Proving Common Law Trademark Rights in Court

What Do You Have to Prove to Enforce a Common Law Trademark in Minnesota?

To enforce an unregistered name in Minnesota, you have to prove three things. The name is protectable; you used it first and hold rights to it in the market where it is used; and the other business’s use is likely to confuse customers. In Howards Clothes, Inc. v. Howard Clothes Corp., 52 N.W.2d 753 (Minn. 1952), the Minnesota Supreme Court said the owner suing over a trade name “has the burden of proof” on three requisites. Howards Clothes listed secondary meaning as the first requisite; later Minnesota decisions, covered below, say that an arbitrary or suggestive name needs none.

You can rest the claim on three sources of law at once:

1. Common law. Unfair competition and trade-name infringement, under Howards Clothes and the cases that follow it.
2. Federal law. 15 U.S.C. § 1125(a) reaches a name or symbol whose use “is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.” In Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992), a case over a restaurant’s decor, the U.S. Supreme Court said “§ 43(a) protects qualifying unregistered trademarks.” Section 43(a) is the same provision as § 1125(a).
3. Minnesota statute. Under Minn. Stat. § 325D.44, subd. 1, a person in business commits a deceptive trade practice when the person “causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services,” or “causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another.”

None of the three requires a registration. Each one requires proof, and the sections below take the elements in the order a court reaches them.

How Do You Prove You Used the Mark First?

You prove first use with dated evidence that you sold goods under the name, or advertised and rendered services under it, before the other business did. Picking the name is not enough. In United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90 (1918), a case decided before the Lanham Act, the U.S. Supreme Court said, citing an earlier decision, that “the right to a particular mark grows out of its use, not its mere adoption.”

Federal law draws the same line. Under 15 U.S.C. § 1127, use in commerce “means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” Sales made only to hold the name do not meet that definition. For goods, the section also requires that “the goods are sold or transported in commerce.” For services, the mark must be “used or displayed in the sale or advertising of services and the services are rendered in commerce,” and the section’s other test for services also requires that they be rendered.

A filing with the Minnesota Secretary of State does not prove first use either. The corporate and LLC name statutes, Minn. Stat. § 302A.115, subd. 4 and Minn. Stat. § 322C.0108, subd. 3, say they do not “abrogate or limit the law of unfair competition or unfair practices,” Minnesota’s trademark statutes (sections 333.001 to 333.54), or the federal laws protecting trade names and trademarks. They also do not “derogate the common law or the principles of equity.”

Evidence that tends to date your first use includes:

• invoices, receipts, and order records showing the name on a sale;
• dated advertisements, mailers, and archived website or social media captures;
• signed contracts and proposals using the name;
• dated photographs of signs, packaging, vehicles, or labels.

When the other side holds a federal registration, the date it filed matters as much as your first sale. The relationship between first use and the federal priority date is covered on a separate page.

How Do Business Records Become Evidence of Use?

In a Minnesota state court, your sales records and ads can come into evidence through the business-records exception to the rule against hearsay. Minn. R. Evid. 803(6) admits a record “made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.”

In plain terms, someone from your company testifies that the record was made when the sale or ad happened and that keeping such records is routine. The rule then adds: “A memorandum, report, record, or data compilation prepared for litigation is not admissible under this exception.” A spreadsheet assembled after the dispute begins does not come in as a business record. I suggest keeping invoices, ad files, and website captures in the ordinary course now, because those are the records the rule admits.

Gaps in use matter too. Section 1127 treats a mark as abandoned “When its use has been discontinued with intent not to resume such use,” or when the owner’s conduct “causes the mark to become the generic name for the goods or services on or in connection with which it is used or otherwise to lose its significance as a mark.” Applying that definition, the Minnesota Court of Appeals said in Birch Publications, Inc. v. RMZ of St. Cloud, Inc., 683 N.W.2d 869 (Minn. Ct. App. 2004), quoting an earlier decision, that intent to resume “requires the trademark owner to have plans to resume commercial use of the trademark.” The court added that “The owner of a trademark cannot defeat an abandonment claim by asserting a vague, subjective intent to resume use of a trademark at some unspecified future date,” and it affirmed a trial court’s abandonment finding after a bench trial. Section 1127 also says: “Nonuse for 3 consecutive years shall be prima facie evidence of abandonment.” For a mark registered under Minnesota’s act, Minn. Stat. § 333.18, subd. 6 sets its own rule “For purposes of sections 333.18 to 333.31”: “Nonuse for two consecutive years constitutes prima facie evidence of abandonment.” Check the current text of the statute before relying on these periods. Records that show steady sales under the name, year after year, answer an abandonment argument before it is made.

