Foreign Use of a Mark May Establish Trademark Priority in the U.S.

In the recent decision of First Niagara Ins. Brokers, Inc. v. First Niagara Fin. Group, Inc. (Fed. Cir. 2007) (the 'Federal Circuit's decision'), the Federal Circuit overturned a ruling by the Trademark Trial and Appeal Board (the 'Board') dismissing an opposition by First Niagara Insurance Brokers ('FN-Canada'), a Canadian company, to registration of 'First Niagara' and related marks by First Niagara Financial Group ('FN-US'), a U.S. company. In rendering its holding, the Federal Circuit declared that, in some cases, what would seem to be purely foreign trademark activity may establish superior trademark rights in the United States.

Company Histories of FN-Canada and FN-US

FN-Canada is an insurance broker that sells insurance policies issued by other companies in exchange for a commission. FN-Canada has been in business since 1886 and assumed the name 'First Niagara Insurance Brokers' in 1984. FN-Canada is located in Niagara Falls in Ontario, Canada near Niagara Falls, NY, though FN-Canada has no actual business presence in the United States and is not licensed to sell insurance in the United States. However, FN-Canada does have ties to the United States. For example:

• FN-Canada sells insurance policies issued by U.S. companies;
• FN-Canada sells insurance policies to U.S. citizens that have Canadian property;
• FN-Canada provides insurance to Canadians who are traveling to the United States; and
• FN-Canada has customers such as the Niagara Falls Bridge Commission, a joint United States-Canada commission that operates bridges between the countries.

Though FN-Canada does not own any registered U.S. trademarks, it uses several unregistered marks in its advertising and correspondence, such as 'First Niagara' and 'First Niagara Insurance Brokers.'

FN-US is also an insurance broker located in Northpointe, NY. FN-US has both Canadian and American customers. FN-US uses the following marks in connection with its business: 'First Niagara,' 'First Niagara Financial Group,' 'First Niagara Online,' 'First Niagara Bank's Customer Connection Line,' and 'First Niagara E-CD.'

FN-US filed intent-to-use applications with the United States Patent and Trademark Office ('USPTO') in January 2000 for the marks that it used in connection with its business. FN-Canada filed oppositions to each of the applications, claiming that FN-US's marks would likely cause confusion with FN-Canada's marks. FN-US retorted that FN-Canada had not used its marks 'in commerce' in the United States and could therefore not establish the necessary priority for a likelihood of confusion claim. This matter came before the Board, which found in favor of FN-US on Oct. 25, 2005.

First Niagara: The Board's Decision

In making its decision, the Board held that FN-Canada did not use its mark 'in a type of commerce regulable by Congress.' First Niagara Ins. Brokers, Inc. v. First Niagara Fin. Group, Inc., Opposition Nos. 911-22072, 91122224, 91122193, 91122450, 91122712, 91150237, 77 U.S.P.Q.2d 1334, 1345 (TTAB Oct. 21, 2005) (the 'Board's Decision'). In dismissing FN-Canada's oppositions, the Board held that '[t]he nexus of [FN-Canada's] services is Ontario and the activities [FN-Canada] undertakes in communicating with U.S. Brokers and clients are simply a necessary part of its Canadian business.' Board's Decision, 77 U.S.P.Q.2d at 1344. The Board concluded that '[t]he activities with any connection to the United States that [FN-Canada] has established ' are de minimis and merely incidental to [FN-Canada's] rendering of its insurance brokerage services in Canada.' Id. The Board noted that FN-Canada had not used its marks 'in commerce' because 'the insurance policies ' brokered by [FN-Canada] that extend certain coverages to the United States or U.S. citizens in Canada ' reflect the rights and liabilities of the underwriter, not those of the broker ' Such activities do not constitute rendering of insurance brokerage services in either interstate or foreign commerce.' Id.

The Board dismissed FN-Canada's opposition claims and found in favor of FN-US. FN-Canada subsequently appealed the Board's decision to the Federal Circuit.

First Niagara: The Federal Circuit's Decision

On Jan. 9, 2007, the Federal Circuit reversed the Board's October 2005 decision. The Federal Circuit first referred to '13(a) of the Lanham Act (15 U.S.C. '1063(a)), which discusses the standard for opposing an application. The Federal Circuit noted that a 'ground' for opposing registration must be 'a statutory ground which negates the applicant's entitlement to registration.' Federal Circuit's decision, slip op. at 5 (internal citations omitted). The Federal Circuit pointed out that FN-Canada relied on '2(d) of the Lanham Act as the basis for its statutory ground:

No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it ' [c]onsists of or comprises a mark which so resembles a mark registered in the Patent and Trademark Office, or a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive ' 15 U.S.C. '1052(d) (emphasis added).

