Commencing Commerce:Meeting USPTO definitions of Use in Commerce
Alex Sandler | December 25, 2020
To establish exclusive rights in a trademark, the trademark owner must be the first to use the mark in commerce. When an applicant files for a trademark on an in-use (§1(a)) basis, the applicant must verify that the mark is used in commerce at least as of the filing date. This rule does not apply to applications filed as intent-to-use (§1(b)) applications for which an applicant must establish use in commerce before registration.
So, what exactly is use in commerce, and how does a trademark applicant establish it? This guide is intended to help trademark attorneys and professionals understand what constitutes use of a mark in commerce, which is critical to obtaining federal trademark protection.
In order to obtain a registration, the applicant must demonstrate that the mark is in use in commerce in connection with all goods and/or services listed on the application. The applicant must provide a specimen showing use in commerce for each good and/or service listed. We’ll discuss specimens later in this guide, but you can also read more about specimens here. The Trademark Act defines “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.” Section 45 of the Trademark Act defines “use in commerce” in connection with 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, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and
the goods are sold or transported in commerce.
Section 45 of the Trademark Act defines “use in commerce” in connection with services when:
the mark 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.
Trademark Use in Commerce Requires the Appropriate “Forum of Commerce”
In order to demonstrate use in commerce, the use must be of a type that is regulated by commerce. This includes interstate commerce, territorial commerce (i.e. Guam, Puerto Rico, the Virgin Islands, etc.), or commerce between the US and a foreign country. Interstate commerce means that the goods or services are shipped or rendered to a consumer across state lines in furtherance of a sale.
Consequently, intrastate use of a mark will usually not qualify as use in commerce unless the intrastate use is of a type that would, when taken in the aggregate, have a direct effect on interstate commerce. For example, an applicant who owns a mom-and-pop retail shop in Arizona and only sells goods to consumers in Arizona would not be eligible for federal trademark protection. On the other hand, the travel and hospitality industries tend to involve interstate commerce. For example, a hotel operating in Las Vegas likely has consumers traveling from other states to utilize its services. Offering goods and services over the Internet has also been held to constitute use in commerce since the goods and services are available to consumers throughout the United States.
Trademark Use in Commerce Requires Lawful Use
The USPTO requires lawful use in commerce to register a trademark. If the goods or services are illegal under federal law, the USPTO will refuse to register the mark. The Federal Court has reasoned that to hold otherwise “would put the government in an anomalous position of extending benefits of trademark protection to a seller based upon actions the seller took in violation of the government’s own laws.” CreAgri, Inc. v. USANA Health Scis., Inc., 474 F3d 626, 630 (9th Cir. 2007).
For example, an applicant cannot register a trademark for use in connection with cannabis. Cannabis is a Schedule 1 drug under the Controlled Substances Act. Because a business cannot legitimately sell cannabis across state lines, an individual in California (where cannabis can be sold legally) cannot obtain federal trademark protection to sell cannabis under a particular brand name. Learn more about the complexities of filing trademark applications involving cannabis here and here. To consider another example, a pharmaceutical company selling a new drug in violation of FDA requirements could not obtain federal trademark protection. See, e.g., CreAgri, Inc., 474 F3d at 634. Trademark applicants must ensure that their use in commerce is lawful.
Use in Commerce Means Bona Fide Use
Another critical requirement is that use in commerce must go beyond “token” use. This requirement is intended to prevent a company from reserving rights in a trademark simply by making one sale of a product. Specifically, the Trademark Act maintains that the definition of use in commerce is “bona fide use of a mark in the ordinary course of trade, and not made merely to reserve rights in a mark.” Although no bright-line rule has been established regarding the number of sales that an applicant must have to support bona fide use, a handful of sales has been found to be sufficient. The use in commerce standard has also been interpreted to account for differences in industry practices, which may include less traditional uses, such as seasonal sales or continuous shipments of a new drug to clinical investigators by a company awaiting regulatory approval.