What Makes a Business Name Distinctive Enough to Protect?

A business name is protectable from its first use only if it is arbitrary or suggestive; a descriptive name needs proof of secondary meaning, and a generic name is never protectable as a mark. The Minnesota Supreme Court set out that scale in Imported Auto Parts Corp. v. R. B. Shaller & Sons, Inc., 258 N.W.2d 797 (Minn. 1977): “If the business selects a mark that is arbitrary with respect to its trade or merely suggestive of it, the business’ first use of the mark will establish common-law rights, if another has not yet appropriated it.”

The court added that “A generic mark, on the other hand, never leaves the public domain,” and that the test for which category a name falls in “is consumer reaction to it in the marketplace.” The case shows how much the category decides. The owner of “Imported Auto Parts” had enough secondary-meaning evidence to survive summary judgment if its name were descriptive, and some people had mistaken the later stores for its branches. The court held the name generic, said the confusion was “attributable to the generic nature” of the name, and affirmed judgment for the later user, which had put the name “Rossi” in front. It also said that “the doctrine of unfair competition requires that subsequent use of the term be fair.”

An arbitrary name sits at the other end of the scale. In North Star State Bank of Roseville v. North Star Bank Minnesota, 361 N.W.2d 889 (Minn. Ct. App. 1985), the Minnesota Court of Appeals affirmed a temporary injunction for the earlier bank. It treated “North Star” as arbitrary for banking: “Since it is arbitrary, proof of secondary meaning is unnecessary.” I suggest placing your own name on this scale honestly before a dispute, because the category sets how much evidence you will need.

How Do You Prove Secondary Meaning for a Descriptive Name?

For a descriptive name, you prove secondary meaning by showing that customers connect the name with one source, your business. Howards Clothes described the point at which a name “has become the symbol by which plaintiff’s goods are identified as his by the ordinary” purchaser in the owner’s market.

The Eighth Circuit is the federal appeals court that covers Minnesota. It listed the kinds of proof in Frosty Treats, Inc. v. Sony Computer Entertainment America, Inc., 426 F.3d 1001 (8th Cir. 2005), a Lanham Act case from Missouri. It said “direct evidence such as consumer testimony or surveys are most probative of secondary meaning,” and that circumstantial evidence can also prove it, including:

• how exclusively, how long, and in what manner you have used the name;
• how much you have advertised it, and how;
• your sales volume and number of customers;
• your established place in the market;
• evidence that the other business copied you on purpose.

The court also said secondary meaning “does not require the consumer to identify a source by name but does require that the public recognize the mark and associate it with a single source.” The same case shows what falls short. The owner had used “Frosty Treats” continuously since 1991, but its survey found that “Only one percent of the respondents in the survey mentioned Frosty Treats by name,” and the name appeared on its vans only as a small decal among other decals. The court affirmed summary judgment against the owner. For more on building this proof, see the page on acquired distinctiveness.

If what you want to protect is the design of the product itself, rather than a word, the bar is set by statute and by the U.S. Supreme Court. In Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205 (2000), the Court held that for unregistered trade dress “a product’s design is distinctive, and therefore protectible, only upon a showing of secondary meaning.” The Court distinguished packaging and restaurant decor, saying Two Pesos “unquestionably establishes the legal principle that trade dress can be inherently distinctive, . . . but it does not establish that product-design trade dress can be.” In close cases, it said, courts “should err on the side of caution and classify ambiguous trade dress as product design, thereby requiring secondary meaning.” Section 1125(a)(3) adds that for unregistered trade dress “the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.”