Though the Board had assumed that an 'opposer's claim of prior use can succeed only if it has proved use of its marks in connection with the services rendered in commerce lawfully regulated by Congress, as required under Section 45 of the Trademark Act,' (Board's Decision, 77 U.S.P.Q.2d at 1341), the Federal Circuit disagreed. Federal Circuit's Decision, slip op. at 6. The Federal Circuit opined that the plain language of '2(d) of the Lanham Act merely requires for the mark to have been previously used in the United States by another. Id. (internal citations omitted). The Federal Circuit noted that there is no requirement that the mark have been 'in commerce.' Id. at 7.

The Federal Circuit reversed the Board's decision, holding that '[t]he record unquestionably reveals more than ample use of FN-Canada's marks in the United States to satisfy the use requirements of section 2(d).' Id.

Grupo Gigante Case

The facts of the First Niagara case are reminiscent of a 2004 Ninth Circuit case involving Gigante grocery stores. Grupo Gigante SA De CV v. Dallo & Co., Inc., 119 F. Supp. 2d 1083 (C.D. Cal. 2004), vacated and remanded, 391 F.3d 1088 (9th Cir. 2004). Grupo Gigante, a Mexican company, owned a chain of Mexican grocery stores called Gigante. Grupo Gigante, 391 F.3d at 1091. Grupo Gigante opened its first store in Mexico City in 1962, and by 1991 it had more than 100 stores in Mexico, including two in Tijuana, a city on the U.S.-Mexican border just south of San Diego. Id. In August 1991, Dallo started operating a grocery store in San Diego called 'Gigante Market.' Dallo opened a second 'Gigante Market' grocery store in San Diego in 1996. Id. In 1998, Grupo Gigante tried to convince Dallo to stop using the 'Gigante' mark, but to no avail. Id. at 1092. In June 1998, Grupo Gigante registered the 'Gigante' mark with the state of California and, in July 1998, Dallo followed suit. Id. Grupo Gigante opened three 'Gigante' grocery stores in the Los Angeles area between 1999 and 2000. Id. Dallo sent Grupo Gigante a cease and desist letter after discovering the opening of the first U.S. store, demanding that Grupo Gigante stop using the 'Gigante' name on its Los Angeles stores. Id. Grupo Gigante responded by filing a lawsuit, maintaining that it had superior rights to 'Gigante' in Southern California. Id. Dallo counterclaimed, also claiming superior rights to 'Gigante' in Southern California. Id.

The District Court found the Mexican mark was 'well known' in the United States because the mark had acquired secondary meaning in Southern California. Id. On appeal, the Ninth Circuit found that the evidence presented was insufficient to support a finding of summary judgment that Grupo Gigante's 'Gigante' mark was 'well known' in Southern California before Dallo's first use there. Id. at 1106. In making its determination, the Ninth Circuit recognized an exception to the territorial aspect of trademark law, i.e., the 'well-known' marks exception. Id. at 1093-94.

The Ninth Circuit determined that a mark needed to have acquired more than just secondary meaning in the relevant U.S. market to be considered 'well-known.' Id. at 1098. In order to be 'well-known,' the mark had to be familiar to a 'substantial percentage' of people in the relevant U.S. market. Id. The Ninth Circuit required the foreign mark to have an intermediate level of recognition in the relevant U.S. market: The level of recognition must be higher than that required for secondary meaning, but not as high as that required to achieve 'famous mark' status. Id. In determining whether a mark was 'well-known,' the Ninth Circuit noted that several factors should be considered, such as intentional copying by the defendant and whether U.S. customers are likely to be confused. Id.

Going Forward

First Niagara, like Grupo Gigante, recognized that foreign use of a mark may suffice to establish trademark priority in the United States, assuming the mark is adequately recognized in the United States. Grupo Gigante laid the foundation by establishing a standard for determining when a foreign mark is considered 'well known' in a given area in the United States. First Niagara clarified this standard by holding that a foreign mark need not be used in commerce in the United States in order to achieve trademark priority. Rather, according to First Niagara, a foreign mark merely must be used in the United States to attain trademark priority.

These cases pave the way for foreign marks to penetrate the U.S. trademark system without any use in commerce of the marks in the United States. Because the emphasis is being placed on whether a mark is sufficiently recognizable in the United States, it is possible that an increasing number of marks never used in interstate commerce may attain trademark priority in the United States.

Deena R. Sturm is an associate in the New York office of Kenyon & Kenyon LLP. She can be reached at 212-908-6859.

