19. What is trademark protection under state law?
States often pass statutes or provide administrative procedures allowing the public to file or register trademarks that are used in commerce within the state. These states will also provide statutory protections and causes of action against those who infringe upon an individual’s state-recognized, trademark rights. In addition to the statutory protections provided by some states, every state provides for common-law protection of trademark rights. That is, an individual has the ability to legally enforce her rights in a trademark via state, common-law remedies. State common-law protection of trademark rights arises when an individual or business is the first to use a particular mark in business or commerce within the state and no other business has federal trademark protection.
• Example: An individual or firm employs a mark in an attempt to sell a product or service to the public. The mark is not used by another firm within the state and is not subject to federal trademark protection. The individual or firm using the mark is automatically protected under common law in the state where the mark is used in commerce.
Limits on State Trademark Protection
State trademark protections have significant limitations. First, the mark is not protected in areas outside of the state. As such, a business may acquire statutory or common law protection only in the states in which it carries on commercial activity. If someone infringes upon the mark by employing a confusingly similar mark within the trademark holders area of commercial activity, the trademark owner may bring an action to halt use. If, however, someone uses a confusingly similar mark in an area where the firm has not registered or does not carry on commercial activity, no remedy is available. As such, the individual using the infringing mark in another state may effectively lock out the original user of the mark from employing the mark within that jurisdiction. It comes down to a system of first to register or first to use the trademark in commerce in that jurisdiction.
• Discussion: Why do you think states offer statutory and common-law protection of trademark rights? How does state, common-law protection of trademarks relate to the concept of property rights? How do you feel about the ability of a business to claim trademark rights under state law by being the first to use that mark in the state?
• Practice Question: Billy has a small consulting business named Peak Perform Consulting that is organized in the state of Alabama. He provides consulting services throughout the states of Georgia, Alabama, Florida, Louisiana, and Tennessee. He is looking into opening an office in South Carolina when he learns that a professional services firm named Peak Performance Consulting already exists. Will Billy be able to use his company name in the state of South Carolina? What other information do you need to know about this situation to fully answer this question?