How Far Do Common Law Rights Reach Geographically?

Common law rights cover the market where your name is used and known, and you prove that market with records of where you sold and advertised. In United Drug, a later user had adopted the same mark “in good faith, and without notice of any prior use by others,” and built a trade with it in a distant market before the earlier user entered that market. The U.S. Supreme Court affirmed a decision that did not let the earlier user stop it. A federal registration on the principal register, under 15 U.S.C. § 1072, “shall be constructive notice of the registrant’s claim of ownership thereof.”

In Minnesota, your market is not limited to the area where the two businesses compete head to head. North Star states that “A territorial market is not necessarily confined to an area of actual competition.” The earlier bank there had used its name for thirteen years and had spent more than $185,000 promoting its services since 1972, in Twin Cities media and in magazines with statewide distribution. The later bank sat about ten miles away.

A registration by the other side changes the map:

• A later Minnesota registration. Minn. Stat. § 333.30 preserves good-faith common-law rights, “except that the rights as against the registrant of the same or confusingly similar mark are limited to the areas of the person’s use established prior to the registration date and areas in which the person’s mark has become known prior to the registration date.” That limit applies only to rights “as against the registrant,” and two other sections reach the registration itself. Minn. Stat. § 333.19, subd. 1, says a mark “must not be registered” if it so resembles “a mark or trade name previously used in this state by another and not abandoned” as to be likely “to cause confusion or mistake or to deceive.” Under Minn. Stat. § 333.25, subd. 1, the secretary of state cancels a registration “in compliance with an order of a district court” finding that “the registrant is not the owner of the mark.”

• A later federal registration. Under 15 U.S.C. § 1057(c), “Contingent on the registration of a mark on the principal register,” the filing of the application is constructive use “conferring a right of priority, nationwide in effect, on or in connection with the goods or services specified in the registration,” except, among others, against a person “whose mark has not been abandoned and who, prior to such filing” used the mark or filed its own application. Section 1115(a) says the registration “shall not preclude another person from proving any legal or equitable defense or defect, including those set forth in subsection (b), which might have been asserted if such mark had not been registered.”

  15 U.S.C. § 1065 withholds incontestability “to the extent, if any, to which the use of a mark registered on the principal register infringes a valid right acquired under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration.” Where the registrant’s right “has become incontestable under section 1065,” 15 U.S.C. § 1115(b)(5) gives a defense only if your mark “was adopted without knowledge of the registrant’s prior use” and used continuously from before the date the section names, and “this defense or defect shall apply only for the area in which such continuous prior use is proved.”

  Under 15 U.S.C. § 1064, a person “who believes that he is or will be damaged” by the registration may petition to cancel it “(1) Within five years from the date of the registration of the mark under this chapter.” The paragraph allowing a petition “At any time” lists subsections “(a), (b), or (c) of section 1052,” not the bar in 15 U.S.C. § 1052(d) on a mark that resembles “a mark or trade name previously used in the United States by another and not abandoned.” Check the current text of the statute before relying on this period.

I suggest keeping a running record of where your customers are and where your advertising reaches, because that record is the proof of your territory.

How Do You Prove the Other Use Is Likely to Cause Confusion?

You prove likelihood of confusion by showing that ordinary customers are likely to mistake the other business for yours or to believe the two are connected. In SquirtCo v. Seven-Up Co., 628 F.2d 1086 (8th Cir. 1980), a case over a federally registered mark, the Eighth Circuit reviewed a district court’s ruling after a bench trial. It noted that the district court “recognized that resolution of this issue does not hinge on a single factor but requires a consideration of numerous factors to determine whether under all the circumstances there is a likelihood of confusion.” The factors the opinion discusses include the strength of the mark, the similarity of the marks, how closely related the products are, competitive proximity, intent, actual confusion, and the care buyers use. On that last factor, the opinion quotes an earlier decision: “the kind of product, its cost and the conditions of purchase are important factors in considering whether the degree of care exercised by the purchaser can eliminate the likelihood of confusion which would otherwise exist.” The Eighth Circuit held the district court’s findings “not clearly erroneous” and affirmed the injunction.

