federal Circuit Court Decision Clarifies Meaning of “Use in Commerce” Requirement for Trademark Matters

November 30, 2016

by Jerry Glover

The U.S. Court of Appeals for the Federal Circuit, located in Washington, D.C., hears, among other things, appeals from an administrative body in the U.S. Trademark Office called the Trademark Trial and Appeals Board.

In order to register a mark in the U. S. Trademark Office, the owner of the mark must have used it on products or services (or in advertising) in interstate commerce (sold beyond the borders of the state in which the trademark owner resides). But just how much use in interstate commerce is needed?

The Federal Circuit recently decided a case where no out-of-state sales occurred but, nevertheless, allowed a trademark owner to register its mark with the US Trademark Office. In this case, the owner had sold only two pieces of merchandise that included the mark to one buyer, an out-of-state resident, who purchased the product in the trademark owner’s home state. Christian Faith Fellowship Church v. Adidas AG, 2016 WL 6678408 (Fed. Cir. November 14, 2016).

In this case, the Church was located in Zion, Illinois near the Illinois-Wisconsin border. It sold caps and shirts with the phrase ADD A ZERO on them in its Zion-based bookstore. The Church also sold two hats with the ADD A ZERO mark on them to a resident of Wisconsin at the Illinois bookstore before the Church filed to register the mark. It later produced that person’s canceled check as proof of the sale.

The Church registered ADD A ZERO in the Trademark Office in 2005. In 2009, Adidas wanted to register a trademark for ADD A ZERO but the Trademark Office refused its registration because it was likely to be confused with the Church’s already registered mark. Adidas appealed that decision to the Trademark Trial and Appeal Board. The Board ruled that the Church had failed to use the mark in commerce before it registered the mark and that the sale of the two hats to the Wisconsin person was “de minimus” use in commerce and had no real affect on interstate commerce. The Church appealed that decision.

The Federal Circuit noted that the federal trademark act, the Lanham Act, defined “use in commerce” as “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” 15 U.S. C. Sec. 1127(b) The Act continues by noting that a mark is deemed to be in use in commerce on goods “when 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… and the goods are sold or transported in commerce.” Id. Commerce is also defined in the Act as “all commerce which may lawfully be regulated by Congress”. Id.

The court noted that under the Commerce Clause of the U.S. Constitution Congress’ power is broad as long as that commerce exerts a substantial economic effect on interstate commerce even if the activity is local and might not be traditionally regarded as commerce. Wickard v. Filburn, 317 U.S.111 (1942). The Court noted that its previous decisions had refused to set some standard relating to the percentage of services furnished to out-of-state purchasers to determine whether a mark had been used in commerce. The court held that the sale of two hats by the Church was regulable by Congress under the Commerce Clause and constituted use in commerce. The court again refused to define the “outer contours” of the Commerce Clause congressional power. Nor did it require the Church to show an actual and specific effect that its sale of hats to the out-of-state resident had on intestate commerce.

The court disagreed with the Board that registration of the Church’s mark could be denied because the sale of the two hats was de minimus noting that the U.S. Supreme Court had held that it makes no difference if any actual effect on commerce in any particular case is minimal. See Gonzales v. Raich, 545 U.S. 1 (2005). The court reviewed several of its earlier use in commerce decisions noting that it had held that a single location restaurant that serves a minimal number of interstate travelers involved commerce that could be regulated by Congress. It even noted a decision which held that intra state sale of French win constituted use in commerce.

So any argument that the hat sales were de minimus use in interstate commerce was unavailing in this case. Since commerce need not be directed across state lines for Congress to regulate the activity, there could be no such requirement under the Lanham Act.

TAKE AWAY: Although the court’s opinion on the requirement of “use in commerce” does not necessarily include a requirement of interstate sales/advertising, it is usually easier to get a trademark examiner in the U.S. Trademark Office to approve a trademark registration if the mark owner can show use across state lines.

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