15.23 Defenses—Continuous Prior Use Within Remote Geographic Area—Affirmative Defense (15 U.S.C. § 1115(b)(5))

            An owner of a registered trademark may not exclude others who began using [that] [a confusingly similar] trademark in a geographic area, without knowledge of the owner’s prior use of [the] [a similar] trademark elsewhere, and before the owner had [applied for registration of the] [registered the] [published the registered] trademark. 

            The defendant contends that defendant has the right to use the trademark within the [specify geographic region] area. 

            The defendant has the burden of proving each of the following by a preponderance of the evidence: 

1.         the [defendant] [defendant’s assignor] [defendant’s licensor] continuously used the trademark, without interruption, in [geographic region where defendant claims prior use]; 

2.         the [defendant] [defendant’s assignor] [defendant’s licensor] began using the trademark without knowledge of the plaintiff’s prior use elsewhere; and 

3.         the defendant used the trademark before the plaintiff [applied for registration of the] [registered the] [published the registered] trademark. 

Comment 

            The defendant has the burden of pleading and proving the elements of this defense. See Philip Morris, Inc. v. Imperial Tobacco Co., 251 F. Supp. 362, 379 (E.D.Va.1965), aff’d, 401 F.2d 179 (4th Cir.1968); 5 J. Thomas McCarthy, Trademarks And Unfair Competition § 26:44 (4th ed. 2015). 

            “Continuous” means lack of interruption. See Casual Corner Assocs., Inc. v. Casual Stores of Nevada, Inc., 493 F.2d 709, 712 (9th Cir. 1974).  The dimensions of the geographic area are a question of fact, determined in terms of the relevant zones of sales, advertising, and reputation as of the date of plaintiff’s registration.  Consol. Freightways Corp. v. Consol. Forwarding, Inc., 156 U.S.P.Q. 99 (N.D. Ill. 1967); see also Watec Co., Ltd. v. Liu, 403 F.3d 645, 653 (9th Cir. 2005) (approving trial court jury instruction that claimant of senior rights to trademark “must demonstrate that it has sufficient market penetration in a specific locality or localities. Market penetration must consider such factors as the total dollar value of sales, the proportion or percentage of the…[trademark] claimants’ sales of trademarked products in relation to the marketplace in the locality in question. The actual doing of business rather than the mere use of a flyer or advertisement is required [f]or the establishment of common-law rights in any locality”). 

            Even if marks are precisely identical, there may be no infringement if the marks are in different geographic areas.  See Brookfield Commc’ns Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1054 (9th Cir. 1999) (acknowledging that some courts permit the use of identical marks if in distinct geographic area).