Dec 10 | 2014

USPTO: “Pre-sales” Not Enough to Show Use for Trademark Registration

In a recent update to the U.S. Patent and Trademark Office’s (“USPTO”) Trademark Manual of Examining Procedure (“TMEP”), the USPTO noted and clarified its position on whether “pre-sales” of goods or services constitute trademark use. The USPTO stated that a webpage that offers “pre-sale” orders (commonly known as “pre-orders”) for goods does not constitute “use in commerce” for the purposes of trademark registration if the goods are not yet available to the consumer. This determination is consistent with past USPTO policy, but the issue – what constitutes trademark use – continues to be confusing.

In order to obtain trademark protection, a trademark owner must first demonstrate “use in commerce” (i.e., “the bona fide use of a trademark in the ordinary course of trade”). While trademark rights derive simply from the use of a trademark in the marketplace, exclusive nationwide rights are further established by registering the trademark with the USPTO. Applicants can seek federal trademark protection for specified goods and/or services, and registration typically will not occur until the essential use requirement has been met.

The rules governing the exact point in time when use in commerce begins, however, are not so straightforward. The source of this confusion is that federal law defines trademark use related to goods differently than trademark use related to services. The Lanham Act (15 U.S.C. § 1051) deems a mark to be used in commerce in connection with goods when “it is placed in any manner on the goods… and the goods are sold or transported in commerce.” On the other hand, the Lanham Act establishes a trademark’s use in commerce in connection with services when “it is used or displayed in the sale or advertising of services and the services are rendered in commerce.”

Given that the law only requires a “sale” or “transport” of goods, it is curious that the USPTO takes the view that “pre-sales” do not constitute use in commerce for goods, especially since an online pre-order of a product displaying a trademark should constitute a sale and “use” in commerce if the consumer is charged at the time of the pre-order. Despite the USPTO’s position to the contrary, nothing in the statute requires the goods to be immediately available.
There should be no confusion over the issue of use in commerce for services, since both the law and the USPTO’s position are clear. Specifically, in order for an applicant to show use in commerce for services, the services must be rendered. Both the USPTO and various federal courts have consistently held that if a trademark applicant is not yet capable of rendering services, then the applicant’s trademark rights in connection with those services have not begun. This position tracks the language of the statute.

The rules regarding “pre-sales” of goods and services have important implications for trademark owners wishing to federally protect their trademarks. In particular, trademark owners who apply to register a mark and allege “use in commerce” on pre-sales of goods could create a situation where the USPTO objects to register that mark based on insufficient (or lack of) “use in commerce.” Moreover, if the mark that is the subject of such an application is litigated in court, the court could declare the application void – as if the application never legally existed. Trademark owners who alleged use in commerce based on pre-sales during the application process, but who now enjoy the benefits of a federally registered trademark, could be vulnerable to losing the federal registration altogether. That could happen if someone contests the basis of use of the federally registered mark and petitions to cancel the registration. If that mark registered due to invalid grounds, then that registration is vulnerable to attack. Accordingly, trademark applicants and registrants should err on the side of caution and wait to allege use in commerce until the goods are ready to ship and the services have already been rendered.

By Connie Boutsikaris, Esq.