Clorox-Gameologist cemented a rigid, common use requirement for trademarks that is unforgiving to startups.

The Clorox decision demonstrates that, when interpreting the use requirement to prove the validity of a federal registration, the courts follow a literal interpretation of the Act, which mandates a “sale” or “transportation” of the goods bearing the mark. It is this note’s contention that the stringent interpretation of the open and notorious public use aspect of the sale or transportation requirement is inequitable, as it makes it more difficult for trademark owners who operate in industries with high barriers to entry to prove use. In Clorox, the manner in which the sale or transportation requirement was interpreted required the Board to disregard evidence of bona fide use relating to both the applicant’s internet advertising, via its website, and an interstate shipment of parts of the applicant’s products bearing the mark. The shipment of parts of the applicant’s products from Utah to Mexico would have posed no difficulty satisfying the jurisdictional prerequisite that the use in question have an effect on commerce with foreign nations. Thus, inequity follows where the Act requires invalidation of a federal registration in circumstances where an applicant is making a bona fide use of a mark, and significantly investing in its brand, in order to obtain an initial sale. If sales are typically infrequent in a given industry, a sale is going to be unquestionably harder to make in that industry. It logically follows that a trademark owners’ ability to satisfy the sale or transportation requirement of the Act is more burdensome where the standard of use dictates a sale must be made, but the trademark owner’s evidence of its open and public use of the mark in connection with obtaining a sale (which would likely be building some public association between the mark and the good) is disregarded. Consequently, the use requirement is unequal in its application as the sale or transportation requirement does not factor in that sales are more difficult to attain in certain industries.

The Act’s legislative history expresses the desire of Congress to interpret use in commerce flexibly, and to accommodate use that is typical in a particular industry. However, Congress’ desire for a flexible interpretation focuses on use of a mark made after an initial sale or transportation of the good bearing that mark. The need for a flexible interpretation of use equally applies to uses that may be made of a mark before an initial sale or transportation of the good has been made. Trademark owners would receive greater protection and certainty if the Act stipulated a more flexible commercial standard of use that incorporated open and public pre-sales use of a mark (that is, use occurring before an initial sale or transportation takes place) as sufficient. This is especially important where applicants, like the applicant in Clorox, operate in an industry where products are high-end, custom made goods and therefore sales are, by their inherent nature, more infrequent and difficult to obtain. As the system currently stands, injustice results to the extent that the law requires businesses to invest in a mark to secure a sale, only to have a registration invalidated at a later date merely because the trademark owner had not actually attained any sales.

B. The Continuous Use Threshold Disadvantages Small Businesses and New Market Entrants

The Gameologist decision, and the litany of cases before it litigating the use issue, indicate that, in order to maintain a valid registration, more than minimal use of a trademark is required.98 In this note’s view, the continuous approach to use is undesirable as courts are essentially required to make a ruling regarding whether a brand is growing fast enough. In Gameologist, the requirement for more than de minimis use compelled the court to disregard documented bona fide evidence of actual sales of the plaintiff’s products bearing the mark, with the court holding, “de minimis sales such as these are insufficient to demonstrate use in commerce.” In simple terms, the court effectively said that the plaintiff’s use of its mark was not good enough. Thus, Gameologist highlights the difficulty trademark owners face when attempting to determine whether use of the mark crosses the threshold from minimal to sufficient, as there is no bright line test to answer this question.1

Many start-up and small businesses have sporadic initial sales patterns for a number of justifiable reasons, including a lack of resources or expertise (if the mark owner is new to the industry) or lack of capital (which may prevent the mark owner from obtaining legal counsel). It follows, then, that the continuous use standard is prejudiced in favor of those brands that are already strong, or have sufficient capital, over those that are starting out. In this way, the continuous use standard under the Act is unequal in its application as the standard is biased in favor of the strong. Where de minimis use is in issue, the law says “might is legally right,” or at least, “legally better.” As a result, the continuous use standard deprives some new or startup businesses from growing a burgeoning brand into a thriving core asset.