In the recent decision of First Niagara Ins. Brokers, Inc. v. First Niagara Fin. Group, Inc. (Fed. Cir. 2007) (the 'Federal Circuit's decision'), the Federal Circuit overturned a ruling by the Trademark Trial and Appeal Board (the 'Board') dismissing an opposition by First Niagara Insurance Brokers ('FN-Canada'), a Canadian company, to registration of 'First Niagara' and related marks by First Niagara Financial Group ('FN-US'), a U.S. company. In rendering its holding, the Federal Circuit declared that, in some cases, what would seem to be purely foreign trademark activity may establish superior trademark rights in the United States.

Company Histories of FN-Canada and FN-US

FN-Canada is an insurance broker that sells insurance policies issued by other companies in exchange for a commission. FN-Canada has been in business since 1886 and assumed the name 'First Niagara Insurance Brokers' in 1984. FN-Canada is located in Niagara Falls in Ontario, Canada near Niagara Falls, NY, though FN-Canada has no actual business presence in the United States and is not licensed to sell insurance in the United States. However, FN-Canada does have ties to the United States. For example:

• FN-Canada sells insurance policies issued by U.S. companies;
• FN-Canada sells insurance policies to U.S. citizens that have Canadian property;
• FN-Canada provides insurance to Canadians who are traveling to the United States; and
• FN-Canada has customers such as the Niagara Falls Bridge Commission, a joint United States-Canada commission that operates bridges between the countries.

Though FN-Canada does not own any registered U.S. trademarks, it uses several unregistered marks in its advertising and correspondence, such as 'First Niagara' and 'First Niagara Insurance Brokers.'

FN-US is also an insurance broker located in Northpointe, NY. FN-US has both Canadian and American customers. FN-US uses the following marks in connection with its business: 'First Niagara,' 'First Niagara Financial Group,' 'First Niagara Online,' 'First Niagara Bank's Customer Connection Line,' and 'First Niagara E-CD.'

FN-US filed intent-to-use applications with the United States Patent and Trademark Office ('USPTO') in January 2000 for the marks that it used in connection with its business. FN-Canada filed oppositions to each of the applications, claiming that FN-US's marks would likely cause confusion with FN-Canada's marks. FN-US retorted that FN-Canada had not used its marks 'in commerce' in the United States and could therefore not establish the necessary priority for a likelihood of confusion claim. This matter came before the Board, which found in favor of FN-US on Oct. 25, 2005.

First Niagara: The Board's Decision

In making its decision, the Board held that FN-Canada did not use its mark 'in a type of commerce regulable by Congress.' First Niagara Ins. Brokers, Inc. v. First Niagara Fin. Group, Inc., Opposition Nos. 911-22072, 91122224, 91122193, 91122450, 91122712, 91150237, 77 U.S.P.Q.2d 1334, 1345 (TTAB Oct. 21, 2005) (the 'Board's Decision'). In dismissing FN-Canada's oppositions, the Board held that '[t]he nexus of [FN-Canada's] services is Ontario and the activities [FN-Canada] undertakes in communicating with U.S. Brokers and clients are simply a necessary part of its Canadian business.' Board's Decision, 77 U.S.P.Q.2d at 1344. The Board concluded that '[t]he activities with any connection to the United States that [FN-Canada] has established ' are de minimis and merely incidental to [FN-Canada's] rendering of its insurance brokerage services in Canada.' Id. The Board noted that FN-Canada had not used its marks 'in commerce' because 'the insurance policies ' brokered by [FN-Canada] that extend certain coverages to the United States or U.S. citizens in Canada ' reflect the rights and liabilities of the underwriter, not those of the broker ' Such activities do not constitute rendering of insurance brokerage services in either interstate or foreign commerce.' Id.

The Board dismissed FN-Canada's opposition claims and found in favor of FN-US. FN-Canada subsequently appealed the Board's decision to the Federal Circuit.

First Niagara: The Federal Circuit's Decision

On Jan. 9, 2007, the Federal Circuit reversed the Board's October 2005 decision. The Federal Circuit first referred to '13(a) of the Lanham Act (15 U.S.C. '1063(a)), which discusses the standard for opposing an application. The Federal Circuit noted that a 'ground' for opposing registration must be 'a statutory ground which negates the applicant's entitlement to registration.' Federal Circuit's decision, slip op. at 5 (internal citations omitted). The Federal Circuit pointed out that FN-Canada relied on '2(d) of the Lanham Act as the basis for its statutory ground:

No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it ' [c]onsists of or comprises a mark which so resembles a mark registered in the Patent and Trademark Office, or a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive ' 15 U.S.C. '1052(d) (emphasis added).

