No Brand Extension When Giving Branded Clothing to Employees

"brand clothing polo shirt"

Companies give branded clothing items to their employees to wear during the performance of their job. Make the branded clothing stylish enough and the employee may just wear it out socially as well. Brand extensions are helpful to increasing the conceptual strength of the mark, so being able to extend a brand to clothing or anything else can be a positive thing. Unfortunately, giving branded clothing to employees will likely not extend your brand to clothing because it likely does not qualify as transport in actual trade.

Trademark rights are based on use of the mark in commerce, and for use to be sufficient to establish trademark rights it must: (1) be a bona fide use in the ordinary course of trade; and (2) not be merely for the purpose of reserving rights in a mark. The use must a genuine commercial use as opposed to use solely for the purpose of establishing trademark rights. Accordingly, whether use is genuine is based on what is a typical commercial use within the relevant industry.

Commercial use does not mean that a sale must occur. A mark is used in commerce in connection with goods when the goods are sold or transported in commerce. For a sale or transport to qualify as use in commerce it must be: (1) in actual trade; and (2) lawful. And in the case of transport as the basis, the use must also be: (a) of a finished product; and (b) open and public to actual consumers of the goods.

Transport of a good in actual trade means the good must benefit and have independent value to others, and cannot be an item that is transported incidentally in connection with other primary goods and services. Goods that are incidental to other primary goods and services: (1) are useful only in connection with a primary good or service; (2) are inextricably tied to a primary good or service; and (3) lack independent value.

Branded clothing given to employees is connected to the primary purpose of the business. It is incidental to the primary purpose of the business. Generally, the branded clothing is useful only in the performance of the employee’s job. And, generally, it lacks independent value. Branded clothing given to employees functions more like advertising or promotional material, which is insufficient to establish trademark rights for goods.

What Trademark Searchers Need to Know About Use in Commerce

"woman spooning samples of guacamole showing use in commerce of the Wholely Guacamole trademark"

In the United States, trademark rights are created through use in commerce not registration with the United States Patent and Trademark Office. This is why all new businesses or current businesses launching a new product are advised to pay for comprehensive searches. But even an expensive, comprehensive search is incapable of finding every possible threat to a proposed trademark. And here is why, the amount of use in commerce required to establish trademark rights in the United States, assuming the mark is inherently distinctive, is not as much as the average trademark searcher would think. In fact, the required amount of use in commerce is much lower.

This was an issue the Trademark Trial and Appeal Board addressed recently in Dexas International, Ltd. v. Ideavillage Products Corp. Ideavillage Products applied to register the mark SNACKEEZ DUO for beverageware and food containers. Dexas International opposed the registration of Ideavillage Products’ mark on the ground that it was likely to cause confusion with its common law mark SNACK-DUO for food and drink containers.

Ideavillage Products filed its SNACKEEZ DUO application on December 5, 2014 on an intent-to-use basis. Dexas International made the first sale of its SNACK-DUO food and drink container in January 2015, but claimed its trademark rights began in July 2014 based on the interstate shipment of two samples bearing the SNACK-DUO mark to a retailer.

It is well settled that use of a mark in a manner analogous to technical trademark use may furnish a valid basis for claiming priority and maintaining an opposition. Thus, even before proper trademark use in commerce commences, advertising or similar pre-sale activities may establish priority if they create the necessary association in the mind of the consumer. There is specific percentage or number of consumers required to associate the mark with the goods based on the pre-sale activity. Rather, the United States Court of Appeals has simply said that it must be:

more than insubstantial and more than negligible.

As you can imagine, what this means has been decided on a case-by-case basis, and often times requires a very fact intensive inquiry because priority is critical to bringing and maintaining an infringement lawsuit in District Court or proceeding before the Trademark Trial and Appeal Board.

In the Ideavillage case, the Board found that the two samples served a commercial purpose because the retailer eventually placed several more orders for the product. Therefore, the Board found that the priority date for the SNACKEEZ DUO mark was July 2014.

As a trademark searcher, if you were searching a mark similar to the SNACKEEZ DUO mark in 2014, there is no way you would have found Ideavillage’s mark. While the decision talks about other pre-sales activity Ideavillage engaged in, it does not say when these activities occurred. It is precisely because the level of use in commerce necessary to establish trademark rights is so low, that no trademark search, irrespective of its price, is capable of finding every possible conflict with a proposed mark. But the place a trademark searcher must absolutely search is the United States Patent and Trademark Office.

Trademark Use in Interstate Commerce Sufficient to Avoid Abandonment

"Mombacho cigars trademark use in interstate commerce"

Trademark use in interstate commerce is required to create a basis upon which a federal trademark registration may issue. This requirement naturally raises two questions. First, what use qualifies as trademark use? Second, how much trademark use in interstate commerce is enough?

With respect to the first question, the use of the trademark must be a bona fide use in the ordinary course of trade rather than made merely to reserve a right in the mark. Whether the use was bona fide will depend on the industry. For example, testing or selling samples in one industry such as the software industry is sufficient to satisfy the bona fide use requirement because it is ordinary to engage in beta testing before launching into full commercial-scale production. But selling samples of a t-shirt is not ordinary for the clothing industry before launching into full commercial-scale production. In the case of selling samples in the clothing context, you are much more likely to not satisfy the bona fide trademark use requirement.

Assuming the use qualifies as trademark use, then the focus turns to how much trademark use in interstate commerce is enough.  In other words, was the trademark use merely token use. Recently, the Trademark Trial and Appeal Board had the opportunity to address this issue in the Mombacho Cigars S.A. v. Tropical Tobacco, Inc. case.

Mombacho Cigars petitioned to cancel Tropical Tobacco’s registration for the MOMBACHO mark in connection with “cigars.” Mombacho Cigars that Tropical Tobacco had made nominal use of the MOMBACHO mark for five years – two years longer than the presumptive abandonment period of three years. Tropical Tobacco admitted that it did not market the MOMBACHO brand, but maintained that it continuously sold the cigar from its date of first use to the present even though sales dwindled between 2010 to 2015. In 2012 to 2014, Tropical Tobacco sold between two to four boxes of cigars to one distributor. But in 2015, the sales increased to 24 boxes and then a 300 box order all by the same distributor.

The Board found that while low, this pattern of sale activity was sufficient to establish trademark rights and avoid an abandonment claim.