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Brand Name Layaways: How to reserve a trademark

For any number of reasons, the question often arises whether someone may reserve a trademark before actually using it. For example, a company preparing to launch a new product may wish to protect the new product’s name before its rollout. Other times, a company may determine that it can gain a competitive advantage by snagging a brand name before its competitor does. On the more sinister end are those individuals who spot an opportunity to profit by squatting on a name and offering it for sale to the highest bidder. While the law permits the reservation of a trademark in certain circumstances, the ins and outs of these brand name layaways can be tricky.

Intent-to-Use Application

The general rule under U.S. trademark law is that trademark rights arise upon the first use of the mark in commerce. Previously, a trademark owner could not even file a trademark application with the U.S. Patent and Trademark Office (PTO) until the trademark was put “into use.” In fact, that rule remains in place for state trademark applications. Now, however, the “intent-to-use” (ITU) trademark application provides one notable caveat to that general rule at the federal level.

Specifically, a party who, in good faith, has a bona fide intention to use a trademark in commerce, may file an ITU trademark application with the PTO to protect that mark before it has been put into use. That is to say, a party who genuinely anticipates using a mark may effectively reserve that mark with the PTO. These requirements are designed to prevent the opportunist from squatting on names only to sell them to others actually interested in them. To make a valid trademark reservation, a party need only file an ITU application with the PTO and submit the relevant government filing fee.

Once the ITU application is on file, the PTO will examine the application for issues concerning its registration. If “allowed” by the PTO, the ITU applicant will then be required to provide the PTO with evidence that the mark has been put into use within six months of allowance. If, at the end of that six-month window, the mark has not yet been used in commerce, the ITU applicant may request up to five additional six month extensions of time to demonstrate use of the mark (but each extension requires the payment of an extra fee). As a result, an ITU applicant may essentially reserve a trademark with the PTO for roughly three years before using the mark.

Benefits of an ITU Application

Even with an ITU application on file, however, the ITU applicant’s rights in the mark will not actually accrue until the mark has been put into use. Therefore, the owner of an ITU trademark application, without more, cannot prevent others from infringing upon its mark. Nevertheless, an ITU trademark application is beneficial because it puts others on notice of your anticipated rights in the mark, which can serve as a deterrent to others interested in the mark. Moreover, if the ITU application matures into a trademark registration, the trademark owner will then acquire constructive nationwide rights in the mark which date back to the filing date of the ITU application even though the mark was not actually in use as of that date. With the registration in hand, the trademark owner may then prevent others from infringing upon its trademark rights.

Different Rules in Different Countries

Because trademark rights are territorial, each country has its own rules governing them. Again, the general rule in the U.S. is that trademark rights do not arise until the mark is first used in commerce. This makes the U.S. a “first to use” country. Many foreign countries, however, follow a “first to file” regime, meaning a trademark owner may obtain a trademark registration and the accompanying trademark rights by winning the race to file an application in that country’s trademark office. Unlike the U.S., these “first to file” countries do not require that the trademark owner demonstrate use of the mark before being issued a registration. Therefore, many foreign countries permit a party to actually reserve a trademark and prevent others from using that mark even if the trademark owner has not put the mark into use. The only catch is that if the mark has not been used in that country for three years following its registration, a third party may seek to cancel the registration thereby clearing the path for that third party to acquire rights in the mark.

The Takeaways

If you want to protect a trademark in the U.S., the earlier you use the mark the better. Although you may file an ITU application to stake some claim in the mark before it has been used, you must be prepared to demonstrate actual use of the mark within roughly three years of filing the ITU application. If, on the other hand, you wish to protect a trademark abroad, being the first to file a trademark application is paramount. If you lose the race to the trademark office, you lose a lot. In every country, foresight and planning are key. If you anticipate starting a company, launching a new product, or expanding your business into a new territory, it is never too early to think about protecting your brand.

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