Though the Board had assumed that an 'opposer's claim of prior use can succeed only if it has proved use of its marks in connection with the services rendered in commerce lawfully regulated by Congress, as required under Section 45 of the Trademark Act,' (Board's Decision, 77 U.S.P.Q.2d at 1341), the Federal Circuit disagreed. Federal Circuit's Decision, slip op. at 6. The Federal Circuit opined that the plain language of '2(d) of the Lanham Act merely requires for the mark to have been previously used in the United States by another. Id. (internal citations omitted). The Federal Circuit noted that there is no requirement that the mark have been 'in commerce.' Id. at 7.

The Federal Circuit reversed the Board's decision, holding that '[t]he record unquestionably reveals more than ample use of FN-Canada's marks in the United States to satisfy the use requirements of section 2(d).' Id.

Grupo Gigante Case

The facts of the First Niagara case are reminiscent of a 2004 Ninth Circuit case involving Gigante grocery stores. Grupo Gigante SA De CV v. Dallo & Co., Inc., 119 F. Supp. 2d 1083 (C.D. Cal. 2004), vacated and remanded , 391 F.3d 1088 (9th Cir. 2004). Grupo Gigante, a Mexican company, owned a chain of Mexican grocery stores called Gigante. Grupo Gigante, 391 F.3d at 1091. Grupo Gigante opened its first store in Mexico City in 1962, and by 1991 it had more than 100 stores in Mexico, including two in Tijuana, a city on the U.S.-Mexican border just south of San Diego. Id. In August 1991, Dallo started operating a grocery store in San Diego called 'Gigante Market.' Dallo opened a second 'Gigante Market' grocery store in San Diego in 1996. Id. In 1998, Grupo Gigante tried to convince Dallo to stop using the 'Gigante' mark, but to no avail. Id. at 1092. In June 1998, Grupo Gigante registered the 'Gigante' mark with the state of California and, in July 1998, Dallo followed suit. Id. Grupo Gigante opened three 'Gigante' grocery stores in the Los Angeles area between 1999 and 2000. Id. Dallo sent Grupo Gigante a cease and desist letter after discovering the opening of the first U.S. store, demanding that Grupo Gigante stop using the 'Gigante' name on its Los Angeles stores. Id. Grupo Gigante responded by filing a lawsuit, maintaining that it had superior rights to 'Gigante' in Southern California. Id. Dallo counterclaimed, also claiming superior rights to 'Gigante' in Southern California. Id.

The District Court found the Mexican mark was 'well known' in the United States because the mark had acquired secondary meaning in Southern California. Id. On appeal, the Ninth Circuit found that the evidence presented was insufficient to support a finding of summary judgment that Grupo Gigante's 'Gigante' mark was 'well known' in Southern California before Dallo's first use there. Id. at 1106. In making its determination, the Ninth Circuit recognized an exception to the territorial aspect of trademark law, i.e., the 'well-known' marks exception. Id. at 1093-94.

The Ninth Circuit determined that a mark needed to have acquired more than just secondary meaning in the relevant U.S. market to be considered 'well-known.' Id. at 1098. In order to be 'well-known,' the mark had to be familiar to a 'substantial percentage' of people in the relevant U.S. market. Id. The Ninth Circuit required the foreign mark to have an intermediate level of recognition in the relevant U.S. market: The level of recognition must be higher than that required for secondary meaning, but not as high as that required to achieve 'famous mark' status. Id. In determining whether a mark was 'well-known,' the Ninth Circuit noted that several factors should be considered, such as intentional copying by the defendant and whether U.S. customers are likely to be confused. Id.

Going Forward

First Niagara, like Grupo Gigante, recognized that foreign use of a mark may suffice to establish trademark priority in the United States, assuming the mark is adequately recognized in the United States. Grupo Gigante laid the foundation by establishing a standard for determining when a foreign mark is considered 'well known' in a given area in the United States. First Niagara clarified this standard by holding that a foreign mark need not be used in commerce in the United States in order to achieve trademark priority. Rather, according to First Niagara, a foreign mark merely must be used in the United States to attain trademark priority.

These cases pave the way for foreign marks to penetrate the U.S. trademark system without any use in commerce of the marks in the United States. Because the emphasis is being placed on whether a mark is sufficiently recognizable in the United States, it is possible that an increasing number of marks never used in interstate commerce may attain trademark priority in the United States.

Deena R. Sturm is an associate in the New York office of Kenyon & Kenyon LLP. She can be reached at 212-908-6859.