Trademark in Commerce Requirement
Being able to register and maintain a trademark with the United States Patent & Trademark Office generally means that you must be able to show that the trademark is used "in commerce". This memorandum shows of examples how the determination as to whether your trademark can be federally registered and protected is made.
This question most often comes up in situations where a business is operated out of a single location.
As defined in the law, “commerce” means “all commerce which may lawfully be regulated by Congress.” This has typically required that the involved commerce be ‘interstate’ commerce as opposed to ‘intrastate’ commerce.
This inevitably engages the interstate commerce clause of the Constitution. That has proved difficult to interpret at times, and decisions have not always been uniform. The Supreme Court has considered what intrastate commerce affects interstate commerce to justify Congress regulating it. The Court said the precise line can be drawn only as individual cases arise, but the distinction is clear in principle. Where the effect of intrastate transactions on interstate commerce is only indirect, transactions remain within the domain of state power.
Ultimately, it is a matter of degree. If an applicant is involved in purely intrastate commerce activity, it is not sufficient use to justify a federal trademark registration unless that intrastate activity has enough of an effect on interstate commerce where one could say that Congress would be justified in regulating it.
A single location restaurant using the mark BOZO’S for restaurant services contended its services were rendered to interstate travelers and there were out of state articles discussing these services. The court said that while the facts supporting BOZO’S contention that its service mark had been used in commerce was not as extensive as in others, it was sufficient to satisfy the statutory requirement for registration. It further held that it had been established that the BOZO’S mark has been used in connection with services rendered to customers traveling across state boundaries and it was not required that such services be rendered in more than one state to satisfy the requirement. The court rejected the argument that a certain increased threshold level of interstate activity is a requirement before registration of the mark is granted to a single-location restaurant. There was a dissent in this case which raised the contention that precedent is sparse for single-location restaurants. The restaurant was not on an interstate highway, not listed in a travel guide, there were no out of state advertisements and no liquor license. Nevertheless, there was competent evidence introduced that there were sufficient out of state travelers to support registration.
A restaurant located on I-180 in Illinois served approximately 1,600 patrons daily, many of whom were interstate travelers. The ruling found that services were not required to be rendered in more than one state. The Civil Rights Act of 1964, which provides that “restaurants serving food to interstate travelers are engaged in commerce” was cited Again, there was competent evidence that the services rendered affect interstate travelers.
One case involved a chain of auto and truck service stations all located in Ohio. Some of the locations were on interstate highways with frequent and regular patronage by out of state travelers. Invoices showed that a significant number of customers purchased gasoline who lived out of state. Other services rendered including towing, and repair of out of state vehicles as well as vehicles that themselves were involved in transportation of goods across state lines. Thus, while the services were only rendered in Ohio and goods were only sold in Ohio, the extension of credit to out of state customers, the sale of gasoline and services rendered to those who themselves are in the business of interstate commerce showed a direct effect on interstate commerce and supported registration.
In a case involving a mark in connection with the sale of wine. Labels bearing the mark were placed on the bottles in France as this was imported wine. The labels bear a “Certificate of Label Approval” issued by the Bureau of Alcohol, Tobacco and Firearms, United States Treasury Department. While the end product bottled wine was only sold in one state, the goods were of a type that were already directly regulated by the federal government. That regulation supported registration.
A single department store location had over 7200 charge accounts with customers located all across the country. Each of those out of state customers regularly received catalogs, ads and mailings and the store shipped products to those out of state customers via 200,000 orders. Since there is no requirement for a physical location in more than one state to render services in more than one state, registration was supported by the evidence.
A single location motel on an interstate highway in Texas advertised in the national Tourist Court Journal and had its services listed in travel guides. The ruling held that advertising in interstate commerce placed the advertised services in interstate commerce as a matter of law. Moreover, the evidence showed many patrons were out of state travelers.
