Trademark “use in commerce” must be lawful to build trademark rightsJanuary 17, 2007

When is a use in commerce not sufficient to build trademark rights? When that use is unlawful. The Ninth Circuit, in a dispute between two manufacturers of antioxidants made from olive extract, held in an issue of first impression in that circuit that unlawful use in commerce cannot support federal trademark rights. This decision agrees with the Tenth Circuit, apparently the only other Court of Appeal to have decided this issue, as well as the Trademark Trial and Appeal Board (TTAB). More details of the case after the jump.In 2001, CreAgri began selling a product it called Olivenol, a product containing hydoxytyrosol, an antioxidant found in olives. In 2003, another company, USANA Health Sciences (USANA) began selling a competing product called Olivol. USANA had priority of use dating back to an intent-to-use trademark application filed June 18, 2002. Likelihood of confusion was not at issue here, but rather the only issue was which party had an earlier priority date. The Food, Drug, and Cosmetic Act (FDCA) requires dietary supplements such as these to comply with certain labeling requirements, however when compliance with these requirements is not technologically feasible, the FDA has the power to grant exemptions from the requirements. CreAgri believed it was not technologically feasible to accurately measure the amount of hydroxytyrosol in its tablets, but never applied for an exemption from the FDA. The original 2001 label stated that each tablet contained 25mg of hydroxytyrosol. In 2002, CreAgri changed the label to indicate that each tablet contained 5mg after further testing revealed that the initial results may not have been accurate. Finally, in February, 2004 after the case was filed, it conducted additional tests that discovered the actual amount was closer to 3mg. This last label finally met the requirements of the FDCA. The court held that because the labels CreAgri used before February 2004 did not meet the labeling requirements of the FDCA, CreAgri could not rely on any use prior to 2004 for purpose of proving its priority of rights over USANA. This decision follows the prevailing rule applied at the Trademark Office and by the TTAB that where use in commerce relied upon for trademark rights is not lawful, that use cannot create trademark rights. The Ninth Circuit did not decide if the various exceptions to this rule apply because the court stated that even if they did apply, CreAgri would not benefit from them. For example, the TTAB holds that there must be some nexus between the unlawful activity and the use of the mark in order to result in a forfeiture of trademark rights. Here, the violation related to the labeling of CreAgri’s product, which directly related to the use of the mark, as the mark appeared on the label. Thus, the required nexus existed under the TTAB rule. The court considered other arguments as to why CreAgri’s unlawful labeling should not divest it of trademark rights, but found them unpersuasive. The moral of the story here? Make sure your product complies with federal requirements, or your trademark rights may be lost. To read the full decision in CreAgri, Inc. v. USANA Health Scis., Inc., click here.

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