In today’s fast-paced and competitive world, companies are now more committed than ever to obtaining trademarks. Startups and established businesses have begun to make trademarking an important part of their strategic plans. At the same time, however, the increase in the number of businesses starting up has created a whole new set of legal issues when companies are filing for the same or very similar trademarks on a proposed-to-be-used basis (without having any actual commercial use at the time of filing). As a result, many new conflicts are being created regarding trademarks prior to the launch of the products or services that the companies claim to be entitled to use under the marks they have applied for. The new conflicts that arise from this way of filing for trademarks differ from traditional trademark conflicts, which are based on prior use of the trademark, in that the issues being litigated stem from issues of intent, timing, and statutory interpretation. Many entrepreneurs think just because they are the first to use a mark, they have primary ownership rights in the mark, but in these cases, the law tends to treat the filing date of the trademark application as the prevailing date regardless of subsequent post-filing use. There is a significant legal gray area here in terms of which party has the right to claim exclusive rights to use the mark, as neither party has yet to establish goodwill or reputation in the marketplace associated with the claimed mark. Therefore, understanding how trademark authorities and courts will address these issues is very important for any business that is seeking to protect its brand identity. This blog article will provide you with information concerning the laws and legal principles regarding these types of prior to commercial use trademark conflicts in order to assist you in managing your risks and making educated business decisions.
Understanding “Proposed to Be Used” Trademark Applications
A “proposed to be used” trademark application allows businesses to reserve a name, logo or slogan that they plan on using in the future. One reason this provision is particularly helpful for startup companies wanting to establish their brand identity as early as possible is because of these features:
• There is no requirement for prior use at the time of filing
• The applicant must demonstrate that there is a genuine intent to use the mark
• The applicant receives priority from the date the application was filed
However, this convenience can also result in conflicts between two or more applicants who submit similar applications around the same time.
What is “Deceptive Similarity”?
A mark can also be confusingly similar when it causes consumers confusion or otherwise misrepresents the origin of goods/services. Some examples of potentially confusingly similar marks would be:
In fact, even minor differences between two marks can lead to legal challenges.
What Happens When Both Marks Are Filed Without Use?
Let’s break down the possible scenarios:
Scenario 1: An earlier registered mark has a priority over a subsequently registered mark.
Scenario 2: Both filings are made around the same time.
Both parties may be required to present supporting arguments.
The decision will be based, in part, on:
Scenario 3: An opposition is initiated.
The Core Issue: Similar Marks Without Prior Use
When two businesses try to trademark the same or very similar name without being the first to do so, their dispute focuses less on whether the businesses are in competition and more on who has priority to the name and what they intended to do when they applied for it.
What Makes Marks “Similar”?
• They sound alike (e.g., “Zylo” vs. “Xylo”)
• They look alike (e.g., logos, font styles, colors)
• They have a similar meaning (e.g., same type of product or service)
Trademark authorities determine whether similarities are likely to confuse consumers.
Legal Principle: Priority of Filing vs. Priority of Use
One of the major issues in the case of trademark litigation is whether the trademark filing priority or the trademark usage priority will prevail.
1.Trademark Filing Priority
• The party that files for a trademark first will typically have priority
• Especially true when both parties have filed for ‘proposed use’ trademarks
2. Trademark Usage Priority
• Traditionally, the party that has used the trademark first will have priority in trademark law
• For trademark use priority to exist, there must be proof of actual use in the market place
In Pre-Launch Conflict Situations:
Since neither party has used - the deciding factor is the trademark applicant who filed first and any subsequent use of the trademark by either party does not create or enhance any rights to the trademark.
Why Subsequent Use Does Not Help
It is often mistakenly presumed that using a trademark after filing would provide a stronger case for the trademark owner. In disputes regarding an application for a trademark that has "proposed to be used," the following applies:
• Later use does not supplant an earlier application date;
• Such later use may be deemed irrelevant or to have been made for tactical reasons by the courts; and
• The intent at the time of application is determinative.
Therefore, businesses cannot depend upon actions taken after the filing date as a means of obtaining a competitive advantage.
Examination Process by Trademark Authorities
There is a systematic procedure that the Trademark Registry follows when processing applications for similar trademarks:
1.Initial Examination
• Determining if there are already existing trademarks that are identical or confusingly similar
• Identifying any objections to registration based on applicable provisions
2. Publication in the Trademark Journal
• Trademarks are published for opposition by the public
3. Opposition Proceedings
• Third parties (including competing applicants) can oppose the registration of the trademark
4. Hearing/Decision
• Both sides present their arguments
• The Registry makes its decision based on evidence and the law
Role of Intent in Trademark Applications
Intent is an important factor in "proposed to be used" applications.
1.Bona Fide Intent:
• The applicant needs to actually have plans on how they intend to use the mark.
• As evidence of good faith intention, the applicant can show drafts of business plans, drafts of new product development and/or marketing plans.
2.No Intent:
• Filing without an honest intention of using mark will be grounds for denial or cancellation of application.
• Filing without intent to use is also considered as filing in bad faith.
Trademark Opposition: How Conflicts Escalate
When similar trademarks are published, opposition is the first area of battleground.
Grounds for Opposition:
• Likelihood of confusion.
• Similarity to already existing trademarks.
• Filing in bad faith.
Primary Elements in Opposition:
• Date of the filing.
• Goods/services associated with all marks involved.