Evidence of actual confusion helps, but it is not required. SquirtCo says “actual confusion is not essential to a finding of trademark infringement, although it is positive proof of likelihood of confusion.” In evaluating a survey, the court added, “technical deficiencies go to the weight to be accorded them, rather than to their admissibility.” In North Star, the earlier bank “documented a number of cases of actual confusion, including a customer who assumed the two banks were affiliated.” Under Minnesota’s statute, Minn. Stat. § 325D.44, subd. 2, “a complainant need not prove competition between the parties or actual confusion or misunderstanding.”

In one inquiry I answered, a business owner reported that a company started several years later in the same industry, with a very similar name, was causing confusion among clients and other businesses. I suggested writing down each instance of confusion: the date, who was involved, and what was said, because a letter would rely on those details. The page on likelihood of confusion covers each factor in more depth.

What Can a Court Order Once You Prove Your Rights?

Once you prove your rights and likely confusion, a court can order the other business to stop or to change how it uses the name, and federal law allows money in some cases. Under Minn. Stat. § 325D.45, subd. 1, “A person likely to be damaged by a deceptive trade practice of another may be granted an injunction against it under the principles of equity and on terms that the court considers reasonable. Proof of monetary damage, loss of profits, or intent to deceive is not required.”

Attorney fees under the Minnesota act cut both ways. Under subdivision 2, the court may award fees to the prevailing party if “the party complaining of a deceptive trade practice has brought an action knowing it to be groundless,” or if “the party charged with a deceptive trade practice has willfully engaged in the trade practice knowing it to be deceptive.”

Federal law adds two tools for a § 1125(a) violation:

• An injunction. Under 15 U.S.C. § 1116(a), a court may grant injunctions “according to the principles of equity and upon such terms as the court may deem reasonable.” The owner is “entitled to a rebuttable presumption of irreparable harm” once it shows a violation, or a likelihood of success for a preliminary order.
• Money. Under 15 U.S.C. § 1117(a), when a § 1125(a) violation is established, the owner may recover, “subject to the principles of equity,” the “(1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” In proving profits, “the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed.” Section 1117(a) also says: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

An order does not have to shut the other business down. In North Star, the trial court required the later bank to add “formerly Crystal State Bank” to its name in advertising, forms, and telephone greetings. A lawsuit is also one path among several: a call between the two owners, a cease-and-desist letter, or a coexistence agreement may resolve the conflict, and the same proof strengthens each of them. The page on your options when a competitor uses your business name weighs each path. Delay in objecting raises the separate question of laches.

Why Does Registration Change What You Have to Prove?

Registration moves the first question, ownership, onto the other side. A federal registration on the principal register, under Section 1115(a), “shall be prima facie evidence of the validity of the registered mark and of the registration of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark in commerce.” Prima facie evidence is proof that stands unless the other side rebuts it.

A Minnesota registration has its own effect in a Minnesota court. Under Minn. Stat. § 333.21, subd. 2, the certificate “shall be prima facie evidence of registrant’s ownership and exclusive right to use the mark on or in connection with the goods or services described in the certificate.” A federal application that becomes a principal-register registration also starts the priority described above, for the goods or services specified in the registration.

Registration does not fix a weak name. In Imported Auto Parts, the owner had registered its name under Minnesota’s act, and the court held the generic name “was not properly registrable under the statute.” The choice between federal and Minnesota trademark registration is covered on its own page.

Building Your Proof Before a Dispute

Common law trademark rights depend on proof, and Minnesota’s business-records rule favors records made in the ordinary course before any dispute starts. I suggest keeping dated sales records, ads, and website captures under the name. I also suggest recording where you sell and advertise and noting each instance of customer confusion, because each record answers a question a court will ask. For the rest of Minnesota trademark law that bears on your name, the practice page is the starting point.

If you rely on an unregistered name and want to know how strong your proof is, email [email protected] with a brief description. I can start an intake and conflict check before you send any confidential documents.