REGISTRATION NOT SUPPORTED
A case involved a single location restaurant in Philadelphia, PA applied to register the mark OLD ORIGINAL BOOKBINDERS for restaurant services. The applicant said it was near the PA/NJ border and it also served many customers from DE. However, the contentions were unverified. The court upheld the refusal to register on the grounds that the applicant failed to show use in commerce as required under the law. This case may have had a different outcome had the applicant been able to prove a substantial customer base in New Jersey and Delaware and thus demonstrate a direct effect on interstate commerce.
Another case involved a single location food establishment using the mark FRAGEL for french fried bagels. The sales were entirely made in Michigan. However, the applicant said its customers transported the goods to Ohio after sale. The record was not clear how the Applicant determined this. The ruling held that transportation across state lines “must be made on behalf of or under the sponsorship of the trademark owner, and at all times with the knowledge, sanction, and control of the owner.” Thus, while there was a contention that the good ended up in a different state, it was not transported by the trademark owner. Once the good was sold, the use of the mark by the owner was complete and not in commerce.
A single location church and related bookstore in Illinois very close to the Wisconsin border sold caps and t-shirts in the bookstore. The evidence showed at least two sales made to Wisconsin residents, although the goods were sold in Illinois. The ruling found that two sales merely demonstrated that sales could be made to out of staters and was insufficient to show a sufficient effect on interstate commerce. There was no shipping to out of staters, only in state sales of goods otherwise not regulatable by Congress.
The mark HOMESTEAD was applied to a variety of processed meats. Applicant stated that it did not need to comply with the Federal Meat Inspecting Act since the products are only sold to Ohio firms and it complied with the Ohio Meat Inspection Act. The location was near the state line and had out of staters come to purchase product. However, when the product is sold in Ohio and not shipped across state lines (which would have triggered complying with the Federal Meat Inspection Act), the sales transaction was complete and title to the goods passed to the customer in Ohio. What the customer then does is beyond the dominion and control of the mark owner and the transportation across state lines is out of their purview. Registration was not supported.
Factors Supporting Registration
There is no requirement that an establishment be located in more than one state to render services (or sell goods) that affect interstate commerce in such a way that supports use in commerce to obtain a federal trademark registration. However, single location or single state enterprises need to establish certain activity to be viewed as rendering services or selling goods that ‘affect’ interstate commerce.
Shipping goods to more than one state on a regular basis as a part of the normal continuing course of business, satisfies affecting interstate commerce.
Advertising in more than one state places the good or service advertised in interstate commerce. Moreover, if advertising is more than local (radio station advertising heard in more than one state; advertising directed at interstate travelers), that would likely be a factor in favor of finding interstate commerce.
Having a substantial customer base from more than one state who are extended credit or send checks across state lines satisfies affecting interstate commerce.
Being able to demonstrate a flow of money across state lines (checks, credit cards from out of state customers) affects interstate commerce. While likely not dispositive on its own, credit card transactions from out of state could be a factor as affecting commerce regulatable by Congress.
Rendering services that inherently affect travel to and from separate states and across state lines (towing, auto repair and sale of gasoline to travelers likely to be engaging in interstate commerce, etc., located on or near an interstate highway) affects interstate commerce.
When certain intrastate activity is directly regulatable by Congress, like importing and selling alcoholic beverages, or the need to comply with a federal law or regulation to render the service or sell the good, even where only sold intrastate, that activity is affecting interstate commerce.
Factors Not Supporting Registration
Minor interstate activity i.e. one or two sales over the whole period of the enterprise.
Transportation of a good is performed by the purchaser after the sale is completed on the mark owner’s premises and title has passed to the customer there.
Where the evidence is anecdotal of interstate travelers availing themselves of the services rendered without competent admissible evidence supporting the contention, interstate commerce will not be found. It is important to understand the need for competent, admissible evidence demonstrating you have satisfied the elements noted above. Anecdotal stories or hearsay will not carry the day. An affidavit from someone with knowledge may be enough, for example, as admissible evidence. The more, the better.