• Number of distinctive qualities associated with the respective trademarks.
Judicial Interpretation: What Courts Consider
There are a number of things that the court will analyze when dealing with this sort of dispute:
The court has also held that if one company submits an application later than another company (neither of which was currently using its trademark when it originally applied) it does not validate the later application.
Real-World Implications for Businesses
1.Brand Confusion
Many businesses create a brand and have to deal with litigation over it before they launch.
2. Economic Loss
Companies that have to change a brand before launching can incur major costs for issues like:
3.Delay in Product Launches
Because of litigation, companies may be delayed in launching their products, which affects their ability to be competitive in the marketplace.
How Courts and Authorities Decide Such Cases
In cases of regarding Trademark disputes, a court or tribunal will consider, among other facts, the following evidence, including but not limited to:
1.Filing Date
The earliest filing will be prioritized.
2. Bona Fide Intent
The bona fide intent of the applicant will be important.
3. Distinctive Character of Mark
Distinctive marks will favorably influence a determination.
4. Industry and Market Segment
Marks in the same industry are more likely to confuse.
5. Evidence
Well-documented evidence will have an impact on a determination.
Strategic Approaches for Businesses
Business Practices to Avoid or Address Trademark Disputes:
1.Conduct Trademarks Searches
Before filing an application for a mark, you should ensure that there are no existing or pending applications.
2. Choose a Distinctive Brand Name
Avoid names that may be confusingly similar to existing marks.
3. Apply Early
Apply for your mark as soon as you are able to.
4. Compile Evidence of Intent
Keep evidence that supports the applicant's dezvoltement of a brand, including business plans, branding materials and product concepts.
5. Watch the Trademark Journal
Monitor similar filings and watch the Trademark Journal for new filings.
Importance of Distinctiveness in Trademark Selection
The distinctiveness of a trademark will influence the likelihood of a conflict happening.
There are three categories of distinctiveness in trademarks:
Trademarks that contain distinctive marks are less likely to lead to disputes than those that contain less distinctive marks and/or have a higher probability of being approved by the United States Patent and Trademark Office ("USPTO").
Impact on Startups and Entrepreneurs
Startups are particularly vulnerable to such disputes due to:
• Lack of knowledge about the law
• Inability to pay for legal services
• Desire to get to market quickly
Startups are even more prone to trademark disputes.
What Happens If Both Parties Have Equal Claims?
In the very rare situation where:
• The dates of the filed trademark applications are very close
• The trademarks are similar
• Both parties sincerely intend to use the trademarks
The decision will be based on:
• The distinctiveness of the trademarks
• The type of product being sold/service being provided
• Whether or not the two trademarks are likely to be confused
There are situations when both applications will have to be altered, limited, or denied.
Legal Risks for Businesses
There are serious risks associated with trademark disputes prior to launch:
1. Brand Delays
A business may not be able to go to market because they have a trademark dispute that has not been resolved.
2. Financial Loss
The company may have incurred substantial rebranding costs, have incurred substantial attorney fees related to the dispute and may also lose significant marketing dollars because of the delay.
3. Market Loss
The competitor has now captured whatever market share was available to the business because of the delay.
4. Legal Uncertainty
Ongoing trademark disputes provide no clear guidance about who has rights to the brand.
Strategic Importance for Startups
Startups should not think about filing a trademark simply as legal compliance but rather should consider it a business strategy as well.
Advantages:
• Secures your brand identity ahead of time
• Prevents future disputes
• Increases investor confidence
• Develops your brand equity for the long-term
Unfamiliarity with what proposed-to-be-used filings are can result in unnecessary conflict.
FAQs
1. What is a “proposed to be used” trademark?
It is a trademark application filed without prior commercial use, based on the applicant’s intention to use it in the future.
2. Who gets priority if two similar trademarks are filed without use?
Generally, the applicant with the earlier filing date gets priority.
3. Does using the trademark after filing improve my chances?
No, subsequent use does not override the priority established by the filing date.
4. Can I oppose a similar trademark application?
Yes, you can file an opposition after the mark is published in the Trademark Journal.
5. What happens if I lose a trademark dispute?
You may need to rebrand, which can involve financial and operational challenges.
Conclusion
Trademark disputes can be a very serious problem for brands when it comes to brand protection and it's important to know when to file your trademark application, as well as what your intent was at the time of filing your trademark application. In other words, when two companies file for the same trademark or a similar trademark under a proposed use basis, the legal system changes its focus from whether either company has a presence in the marketplace to who filed first. Therefore, in these instances, the first party to file will typically have the advantage even if the other party files after they begin using the trademark. These types of trademark disputes highlight that the trademark law is evolving and that proactive legal actions carry much more weight than reactive business actions. For entrepreneurs and businesses, it is a strong reminder that brand development is not only a creative process but also a legal process and that if you do not file for your trademark rights in a timely manner, you risk expensive disputes, delayed launches, and possibly complete rebranding. Therefore, relying upon future use of a trademark application as a backup will typically not work in light of other companies previously filed trademark applications. As a result, companies need to adopt a forward-thinking process by conducting thorough trademark searches, filing their trademark application as soon as possible, and having the intent that they are going to use the trademark as a registered trademark when they file their trademark application. By understanding how trademark authorities will resolve disputes involving different trademark applications will help businesses to make educated business decisions, lessen the risk of expensive litigation, and begin building a successful trademark portfolio.
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