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November 21, 2016

The Federal Circuit recently reversed a prior decision of the United States Patent & Trademark Office (“USPTO”) Trademark Trial and Appeal Board (“Board”) regarding “use in commerce”, finding instead that the local sale of two hats bearing the mark in question to an out-of-state resident was sufficient to constitute use “in commerce” for purposes of federal registration.  Christian Faith Fellowship Church v adidas AG, Appeal No. 2016-1296 (Fed. Cir. November 14, 2016). 

Pursuant to the Lanham Act, “commerce” is defined as “all commerce which may lawfully be regulated by Congress.”  15 USC §1127.  Further, before federal registration will issue, a federal applicant must identify the date it first sold or transported goods bearing the applied-for mark “anywhere” and “in commerce.”  Historically, first use “anywhere” was meant to cover “intrastate” sales and first use “in commerce” covered “interstate” sales.

Questions have always arisen as to whether “intrastate” sales of marked products would in fact satisfy the second “use in commerce” requirement if the goods were not otherwise sold or transported across state lines.  This decision now answers that question in the affirmative, at least as it pertains to local sales to out-of-town purchasers.  Moreover, the Federal Circuit recognized that the definition of what constitutes “commerce which may lawfully be regulated by Congress” continues to expand; therefore, more and more “intrastate” sales will likely satisfy the second prong as time goes by. 

Intrastate sales of products that are otherwise regulated by Congress for other reasons regardless of the location of the sale (e.g., alcoholic beverages, tobacco products), would likewise satisfy the “use in commerce” requirement for federal registration purposes regardless of the domicile of the purchaser.

In closing, the Federal Circuit remanded the case back to the TTAB for a decision regarding the other grounds asserted by adidas in the cancellation proceedings, namely, 1) whether the mark failed to function as a “trademark” and 2) whether the Church had otherwise abandoned the mark because of non-use.

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