Additionally, shipments of goods across state lines that include use of the mark for sampling may satisfy the use in commerce requirement if the shipment was made for a legitimate commercial purpose. For example, in Tao Licensing, LLC v. Bender Consulting Ltd., the TTAB granted a petition to cancel TAO VODKA, in part, because the owner of the mark did not make sufficient use of its mark in com
merce before its Statement of Use deadline. See 125 U.S.P.Q.2D (BNA) 1043, 1055 (TTAB 2017). The owner claimed that it had distributed two to three complimentary sample bottles of TAO VODKA to three parties—a shareholder, a restaurant, and a distributor—to evaluate the product. See id. at 1053. However, none of the three entities ever purchased TAO VODKA. See id. at 1055. The Board held that this promotional activity was preliminary, and the owner was not ready to introduce the product to the market at that time. See id. at 1054. In fact, TAO VODKA’s first sale did not even occur until over two years later. See id. at 1050. As a result, the Board held that the distribution of samples did not constitute bona fide use in commerce. See id. at 1054.
In contrast, Dexas International, Ltd. v. Ideavillage Products Corp. is an example of how distributing samples to a prospective purchaser may qualify as sufficient use in commerce. Dexas International claimed its trademark rights began in July 2014 when it sent two samples to a retailer. See No. 91225850, 2018 WL 3586101, at *3 (July 24, 2018). After receiving the samples, the retailer ordered hundreds of units and has since continued purchasing the product. See id. at *15. Consequently, the Board found that the shipment of the samples served a legitimate commercial purpose and therefore constituted bona fide use in commerce. See id.
The following is a list of what will not likely meet the statutory requirement:
The transportation of goods from a manufacturer to the owner of the trademark
Internal, non-public transactions
“Sales” to family and friends
A shipment of a single product free of charge
Providing a one-time service at a fraction of its market value
The USPTO examiner typically will not challenge an applicant’s bona fide use in commerce. Rather, the examiner will rely on the applicant’s sworn statement that he or she has made bona fide use of the mark in commerce. The issue of whether a trademark owner has been genuinely using a mark in commerce arises in an inter partes proceeding—such as a cancellation or opposition proceeding— or a post-registration audit. For more about the USPTO’s post-registration audit program, check out this article and Allison Rickett’s talk from Alt Legal Connect 2020.
As for trademark applicants filing under §1(b) of the Trademark Act, because their use in commerce does not begin until after the filing date, applicants must submit a verified statement that they have a bona fide intent to use the mark in commerce (for an extreme example of an application that would be difficult to prove bona fide use for, check out this article). Again, the examiner will not evaluate an applicant’s bona fide intent but will rely on the applicant’s sworn statement that there is a bona fide intent to use a mark in commerce. If an opposer challenges an applicant’s intent, the USPTO places the burden of proving intent on the applicant. As such, applicants should maintain documents to support their allegations. Relevant documents may come in the form of business plans; emails or other written communication sent to prospective retailers, distributors, or suppliers; draft marketing materials; and records of internal meetings. Keeping a record of all relevant documents may be key to saving a trademark application.
Establishing Use in Commerce
In order to demonstrate use in commerce, the applicant must submit a specimen of use. A specimen of use is an actual example of how the mark is used in commerce. An actual example is an object that bears the mark, not just a drawing or mockup of what the mark would look like.
If an applicant is filing an application that lists use in connection with goods, the applicant may place the mark directly on the goods, on a label or tag affixed to the goods, or on the product’s packaging. If it is not feasible to place the mark directly on the goods or the packaging, an applicant can also prove use in commerce by submitting a display associated with the goods, which includes certain catalogs, flyers, and webpages that serve as point-of-sale displays (i.e., they contain information necessary for a consumer to make a purchase.) Advertising materials such as brochures, price lists, press releases, and online advertising banners are not acceptable as specimens for goods.
If an applicant is filing an application that lists use in connection with services, the applicant may prove use in commerce by showing the mark in the sale or advertising of the services. Acceptable specimens for services include marketing materials that directly associate the mark with the services, such as newspaper and magazine advertisements, brochures, and leaflets. To show that the mark used in the rendering of the services, an acceptable specimen may include a copy of a menu for restaurant services or a screenshot of a website showing the services offered.
Understanding what constitutes trademark use is imperative to securing and maintaining federal trademark protection. Failure to comply with use requirements can result in the failure to achieve registration or cancellation of a trademark owner’s registration. If you would like to learn more about requirements for use in commerce, please refer to §900 of the Trademark Manual Examining and Procedure Guide (TMEP).